10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

(Mark One)

[X]QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2013

[  ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from__________ to___________

Commission file number      000-27464

BROADWAY FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	95-4547287
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

5055 Wilshire Boulevard, Suite 500 Los Angeles, California	90036
(Address of principal executive offices)	(Zip Code)

(323) 634-1700

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [ X ]   No [   ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes [ X ]  No [   ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated, or a smaller reporting company.  See the definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.  (Check one):

Large Accelerated Filer [   ]   Accelerated Filer [   ]   Non-Accelerated Filer [   ]   Smaller Reporting Company [ X]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [   ]   No [ X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:  6,145,451 shares of the Company’s Common Stock, par value $0.01 per share, were outstanding as of November 5, 2013.

TABLE OF CONTENTS

			Page
PART I.	FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Consolidated Statements of Financial Condition as of September 30, 2013 (unaudited) and December 31, 2012	1
		Consolidated Statements of Operations and Comprehensive Income (Loss) (unaudited) for the three and nine months ended September 30, 2013 and 2012	2
		Consolidated Statements of Cash Flows (unaudited) for the nine months ended September 30, 2013 and 2012	3
		Notes to Unaudited Consolidated Financial Statements	4
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40
	Item 4.	Controls and Procedures	40
PART II.	OTHER INFORMATION
	Item 1.	Legal Proceedings	41
	Item 1A.	Risk Factors	41
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	41
	Item 3.	Defaults Upon Senior Securities	41
	Item 4.	Mine Safety Disclosures	41
	Item 5.	Other Information	41
	Item 6.	Exhibits	41
	Signatures		43
	3.1	Certificate of Incorporation of Registrant and amendments thereto
	3.2	Bylaws of Registrant
	4.3	Certificate of Designation for Series A Preferred Stock
	4.5	Certificate of Designation for Series B Preferred Stock
	4.7	Certificate of Designation for Series C Preferred Stock
	4.9	Certificate of Designation for Fixed Rate Cumulative Perpetual Preferred Stock Series D  (Exhibit 3.3 to Form 8-K filed by the Registrant on November 19, 2008)
	4.12	Certificate of Designation for Fixed Rate Cumulative Perpetual Preferred Stock Series E  (Exhibit 4.1 to Form 8-K filed by the Registrant on December 9, 2009)
	4.13	Certificate of Designations of Series F Common Stock Equivalents
	4.14	Certificate of Designations of Series G Non-Voting Preferred Stock
	10.19	Exchange Agreement by and between the Registrant and The United States Department of the Treasury (Exhibit 10.19 to Form 10-K filed by the Registrant on April 1, 2013) and Amendment No. 1 thereto
	10.20	Exchange Agreement by and among the Registrant, the Insurance Exchange of the Automobile Club and the Automobile Club of Southern California (Exhibit 10.20 to Form 10-K filed by the Registrant on April 1, 2013)
	10.21.1	Exchange Agreement by and between the Registrant and BBCN Bancorp, Inc.
	10.21.2	Investor Rights Letter by and between the Registrant and BBCN Bancorp, Inc.
	10.22.1	Exchange Agreement by and between the Registrant and National Community Investment Fund (Series C for Series F Preferred Stock)
	10.22.2	Investor Rights Letter by and between the Registrant and National Community Investment Fund
	10.22.3	Exchange Agreement by and between the Registrant and National Community Investment Fund (Series F for Series G Preferred Stock)
	10.23	Registration Rights Agreement between the Registrant, CJA Private Equity Financial Restructuring Master Fund I LP, National Community Investment Fund and BBCN Bancorp, Inc.
	10.24	Form of Subscription Agreements entered into by the Registrant with various purchasers of the Registrant’s common stock
	10.25.1	Subscription Agreement between the Registrant and CJA Private Equity Financial Restructuring Master Fund I LP
	10.25.2	Investor Rights Letter between the Registrant and CJA Private Equity Financial Restructuring Master Fund I LP
	10.26.1	Subscription Agreement between the Registrant and Valley Economic Development Center, Inc.
	10.26.2	Investor Rights Letter between the Registrant and Valley Economic Development Center, Inc.
	10.27	Agreement for Partial Satisfaction of Debt Previously Contracted by and between BBCN Bank and the Registrant
	31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Financial Condition

(In thousands, except share and per share amounts)

	September 30,			December 31,
	2013			2012
Assets	(Unaudited)
Cash	$	8,964		$	13,420
Federal funds sold	51,260			50,940
Cash and cash equivalents	60,224			64,360
Securities available-for-sale, at fair value	10,148			13,378
Loans receivable held for sale, at lower of cost or fair value	1,085			19,051
Loans receivable held for investment, net of allowance of $10,339 and $11,869	251,504			251,723
Accrued interest receivable	1,116			1,250
Federal Home Loan Bank (FHLB) stock	4,113			3,901
Office properties and equipment, net	2,688			2,617
Real estate owned (REO)	6,611			8,163
Bank owned life insurance	2,739			2,688
Investment in affordable housing limited partnership	1,364			1,528
Other assets	4,079			5,034
Total assets	$	345,671		$	373,693
Liabilities and stockholders’ equity
Liabilities:
Deposits	$	218,569		$	257,071
FHLB advances	87,500			79,500
Junior subordinated debentures	6,000			6,000
Other borrowings	2,960			5,000
Accrued interest payable	674			1,941
Dividends payable	-			2,104
Advance payments by borrowers for taxes and insurance	1,034			711
Other liabilities	3,350			3,359
Total liabilities	320,087			355,686
Stockholders’ Equity:
Preferred stock, $.01 par value, authorized 1,000,000 shares:
Senior preferred cumulative and non-voting stock, Series D, no shares issued and outstanding at September 30, 2013 and 9,000 shares issued and outstanding at December 31, 2012	-			8,963
Senior preferred cumulative and non-voting stock, Series E, no shares issued and outstanding at September 30, 2013 and 6,000 shares issued and outstanding at December 31, 2012	-			5,974
Preferred non-cumulative and non-voting stock, no shares issued and outstanding at September 30, 2013 and 55,199 shares of Series A, 100,000 shares of Series B and 76,950 shares of Series C issued and outstanding at December 31, 2012	-			2,457
Preferred non-cumulative voting stock, Series F, 13,997 shares issued and 13,299 shares outstanding at September 30, 2013 and no shares authorized, issued or outstanding at December 31, 2012	13,299			-
Preferred non-cumulative non-voting stock, Series G, 6,982 shares issued and outstanding at September 30, 2013 and no shares authorized, issued or outstanding at December 31, 2012	698			-
Common stock, $.01 par value, authorized 8,000,000 shares at September 30, 2013 and December 31, 2012; issued 6,249,442 shares at September 30, 2013 and 2,013,942 shares at December 31, 2012; outstanding 6,145,451 shares at September 30, 2013 and 1,917,422 shares at December 31, 2012	62			20
Preferred stock discount	-			(598		)
Additional paid-in capital	21,785			10,095
Accumulated deficit	(9,027		)	(7,988		)
Accumulated other comprehensive income, net of taxes of $400 at September 30, 2013 and December 31, 2012	96			318
Treasury stock-at cost, 103,991 shares at September 30, 2013 and 96,520 shares at December 31, 2012	(1,329		)	(1,234		)
Total stockholders’ equity	25,584			18,007
Total liabilities and stockholders’ equity	$	345,671		$	373,693

See accompanying notes to unaudited consolidated financial statements.

1

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
	(In thousands, except per share)
Interest income:
Interest and fees on loans receivable	$	3,637		$	4,595		$	11,420		$	14,955
Interest on mortgage backed and other securities	71			109			240			392
Other interest income	103			19			237			55
Total interest income	3,811			4,723			11,897			15,402
Interest expense:
Interest on deposits	522			707			1,728			2,562
Interest on borrowings	651			789			2,075			2,437
Total interest expense	1,173			1,496			3,803			4,999
Net interest income before provision for loan losses	2,638			3,227			8,094			10,403
Provision for loan losses	414			129			414			1,190
Net interest income after provision for loan losses	2,224			3,098			7,680			9,213
Non-interest income:
Service charges	132			149			403			440
Loan servicing fees, net	8			(6		)	18			(168		)
Net gains (losses) on sales of loans	-			(280		)	97			(280		)
Net gains (losses) on sales of REO	(8		)	(107		)	(10		)	288
Gain on sale of office properties and equipment	-			-			-			2,523
Gain on sale of securities	-			-			-			50
Gain on restructuring of debt	1,221			-			1,221			-
Other	14			27			113			77
Total non-interest income	1,367			(217		)	1,842			2,930
Non-interest expense:
Compensation and benefits	1,479			1,534			4,428			4,661
Occupancy expense, net	269			358			932			942
Information services	213			212			636			664
Professional services	225			246			558			530
Provision for (recapture of) losses on loans held for sale	(315		)	(267		)	153			(81		)
Provision for losses on REO	321			427			544			739
FDIC insurance	181			229			573			662
Office services and supplies	91			113			312			330
Other	543			640			1,640			1,609
Total non-interest expense	3,007			3,492			9,776			10,056
Income (loss) before income taxes	584			(611		)	(254		)	2,087
Income tax expense	-			2			6			849
Net income (loss)	$	584		$	(613	)	$	(260	)	$	1,238
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities available for sale	$	(76	)	$	7		$	(222	)	$	(72	)
Reclassification of net gains included in net income	-			-			-			(50		)
Income tax effect	-			-			-			-
Other comprehensive income (loss), net of tax	(76		)	7			(222		)	(122		)
Comprehensive income (loss)	$	508		$	(606	)	$	(482	)	$	1,116
Net income (loss)	$	584		$	(613	)	$	(260	)	$	1,238
Dividends and discount accretion on preferred stock	(127		)	(287		)	(779		)	(858		)
Income (loss) available to common stockholders	$	457		$	(900	)	$	(1,039	)	$	380
Earnings (loss) per common share-basic	$	0.05		$	(0.48	)	$	(0.23	)	$	0.21
Earnings (loss) per common share-diluted	$	0.05		$	(0.48	)	$	(0.23	)	$	0.21
Dividends declared per share-common stock	$	0.00		$	0.00		$	0.00		$	0.00

See accompanying notes to unaudited consolidated financial statements.

2

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)

	Nine Months Ended September 30,
	2013			2012
	(In thousands)
Cash flows from operating activities:
Net income (loss)	$	(260	)	$	1,238
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Provision for loan losses	414			1,190
Provision for (recapture of) losses on loans receivable held for sale	153			(81		)
Provision for losses on REO	544			739
Depreciation	161			249
Net amortization of deferred loan origination costs	149			115
Net amortization of premiums on mortgage-backed securities	28			44
Amortization of investment in affordable housing limited partnership	164			126
Stock-based compensation expense	33			60
Earnings on bank owned life insurance	(51		)	(60		)
Net (gains) losses on sales of REO	10			(288		)
Net (gains) losses on sales of loans	(97		)	280
Gain on sale of office properties and equipment	-			(2,523		)
Gain on sale of securities	-			(50		)
Gain on restructuring of debt	(1,221		)	-
Net change in accrued interest receivable	134			303
Net change in deferred tax assets	-			850
Net change in other assets	955			(4		)
Net change in accrued interest payable	489			535
Net change in other liabilities	(9		)	638
Net cash provided by operating activities	1,596			3,361
Cash flows from investing activities:
Net change in loans receivable held for investment	(2,041		)	35,096
Proceeds from sales of loans receivable held for sale	15,502			1,486
Principal repayments on loans receivable held for sale	1,520			366
Available-for-sale securities:
Sales	-			1,050
Maturities, prepayments and calls	2,980			3,229
Proceeds from sales of REO	3,583			7,750
Investment in affordable housing limited partnership	-			(350		)
Net (purchase) redemption of Federal Home Loan Bank stock	(212		)	188
Proceeds from sale of office properties and equipment	-			4,237
Additions to office properties and equipment	(232		)	(9		)
Net cash provided by investing activities	21,100			53,043
Cash flows from financing activities:
Net change in deposits	(38,502		)	(31,878		)
Proceeds from FHLB advances	36,000			17,000
Repayments on FHLB advances	(28,000		)	(17,000		)
Net proceeds from issuance of common stock	3,347			-
Reissuance of treasury stock	-			150
Net change in advance payments by borrowers for taxes and insurance	323			272
Net cash used in financing activities	(26,832		)	(31,456		)
Net change in cash and cash equivalents	(4,136		)	24,948
Cash and cash equivalents at beginning of period	64,360			31,597
Cash and cash equivalents at end of period	$	60,224		$	56,545
Supplemental disclosures of cash flow information:
Cash paid for interest	$	3,314		$	4,464
Cash paid for income taxes	$	4		$	-
Supplemental disclosures of non-cash investing and financing activities:
Transfers of loans receivable held for investment to REO	$	1,832		$	3,461
Transfers of loans receivable held for sale to REO	$	753		$	333
Transfers of loans receivable from held for investment to held for sale	$	7,259		$	616
Transfers of loans receivable from held for sale to held for investment	$	7,394		$	-
Exchange of other borrowings to equity	$	2,575		$	-
Exchange of dividends payable to equity	$	2,646		$	-
Transfer of accrued interest to other borrowings	$	535		$	-

See accompanying notes to unaudited consolidated financial statements.

3

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

September 30, 2013

NOTE (1) – Basis of Financial Statement Presentation

The accompanying unaudited consolidated financial statements include Broadway Financial Corporation (the “Company”) and its wholly owned subsidiary, Broadway Federal Bank, f.s.b. (the “Bank”).  Also included in the unaudited consolidated financial statements is Broadway Service Corporation, a wholly owned subsidiary of the Bank.  All significant intercompany balances and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for quarterly reports on Form 10-Q.  These unaudited consolidated financial statements do not include all disclosures associated with the Company’s consolidated annual financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2012 and, accordingly, should be read in conjunction with such audited consolidated financial statements.  In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included.  Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

Some items in the consolidated financial statements for the prior period were reclassified to conform to the current presentation.  Reclassifications had no effect on prior period consolidated net earnings or stockholders’ equity.

Recent Accounting Pronouncements

FASB ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” The provisions of ASU No. 2013-11 require an entity to present an unrecognized tax benefit, or portion thereof, in the statement of financial position as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have a material impact on the Company’s consolidated financial statements.

