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
16, 1999.
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, BOB ADKINS,
AT (213) 634-1700, EXT 224.
BROADWAY FINANCIAL CORPORATION
4800 Wilshire Boulevard
Los Angeles, California 90010
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on June 16, 1999
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 16, 1999, for the following purposes:
1) To elect three directors of the Company to serve until the Annual
Meeting to be held in the year 2002 or until their successors are
elected and have been qualified. The Board of Directors has
nominated Messrs. A. Odell Maddox, Lyle Marshall and Daniel A.
Medina.
2) To ratify the appointment of KPMG LLP as the Company's independent
auditing firm for 1999 and 2000.
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 May 21, 1999 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 principal executive
offices of Broadway Financial Corporation 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
Bob Adkins
Secretary
Los Angeles, California
April 30, 1999
BROADWAY FINANCIAL CORPORATION
4800 Wilshire Boulevard
Los Angeles, California 90010
PROXY STATEMENT
Annual Meeting of Stockholders
June 16, 1999
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 16, 1999, 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 25, 1999.
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 May 21, 1999 as the record
date for the determination of stockholders entitled to notice of and to vote
at the Annual Meeting. A total of 932,494 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
1
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 years ending December 31, 1999 and 2000. 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 Bob Adkins, 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 American Securities Transfer & Trust, Inc., the Company's transfer
agent, to assist in the solicitation of proxies for an estimated fee of
$1,606 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 subsidiary, 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, Messrs. A. Odell Maddox, Lyle Marshall and Daniel A. Medina 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
2
their intention to serve if elected. Each director listed below, except Mr.
Daniel A. Medina, 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 Company formation. 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 1998 SINCE EXPIRES THE COMPANY AND THE BANK
- ------------------------- ------------ -------- ------- -----------------------------
NOMINEES:
Lyle A. Marshall 73 1976 2002 Director of Company and Bank
A. Odell Maddox 52 1986 2002 Director of Company and Bank
Daniel A. Medina 41 1997 2002 Director of Company and Bank
SIX CONTINUING DIRECTORS:
Paul C. Hudson(1) 50 1985 2000 Director, President and Chief
Executive Officer of Company and
Bank
Kellogg Chan 59 1993 2000 Director of Company and Bank
Larkin Teasley 62 1977 2000 Director of Company and Bank
Elbert T. Hudson(1) 78 1959 2001 Director and Chairman of the
Board of Company and Bank
Willis K. Duffy 71 1974 2001 Director of Company and Bank
Rosa M. Hill 69 1977 2001 Director of Company and Bank
- --------------------
(1) Elbert T. Hudson and Paul C. Hudson are father and son.
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:
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 and the Internal Asset Review Committees of the Board.
Mr. Marshall also chairs the Board of the Watts/Willowbrook Boys and Girls
Club.
3
A. Odell Maddox is President and Manager of Maddox & Stabler Construction Co.
Inc. and a real estate broker for Maddox Company, a real estate property
management 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 is
Chairman of the Loan Committee of the Board.
Daniel A. Medina is a Managing Director in the Global Corporate Finance
Practice of 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.
CONTINUING DIRECTORS:
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.
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 a member of the Boards of
Directors of America's Community Bankers (the national thrift industry
association), the American League of Financial Institutions, Pitzer College,
the Fulfillment Fund, 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. Now
semi-retired, he previously served as Chairman and Chief Executive Officer of
Universal Bank, f.s.b. from 1994 to 1995, as a consultant to Seyen
Investments from 1993 to 1994 and, prior to that, he
4
served as President and Chief Executive Officer of East-West Bank from 1976
to 1992. Currently, Mr. Chan is President of North American Financing
Corporation, a real estate investment banking firm. 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.
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. 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 is the Corporate Secretary of S.J.H. Investment Company. She
was formerly an elementary school teacher in the Los Angeles City Schools and
Fisk University Children's School. Mrs. Hill also worked as a social worker
with the Los Angeles County Bureau of Public Assistance. She is the
Chairperson of the Compliance/Community Reinvestment Act ("CRA")/Public
Relations Committee of the Board. She served on the Board of Trustees of
Bennett College, Greensboro, North Carolina. Mrs. Hill has been an active
member of Holman United Methodist Church for over 45 years where she has held
many leading roles.
