Written by Biloxi
As a reminder, here is a history of Broadway Federal Bank:
In 1946, Broadway Federal Savings and Loan Association was founded by a group of civic minded people to provide bank services to minorities in the greater Los Angeles area, who were not being serviced by any of the existing financial institutions.
And what has happened to the 67 year old bank? From the Christianity Today article in November of last year:
Broadway Federal Bank has been serving Los Angeles’s African American community since the 1940s. But recent economic pressures have forced the small bank to foreclose on black church properties in an effort to stay afloat.
Now, the pastors of those churches are protesting the foreclosures. According to a statement from the Greater Open Door Church of God in Christ, a group of pastors will hold a Saturday press conference “about Broadway Federal Bank and Bank of America predatory lending practices.
A recent report showed that the bank had over 12 percent of loans and other assets in delinquency or foreclosure—and seven currently repossessed churches. According to a 2011 report, Broadway Federal has “experienced elevated levels of loan delinquencies… during the period from 2010 to the present that have resulted in operating losses.” Those losses totaled $14 million in 2011.
Broadway Federal say that the bank has foreclosed on 60 churches. The bank was in serious trouble back in 2010. In fact, on SEC filing of cease and desist order of the bank, the Office of Thrift Supervision determined the bank to be “in troubled condition.” Here are some of the highlights of the bank’s problems and an order not make any more new loans, make purchase, refinance and even extended loans to churches according to the SEC filing in September 9, 2010:
Cease and Desist.
1. The Association and its directors, officers, and employees shall cease and desist from any action (alone or with others) for or toward, causing, bringing about, participating in or
Broadway Federal Bank, f.s.b.
Order to Cease and Desist
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counseling, or aiding and abetting the unsafe or unsound practices that resulted in deteriorating asset quality, ineffective risk management practices, excessive concentrations of credit, inadequate oversight and supervision of the lending function, and inadequate liquidity planning at the Association.
34. The asset classification review conducted by the Loan Review Consultant shall include the following:
(a) one hundred percent (100%) of Church Loans (as defined in Paragraph 45 below);
(b) seventy-five percent (75%) of commercial and industrial loans, both secured and unsecured;
(c) seventy-five percent (75%) of non-residential and multifamily real estate loans;
(d) seventy-five percent (75%) of land loans; and
(e) seventy-five percent (75%) of construction loans.
45. Effective immediately, the Association shall not make, purchase, or commit to make or purchase: (a) any term real estate loan secured by churches or church-owned property; (b) any loan provided for the purpose of purchasing or refinancing churches or church-owned property; or (c) any other loan extended or maintained as part of the Association’s church loan program (collectively, Church Loans).
The troubled churches that are facing foreclosure with Broadway Federal Bank will be in tough fight as the banks’ hands are tied with SEC to stay afloat as the bank is trying to stay in business. The bank is face with a decision between business vs. commitment to client. And since 100% loans are church loans, sadly there certainly will be a community backlash of conducting business with the oldest African-American bank. By the way, the bank closed two branches in 2011 to raise new capital. According to the LA Times, Broadway Federal lost $6.5 million in 2009, turned a $1.9-million profit in 2010, but has lost $1.8 million during the first half of 2011.