NOTE (2) – Going Concern, Regulatory Matters and Recapitalization of the Company

Going Concern

The Company’s financial statements have been prepared assuming that the Company will continue as a going-concern, which contemplates continuity of operations, and realization of assets and liquidation of liabilities in the ordinary course of business.  The ability of the Company to continue as a going concern is dependent on many factors, including regulatory actions. The following discussion describes matters that raise substantial doubt about the Company’s ability to continue as a going concern, as well as management’s plans for responding to these matters.

Holding Company Liquidity

The Company has limited liquidity to pay operating expenses over an extended period of time and will need to raise additional capital within the next 12 to 18 months to continue paying operating expenses, including allocations of shared expenses from the Bank, on a timely basis.  Additionally, the Company stopped paying interest expense on its $6.0 million aggregate principal amount of Floating Rate Junior Subordinated Debentures (the “Debentures”) in September 2010 and does not have sufficient capital to repay the Debentures when they mature on March 17, 2014.  Also, the Company had to restructure its $5.0 million senior line of credit, payable to another financial institution (see Note 7).  This restructuring was completed as part of the Company’s recapitalization that closed on August 22, 2013.  Pursuant to that restructuring the Company exchanged $2.6 million of common stock equivalents for $2.6 million principal amount of the line of credit and the lender forgave all of the $1.8 million of accrued interest on the entire amount of the line of credit as of the closing of the recapitalization.  The Company must obtain approval from the Federal Reserve Bank of San Francisco (the “FRB”) before making principal or interest payments on the remaining $2.4 million principal amount of the modified senior loan.  The Company has received approval from the FRB to make the first payment of interest only due in November 2013 (see Note 7).

The Company’s principal sources of funds have historically been dividends from the Bank and, to a lesser extent, additional capital from investors.  At the current time the Bank cannot pay dividends to the Company because of its recent operating losses and because of limitations in a Consent Order the Bank entered into with the Office of the Comptroller of the Currency (“OCC”) on October 30, 2013.  Management does not anticipate that the Bank will receive approval to pay dividends for at least the next several quarters.  Accordingly, the Company will not be able to meet its payment obligations on its debt noted above within the foreseeable future unless the Company is able to secure new capital.

4

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

September 30, 2013

Regulatory Matters

As a result of significant deficiencies in the Company’s and the Bank’s operations noted in a regulatory examination in early 2010, the Company and the Bank were declared to be in “troubled condition” and entered into cease and desist orders (the “Orders”) issued by the OCC’s regulatory predecessor effective September 9, 2010, requiring, among other things, that the Company and the Bank take remedial actions to improve the Bank’s loan underwriting and internal asset review procedures, to reduce the amount of its non-performing assets and to improve other aspects of the Bank’s business, as well as the Company’s management of its business and the oversight of the Company’s business by the Board of Directors.  Effective October 30, 2013, the Order for the Bank was superseded by a Consent Order entered into by the Bank and the OCC.  As part of the Consent Order, the Bank is required to attain, and thereafter maintain, a Tier 1 (Core) Capital to Adjusted Total Assets ratio of at least 9% and a Total Risk-Based Capital to Risk-Weighted Assets ratio of at least 13%, both of which ratios are greater than the respective 4% and 8% levels for such ratios that are generally required under OCC regulations.  The Bank’s regulatory capital exceeded both of these higher capital ratios at September 30, 2013 (see Note 10).

Additionally, the Consent Order issued by the OCC imposes certain other requirements on the Bank.  These requirements include the following, among others:

· The Bank must create a Compliance Committee consisting of at least three independent Directors to monitor compliance with the Consent Order, among other matters.

· The Board of the Bank must prepare and submit a Strategic Plan and a Capital Plan that is consistent with the Strategic Plan. The Capital Plan requirement includes requirements regarding targeted capital ratios and prior approval requirements for the payment of dividends, both of which are mentioned above.

· The Bank must implement an enhanced set of business operational and corporate governance processes, as well as create a commercial real estate concentration risk management program and a written program to reduce the level of assets considered doubtful, substandard or special mention. This latter program requirement includes requirements to monitor the levels of such assets on an ongoing basis and prepare and implement corrective actions as deemed necessary.

· The Bank must also implement an independent ongoing loan review system and adopt new policies with respect to maintaining an adequate allowance for loan and lease losses (“ALLL”).

The Consent Order does not include certain restrictions on the Bank that had been imposed by the Order, such as the specific limitation on the Bank’s ability to increase its assets during any quarter or certain limitations on employment agreements and compensation arrangements.  Management believes that the Order issued to the Company, which has been administered by the FRB since July 2012, remains in effect.  This Order imposes limitations and restriction on several matters, including the following:

· The Company may not declare or pay any dividends or make any other capital distributions without the prior written approval of the FRB.

· The Company may not make any changes in its directors or senior executive officers without prior notice to and receipt of notice of non-objection from the FRB.

· The Company is subject to limitations on severance and indemnification payments and on entering into or amending employment agreements and compensation arrangements, and on the payment of bonuses to Bank directors and officers.

· The Company may not incur, issue, renew, repurchase, make payments on or increase any debt or redeem any capital stock without prior notice to and receipt of written notice of non-objection from the FRB.

5

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

Recapitalization of the Company

Management’s plan to address the conditions described above has consisted of completing a recapitalization of the Company and then raising additional equity capital for the Company and negotiating an extension of the maturity of the Debentures.  The Company completed the recapitalization on August 22, 2013, which improved the Company’s liquidity and capital structure, and enhanced the Bank’s capital ratios as described below.  The Company’s ability to continue as a going concern is dependent on the timely implementation and success of these next steps: raising more capital and extending the maturity of the Debentures.  There can be no assurance that management’s plan will be achieved.

The recapitalization strengthened and simplified the Company’s capital structure through completion of the following transactions:

(1)The issuance of 8,776 shares of Series F Non-cumulative Voting Preferred Stock (the “Common Stock Equivalents”) in exchange for the five series of the Company’s formerly outstanding preferred stock with an aggregate liquidation value or preference of $17.6 million, including the TARP Preferred Stock that was issued to the Treasury Department pursuant to the Capital Purchase Program component of the Treasury Department’s Troubled Asset Relief Program, which the parties agreed to value at $8.8 million based on the price at which shares of the Common Stock were sold in the Subscription Offering referred to below;

(2)The issuance of 2,646 shares of Common Stock Equivalents in exchange for all of the accumulated dividends on the TARP Preferred Stock, totaling $2.6 million as of the date of the exchange;

(3)The issuance of 2,575 shares of Common Stock Equivalents in exchange for $2.6 million principal amount of the Company’s bank debt (the “Debt Exchange”);

(4)The modification of the terms of the remaining $2.4 million principal amount of the senior line of credit to, among other matters, extend the maturity and eliminate the default rate;

(5)The forgiveness of the $1.8 million of accrued interest on the entire amount of the Company’s bank debt as of the date of the exchange;

(6)The exchange of 698 shares of Common Stock Equivalents issued in the Debt Exchange for 6,982 shares of Series G Non-Voting Preferred Stock; and

(7)The issuance of 4,235,500 shares of Common Stock in private sales (the “Subscription Offering”) at a price of $1.00 per share, yielding $4.2 million in gross proceeds. Of the $4.2 million in gross proceeds, $1.2 million were used to invest additional capital into the Bank and to repay all of the inter-company payables due to the Bank from the Company.  As a result, the Bank’s capital ratios increased on a pro forma basis as of June 30, 2013 from 9.48% to 9.75% for Tier 1 Capital, from 14.98% to 15.51% for Tier 1 Risk Based Capital and from 16.27% to16.80% for Total Risk Based Capital.

The Common Stock Equivalents are a new series of preferred stock of the Company that will automatically convert into shares of the Company’s common stock, at the rate of 1,000 shares of common stock for each of the shares of Common Stock Equivalents upon stockholder approval of an amendment to the Company’s certificate of incorporation increasing the number of shares of common stock the Company is authorized to issue so as to permit such conversion.  The Series G Non-Voting Preferred Stock will automatically convert into shares of non-voting common stock of the Company upon approval by the stockholders of an amendment of the Company’s certificate of incorporation authorizing the Company to issue non-voting common stock.  The board of directors of the Company will present the amendments required to effect such conversions at the Company’s Annual Meeting of Stockholders, which will be held on November 27, 2013.  Management believes that the conversions will improve the Company’s ability to raise additional capital.

6

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

NOTE (3) – Earnings (Loss) Per Share of Common Stock

Basic earnings (loss) per share of common stock is computed by dividing income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding for the period.  Diluted earnings (loss) per share of common stock is computed by dividing income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding for the period, increased for the dilutive effect of common stock equivalents, except for the Common Stock Equivalents (defined in Note 2) and Series G Non-Voting Preferred Stock, which are both described as participating securities in the table below.  The participating securities are entitled to share in common stock dividends on an as-converted basis.

The following table shows how the Company computed basic and diluted earnings (loss) per share of common stock for the three and nine months ended September 30, 2013 and 2012:

	For the three months ended September 30,						For the nine months ended September 30,
	2013			2012			2013			2012
	(Dollars in thousands, except per share)
Basic
Net income (loss)	$	584		$	(613	)	$	(260	)	$	1,238
Less: Preferred stock dividends and accretion	(127		)	(287		)	(779		)	(858		)
Less: Net income (loss) attributable to participating securities	(283		)	-			465			-
Income (loss) available to common stockholders	$	174		$	(900	)	$	(574	)	$	380
Weighted average common shares outstanding	3,755,695			1,858,697			2,536,913			1,782,887
Earnings (loss) per common share - basic	$	0.05		$	(0.48	)	$	(0.23	)	$	0.21
Diluted
Net income (loss)	$	584		$	(613	)	$	(260	)	$	1,238
Less: Preferred stock dividends and accretion	(127		)	(287		)	(779		)	(858		)
Less: Net income (loss) attributable to participating securities	(283		)	-			465			-
Income (loss) available to common stockholders	$	174		$	(900	)	$	(574	)	$	380
Weighted average common shares outstanding	3,755,695			1,858,697			2,536,913			1,782,887
Add: dilutive effects of assumed exercises of stock options	-			-			-			-
Weighted average common shares - fully diluted	3,755,695			1,858,697			2,536,913			1,782,887
Earnings (loss) per common share - diluted	$	0.05		$	(0.48	)	$	(0.23	)	$	0.21

Stock options for 148,750 shares of common stock for the three and nine months ended September 30, 2013 and 227,075 shares of common stock for the three and nine months ended September 30, 2012 were not considered in computing diluted loss per common share because they were anti-dilutive.

7

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

NOTE (4) – Securities

The following table summarizes the amortized cost and fair value of the available-for-sale investment securities portfolios at September 30, 2013 and December 31, 2012 and the corresponding amounts of unrealized gains which are recognized in accumulated other comprehensive income (loss):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
September 30, 2013:
Residential mortgage-backed	$	9,652	$	496	$	-	$	10,148
Total available-for-sale securities	$	9,652	$	496	$	-	$	10,148
December 31, 2012:
Residential mortgage-backed	$	12,660	$	718	$	-	$	13,378
Total available-for-sale securities	$	12,660	$	718	$	-	$	13,378

There were no securities with unrealized losses at September 30, 2013 and December 31, 2012.  At September 30, 2013, the Bank’s investment portfolio consisted of residential mortgage-backed securities with an estimated remaining life of 5.4 years.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

At September 30, 2013 and December 31, 2012, securities pledged to secure public deposits and FHLB advances had a carrying amount of $10.1 million and $1.5 million, respectively.  At September 30, 2013 and December 31, 2012, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.  There were no sales of securities during the nine months ended September 30, 2013.  During the nine months ended September 30, 2012, $1.0 million of U.S federal agency bonds were sold and the Company recognized a gain of $50 thousand.

NOTE (5) – Loans Receivable Held For Sale

Loans receivable held for sale totaled $1.1 million at June 30, 2013 and $19.1 million at December 31, 2012.

During the nine months ended September 30, 2013, certain loans held for investment were reclassified to loans receivable held for sale at the lower of cost or fair value, less estimated selling costs.  At the time of transfers, the carrying amount of these loans totaled $8.8 million, and required additional charge-offs of $1.5 million, which were reserved for at year-end 2012.

During the third quarter of 2013, management determined that certain loans held for sale were no longer to be marketed for sale and therefore, transferred such loans to held for investment at the lower of cost or fair value.  Loans transferred to held for investment totaled $7.4 million and consisted of $2.5 million in multi-family loans, $1.4 million in commercial real estate loans and $3.5 million in church loans.

Loans sold during the first nine months of 2013 totaled $15.5 million with a net gain of $97 thousand.  Additionally, a loan receivable held for sale secured by a church building was transferred to REO during the nine months ended September 30, 2013.

8

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

Loans sold during the first the nine months of 2012 totaled $1.8 million with a net loss of $280 thousand.  During the nine months ended September 30, 2012, two loans receivable held for sale were transferred to REO.  The loans were secured by commercial real estate properties, which had a total carrying amount of $333 thousand, net of charge-offs of $327 thousand.