Larkin Teasley has been President and Chief Executive Officer of Golden State
Mutual Life Insurance Company since 1980 and is a member of its Board of
Directors. Mr. Teasley is a member of the Boards of Directors of the Golden
State Minority Foundation, the Greater Los Angeles African American Chamber
of Commerce, the California Chamber of Commerce and the Los Angeles County
Board of Investment for the County Employees Retirement Association. He is
Chairman of the National Insurance Association.
BOARD MEETINGS AND COMMITTEES:
The Board of Directors of the Company and the Board of Directors of the Bank
held twelve and fourteen meetings, respectively, during 1998. The Company
has three committees: The Executive Committee, the Compensation/Benefits
Committee and the Audit Committee. The Bank has a total of seven committees:
The Executive Committee, the Audit Committee, the Compensation/Benefits
Committee, the Loan Committee, the Internal Asset Review Committee, the
Asset/Liability and Investment Committee and the Compliance 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
5
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. During 1998 the Executive Committee had no meetings.
The Audit Committee consists of Mr. Lyle A. Marshall (Chairperson), Mrs. 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 regulatory compliance. The committee is also responsible for
oversight of external auditors. During 1998 the Audit Committee had one
meeting.
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. During 1998 the Compensation/Benefits Committee had no
meetings.
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 seven times during
1998.
The Audit Committee consists of Mr. Lyle A. Marshall (Chairperson), Mrs. Rosa
M. Hill, Dr. Willis K. Duffy and Mr. Daniel A. Medina. The Audit 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. During 1998 the Audit Committee met eight
times.
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. During 1998 the committee met five times.
The Loan Committee consists of Messrs. A. Odell Maddox (Chairperson), Paul C.
Hudson, Kellogg Chan and the Chief Loan Officer (position is currently
vacant) as a non-Board
6
member. 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. During 1998 the committee met eleven times.
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. During 1998 the committee met twelve times.
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, Sr. Vice President-Chief Financial Officer, Robert Marrujo, Vice
President-Chief Savings Officer and the Chief Loan Officer (position
currently vacant). The Asset/Liability and Investment Committee is
responsible for monitoring Broadway Federal's interest rate risk in order to
reduce the vulnerability of the Bank's operations to changes in interest
rates. The Committee also monitors and controls the level and type of
securities investments made by the Bank. During 1998 the committee met one
time.
The Compliance/CRA/Public Relations Committee consists of Mrs. Rosa Hill
(Chairperson) and Messrs. Elbert T. Hudson, Kellogg Chan and Daniel A.
Medina. This committee is responsible for reviewing the Bank's compliance
with state and federal regulations, monitoring compliance with the Community
Reinvestment Act and oversight of public relations and community outreach
efforts. During 1998 the committee met two times.
EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
The following table sets forth certain information with respect to executive
officers of the Company and/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 48 Chief Financial Officer and Secretary of
Company and Sr. Vice President/Chief
Financial Officer of Broadway Federal
Bruce Solomon(2) 51 Sr. Vice President/Chief Loan Officer of
Broadway Federal
Robert Marrujo 37 Vice President/Chief Savings Officer of
Broadway Federal
- --------------------
(1) As of December 31, 1998.
7
(2) Executive resigned position in March 1999.
The business experience of each of the executive officers is as follows:
Bob Adkins joined Broadway Federal in 1994 as the Chief Financial Officer.
In January 1995 Mr. Adkins became Senior Vice President/Chief Financial
Officer. Mr. Adkins also serves as Director and Secretary/Treasurer of
Broadway Service Corporation. Immediately prior to joining Broadway Federal,
Mr. Adkins was Chief Financial Officer of Westside Bank of Southern
California for three years. Mr. Adkins has over 20 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.
Bruce Solomon joined Broadway Federal in 1993 as the Chief Loan Officer and
currently served as Senior Vice President/Chief Loan Officer and CRA Officer
until his resignation in March 1999. Prior to joining Broadway Federal, Mr.
Solomon had over 19 years of experience in the banking industry, primarily in
real estate lending with Hancock Savings and Loan Association, National Home
Equity Corporation and Valley Federal Savings and Loan Association. Mr.
Solomon serves on the Boards of Directors of the Home Loan Counseling Center,
Inglewood Neighborhood Housing Services and the Los Angeles Local Development
Corporation.
