Broadway Financial Corp. in Los Angeles is planning to close two of its five branches as part of a broader plan to trim overhead and preserve capital.
The $447 million-asset parent of Broadway Federal Bank, which largely serves low-income communities, also said this week that that it intends to raise an additional $10 million of capital to gird it against potential loan losses and position it to "participate in the future economic growth of low to moderate markets in South Los Angeles."
"We all must make difficult decisions during these challenging economic times to ensure long-term viability and the bank is not immune from the impact of high unemployment, low consumer confidence and government deficits," Chairman and Chief Executive Officer Paul Hudson said in a news release Tuesday. "These changes are designed to help insure that the bank continues to be a leader in serving the financial needs of low-to-moderate income communities … by improving the bank's efficiency."
With its asset quality weakening, Broadway swung to a $1.7 million loss in the second quarter from a profit of $846,000 in the same period in 2010. At June 30, 11.15% of its loans were nonperforming, up from 6.65% a year earlier.
To cut costs, the company intends to close to its branches on Wilshire Boulevard and in Leimart Park on Nov. 7 and will transfer the deposits to other locations.
In an interview with the Los Angeles Business Journal, Hudson said that the company has not yet determined how many jobs will be cut.
"We intend to transfer some of the employees, but since the closures are not projected until November, we have not finalized employee reduction numbers or calculated expense savings," he said.