NOTE (6) – Loans Receivable Held for Investment

Loans at September 30, 2013 and December 31, 2012 were as follows:

	September 30, 2013			December 31, 2012
	(In thousands)
Real estate:
One-to-four units	$	50,296		$	57,733
Five or more units	104,301			83,350
Commercial real estate	32,944			41,124
Church	70,720			76,254
Construction	434			735
Commercial:
Sports	1,423			1,711
Other	670			2,184
Consumer:
Other	36			35
Total gross loans receivable	260,824			263,126
Loans in process	(25		)	(74		)
Net deferred loan costs	784			557
Unamortized premium (discounts)	260			(17		)
Allowance for loan losses	(10,339		)	(11,869		)
Loans receivable, net	$	251,504		$	251,723

The following tables present the activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30, 2013
	One-to- four units			Five or more units			Commercial real estate			Church			Construction			Commercial			Consumer			Total
	(In thousands)
Beginning balance	$	2,445		$	1,169		$	1,674		$	5,060		$	8		$	213		$	10		$	10,579
Provision for loan losses	(315		)	351			72			523			(1		)	(213		)	(3		)	414
Recoveries	-			-			16			5			-			59			-			80
Loans charged off	(51		)	(3		)	(190		)	(490		)	-			-			-			(734		)
Ending balance	$	2,079		$	1,517		$	1,572		$	5,098		$	7		$	59		$	7		$	10,339
	Nine Months Ended September 30, 2013
	One-to- four units			Five or more units			Commercial real estate			Church			Construction			Commercial			Consumer			Total
	(In thousands)
Beginning balance	$	2,060		$	2,122		$	2,685		$	4,818		$	8		$	167		$	9		$	11,869
Provision for loan losses	(150		)	56			(96		)	929			(1		)	(322		)	(2		)	414
Recoveries	259			-			117			18			-			214			-			608
Loans charged off	(90		)	(661		)	(1,134		)	(667		)	-			-			-			(2,552		)
Ending balance	$	2,079		$	1,517		$	1,572		$	5,098		$	7		$	59		$	7		$	10,339

9

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

	Three Months Ended September 30, 2012
	One-to- four units			Five or more units			Commercial real estate			Church			Construction			Commercial			Consumer			Total
	(In thousands)
Beginning balance	$	4,701		$	2,897		$	2,640		$	7,223		$	106		$	270		$	19		$	17,856
Provision for loan losses	453			(326		)	135			3			(1		)	(126		)	(9		)	129
Recoveries	-			1			15			3			-			97			3			119
Loans charged off	(539		)	(14		)	(346		)	(221		)	-			-			-			(1,120		)
Ending balance	$	4,615		$	2,558		$	2,444		$	7,008		$	105		$	241		$	13		$	16,984
	Nine Months Ended September 30, 2012
	One-to- four units			Five or more units			Commercial real estate			Church			Construction			Commercial			Consumer			Total
	(In thousands)
Beginning balance	$	4,855		$	2,972		$	3,108		$	5,742		$	249		$	316		$	57		$	17,299
Provision for loan losses	654			(401		)	(305		)	1,864			(144		)	(427		)	(51		)	1,190
Recoveries	-			1			45			10			-			352			7			415
Loans charged off	(894		)	(14		)	(404		)	(608		)	-			-			-			(1,920		)
Ending balance	$	4,615		$	2,558		$	2,444		$	7,008		$	105		$	241		$	13		$	16,984

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2013 and December 31, 2012:

	September 30, 2013
	One-to-four units		Five or more units		Commercial real estate		Church		Construction		Commercial		Consumer		Total
	(In thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	508	$	147	$	293	$	1,486	$	-	$	16	$	-	$	2,450
Collectively evaluated for impairment	1,571		1,370		1,279		3,612		7		43		7		7,889
Total ending allowance balance	$	2,079	$	1,517	$	1,572	$	5,098	$	7	$	59	$	7	$	10,339
Loans:
Loans individually evaluated for impairment	$	3,674	$	4,226	$	7,936	$	22,552	$	-	$	162	$	-	$	38,550
Loans collectively evaluated for impairment	46,622		100,075		25,008		48,168		434		1,931		36		222,274
Total ending loans balance	$	50,296	$	104,301	$	32,944	$	70,720	$	434	$	2,093	$	36	$	260,824

10

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

	December 31, 2012
	One-to-four units		Five or more units		Commercial real estate		Church		Construction		Commercial		Consumer		Total
	(In thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	719	$	125	$	543	$	1,276	$	-	$	69	$	-	$	2,732
Collectively evaluated for impairment	1,341		1,997		2,142		3,542		8		98		9		9,137
Total ending allowance balance	$	2,060	$	2,122	$	2,685	$	4,818	$	8	$	167	$	9	$	11,869
Loans:
Loans individually evaluated for impairment	$	4,576	$	3,766	$	10,364	$	25,328	$	273	$	69	$	-	$	44,376
Loans collectively evaluated for impairment	53,157		79,584		30,760		50,926		462		3,826		35		218,750
Total ending loans balance	$	57,733	$	83,350	$	41,124	$	76,254	$	735	$	3,895	$	35	$	263,126

The following table presents information related to loans individually evaluated for impairment by type of loans as of September 30, 2013 and December 31, 2012:

	September 30, 2013						December 31, 2012
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(In thousands)
With no related allowance recorded:
One-to-four units	$	2,348	$	1,694	$	-	$	1,986	$	1,484	$	-
Five or more units	2,703		2,647		-		2,038		1,819		-
Commercial real estate	4,869		1,451		-		10,184		6,423		-
Church	12,938		9,695		-		18,664		15,689		-
Construction	-		-		-		279		273		-
Commercial:
Sports	3,850		-		-		3,888		-		-
With an allowance recorded:
One-to-four units	1,980		1,980		508		3,092		3,092		719
Five or more units	1,586		1,579		147		1,947		1,947		125
Commercial real estate	6,491		6,485		293		3,941		3,941		543
Church	12,911		12,857		1,486		9,677		9,639		1,276
Commercial:
Other	162		162		16		69		69		69
Total	$	49,838	$	38,550	$	2,450	$	55,765	$	44,376	$	2,732

The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality.  For purposes of this disclosure, the unpaid principal balance is not reduced for net charge-offs.

11

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

The following tables present the monthly average of loans individually evaluated for impairment by type of loans and the related interest income for the three and nine months ended September 30, 2013 and 2012.

	Three Months Ended September 30, 2013				Nine Months Ended September 30, 2013
	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
	(In thousands)
One-to-four units	$	3,699	$	30	$	3,822	$	91
Five or more units	3,347		15		3,215		55
Commercial real estate	6,986		182		7,778		405
Church	22,472		131		23,027		407
Construction	-		-		81		5
Commercial:
Other	165		2		156		8
Total	$	36,669	$	360	$	38,079	$	971

	Three Months Ended September 30, 2012				Nine Months Ended September 30, 2012
	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
	(In thousands)
One-to-four units	$	14,143	$	120	$	13,844	$	354
Five or more units	2,266		10		3,047		50
Commercial real estate	8,251		115		7,847		260
Church	31,094		237		31,709		834
Construction	288		3		294		12
Commercial:
Other	70		2		70		4
Total	$	56,112	$	487	$	56,811	$	1,514

Cash-basis interest income recognized represents cash received for interest payments on accruing impaired loans.  Interest income that would have been recognized for the nine months ended September 30, 2013 and 2012 had loans performed in accordance with their original terms were $2.5 million and $3.4 million.

12

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

The following table presents the recorded investment in non-accrual loans by type of loans as of September 30, 2013 and December 31, 2012:

	September 30, 2013		December 31, 2012
	(In thousands)
Loans receivable held for sale:
One-to-four units	$	-	$	6,656
Five or more units	-		1,956
Church	785		1,556
Loans receivable held for investment:
One-to-four units	1,694		1,489
Five or more units	3,041		2,312
Commercial real estate	1,451		7,090
Church	13,002		15,689
Construction	-		273
Commercial:
Other	162		69
Total non-accrual loans	$	20,135	$	37,090

There were no loans 90 days or more delinquent that were accruing interest as of September 30, 2013 or December 31, 2012.

The following tables present the aging of the recorded investment in past due loans, including loans receivable held for sale, as of September 30, 2013 and December 31, 2012 by type of loans:

	September 30, 2013
	30-59DaysPast Due		60-89DaysPast Due		Greater than90 DaysPast Due		TotalPast Due		Total Loans Not Past Due
	(In thousands)
Loans receivable held for sale:
Church	$	-	$	-	$	785	$	785	$	300
Loans receivable held for investment:
One-to-four units	876		-		1,694		2,570		47,726
Five or more units	-		-		3,041		3,041		101,260
Commercial real estate	-		-		1,451		1,451		31,493
Church	419		-		13,002		13,421		57,299
Construction	-		-		-		-		434
Commercial:
Sports	-		-		-		-		1,423
Other	-		20		162		182		488
Consumer:
Other	-		-		-		-		36
Total	$	1,295	$	20	$	20,135	$	21,450	$	240,459

13

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

	December 31, 2012
	30-59DaysPast Due		60-89DaysPast Due		Greater than90 DaysPast Due		TotalPast Due		Total Loans Not Past Due
	(In thousands)
Loans receivable held for sale:
One-to-four units	$	-	$	871	$	6,656	$	7,527	$	389
Five or more units	-		-		1,956		1,956		3,839
Commercial real estate	-		-		-		-		1,358
Church	-		-		1,556		1,556		2,744
Loans receivable held for investment:
One-to-four units	1,077		-		1,489		2,566		55,167
Five or more units	587		554		2,312		3,453		79,897
Commercial real estate	-		-		7,090		7,090		34,034
Church	1,617		-		15,689		17,306		58,948
Construction	-		-		273		273		462
Commercial:
Sports	-		-		-		-		1,711
Other	-		-		69		69		2,115
Consumer:
Other	-		-		-		-		35
Total	$	3,281	$	1,425	$	37,090	$	41,796	$	240,699

Troubled Debt Restructurings

During the nine months ended September 30, 2013, the terms of certain loans were modified as troubled debt restructurings (“TDRs”).  The modification of the terms of such loans included payments of delinquent property taxes, which the borrower would be required to repay over a period greater than six months.

At September 30, 2013, loans classified as TDRs totaled $32.2 million, of which $13.0 million were included in non-accrual loans and $19.2 million were on accrual status.  At December 31, 2012, loans classified as TDRs totaled $41.1 million, of which $22.8 million were included in non-accrual loans and $18.3 million were on accrual status.  The Company has allocated $2.1 million and $2.5 million of specific reserves for accruing TDRs as of September 30, 2013 and December 31, 2012.  TDRs on accrual status are comprised of loans that were accruing at the time of restructuring or loans that have complied with the terms of their restructured agreements for a satisfactory period of time, and for which the Bank anticipates full repayment of both principal and interest.  TDRs that are on non-accrual status can be returned to accrual status after a period of sustained performance, generally determined to be six months of timely payments as modified.  As of September 30, 2013 and December 31, 2012, the Company has no commitment to lend additional amounts to customers with outstanding loans that are classified as TDRs.

14

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

The following tables present loans by type modified as troubled debt restructurings during the three and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30, 2013					Nine Months Ended September 30, 2013
	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(Dollars in thousands)
One-to-four units	-	$	-	$	-	5	$	739	$	789
Commercial real estate	-	-		-		1	1,456		1,497
Total	-	$	-	$	-	6	$	2,195	$	2,286

	Three Months Ended September 30, 2012					Nine Months Ended September 30, 2012
	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(Dollars in thousands)
One-to-four units	-	$	-	$	-	1	$	36	$	36
Commercial real estate	-	-		-		2	734		740
Church	1	503		503		9	3,902		3,907
Total	1	$	503	$	503	12	$	4,672	$	4,683

The troubled debt restructurings described above increased the allowance for loan losses by $0 thousand and $57 thousand for the three and nine months ended September 30, 2013 and by $0 thousand and $228 thousand for the same periods in 2012.  These TDRs resulted in charge-offs of $23 thousand during the nine months ended September 30, 2013, compared to $100 thousand for the same period in 2012.

At September 30, 2013, there were no loans modified as troubled debt restructurings within the previous 12 months for which there was a payment default.  A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

All loan modifications during the nine months ended September 30, 2013 were considered troubled debt restructurings.  The terms of certain other loans were modified during the nine months ended September 30, 2012 that did not meet the definition of a troubled debt restructuring.  These loans had a total recorded investment of $2.2 million as of September 30, 2012.  The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be insignificant.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed to determine the likelihood that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.  This evaluation is performed under the Company’s internal underwriting policy.

15

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as:  current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  For one-to-four family residential, consumer and other smaller balance homogenous loans, a credit grade is established at inception, and generally only adjusted based on performance.  Information about payment status is disclosed elsewhere.  The Company analyzes all other loans individually by classifying the loans as to credit risk. This analysis is performed at least on a quarterly basis.  The Company uses the following definitions for risk ratings:

·Special Mention.  Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

·Substandard.  Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

·Doubtful.  Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

·Loss.  Loans classified as loss are considered uncollectible and of such little value that to continue to carry the loan as an active asset is no longer warranted.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.  Based on the most recent analysis performed, the risk category of loans by type of loans as of September 30, 2013 and December 31, 2012 is as follows:

	September 30, 2013
	Pass		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
One-to-four units	$	45,048	$	3,554	$	1,694	$	-	$	-
Five or more units	95,955		2,742		5,604		-		-
Commercial real estate	23,219		1,632		8,093		-		-
Church	35,389		16,898		18,433		-		-
Construction	434		-		-		-		-
Commercial:
Sports	-		1,423		-		-		-
Other	488		20		162		-		-
Consumer:
Other	36		-		-		-		-
Total	$	200,569	$	26,269	$	33,986	$	-	$	-

16

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

	December 31, 2012
	Pass		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
One-to-four units	$	55,613	$	631	$	1,489	$	-	$	-
Five or more units	73,673		5,250		4,427		-		-
Commercial real estate	25,605		2,541		12,921		57		-
Church	33,532		19,502		23,220		-		-
Construction	462		-		273		-		-
Commercial:
Sports	-		1,711		-		-		-
Other	1,877		141		166		-		-
Consumer:
Other	35		-		-		-		-
Total	$	190,797	$	29,776	$	42,496	$	57	$	-

NOTE (7) – Junior Subordinated Debentures and Other Borrowings

On March 17, 2004, the Company issued $6.0 million of Floating Rate Junior Subordinated Debentures in a private placement.  The Debentures mature on March 17, 2014 and interest is payable quarterly at a rate per annum equal to the 3-month LIBOR plus 2.54%.  The interest rate is determined as of each March 17, June 17, September 17, and December 17, and was 2.79% at September 30, 2013.  The Company stopped paying interest on the Debentures in September 2010 and the accrued interest on the Debentures was $609 thousand as of September 30, 2013.  Under the Order applicable to the Company discussed in Note 2, the Company is not permitted to make payments on its debt without prior notice to and receipt of written notice of non-objection from the FRB.  In addition, under the terms of the Debentures, the Company is not allowed to make payments on the Debentures if the Company is in default on any of its senior indebtedness, which term includes the senior line of credit described below.

On February 28, 2010, the Company borrowed an aggregate of $5.0 million under its $5.0 million line of credit with another financial institution, and invested all of the proceeds in the equity capital of the Bank.  Pursuant to a directive from the FRB and subsequently the Order applicable to the Company discussed in Note 2, the Company has not been permitted to make principal or interest payments on this senior debt since June 2010.  The line of credit matured at the end of July 2010, but was not repaid and remains in default.