Robert Marrujo joined Broadway Federal Bank in 1995 as Branch Manager of its
main office and currently serves as Vice President/Chief Savings Officer and
Office of Foreign Asset Control ("OFAC") Compliance Officer. Prior to
joining Broadway Federal Bank, Mr. Marrujo had over 16 years of experience in
the banking industry with Glendale Federal Bank and Great American Bank,
where he served in various management positions. Mr. Marrujo has served on
the Boards of Directors of Inglewood Neighborhood Housing Services, the
Inglewood Chamber of Commerce, and the San Gabriel Chamber of Commerce. He
currently serves on the Community Advisory Council for Big Brothers of
Greater Los Angeles.
8
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth, as of April 20, 1999, certain information
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).
AMOUNT AND
NATURE OF
NAME AND ADDRESS BENEFICIAL PERCENT OF
OF BENEFICIAL OWNER OWNERSHIP CLASS
- -------------------------------------- ----------- ----------
BENEFICIAL OWNERS:
Broadway Federal Bank Employee Stock
Ownership Plan (1) 67,487 7.13%
First Financial Fund, Inc. (3)
Gateway Center Three
100 Mulberry Street, 9th Floor
Newark, NJ 07102-4077 89,640 9.47
Deltec Asset Management Corporation (4)
535 Madison Ave.
New York, NY 10022 233,130 24.63
Franklin Mutual Advisors, Inc. (5)
51 John F. Kennedy Parkway
Short Hills, NJ 07078 56,662 5.99
DIRECTORS AND EXECUTIVE OFFICERS (1):
Elbert T. Hudson 5,067(2)(6) 0.54
Paul C. Hudson 10,766(7) 1.14
Kellogg Chan 10,875(8) 1.15
Willis K. Duffy 3,481(9) 0.37
Rosa M. Hill 10,422(2)(9) 1.10
A. Odell Maddox 5,834(8) 0.62
Lyle A. Marshall 3,481(2)(9) 0.37
Larkin Teasley 4,605(9) 0.49
Daniel A. Medina 649(8) 0.07
Bob Adkins 3,295(10)(12) 0.35
Robert Marrujo 813(11) 0.09
All directors and executive officers
as a group (11 persons) 59,288 6.29%
- ----------------------
9
(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 February 12, 1999 and from a Schedule 13G filed with the Securities and
Exchange Commission by Wellington Management Company, LLP, a Massachusetts
limited liability partnership ("WMC"), on February 9, 1999. 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 9.47% of the outstanding Common Stock as of April 20, 1999,
owned by First Financial Fund, Inc.
(4) All such shares of Common Stock are held by Deltec Asset Management
Corporation, a New York corporation ("Deltec"), for the account of its
brokerage or investment advisory clients over whose accounts Deltec
exercises discretionary authority as to voting, disposition and other
matters. The information regarding Deltec is derived from their Schedule
13D and Form 3 filing with the Securities and Exchange Commission on May
23, 1997 and from their Form 4 filed with the Securities and Exchange
Commission on January 6, 1998. The number of shares have been adjusted
for the 8% stock dividend paid to all shareholders in August 1998.
(5) Information derived from Schedule 13G filed with the Securities and
Exchange Commission by Franklin Mutual Advisors, Inc.("FMAI"), a Delaware
corporation, on January 29, 1999. FMAI is a direct subsidiary of Franklin
Resources, Inc. ("FRI"), its parent holding company. The 56,662 shares of
Common Stock of Broadway Financial Corporation are beneficially owned by
one or more open-end investment companies or other managed accounts which,
pursuant to advisory contracts, are advised by FMAI. Such advisory
contracts grant to FMAI all investment and voting power over the securities
owned by such advisors clients. Therefore, FMAI may be deemed to be, for
purposes of Rule 13d-3 under the Securities Exchange Act of 1934, the
beneficial owner of the securities. The voting and investment powers held
by FMAI are exercised independently from FRI and from all other investment
advisor subsidiaries of FRI. Charles B. Johnson and Rupert H. Johnson, Jr.
(the "Principal Shareholders") each own in excess of 10% of the outstanding
Common Stock of FRI and are the principal shareholders of FRI.
(6) Includes 322 vested and currently exercisable shares under the Performance
Equity Program For Officers and Employees (the "PEP"); 691 allocated shares
under the Broadway Federal Savings and Loan Association Employee Stock
Ownership Plan (the "ESOP"); and 893 shares subject to options granted
under the Long Term Incentive Plan (the "LTIP"), which options are all
currently exercisable.