As part of the recapitalization that closed in August 2013, the Company exchanged 2,575 shares of Common Stock Equivalents with an agreed upon value of $2.6 million for $2.6 million principal amount of this line of credit.  In addition, the lender forgave all of the accrued interest, totaling $1.8 million, on the entire amount of the line of credit as of the date of the exchange and modified the terms of the remaining principal amount of $2.4 million.  The modified terms for the remaining loan include, among others items, an extension of the maturity of the line of credit to February 22, 2019 and a repayment schedule that specifies six quarterly payments of interest only beginning three months following the closing of the recapitalization, followed by 48 fully amortizing equal monthly payments of principal and interest on the loan beginning 19 months after the closing of the recapitalization; provided, that each payment on the loan must receive prior approval from the FRB.  Failure to make such any payment due to an inability to obtain such approval despite the exercise by the Company of required efforts to obtain such approval will not constitute an event of default under the revised loan terms.  In addition the interest rate on the remaining loan has been increased to the Wall Street Journal Prime Rate plus 2%, with a floor (minimum) rate of 6%, from the original loan interest rate of the Wall Street Journal Prime Rate plus 1%, with a floor rate of 6%.  As part of the modification, the Default Rate Margin of 5% has been forgiven.  Borrowings under this line of credit continue to be secured by 100% of the Company’s investment in the Bank.

17

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

In accordance with Accounting Standards Codification (“ASC”) 470-60 - Troubled Debt Restructurings by Debtors, $1.2 million of the forgiven interest has been recorded as a gain on restructuring in the income statement for the third quarter, and the balance of the forgiven interest ($535 thousand) has been added to the principal balance of the line of credit that remains outstanding after consummation of the recapitalization.  Furthermore, any future payments made on the remaining loan amount pursuant to the modified terms shall be applied to the carrying amount of the loan payable, and no interest expense will be recorded on the modified loan between the date that it was restructured (i.e., the closing of the recapitalization) and the new maturity of the modified loan provided that the floating rate on the remaining modified loan does not exceed the floor of 6%.

NOTE (8) – Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate fair value:

The fair values of securities available-for-sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The fair value of non-performing loans receivable held-for-sale and impaired loans that are collateral dependent is generally based upon the fair value of the collateral which is obtained from recent real estate appraisals.  These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.  Non-performing loans held for sale and impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.  These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell.  Fair value is commonly based on recent real estate appraisals which are updated every nine months.  These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.  Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

18

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

Appraisals for collateral-dependent impaired loans, non-performing loans held for sale and real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.  Once received, an independent third-party licensed appraiser reviews the appraisals for accuracy and reasonableness, reviewing the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics.

Assets Measured on a Recurring Basis

Assets measured at fair value on a recurring basis are summarized below:

	Fair Value Measurements at September 30, 2013 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
Assets:
Securities available-for-sale - residential mortgage-backed	$	-	$	10,148	$	-	$	10,148

	Fair Value Measurements at December 31, 2012 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
Assets:
Securities available-for-sale - residential mortgage-backed	$	-	$	13,378	$	-	$	13,378

There were no transfers between Level 1, Level 2, or Level 3 during the three and nine months ended September 30, 2013 and 2012.

19

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

Assets Measured on a Non-Recurring Basis

The following table provides information regarding the carrying values of our assets measured at fair value on a non-recurring basis at the dates indicated.  The fair value measurement for all of these assets falls within Level 3 of the fair value hierarchy.

	September 30, 2013		December 31, 2012
	(In thousands)
Assets:
Non-performing loans receivable held-for-sale:
One-to-four units	$	-	$	6,656
Five or more units	-		1,956
Church	785		1,556
Impaired loans carried at fair value of collateral:
One-to-four units	1,494		1,284
Five or more units	908		1,679
Commercial real estate	1,451		3,385
Church	8,793		6,649
Real estate owned:
Commercial real estate	1,294		2,752
Church	5,317		5,411

The following table provides information regarding gains (losses) recognized on assets measured at fair value on a non-recurring basis for the three and nine months ended September 30, 2013 and 2012.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(In thousands)
Non-performing loans receivable held-for-sale	$	-	$	(296)	$	(471)	$	(109)
Impaired loans carried at fair value of collateral	(671)		(669)		(1,071)		(1,585)
Real estate owned	(321)		(427)		(544)		(739)
Total	$	(992)	$	(1,392)	$	(2,086)	$	(2,433)

20

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

The following tables present quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2013 and December 31, 2012:

	September 30, 2013
	Fair Value		Valuation  Technique(s)	Unobservable  Input(s)	Range
	(Dollars in thousands)
Non-performing loans held for sale – church	$	785	Sales comparison approach	Adjustment for differences between the comparable sales	1%
Impaired loans – one-to-four units	1,494		Sales comparison approach	Adjustment for differences between the comparable sales	-2% to 8%
Impaired loans – five or more units	908		Sales comparison approach	Adjustment for differences between the comparable sales	-10 to 0%
			Income approach	Capitalization rate	7.25% to 9%
Impaired loans – commercial real estate	1,451		Sales comparison approach	Adjustment for differences between the comparable sales	-2 to 0%
			Income approach	Capitalization rate	4.5% to 8.25%
Impaired loans – church	8,793		Sales comparison approach	Adjustment for differences between the comparable sales	-32 to 50%
			Income approach	Capitalization rate	6.75%
Real estate owned – commercial real estate	1,294		Sales comparison approach	Adjustment for differences between the comparable sales	-9% to 3%
			Income approach	Capitalization rate	10%
Real estate owned – church	5,317		Sales comparison approach	Adjustment for differences between the comparable sales	-24% to 11%
			Income approach	Capitalization rate	6.5% to 11.5%

21

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

	December 31, 2012
	Fair Value		Valuation  Technique(s)	Unobservable  Input(s)	Range
	(Dollars in thousands)
Nonperforming loans held for sale – one-to-four units	$	6,656	Sales comparison approach	Adjustment for differences between the comparable sales	-30% to 23%
Nonperforming loans held for sale – five or more units	1,956		Sales comparison approach	Adjustment for differences between the comparable sales	-13% to 17%
			Income approach	Capitalization rate	6% to 8.5%
Nonperforming loans held for sale – church	1,556		Sales comparison approach	Adjustment for differences between the comparable sales	-27% to 29%
Impaired loans – one-to-four units	1,284		Sales comparison approach	Adjustment for differences between the comparable sales	-5% to 18%
Impaired loans – five or more units	1,679		Sales comparison approach	Adjustment for differences between the comparable sales	-26% to 16%
			Income approach	Capitalization rate	6.5% to 9%
Impaired loans – commercial real estate	3,385		Sales comparison approach	Adjustment for differences between the comparable sales	-17% to -1%
			Income approach	Capitalization rate	7% to 9%
Impaired loans – church	6,649		Sales comparison approach	Adjustment for differences between the comparable sales	-45% to 8%
			Income approach	Capitalization rate	6.75% to 8%
Real estate owned – commercial real estate	2,752		Sales comparison approach	Adjustment for differences between the comparable sales	-67% to 1%
			Income approach	Capitalization rate	8% to 11%
Real estate owned – church	5,411		Sales comparison approach	Adjustment for differences between the comparable sales	-12% to 7%
			Income approach	Capitalization rate	11.5%

22

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments, at September 30, 2013 and December 31, 2012 were as follows:

			Fair Value Measurements at September 30, 2013 Using
	Carrying Value		Level 1			Level 2			Level 3			Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	60,224	$	60,224		$	-		$		-	$	60,224
Securities available-for-sale	10,148		-			10,148			-			10,148
Loans receivable held for sale	1,085		-			-			1,085			1,085
Loans receivable held for investment	251,504		-			-			258,332			258,332
Federal Home Loan Bank stock	4,113		N/A			N/A			N/A			N/A
Accrued interest receivable	1,116		-			31			1,085			1,116
Financial Liabilities:
Deposits	$	(218,569)	$	-		$	(211,263)		$		-	$	(211,263)
Federal Home Loan Bank advances	(87,500)		-			(91,145)			-			(91,145)
Junior subordinated debentures	(6,000)		-			-			(5,510)			(5,510)
Other borrowings	(2,960)		-			-			(1,398)			(1,398)
Accrued interest payable	(674)		-			(65)			(559)			(624)
Advance payments by borrowers for taxes and insurance	(1,034)		-			(1,034)			-			(1,034)
			Fair Value Measurements at December 31, 2012 Using
	Carrying Value		Level 1			Level 2			Level 3			Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	64,360	$		64,360	$		-	$	-		$		64,360
Securities available-for-sale	13,378		-			13,378			-			13,378
Loans receivable held for sale	19,051		-			-			19,051			19,051
Loans receivable held for investment	251,723		-			-			252,043			252,043
Federal Home Loan Bank stock	3,901		N/A			N/A			N/A			N/A
Accrued interest receivable	1,250		-			42			1,208			1,250
Financial Liabilities:
Deposits	$	(257,071)	$		-	$		(253,155)	$	-		$		(253,155)
Federal Home Loan Bank advances	(79,500)		-			(84,769)			-			(84,769)
Junior subordinated debentures	(6,000)		-			-			(4,852)			(4,852)
Other borrowings	(5,000)		-			-			(4,205)			(4,205)
Accrued interest payable	(1,941)		-			(87)			(1,527)			(1,614)
Advance payments by borrowers for taxes and insurance	(711)		-			(711)			-			(711)

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

(a) Cash and Cash Equivalents

The carrying amounts of cash and cash equivalents approximate fair values and are classified as Level 1.

(b) Loans receivable held for sale

The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors or appraisal reports adjusted by sales commission assumptions resulting in a Level 3 classification.

23

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

September 30, 2013

(c) Loans receivable held for investment

Fair values of loans, excluding loans held for sale, are estimated as follows:  For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification.  Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification.  Impaired loans are valued at the lower of cost or fair value as described previously.  The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

(d) FHLB Stock

It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability.

(e) Deposits and Advance Payments by Borrowers for Taxes and Insurance

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in Level 2 classification.  Fair values for fixed rate certificates of deposit are estimated using discounted cash flow calculations that apply interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

(f) Federal Home Loan Bank Advances

The fair values of the Federal Home Loan Bank advances are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

(g) Junior Subordinated Debentures and Other Borrowings

The fair values of the Company’s junior subordinated debentures and other borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

(h) Accrued Interest Receivable

The carrying amounts of accrued interest receivable approximate their fair value and are classified the same as the related asset.

(i) Accrued Interest Payable

The carrying amounts of accrued interest on deposits and Federal Home Loan Bank advances approximate their fair value.  The carrying amounts of accrued interest on junior subordinated debentures and other borrowings are estimated by applying a discount similar to the related debt.  The fair values of accrued interest are classified the same as the related liability.

24

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

NOTE (9) – Stock-based Compensation

In 2008, we adopted the 2008 Long-Term Incentive Plan (“2008 LTIP”), which was approved by the stockholders.  The 2008 LTIP replaced the Company’s 1996 Long-Term Incentive Plan (“1996 LTIP”) and 1996 Stock Option Plan (“Stock Option Plan”), which have expired and are no longer effective except as to outstanding awards. The 2008 LTIP permits the grant of non-qualified and incentive stock options, stock appreciation rights, full value awards and cash incentive awards to the Company’s non-employee directors and certain officers and employees for up to 437,390 shares of common stock.  Since the end of the third quarter, the Company mailed a proxy statement to its stockholders that, among other matters, solicits stockholder approval to increase the number of shares reserved for issuance under the 2008 LTIP to 2 million shares of common stock.  Option awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant; those option awards have vesting periods ranging from immediate vesting to 5 years and have 10-year contractual terms.  The Company has a policy of using shares held as treasury stock to satisfy share option exercises.  Currently, the Company has a sufficient number of treasury shares to satisfy expected share option exercises on outstanding options.

No options were granted during the nine months ended September 30, 2013 and 2012.  The Company recorded $33 thousand and $36 thousand of stock-based compensation expense, net of tax, during the first nine months of 2013 and 2012.

NOTE (10) – Regulatory Capital

The Bank is subject to regulatory capital requirements now administered by the Office of the Comptroller of the Currency, or OCC, which is the statutory successor under the Dodd-Frank Act to the former Office of Thrift Supervision, or OTS.  The capital requirements involve quantitative measures of assets, liabilities, and certain off balance sheet items calculated under regulatory accounting practices.  Capital amounts and classifications are also subject to qualitative judgments by the OCC.  Failure to meet capital requirements can result in regulatory action.

The Bank met the minimum capital requirements under the cease and desist order at September 30, 2013 and December 31, 2012.  Actual required capital amounts and ratios at September 30, 2013 and December 31, 2012, together with the higher capital requirements that the Bank is required to meet under the cease and desist order applicable to it, are presented below.

	Actual		Required for Capital Adequacy  Purposes		Capital Requirements under Cease and Desist Order
	Amount	Ratio	Amount	Ratio	Amount	Ratios
			(Dollars in thousands)
September 30, 2013:
Tangible Capital to adjusted total assets	$33,670	9.75%	$   5,182	1.50%	N/A	N/A
Tier 1(Core) Capital to adjusted total assets	$33,670	9.75%	$ 13,819	4.00%	$ 27,637	8.00%
Tier 1(Core) Capital to risk weighted assets	$33,670	14.79%	N/A	N/A	N/A	N/A
Total Capital to risk weighted assets	$36,608	16.08%	$ 18,208	8.00%	$ 27,312	12.00%
December 31, 2012:
Tangible Capital to adjusted total assets	$32,936	8.82%	$   5,603	1.50%	N/A	N/A
Tier 1(Core) Capital to adjusted total assets	$32,936	8.82%	$ 14,940	4.00%	$ 29,881	8.00%
Tier 1(Core) Capital to risk weighted assets	$32,936	13.12%	N/A	N/A	N/A	N/A
Total Capital to risk weighted assets	$36,183	14.41%	$ 20,090	8.00%	$ 30,135	12.00%

On October 30, 2013, the Bank entered into a Consent Order with the OCC that superseded the cease and desist order that had been in effect since September 2010.  The Consent Order raises the minimum capital requirements to 9% for Tier 1 (Core) Capital and 13% for Total Capital to risk weighted assets.  The Bank’s regulatory capital exceeded both ratios as of September 30, 2013.

25

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

September 30, 2013

NOTE (11) – Income Taxes

The Company and its subsidiaries are subject to U.S. federal and state income taxes.  Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized.  In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income and tax planning strategies.  This analysis is updated quarterly.  Based on this analysis, the Company determined that a valuation allowance of $9.5 million was required as of September 30, 2013, resulting in $0 net deferred tax assets.  The Company had recorded a valuation allowance of $9.0 million and $0 net deferred tax assets as of December 31, 2012.

26

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.  Our MD&A should be read in conjunction with the Consolidated Financial Statements and related Notes included in Part I “Item 1, Financial Statements,” of this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2012.

Overview

During the third quarter we closed a recapitalization of the Company’s balance sheet that strengthened the balance sheets of the Company and the Bank, and significantly simplified the capital structure of the Company.  The agreements comprising the recapitalization included:

(1)	The issuance of 8,776 shares of Common Stock Equivalents in exchange for the five series of the Company’s formerly outstanding preferred stock with an aggregate liquidation value or preference of $17.6 million, including the TARP Preferred Stock that was issued to the Treasury Department pursuant to the Capital Purchase Program component of the Treasury Department’s Troubled Asset Relief Program, which the parties agreed to value at $8.8 million based on the price at which shares of the Common Stock were sold in the private placement referred to below;
(2)	The issuance of 2,646 shares of Common Stock Equivalents in exchange for all of the accumulated dividends on the TARP Preferred Stock, totaling $2.6 million as of the date of the exchange;
(3)	The issuance of 2,575 shares of Common Stock Equivalents in exchange for $2.6 million principal amount of the Company’s senior line of credit (the “Debt Exchange”) (See Notes 2 and 7);
(4)	The modification of the terms of the remaining $2.4 million principal amount of the senior line of credit to, among other matters, extend the maturity and eliminate the default rate;
(5)	The forgiveness of the $1.8 million of accrued interest on the entire amount of the Company’s senior line of credit as of the date of the exchange;
(6)	The exchange of 698 shares of Common Stock Equivalents issued in the Debt Exchange for 6,982 shares of Series G Non-Voting Preferred Stock; and
(7)	The issuance of 4,235,500 shares of Common Stock in private sales at a price of $1.00 per share, yielding $4.2 million in gross proceeds. We used a portion of the proceeds to invest additional capital into the Bank and to repay all of the inter-company payables due to the Bank from the Company.

Collectively, these transactions have reduced the Company’s requirements for debt service, eliminated all cumulative dividends on preferred stock and improved the capital and liquidity of both the Company and the Bank. The Company’s stockholders will be asked to approve two proposals relating to the recapitalization at the Company’s annual stockholders meeting that will be held on November 27, 2013. One proposal seeks stockholder approval to increase the number of authorized shares of common stock. Stockholder approval of this proposal will result in the automatic conversion of all of the Common Stock Equivalents issued in the recapitalization into shares of Common Stock. The second proposal seeks stockholder approval to authorize a new class of non-voting common stock. Approval of this proposal will result in the automatic conversion of all of the Series G Non-Voting Preferred Stock issued in the recapitalization into shares of non-voting Common Stock. If both proposals are approved, then the only equity securities of the Company that will remain outstanding will be shares of Common Stock or non-voting Common Stock. We believe that the completion of these transactions should improve the Company’s ability to access capital in the future.

27

From an operating perspective, during the third quarter we continued to aggressively pursue reductions in our classified assets, including through loan sales, foreclosures on properties securing defaulted loans, and sales of real estate owned through foreclosure or through deed in lieu of foreclosure (“REO”).  Also, during the latest quarter we began to pursue prudent growth in our loan portfolio to increase interest income.  Our focus on loan growth is targeted on selective niches within the multi-family and investor-owned single family residential loan markets, which are markets that senior management has successfully served in the past and which are consistent with the Company’s focus on low-to-moderate income communities in Southern California.  During the quarter we originated $16.3 million of new loans, partially offset by loan repayments of $9.2 million, and purchased over $10.9 million of residential real estate loans secured by five or more units (multi-family loans).  As a result, our loan portfolio grew by $17.8 million over the level at the end of the second quarter. However, total assets increased by only $472 thousand during the third quarter as we funded our loan originations with excess liquidity.  For the nine months ended September 30, 2013, total assets decreased by $28.0 million primarily due to a decrease in our loan portfolio as we focused on divesting problem assets.  The decrease in our loan portfolio, including loans held for sale, consisted of a decrease of $15.4 million in our one-to-four family residential real estate loan portfolio, a decrease of $9.5 million in our commercial real estate loan portfolio, a decrease of $8.7 million in our church loan portfolio, a decrease of $301 thousand in our construction loan portfolio and a decrease of $1.8 million in our commercial loan portfolio.  These decreases were partially offset by an increase of $15.2 million in our five or more units (multi-family) residential real estate loan portfolio.

Corresponding to the decrease in assets during the first nine months of 2013, our total deposits decreased by $38.5 million, primarily due to a decrease in certificates of deposit (“CDs”), in particular, CDs with higher interest costs that were obtained through QwickRate, a deposit listing service, and 36-month CDs.  FHLB borrowings increased $8.0 million during 2013 while other borrowings decreased $2.0 million because of the recapitalization.

We recorded net income of $584 thousand for the three months ended September 30, 2013 and a net loss of $260 thousand for the nine months ended September 30, 2013, compared to a net loss of $613 thousand for the three months ended September 30, 2012 and net income of $1.2 million for the nine months ended September 30, 2012.  The increase in net income in the third quarter of 2013 over the comparable quarter in the prior year was primarily attributable to the gain on debt restructuring of $1.2 million that resulted from the recapitalization.  The decrease in income during the nine month period was primarily due to a gain of $2.5 million from the sale of our former headquarters building during the second quarter of 2012, which was partially offset by the $1.2 million gain on debt restructuring during the third quarter of 2013.  In addition, during 2013 we generated lower net interest income before provision for loan losses because of payoffs of our loan portfolio.  We partially offset this decrease in net interest income by reducing our non-interest operating expenses.

Going Concern and Regulatory Matters

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 2 to the financial statements, the Company has limited liquidity and is in default under the terms of its senior debt and subordinated debentures.  These matters raise substantial doubt about the ability of the Company to continue as a going concern.  The ability of the Company to continue as a going concern is dependent on many factors, one of which is regulatory action, including acceptance of its capital plan.  Management’s plans in regard to these matters are also described in Note 2.  The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Results of Operations

Net Income (Loss)

For the three and nine months ended September 30, 2013, we recorded net income of $584 thousand, or $0.05 earnings per diluted common share, and a net loss of $260 thousand, or $0.23 loss per diluted common share, respectively.  For the same periods in 2012, we recorded a net loss of $613 thousand, or $0.48 loss per diluted common share, and net income of $1.2 million, or $0.21 earnings per diluted common share.

The increase from a net loss for the third quarter of 2012 to a net income for the third quarter of 2013 was primarily due to the inclusion of a gain of $1.2 million on the restructuring of the Company’s senior debt in the third quarter of 2013 and lower net loss on sales of REOs.  In addition, during the third quarter of 2012, we recorded a net loss of $280 thousand on the sale of loans.

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The decrease from net income for the first nine months of 2012 to net loss for the first nine months of 2013 was primarily due to the inclusion of a gain of $2.5 million on the sale of our former headquarters building in the second quarter of 2012, which was partially offset by the $1.2 million gain on debt restructuring in the third quarter of 2013.  In addition, the decrease during the first nine months of 2013 was attributable to lower net interest income before provision for loan losses, which was partially offset by a lower provision for loan losses and lower non-interest expenses for the nine months ended September 30, 2013 as compared to the comparable period in 2012.  Also, earnings per share were significantly impacted during the third quarter and nine month periods of 2013 because we issued a combined total of 18,225,229 shares of common stock, Common Stock Equivalents and Series G Non-Voting Preferred Stock, representing over 90% of our total shares of common stock and participating securities currently outstanding, in connection with the recapitalization that closed on August 22, 2013.

Net Interest Income

For the third quarter of 2013, net interest income before provision for loan losses totaled $2.6 million, down $589 thousand, or 18%, from $3.2 million of net interest income before provision for loan losses for the third quarter of 2012.  The decrease in net interest income primarily resulted from a decrease of $59.3 million in average interest-earning assets and a decrease of 11 basis points in net interest margin.

Interest income decreased $912 thousand, or 19%, to $3.8 million for the third quarter of 2013 from $4.7 million for the third quarter of 2012.  The decrease in interest income was primarily due to a decrease of $59.3 million in average interest-earning assets, primarily reflecting a decrease of $68.6 million in the average balance of loans receivable, and a decrease of $4.2 million in the average balance of securities available-for-sale, offset by an increase of $16.2 million in the average balance of federal funds sold.  The decrease of $68.6 million in average loans receivable from $319.3 million for the third quarter of 2012 to $250.8 million for the third quarter of 2013 resulted in a reduction of $994 thousand in interest income.  The average yield on loans increased from 5.76% for the third quarter of 2012 to 5.80% for the third quarter of 2013 primarily due to a lower level of non-accrual loans as $15.5 million of non-performing loans were sold and $1.9 million were paid off during 2013.  The average yield on total interest-earning assets decreased from 4.96% for the third quarter of 2012 to 4.74% for the third quarter of 2013, as a higher percentage of our total interest-earning assets were invested in lower yielding federal funds sold.  Recently we have begun refocusing on loan originations and rebuilding our loan portfolio to improve the yield on interest-earning assets and grow total interest income.  We intend to finance loan growth in the near term by using excess federal funds sold.  Our loan portfolio increased by $17.8 million during the third quarter of 2013 primarily due to loan originations of $16.3 million and loan purchases of $10.9 million, which were partially offset by loan repayments of $9.2 million.

Interest expense decreased $323 thousand, or 22%, to $1.2 million for the third quarter of 2013 from $1.5 million for the third quarter of 2012.  The decrease in interest expense was primarily attributable to a decrease of $44.2 million in the average balance of deposits from $265.4 million for the third quarter of 2012 to $221.2 million for the third quarter of 2013, which resulted in a reduction of $140 thousand in interest expense.  Additionally, the average cost of deposits decreased 13 basis points from 1.07% for the third quarter of 2012 to 0.94% for the third quarter of 2013, which resulted in a reduction of $45 thousand in interest expense.  The decreases in the average balance and average cost of deposits reflect the maturities of certificates of deposit bearing higher rates.  Also contributing to the decrease in interest expense during 2013 was a lower average balance and average cost of FHLB advances.  The average balance of FHLB advances decreased $3.4 million, from $83.0 million for the third quarter of 2012 to $79.6 million for the third quarter of 2013, which resulted in a decrease of $24 thousand in interest expense.  The average cost of FHLB advances decreased 39 basis points, from 2.90% for the third quarter of 2012 to 2.51% for the third quarter of 2013, which resulted in a decrease of $78 thousand in interest expense.  The decrease in the average cost of FHLB advances was primarily due to the restructurings of $20.0 million of higher costing FHLB advances in the second and fourth quarters of 2012 and another $28 million in the second quarter of 2013.

For the nine months ended September 30, 2013, net interest income before provision for loan losses totaled $8.1 million, down $2.3 million, or 22%, from $10.4 million of net interest income before provision for loan losses for the same period a year ago.  The decrease of $2.3 million in net interest income primarily resulted from a decrease of $54.3 million in average interest-earning assets and a decrease of 34 basis points in net interest margin.

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The following tables set forth average balance sheets, average yields and costs, and certain other information for the periods indicated.  All average balances are daily average balances.  The yields set forth below include the effect of deferred loan fees, and discounts and premiums that are amortized or accreted to interest income or expense.  We do not accrue interest on loans on non-accrual status; however, the balance of these loans is included in the total average balance of loans receivable, which has the effect of reducing average loan yields.

	For the three months ended September 30,
	2013					2012
(Dollars in Thousands)	Average Balance		Interest		Average Yield/ Cost (1)	Average Balance		Interest		Average Yield/ Cost (1)
Assets
Interest-earning assets:
Interest-earning deposits	$	3,921	$	7	0.71%	$	6,554	$	6	0.37%
Federal Funds sold and other short-term investments	53,259		32		0.24%	37,082		9		0.10%
Investment securities	-		-		-	-		-		-
Residential mortgage-backed securities	10,218		71		2.78%	14,372		109		3.03%
Loans receivable (2)(3)	250,787		3,637		5.80%	319,340		4,595		5.76%
FHLB stock	3,741		64		6.84%	3,901		4		0.41%
Total interest-earning assets	321,926		$	3,811	4.74%	381,249		$	4,723	4.96%
Non-interest-earning assets	15,764					4,611
Total assets	$	337,690				$	385,860
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Money market deposits	$	16,460	$	16	0.39%	$	18,047	$	20	0.44%
Passbook deposits	37,453		31		0.33%	36,366		28		0.31%
NOW and other demand deposits	32,858		8		0.10%	37,551		7		0.07%
Certificate accounts	134,403		467		1.39%	173,408		652		1.50%
Total deposits	221,174		522		0.94%	265,372		707		1.07%
FHLB advances	79,587		500		2.51%	83,000		602		2.90%
Junior subordinated debentures (4)	6,000		70		4.67%	6,000		46		3.07%
Other borrowings (5)	3,713		81		8.73%	5,000		141		11.28%
Total interest-bearing liabilities	310,474		$	1,173	1.51%	359,372		$	1,496	1.67%
Non-interest-bearing liabilities	6,064					6,902
Stockholders’ Equity	21,152					19,586
Total liabilities and stockholders’ equity	$	337,690				$	385,860
Net interest rate spread (6)			$	2,638	3.22%			$	3,227	3.29%
Net interest rate margin (7)					3.28%					3.39%

(1)Average yields and costs have been annualized.

(2)Amount is net of deferred loan fees, loan discounts, and loans in process, and includes loans held for sale.

(3)Amount excludes interest on non-performing loans.

(4)Includes compounding on past due interest.

(5)Includes default rate margin that was in effect to August 22, 2013.