(7) Includes 455 vested and currently exercisable shares under the PEP; 2,546
allocated shares under the ESOP; and 893 shares subject to options granted
under the LTIP, which options are all currently exercisable.
(8) Includes 110 vested and currently exercisable shares under the Recognition
and Retention Plan for Outside Directors (the "RRP"); and 324 shares
subject to options granted under the 1996 Stock Option Plan For Outside
Directors (the "Stock Option Plan").
(9) Includes 161 vested and currently exercisable shares under the RRP; and 620
shares subject to options granted under the Stock Option Plan.
(10) Includes 303 vested and currently exercisable shares under the PEP; 1,884
allocated shares under the ESOP; and 893 shares subject to options granted
under the LTIP, which options are all currently exercisable.
(11) Includes 813 allocated shares under the ESOP.
(12) 61 shares are held jointly with spouse with whom voting and investment
power is shared.
10
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/Secretary and the Chief Loan Officer, as well as the total
compensation paid to each, during the Company's last three fiscal years:
LONG TERM COMPENSATION
-----------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
------------------------------------- ---------------------- --------
RESTRICTED SECURITIES ALL OTHER
NAME AND OTHER ANNUAL STOCK UNDERLYING LTIP COMPEN-
PRINCIPAL COMPENSATION AWARDS OPTIONS PAYOUTS SATION
POSITION YEAR SALARY ($) BONUS ($) ($) ($) /SARS (#) ($) ($)
- --------------- ---- ---------- --------- ------------ --------- ---------- -------- ---------
Paul C. Hudson,
President/CEO 1998 137,135 16,843 - - - 5,007(a) 4,647(c)
924(d)
1997 125,110 - - - 22,317(b) - 3,619(c)
798(d)
1996 123,484 17,952 - - - - 3,982(c)
798(d)
Bob Adkins,
CFO/Secretary 1998 105,664 8,900 - - - 3,337(a) 3,211(c)
879(d)
1997 102,770 - - - 8,927(b) - 2,924(c)
885(d)
1996 91,725 7,099 - - - - 2,708(c)
756(d)
Bruce Solomon - - - 1,670(a) 3,161(c)
Chief Loan 1998 94,664 10,716 855(d)
Officer (e)
1997 94,760 - - - 4,463(b) - 2,053(c)
798(d)
1996 87,416 6,610 - - - - 2,688(c)
744(d)
- ------------------
(a) 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 price of the Company's stock on the grant date ($11.00 per
share) by the number of shares that vested during 1998. At December 31,
1998 the total remaining shares that have not yet vested for Paul C.
Hudson, Bob Adkins and Bruce Solomon were 1,820, 1,212 and 607
respectively. The value of those shares for Paul C. Hudson, Bob Adkins and
Bruce Solomon, based upon the market price of the shares at December 31,
1998 ($6.94 per share) was $12,626, $11,363 and $4,213, respectively.
(b) The stock options awarded have a grant date of September 17, 1997. At
December 31, 1998 the named executives each had 893 stock options
exercisable, and none had been exercised.
(c) Reflects amounts contributed by the Company to the 401(k) Plan on behalf of
each individual. The amounts contributed by the Company each year
represent 100% of each employee's contribution up to 3% of each
individual's salary.
(d) Reflects the dollar value of group term life insurance paid by the Bank
during the periods covered.
(e) Bruce Solomon resigned his position in March 1999 and is no longer with the
Company.
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The following table summarizes options exercised during 1998 and the value of
unexercised options held by the named executives at fiscal year-end.
NUMBER OF VALUE OF
SECURITIES UNEXERCISED
UNDERLYING IN-THE-MONEY
UNEXERCISED OPTIONS/SARS
OPTIONS/SARS AT AT FISCAL
FISCAL YEAR-END (#) YEAR-END ($)(a)
SHARES ACQUIRED VALUE EXERCISABLE (E)/ EXERCISABLE (E)/
NAME ON EXERCISE (#) REALIZED ($) UNEXERCISABLE (U) UNEXERCISABLE (U)
- --------------- --------------- ------------ ------------------- -----------------
Paul C. Hudson - - 21,424(U) -(U)
893(E) -(E)
Bob Adkins - - 8,034(U) -(U)
893(E) -(E)
Bruce Solomon (b) - - 3,570(U) -(U)
893(E) -(E)
- --------------------
(a) There were no in-the-money exercised or unexercised stock options at
December 31, 1998 since the fair market value of the underlying securities
at that date did not exceed the exercise price of the stock options. The
fair market value of the Company's Common Stock at December 31, 1998 was
$6.94.