(6)Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(7)Net interest rate margin represents net interest income as a percentage of average interest-earning assets.

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	For the nine months ended September 30,
	2013					2012
(Dollars in Thousands)	Average Balance		Interest		Average Yield/ Cost (1)	Average Balance		Interest		Average Yield/ Cost (1)
Assets
Interest-earning assets:
Interest-earning deposits	$	5,472	$	18	0.44%	$	6,553	$	16	0.33%
Federal Funds sold and other short-term investments	58,729		93		0.21%	32,946		23		0.09%
Investment securities	-		-		-	642		24		4.98%
Residential mortgage-backed securities	11,154		240		2.87%	15,496		368		3.17%
Loans receivable (2)(3)	259,217		11,420		5.87%	333,086		14,955		5.99%
FHLB stock	3,789		126		4.43%	3,952		16		0.54%
Total interest-earning assets	338,361		$	11,897	4.69%	392,675		$	15,402	5.23%
Non-interest-earning assets	16,246					6,643
Total assets	$	354,607				$	399,318
Liabilities and Stockholders’ Equity
Interest-bearing liabilities:
Money market deposits	$	16,838	$	49	0.39%	$	19,376	$	63	0.43%
Passbook deposits	37,363		91		0.32%	36,738		88		0.32%
NOW and other demand deposits	34,213		20		0.08%	38,270		21		0.07%
Certificate accounts	149,814		1,568		1.40%	185,579		2,390		1.72%
Total deposits	238,228		1,728		0.97%	279,963		2,562		1.22%
FHLB advances	79,529		1,564		2.62%	83,000		1,878		3.02%
Junior subordinated debentures (4)	6,000		156		3.47%	6,000		140		3.11%
Other borrowings (5)	4,485		355		10.55%	5,000		419		11.17%
Total interest-bearing liabilities	328,242		$	3,803	1.54%	373,963		$	4,999	1.78%
Non-interest-bearing liabilities	7,470					6,513
Stockholders’ Equity	18,895					18,842
Total liabilities and stockholders’ equity	$	354,607				$	399,318
Net interest rate spread (6)			$	8,094	3.14%			$	10,403	3.45%
Net interest rate margin (7)					3.19%					3.53%

(1)Average yields and costs have been annualized.

(2)Amount is net of deferred loan fees, loan discounts, and loans in process, and includes loans held for sale.

(3)Amount excludes interest on non-performing loans.

(4)Includes compounding on past due interest.

(5)Includes default rate margin that was in effect to August 22, 2013.

(6)Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.

(7)Net interest rate margin represents net interest income as a percentage of average interest-earning assets.

Provision and Allowance for Loan Losses

We record a provision for loan losses as a charge to earnings when necessary in order to maintain the allowance for loan losses at a level sufficient, in management’s judgment, to absorb probable incurred losses in the loan portfolio.  At least quarterly, we conduct an assessment of the overall quality of the loan portfolio and general economic trends in the local market.  The determination of the appropriate level for the allowance is based on that review, considering such factors as historical loss experience for each type of loan, the size and composition of our loan portfolio, the levels, trends, and composition of our loan delinquencies, non-performing loans and net loan charge-offs, the value of underlying collateral on problem loans, regulatory policies, general economic conditions, and other factors related to the collectability of loans in the portfolio.

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The provision for loan losses for the third quarter of 2013 totaled $414 thousand, compared to $129 thousand for the same period a year ago.  The provision for loan losses for the third quarter of 2013 was primarily due to loan growth resulting from loan originations and loan purchases. During the third quarter of 2013, loan charge-offs also contributed to the increased provision for loan losses, which was partially offset by recoveries on previously charged-off loans and a decrease in the general valuation allowance.  The decrease in the general valuation allowance reflected lower historical loss reserve factors because periods with higher loan losses are beginning to be replaced with periods with lower loan losses as part of our rolling three-year look back analysis.

For the nine months ended September 30, 2013, the provision for loan losses totaled $414 thousand compared to a provision of $1.2 million for the same period a year-ago. The decrease in loan loss provision was primarily due to a decrease of $38.0 million in our gross loan portfolio from one year ago and improving asset quality.

At September 30, 2013 our allowance for loan losses was $10.3 million, or 3.96% of our loans receivable held for investment, compared to $11.9 million, or 4.51% of our loans receivable held for investment, at December 31, 2012.  The ratio of the allowance for loan losses to non-performing loans, excluding loans held for sale, increased to 53.43% at September 30, 2013 from 44.09% at December 31, 2012, primarily due to the sale of $15.5 million of non-performing loans.

When reviewing the adequacy of the allowance for loan losses as a percentage of non-performing loans, we consider the impact of charge-offs.  Also, we update our estimates of collateral values on non-performing loans at least every nine months.  If the estimated fair value of the loan collateral less estimated selling costs is less than the recorded investment in the loan, a charge-off for the difference is recorded to reduce the loan to its estimated fair value, less estimated selling costs.  Therefore certain losses inherent in our non-performing loans are being recognized periodically through charge-offs.  The impact of updating these estimates of collateral value and recognizing any required charge-offs is to increase charge-offs and reduce the allowance for loan losses required on these loans.  As of September 30, 2013, 61% of our non-performing loans had already been written down to their estimated fair value less estimated selling costs.  The remaining 39% of non-performing loans have specific reserves or are reported at cost as the fair value of collateral less estimated selling costs exceeded the recorded investment in the loan.  Also, in connection with our review of the adequacy of our allowance for loan losses, we track the amount and percentage of our non-performing loans that are paying currently, but nonetheless must be classified as non-performing loans for reasons unrelated to payments.  As of September 30, 2013, approximately $10.8 million of our total non-performing loans of $20.1 million (including loans held for sale) were current in their payments.

Loan charge-offs during the first nine months of 2013 were $2.6 million, or 1.31% of average loans held for investment, compared to $1.9 million, or 0.67% of average loans held for investment, during the first nine months of 2012.  Of the $2.6 million of charge-offs, $1.3 million charge-offs were related to the write down of certain classified loans that were transferred to loans held for sale in the first quarter of 2013 and subsequently sold in April 2013.  Another $177 thousand of charge-offs were related to non-performing church loans that were sold in February and April 2013.  The remaining $1.1 million of charge-offs were related to losses on impaired loans.  Charge-offs on commercial real estate loans totaled $1.1 million and represented 44% of charge-offs during the first nine months of 2013.  Charge-offs on church loans totaled $667 thousand million and represented 26% of charge-offs during the first nine months of 2013.  Charge-offs on multi-family residential real estate loans totaled $661 thousand and represented 26% of charge-offs during the first nine months of 2013.  Charge-offs on one-to-four family residential real estate loans totaled $90 thousand and represented 4% of charge-offs during the first nine months of 2013.

Impaired loans at September 30, 2013 were $38.6 million, compared to $44.4 million at December 31, 2012.  Specific reserves for impaired loans were $2.5 million, or 6.36% of the aggregate impaired loan amount at September 30, 2013, compared to $2.7 million, or 6.16%, at December 31, 2012.  Excluding specific reserves for impaired loans, our coverage ratio (general allowance as a percentage of total non-impaired loans) was 3.55% at September 30, 2013, compared to 4.18% at December 31, 2012.  The decrease in our coverage ratio during 2013 was primarily due to the $20.9 million increase in our multi-family loan portfolio, which has the lowest historical loss reserve factors.  Of the $38.6 million impaired loans, $23.1 million had specific reserves recorded as of September 30, 2013.  Of the $23.1 million impaired loans with specific reserves, $3.7 million were collateral dependent loans measured at fair value with a valuation allowance of $321 thousand and $19.4 million were evaluated based on the loans’ present value of expected cash flows with a valuation allowance of $2.1 million.  On $6.2 million of impaired loans, the fair value of collateral less estimated selling costs exceeded the recorded investment in the loan and did not require a specific reserve or charge-off.  The remaining $9.3 million of impaired loans had been written down to fair value after charge-offs of $10.2 million.

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Classified loans at September 30, 2013 were $34.0 million, compared to $42.6 million at December 31, 2012.  The decrease of $8.6 million in classified loans primarily consisted of a decrease of $4.9 million in substandard commercial real estate loans, a decrease of $4.8 million in substandard church loans and a decrease of $273 thousand in substandard construction loan, offset in part by an increase of $1.2 million in substandard multi-family residential real estate loans and an increase of $205 thousand in one-to-four-family residential loans.  Of the $9.7 million decrease in substandard commercial real estate and church loans, $5.5 million resulted from loan sales, $1.8 million resulted from loans transferred to REO and $1.2 million resulted from repayments.  The $1.2 million increase in substandard multi-family loans was due to asset classification downgrades of $3.7 million, offset in part by $2.2 million in loan sales and $253 thousand in payoffs.

Management believes that the allowance for loan losses is adequate to cover probable incurred losses in the loan portfolio as of September 30, 2013, but there can be no assurance that actual losses will not exceed the estimated amounts.  In addition, the OCC and the FDIC periodically review the allowance for loan losses as an integral part of their examination process.  These agencies may require an increase in the allowance for loan losses based on their judgments of the information available to them at the time of their examinations.

Non-interest Income

Non-interest income for the third quarter of 2013 increased $1.6 million from the third quarter of 2012 primarily due to a gain of $1.2 million from the restructuring of our $5.0 million of senior line of credit.  This gain represents a portion of the accrued interest expense of $1.8 million that was forgiven on this debt as part of the recapitalization.  The balance of the interest forgiven, $535 thousand, was added to the amount of the obligation reported on the Company’s balance sheet at September 30, 2013 in accordance with Accounting Standards Codification (“ASC”) 470-60 - Troubled Debt Restructurings by Debtors.  Also contributing to higher non-interest income in the third quarter of 2013 was a reduction of $99 thousand in net losses on sales of REO compared to the third quarter of 2012.  Also, during the third quarter of 2012, we incurred $280 thousand of net losses on sales of loans.

For the nine months ended September 30, 2013, non-interest income totaled $1.8 million compared to $2.9 million for the same period a year ago.  The decrease in non-interest income during the first nine months of 2013 primarily reflected the gain on the sale of our headquarters building in the year 2012 which was partially offset by the gain on the restructuring of senior debt in August 2013.

Non-interest Expense

Non-interest expense for the third quarter of 2013 decreased $485 thousand from $3.5 million for the third quarter of 2012 to $3.0 million for the third quarter of 2013.  The decrease of $485 thousand in non-interest expense was primarily due to a decrease of $106 thousand in the provision for losses on REO, a decrease of $89 thousand in occupancy expense, a decrease of $55 thousand in compensation and benefits expense, a decrease of $48 thousand in FDIC insurance premium expense, a decrease of $97 thousand in other expenses, primarily REO and appraisal expenses, and an increase of $48 thousand in the recapture of losses on loans held for sale.

For the nine months ended September 30, 2013, non-interest expense totaled $9.8 million compared to $10.1 million for the same period a year ago.  The decrease in non-interest expense during the first nine months of 2013 primarily reflected lower compensation and benefits expense, lower provision for losses on REO, and lower FDIC insurance premium expense, which were partially offset by a higher provision for losses on loans held for sale.

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Income Taxes

The Company’s income tax expense was $0 and $6 thousand for the three and nine months ended September 30, 2013 compared to $2 thousand and $849 thousand for the three and nine months ended September 30, 2012.  The tax expense for the first nine months of 2013 primarily reflects the minimum taxes paid to the state of California.  For the first nine months of 2012, income taxes were computed by applying the projected annual effective income tax rate for the year to the year-to-date earnings plus discrete items (items incurred in the quarter).  The projected effective tax rate incorporates certain non-taxable federal and state income items and expected increases to the valuation allowance for projected deferred tax assets.  Income tax expense for the first nine months of 2012 was primarily related to the gain on the sale of our former headquarters building in the second quarter of 2012.

Financial Condition

Total Assets

Total assets were $345.7 million at September 30, 2013, which represented a decrease of $28.0 million, or 7%, from December 31, 2012, but an increase of approximately $500 thousand from the end of the second quarter.  During the first nine months of 2013, net loans held for investment decreased by $219 thousand, loans held for sale decreased by $18.0 million, securities decreased by $3.2 million, cash and cash equivalents decreased by $4.1 million, REO decreased by $1.6 million and other assets decreased by $955 thousand.

During the first nine months of 2013, the Orders issued to us by the OTS effective September 9, 2010, which are now administered by the OCC with respect to the Bank, limited the increase in the Bank’s total assets during any quarter to an amount equal to the net interest credited on deposit liabilities during the prior quarter without the prior written notice to and receipt of notice of non-objection from the OCC.  This specific growth restriction was eliminated on October 30, 2013 when the Bank entered into a Consent Order with the OCC, which supersedes the Order that was applicable to the Bank.    The Bank is subject to the requirements of the new Consent Order, which includes requirements that the Bank develop a Strategic Plan and a Capital Plan and that the Bank not begin to implement those plans, or any diversions from those plans, until it has submitted the plans, and any proposed diversions, to the OCC for a written statement that the OCC has no supervisory objection thereto.

Loans Receivable Held for Investment

Our gross loan portfolio decreased by $2.3 million to $260.8 million at September 30, 2013 from $263.1 million at December 31, 2012, but increased by $25.4 million from the balance of $235.4 million at June 30, 2013.  The decrease of $2.3 million in our loan portfolio since the end of 2012 consisted of a decrease of $7.4 million in our one-to-four family residential real estate loan portfolio, a decrease of $8.2 million in our commercial real estate loan portfolio, a decrease of $5.5 million in our church loan portfolio, a decrease of $301 thousand in our construction loan portfolio and a decrease of $1.8 million in our commercial loan portfolio, which were partially offset by an increase of $21.0 million in our multi-family residential real estate loan portfolio.

During the third quarter we began to refocus on increasing interest income by rebuilding our loan portfolio.  Loan originations, including loan purchases of $10.9 million, for the nine months ended September 30, 2013 totaled $35.3 million, compared to $18.2 million for the nine months ended September 30, 2012.  Loan repayments for the nine months ended September 30, 2013 totaled $33.4 million, compared to $53.2 million for the nine months ended September 30, 2012.  Loan charge-offs during the first nine of 2013 totaled $2.6 million, compared to charge-offs of $1.9 million during the first nine months of 2012.  Loans transferred to REO during the first nine months of 2013 totaled $1.8 million, compared to $3.5 million during the first nine months of 2012.  Loans transferred to loans held for sale during the first nine months of 2013 totaled $7.3 million, which primarily represented multi-family and commercial real estate loans that we sold in a bulk sale consummated in the second quarter.  During the first nine months of 2012, two non-performing loans, which had a total carrying amount of $616 thousand and were secured by commercial real estate, were transferred to held-for-sale.  During the third quarter of 2013, $7.4 million of loans held for sale were transferred to held for investment as these loans are no longer to be marketed for sale.  All of these transferred loans were performing loans.

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Loans Receivable Held for Sale

Loans held for sale decreased from $19.1 million at December 31, 2012 to $1.1 million at September 30, 2013.  The $18.0 million decrease during the first nine months of 2013 was primarily due to sales of non-performing and classified loans totaling $15.5 million.  In addition, we transferred $7.4 million of loans held for sale to held for investment, transferred $753 thousand to REO and received repayments of $1.5 million.  These reductions in loans held for sale were partially offset by the transfer of $7.3 million of non-performing classified multi-family and commercial real estate loans from the held for investment loan portfolio to the held for sale portfolio in connection with their subsequent sale during the nine months ended September 30, 2013.

Non-Performing Assets

Non-performing assets (“NPAs”) include loans that are 90 days or more delinquent and still accruing, non-accrual loans and REO.  NPAs at September 30, 2013 were $26.7 million, or 7.74% of total assets, compared to $45.3 million, or 12.11% of total assets, at December 31, 2012.

At September 30, 2013, non-accrual loans were $20.1 million compared to $37.1 million at December 31, 2012.  These loans consist of delinquent loans that are 90 days or more past due and troubled debt restructurings that do not qualify for accrual status.  The $17.0 million decrease in non-accrual loans was primarily due to the sale of $15.5 million of non-performing loans and the transfer of $2.6 million to REO.  The non-accrual loans at September 30, 2013 included 20 church loans totaling $13.8 million, six multi-family residential real estate loans totaling $3.0 million, ten one-to-four family residential real estate loans totaling $1.7 million, two commercial real estate loans totaling $1.5 million and two commercial loans totaling $162 thousand.

During the first nine months of 2013, REO decreased by $1.6 million to $6.6 million at September 30, 2013, from $8.2 million at December 31, 2012.  At September 30, 2013 the Bank’s REO consisted of ten commercial real estate properties, seven of which are church buildings.  During the first nine months of 2013, five church loans totaling $2.6 million were foreclosed and transferred to REO and eight REO properties were sold for net proceeds of $3.6 million and a net loss of $10 thousand.

Deposits

Deposits totaled $218.6 million at September 30, 2013, down $38.5 million, or 15%, from December 31, 2012.  During the first nine months of 2013, CDs decreased by $36.2 million and represented 61% of total deposits at September 30, 2013, compared to 66% of total deposits at December 31, 2012.  Of the $36.2 million decrease in CDs during the first nine months of 2013, $29.2 million represented higher rate deposits from QwickRate, a deposit listing service, and $599 thousand were from brokered deposits.  Additionally, core deposits (NOW, demand, money market and passbook accounts) decreased by $2.3 million during the first nine months of 2013 and represented 39% of total deposits at September 30, 2013, compared to 34% of total deposits at December 31, 2012.  Brokered deposits represented 1% of total deposits at September 30, 2013 and December 31, 2012.

The Order issued to the Bank by the OTS effective September 9, 2010, which has been administered by the OCC since July 2012, prohibited the Bank from accepting brokered deposits.

Borrowings

At September 30, 2013, borrowings consisted of advances from the FHLB of $87.5 million, junior subordinated debentures of $6.0 million and our modified senior line of credit of $2.4 million of principal amount and $535 thousand of deferred gain on restructuring.  At December 31, 2012, borrowings consisted of advances from the FHLB of $79.5 million, junior subordinated debentures of $6.0 million and our senior line of credit of $5.0 million.  At September 30, 2013 and December 31, 2012, FHLB advances were 25% and 21%, respectively, of total assets.  The weighted average cost of advances decreased 42 basis points from 2.67% at December 31, 2012 to 2.25% at September 30, 2013 primarily because we restructured $28.0 million of advances in June 2013.

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We are currently developing plans to negotiate an extension of the March 17, 2014 maturity date of the subordinated debentures.  No assurance can be given that we will be successful in negotiating an extension.  As of September 30, 2013 the accrued interest on the subordinated debentures was $609 thousand.  As disclosed previously, the Company is not permitted to make payments on any debt without prior notice to and receipt of written notice of non-objection from the FRB.  In addition, under the terms of the subordinated debentures, the Company is not allowed to make payments on the subordinated debentures if the Company is in default on any of its senior indebtedness, which term includes the senior line of credit described below.

Other borrowings decreased by $2.6 million in connection with the restructuring of our senior line of credit during the third quarter of 2013, offset by the deferral of a portion of the gain on restructuring.  Pursuant to the terms of the restructuring, we exchanged Common Stock Equivalents with an agreed upon value of $2.6 million for $2.6 million of loan principal and modified the terms of the remaining $2.4 million of principal.  In addition, the lender forgave the accrued interest, totaling $1.8 million, on the entire $5 million loan to the date of the closing of the recapitalization.  The modified terms for the remaining loan include, among others items, an extension of the maturity of the line of credit to February 22, 2019 and a repayment schedule that specifies six quarterly payments of interest only beginning three months following the closing of the recapitalization, followed by 48 fully amortizing equal monthly payments of principal and interest on the loan beginning 19 months after the closing of the recapitalization; provided, that each payment on the loan must receive prior approval from the FRB.  Failure to make such any payment due to an inability to obtain such approval despite the exercise by the Company of required efforts to obtain such approval will not constitute an event of default under the revised loan terms.  In addition the interest rate on the remaining loan has been increased to the Wall Street Journal Prime Rate plus 2%, with a floor (minimum) rate of 6%, from the original loan interest rate of the Wall Street Journal Prime Rate plus 1%, with a floor rate of 6%.  As part of the modification, the Default Rate Margin of 5% has been forgiven.   In accordance with Accounting Standards Codification (“ASC”) 470-60 - Troubled Debt Restructurings by Debtors, we have reported $1.2 million of the forgiven interest as a gain on restructuring during the third quarter and added the remaining $535 thousand balance of the forgiven interest to the principal balance of the bank loan that remains outstanding.

Information regarding the subordinated debentures and senior line of credit is included in Note 7 “Junior Subordinated Debentures and Other Borrowings” of the Notes to Consolidated Financial Statements.

Stockholders’ Equity

Stockholders’ equity was $25.6 million, or 7.40% of the Company’s total assets, at September 30, 2013, compared to $18.0 million, or 4.82% of the Company’s total assets, at December 31, 2012.  The increase in stockholders’ equity during 2013 was due to the completion of the recapitalization.  At September 30, 2013, the Bank’s Total Risk-Based Capital ratio was 16.08%, its Tier 1 Risk-Based Capital ratio was 14.79%, and its Core Capital and Tangible Capital ratios were 9.75%.

Liquidity and Capital Resources

The objective of liquidity management is to ensure that we have the continuing ability to fund operations and meet other obligations on a timely and cost-effective basis.  The Bank’s sources of funds include deposits, advances from the FHLB and other borrowings, proceeds from the sale of loans, REO, and investment securities, and payments of principal and interest on loans and investment securities.  Primary uses of funds include withdrawal of and interest payments on deposits, originations of loans, purchases of investment securities, and payment of operating expenses.

Currently, we believe that the Bank has sufficient liquidity to support growth over the foreseeable future; however, we do not expect that the Bank will be able to pay dividends to the Company for at least the next several quarters.  As a result, our immediate priority for enhancing liquidity is to raise additional equity capital for the Company, which has limited liquid assets.  As of September 30, 2013, the Company has $1.6 million of cash available for operating expenses and debt obligations, which reflects full repayment of all inter-company payables that had been owed to the Bank by the Company.  We expect that our ability to raise additional capital will be significantly affected by our success in negotiating an extension of the maturity of the Company’s subordinated debentures, which mature on March 17, 2014.  These conditions and the Company’s operating losses raise substantial doubt about the Company’s ability to continue as a going concern.  These and related matters are discussed in Note 2 “Going Concern, Regulatory Matters and Recapitalization of the Company” of the Notes to Consolidated Financial Statements.  We anticipate that we would use a portion of any additional capital raised by the Company to reduce the Company’s senior debt, negotiate an extension of the maturity of the Company’s subordinated debentures and increase the Bank’s capital.

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Net cash inflows from operating activities totaled $1.6 million and $3.4 million during the nine months ended September 30, 2013 and 2012, respectively.  Net cash inflows from operating activities for the first nine months of 2013 were primarily attributable to interest payments received on loans and securities.

Net cash inflows from investing activities totaled $21.1 million and $53.0 million during the nine months ended September 30, 2013 and 2012, respectively.  Net cash inflows from investing activities for the first nine months of 2013 were attributable primarily to proceeds from sales of loans receivable held for sale, principal repayments on loans and securities and proceeds from sales of REOs.

Net cash outflows from financing activities totaled $26.8 million and $31.5 million during the nine months ended September 30, 2013 and 2012, respectively.  Net cash outflows from financing activities for the first nine months of 2013 were attributable primarily to the net decrease in deposits which was partially offset by a net increase in FHLB advances and net proceeds from issuance of common stock as part of the recapitalization.

When the Bank has more funds than required for reserve requirements or short-term liquidity needs, the Bank sells federal funds to the Federal Reserve Bank or other financial institutions and maintains a portion of its liquid assets in interest-bearing cash deposits with other banks and in securities available-for-sale that are not pledged.  The Bank’s liquid assets at September 30, 2013 consisted of $60.2 million in cash and cash equivalents, compared to liquid assets of $64.4 million in cash and cash equivalents and $11.9 million in securities available-for-sale that were not pledged at December 31, 2012.

Additionally, the Bank is currently approved by the FHLB to borrow up to $100.0 million to the extent the Bank provides qualifying collateral and holds sufficient FHLB stock.  That approved limit and collateral requirement would have permitted the Bank, as of September 30, 2013, to borrow an additional $11.8 million.

Regulatory Capital

The capital regulations applicable to the Bank, which are now administered by the OCC, include three separate minimum capital requirements.  First, the tangible capital requirement mandates that the Bank’s stockholder’s equity, less intangible assets, be at least 1.50% of adjusted total assets as defined in the capital regulations.  Second, the core capital requirement mandates that core capital (tangible capital plus certain qualifying intangible assets) be at least 4.00% of adjusted total assets as defined in the capital regulations.  Third, the risk-based capital requirement mandates that core capital plus supplemental capital (as defined by the OCC) be at least 8.00% of risk-weighted assets as prescribed in the capital regulations.  The capital regulations assign specific risk weightings to all assets and off-balance- sheet items for this purpose.

The Bank was in compliance with all capital requirements in effect at September 30, 2013, and met the generally applicable capital ratio standards necessary to be considered “well-capitalized” under the prompt corrective action regulations adopted pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991.  However, in March 2010, the Company and the Bank were determined to be “in troubled condition” by the OTS and they consented to the issuance of cease and desist orders by the OTS effective September 9, 2010, which orders remained in effect through the first nine months of 2013 and are now administered by the OCC with respect to the Bank and the FRB with respect to the Company.  On October 30, 2013, the Bank entered into a Consent Order with the OCC which superseded the cease and desist order applicable to the Bank.  The cease and desist order required the Bank to achieve and maintain higher levels of regulatory capital than normally required, and the Consent Order raised the required thresholds further.  Under the applicable regulations, the Bank is therefore precluded from being considered to be more than “adequately capitalized” until such special capital requirements are terminated and the Company and the Bank are no longer considered to be “in troubled condition.”

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The Bank met the minimum capital requirements under the cease and desist order at September 30, 2013 and December 31, 2012.  Actual required capital amounts and ratios at September 30, 2013 and December 31, 2012, together with the higher capital requirements that the Bank is required to meet under the cease and desist order applicable to it, are presented below.

	Actual		Required for Capital Adequacy Purposes		Capital Requirements under Consent Order
	Amount	Ratio	Amount	Ratio	Amount	Ratios
	(Dollars in thousands)
September 30, 2013:
Tangible Capital to adjusted total assets	$ 33,670	9.75%	$   5,182	1.50%	N/A	N/A
Tier 1(Core) Capital to adjusted total assets	$ 33,670	9.75%	$ 13,819	4.00%	$ 31,092	9.00%
Tier 1(Core) Capital to risk weighted assets	$ 33,670	14.79%	N/A	N/A	N/A	N/A
Total Capital to risk weighted assets	$ 36,608	16.08%	$ 18,208	8.00%	$ 29,588	13.00%

Actual		Required for Capital Adequacy Purposes		Capital Requirements under Cease and Desist Order
Amount	Ratio	Amount	Ratio	Amount	Ratios
(Dollars in thousands)

December 31, 2012:
Tangible Capital to adjusted total assets	$ 32,936	8.82%	$   5,603	1.50%	N/A	N/A
Tier 1(Core) Capital to adjusted total assets	$ 32,936	8.82%	$ 14,940	4.00%	$ 29,881	8.00%
Tier 1(Core) Capital to risk weighted assets	$ 32,936	13.12%	N/A	N/A	N/A	N/A
Total Capital to risk weighted assets	$ 36,183	14.41%	$ 20,090	8.00%	$ 30,135	12.00%

Effective October 30, 2013, the Bank’s minimum capital requirements were raised by the OCC under the Consent Order to 9% for Tier 1 (Core) Capital and 13% for Total Capital to risk weighted assets.  The Bank’s regulatory capital exceeded both ratios as of September 30, 2013.