(b) Bruce Solomon resigned his position in March 1999 and is no longer with the
Company.
DIRECTORS COMPENSATION
No remuneration was paid to the directors by the Company in 1998. Currently,
the Chairman of the Board of Broadway Federal receives a monthly retainer fee
of $2,800, and all other directors of Broadway Federal, other than the
President, receive a monthly retainer fee of $1,000 each. A fee of $200 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 $150 per meeting are also paid to directors of Broadway Federal, other
than the Chairman of the Board and the President.
SEVERANCE AGREEMENTS
The Company and Broadway Federal have entered into severance agreements with
Messrs. Paul C. Hudson and Bob Adkins having terms of 24 months and 18
months, respectively. 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
12
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), 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 or her 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 two 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 $245,000.
APPOINTMENT OF INDEPENDENT AUDITORS
After evaluating proposals received, the Company changed its independent
auditors from Ernst & Young LLP ("Ernst & Young") to KPMG LLP ("KPMG") based
upon the recommendation of the Company's Audit Committee. KPMG performed the
independent audit for the fiscal year ending December 31, 1998. The Board of
Directors has selected KPMG LLP as the Company's independent auditors for the
fiscal years ending December 31, 1999 and 2000. Ernst & Young's audit report
on the consolidated financial statements of the Company as of and for the
years ended December 31, 1996 and 1997 did not contain any adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principles. It is anticipated that representatives
of KPMG 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.
In connection with the audits of the two fiscal years ended December 31, 1996
and 1997, there were no disagreements with Ernst & Young on any matter of
accounting principles or practices, financial statement disclosure, or
auditing scope or procedures.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
TO RATIFY THE APPOINTMENT OF KPMG LLP AS THE COMPANY'S
INDEPENDENT AUDITORS.
13
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 1.20%. 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
14
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,
while-non-exempt employees are rewarded based upon 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.
The Compensation/Benefits Committee
Dr. Willis K. Duffy
Mr. Larkin Teasley
Mr. Daniel A. Medina
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, 1998,
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, 1998, except for the directors listed below,
all filing requirements were complied with by its executive officers,
directors and beneficial owners of more than ten percent of the Company's
stock. Director Paul C. Hudson was late filing one Form 4 report relating to
the purchase by him of 392 shares of Common Stock, and Director Larkin Teasley
was late filing one Form 4 report relating to the purchase by him of 909
shares of Common Stock.
15
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 2000 proxy solicitation materials must set
forth such proposal in writing and file it with the Secretary of the Company
on or before January 19, 2000. 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 2000 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, 2000, such
proposal may only be voted upon at a meeting held at least 30 days after the
Annual Meeting at which it is presented.
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 Meeting (between March 19, 2000 and April 19,
2000) to be considered at the Annual Meeting in year 2000. 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.
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
Bob Adkins
Secretary
16
BROADWAY FINANCIAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JUNE 16, 1999
The undersigned hereby appoints Paul C. Hudson and Bob Adkins, or any 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 16, 1999, 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 Mr. Lyle A. Marshall as director to serve until the Annual
Meeting to be held in 2002.
/ / FOR / / WITHHOLD
2. Election of Mr. A. Odell Maddox as director to serve until the Annual
Meeting to be held in 2002.
/ / FOR / / WITHHOLD
3. Election of Mr. Daniel A. Medina as director to serve until the Annual
Meeting to be held in 2002.
/ / FOR / / WITHHOLD
4. Ratify the of KPMG LLP as the Company's independent auditors for the
fiscal years ending December 31, 1999 and 2000.
/ / FOR / / AGAINST / / ABSTAIN
5. In the discretion of the proxy holders (s) on such other business as may
properly come before the Annual Meeting or any adjournment thereof.
/ / FOR / / AGAINST / / ABSTAIN
IMPORTANT-PLEASE SIGN AND DATE ON REVERSE SIDE AND RETURN PROMPTLY
17
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 ITEMS 1, 2,
3 AND 4 AND IN THE DISCRETION OF THE PROXY HOLDER(S) ON MATTERS DESCRIBED IN
ITEM 5.
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: ______________, 1999
_______________________________
(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
18