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Phase-in of Increased Regulatory Capital Requirements

In July 2013, the Federal banking regulators amended their capital adequacy regulations to reflect the new capital standards recommended by the Basel Committee on Banking Supervision, commonly called Basel III, and to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act).  The amended regulations change the definition of regulatory capital, increase risk-based capital requirements, make selected changes to the calculation of risk-weighted assets, and adjust the prompt corrective action thresholds.  Community banking organizations, such as the Company and the Bank, become subject to the new rule on January 1, 2015 and certain provisions of the amended regulations will be phased in over the period of 2015 through 2019.  The amended regulations:

¡	Require a minimum ratio of “common equity Tier 1 capital” (a new capital measure) to risk-weighted assets of 4.5%.
¡	Increase the minimum Tier 1 capital to risk-weighted assets ratio requirement from 4% to 6%.
¡	Retain the minimum total capital to risk-weighted assets ratio requirement of 8%.
¡	Establish a minimum leverage ratio requirement of 4%.
¡	Retain the existing regulatory capital framework for 1-4 family residential mortgage exposures.
¡	Permit smaller, less complex banking organizations, such as the Company and the Bank, to retain, through a one-time election, the existing treatment for most accumulated other comprehensive income, such that unrealized gains and losses on securities available for sale will not affect regulatory capital amounts and ratios.
¡	Implement a new “capital conservation buffer” requirement pursuant to which a banking organization must maintain a common equity capital ratio that is more than 2.5% above the minimum common equity Tier 1 capital, Tier 1 capital and total risk-based capital ratios in order to avoid limitations on capital distributions, including dividend payments, and certain discretionary bonus payments. The capital conservation buffer requirement will be phased in beginning on January 1, 2016 at 0.625% and will be fully phased in at 2.50% by January 1, 2019. A banking organization with a buffer of less than the required amount would be subject to increasingly stringent limitations on such distributions and payments as the buffer (the amount of its capital exceeding regulatory minimums) approaches zero. The new rule also generally prohibits a banking organization from making such distributions or payments during any quarter if its eligible retained income is negative and its capital conservation buffer ratio was 2.5% or less at the end of the previous quarter. The eligible retained income of a banking organization is defined as its net income for the four calendar quarters preceding the current calendar quarter, based on the organization’s quarterly regulatory reports, net of any distributions and associated tax effects not already reflected in net income.
¡	Increase capital requirements for past-due loans, high volatility commercial real estate exposures, and certain short-term commitments and securitization exposures.
¡	Expand the recognition of collateral and guarantors in determining risk-weighted assets.
¡	Remove references to credit ratings consistent with the Dodd Frank Act and establish due diligence requirements for securitization exposures.
¡	Permit banking organizations that had less than $15 billion in total consolidated assets as of December 31, 2009 to include in Tier 1 capital trust preferred securities and cumulative perpetual preferred stock issued and included in Tier 1 capital prior to May 19, 2010, subject to a limit of 25% of Tier 1 capital elements, excluding any non-qualifying capital instruments and after all regulatory capital deductions and adjustments have been applied to Tier 1 capital.
¡	Establish new qualifying criteria for regulatory capital, including new limitations on the inclusion of deferred tax assets and mortgage servicing rights.

The Company’s management is currently evaluating the provisions of the final rule and their expected impact on the Company.

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ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable

ITEM 4.  CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures was performed under the supervision of the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) as of September 30, 2013.  Based on that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of September 30, 2013.  There were no significant changes during the quarter ended September 30, 2013 in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II.  OTHER INFORMATION

Item 1.       LEGAL PROCEEDINGS

None

Item 1A.    RISK FACTORS

Not Applicable

Item 2.       UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None

Item 3.       DEFAULTS UPON SENIOR SECURITIES

None

Item 4.       MINE SAFETY DISCLOSURES

Not Applicable

Item 5.       OTHER INFORMATION

None

Item 6.       EXHIBITS

Exhibit Number*
3.1	Certificate of Incorporation of Registrant and amendments thereto
3.2	Bylaws of Registrant
4.3	Certificate of Designation for Series A Preferred Stock
4.5	Certificate of Designation for Series B Preferred Stock
4.7	Certificate of Designation for Series C Preferred Stock
4.9	Certificate of Designation for Fixed Rate Cumulative Perpetual Preferred Stock Series D  (Exhibit 3.3 to Form 8-K filed by the Registrant on November 19, 2008)
4.12	Certificate of Designation for Fixed Rate Cumulative Perpetual Preferred Stock Series E  (Exhibit 4.1 to Form 8-K filed by the Registrant on December 9, 2009)
4.13	Certificate of Designations of Series F Common Stock Equivalents
4.14	Certificate of Designations of Series G Non-Voting Preferred Stock
10.19	Exchange Agreement by and between the Registrant and The United States Department of the Treasury (Exhibit 10.19 to Form 10-K filed by the Registrant on April 1, 2013) and Amendment No. 1 thereto
10.20	Exchange Agreement by and among the Registrant, the Insurance Exchange of the Automobile Club and the Automobile Club of Southern California (Exhibit 10.20 to Form 10-K filed by the Registrant on April 1, 2013)
10.21.1	Exchange Agreement by and between the Registrant and BBCN Bancorp, Inc.
10.21.2	Investor Rights Letter by and between the Registrant and BBCN Bancorp, Inc.
10.22.1	Exchange Agreement by and between the Registrant and National Community Investment Fund (Series C for Series F Preferred Stock)
10.22.2	Investor Rights Letter by and between the Registrant and National Community Investment Fund
10.22.3	Exchange Agreement by and between the Registrant and National Community Investment Fund (Series F for Series G Preferred Stock)

41

Exhibit Number*
10.23	Registration Rights Agreement between the Registrant, CJA Private Equity Financial Restructuring Master Fund I LP, National Community Investment Fund and BBCN Bancorp, Inc.
10.24	Form of Subscription Agreements entered into by the Registrant with various purchasers of the Registrant’s common stock
10.25.1	Subscription Agreement between the Registrant and CJA Private Equity Financial Restructuring Master Fund I LP
10.25.2	Investor Rights Letter between the Registrant and CJA Private Equity Financial Restructuring Master Fund I LP
10.26.1	Subscription Agreement between the Registrant and Valley Economic Development Center, Inc.
10.26.2	Investor Rights Letter between the Registrant and Valley Economic Development Center, Inc.
10.27	Agreement for Partial Satisfaction of Debt Previously Contracted by and between BBCN Bank and the Registrant
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document **
101.SCH	XBRL Taxonomy Extension Schema Document **
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document **
101.DEF	XBRL Taxonomy Extension Definitions Linkbase Document **
101.LAB	XBRL Taxonomy Extension Label Linkbase Document **
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document **

* Exhibits followed by a parenthetical reference are incorporated by reference herein from the document filed by the Registrant with the SEC described therein.  Except as otherwise indicated, the SEC File No. for each incorporated document is 000-27464.

**Pursuant to SEC rules, these interactive data file exhibits shall not be deemed filed for purposes of Section 11 or 12 of the Securities Act or Section 18 of the Exchange Act or otherwise subject to the liability of those sections.

42

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:	November 14, 2013	By:	/s/ Wayne-Kent A. Bradshaw
			Wayne-Kent A. Bradshaw
			Chief Executive Officer
Date:	November 14, 2013	By:	/s/ Brenda J. Battey
			Brenda J. Battey
			Chief Financial Officer

43

EX-3.1

Exhibit 3.1

STATE OF DELAWARE

SECRETARY OF STATE

DIVISION OF CORPORATIONS

FILED 09:00 AM 09/25/1995

950218394 - 2545755

CERTIFICATE OF INCORPORATION

OF

BROADWAY FINANCIAL CORPORATION

FIRST:The name of this corporation is Broadway Financial Corporation.

SECOND:  The address of this corporation’s registered office in the State of Delaware is The Prentice-Hall Corporation System, Inc., 32 Loockerman Square, Suite L-100, City of Dover, State of Delaware 19904. The name of its registered agent at such address is The Prentice-Hall Corporation System, Inc.

THIRD:  The purpose of this corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware.

FOURTH:  The total number of shares of all classes of stock which this corporation shall have authority to issue is four million (4,000,000), of which three million (3,000,000) shall be common stock, par value $0.01 per share, and one million (1,000,000) shall be serial preferred stock, par value $0.01 per share.

The shares of preferred stock may be issued from time to time in one or more series. The board of directors of this corporation shall have authority to fix by resolution or resolutions the designations and the powers, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof, including without limitation the voting rights, the dividend rate, conversion rights, redemption price and liquidation preference, of any series of shares of preferred stock, to fix the number of shares constituting any such series and to increase or decrease the number of shares of any such series (but not below the number of shares thereof then outstanding). In case the number of shares of any such series shall be so decreased, the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution or resolutions originally fixing the number of shares of such series.

FIFTH:  The name and mailing address of the incorporator of this corporation is:

Paul C. Hudson

Chief Executive Officer and President

Broadway Federal Savings and Loan Association

4835 W. Venice Boulevard

Los Angeles, California 90019

SIXTH:  The business and affairs of this corporation shall be under the direction of a board of directors. The exact number of directors shall be fixed from time to time by the board of directors pursuant to a resolution adopted by the affirmative vote of a majority of the full board of directors.

A.Election of Directors. The directors of this corporation shall be divided into three classes: the first class, the second class and the third class. Each director shall serve for a term ending on the third annual meeting following the annual meeting at which such director was elected; provided, however, that the directors first elected to the first class shall serve for a term ending upon the election of directors at the annual meeting next following the end of the calendar year 1995, the directors first elected to the second class shall serve for a term ending upon the election of directors at the second annual meeting next following the end of calendar year 1995, and the directors first elected to the third class shall serve for a term ending upon the election of directors at the third annual meeting next following the end of the calendar year 1995.

At each annual election commencing at the first annual meeting of stockholders, the successors to the class of directors whose term expires at that time shall be elected by the stockholders to hold office for a term of three years to succeed those directors whose term expires, so that the term of one class of directors shall expire each year.

In the event of any change in the authorized number of directors, each director then continuing to serve as such shall continue as a director of the class of which he or she is a member until the expiration of his or her current term, or his or her prior resignation, disqualification, disability or removal. There shall be no cumulative voting in the election of directors. Election of directors need not be made by written ballot.

B.Newly Created Directorships and Vacancies. Any vacancies on the board of directors resulting from death, resignation, retirement, disqualification, removal from office or other cause may be filled only by the affirmative vote of a majority of directors then in office, although less than a quorum, or by the sole remaining director, or, in the event of the failure of the directors or the sole remaining director so to act, by the stockholders at the next annual meeting which occurs after the expiration of a 90-day period commencing on the day the vacancy is created. Directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of the class to which they have been elected expires. A director elected to fill a vacancy by reason of an increase in the number of directorships may be elected by a majority vote of the directors then in office, although less than a quorum of the board of directors, to serve until the next election of the class for which such director shall have been chosen. If the number of directors is changed, any increase or decrease may be allocated to any such class the board of directors selects in its discretion. No decrease in the number of directors constituting the board of directors shall shorten the term of any incumbent director.

2

C.Removal. A director may be removed only for cause as determined by the affirmative vote of the holders of at least a majority of the shares then entitled to vote in an election of directors, which vote may only be taken at an annual meeting or a special meeting of stockholders called expressly for that purpose. Cause for removal shall be deemed to exist only if the director whose removal is proposed has been convicted of a felony by a court of competent jurisdiction or has been adjudged by a court of competent jurisdiction to be liable for gross negligence or misconduct in the performance of such director’s duty to the corporation and such adjudication is no longer subject to direct appeal.

SEVENTH:  A.  Higher Vote for Certain Business Combinations. In addition to any affirmative vote of holders of a class or series of capital stock of this corporation required by law or the provisions of this Certificate of Incorporation and except as otherwise expressly provided in Paragraph B of this Article SEVENTH, a Business Combination (as hereinafter defined) with or upon a proposal by an Interested Stockholder (as hereinafter defined) shall require the affirmative vote of the holders of at least two-thirds of the Voting Stock (as hereinafter defined) of this corporation voting together as a single class. Such affirmative vote shall be required notwithstanding the fact that no vote, or a lesser percentage vote, may be required or may be specified, by law or regulation.

B.When Higher Vote is Not Required.  The provisions of Paragraph A of this Article SEVENTH shall not be applicable to any particular Business Combination if all of the conditions specified in any one of the following Subparagraphs (i), (ii) or (iii) are met:

(i)Approval by Disinterested Directors. The proposed Business Combination has been approved by a vote of a majority of all the Disinterested Directors (as hereinafter defined); or

(ii)Combination with Subsidiary. The proposed Business Combination is solely between this corporation and a subsidiary of this corporation, and such Business Combination does not have the direct or indirect effect set forth in Subparagraph C(ii)(e) of this Article SEVENTH; or

(iii)Price and Procedural Conditions. The proposed Business Combination will be consummated within three years after the date (the “Determination Date”) that the Interested Stockholder became an Interested Stockholder and all of the following conditions have been met:

(a)The aggregate amount of cash and fair market value (as of the date of the consummation of the Business Combination) of consideration other than cash, to be received per share of common stock in such Business Combination by the holders thereof shall be at least equal to the higher of the following: (x) the highest per share price, including any brokerage commissions, transfer taxes and soliciting

3

dealers’ fees (with appropriate adjustments for recapitalizations, reclassifications, stock splits, reverse stock splits and stock dividends) paid by the Interested Stockholder for any shares of common stock acquired by it, including those shares acquired by the Interested Stockholder before the Determination Date, or (y) the fair market value of the common stock of the corporation (as determined by the Disinterested Directors) on the date the Business Combination is first proposed (the “Announcement Date”).

(b)The aggregate amount of cash and fair market value (as of the date of the consummation of the Business Combination) of consideration other than cash, to be received per share of any class or series of preferred stock in such Business Combination by the holders thereof shall be at least equal to the highest of the following: (x) the highest per share price, including any brokerage commissions, transfer taxes and soliciting dealers’ fees (with appropriate adjustments for recapitalizations, reclassifications, stock splits, reverse stock splits and stock dividends) paid by the Interested Stockholder for any shares of such class or series of preferred stock acquired by it, including those shares acquired by the Interested Stockholder before the Determination Date; (y) the fair market value of such class or series of preferred stock of the corporation (as determined by the Disinterested Directors) on the Announcement Date; and (z) the highest preferential amount per share of such class or series of preferred stock to which the holders thereof would be entitled in the event of voluntary or involuntary liquidation, dissolution or winding up of the affairs of the corporation (regardless of whether the Business Combination to be consummated constitutes such an event).

(c)The consideration to be received by holders of a particular class or series of outstanding common or preferred stock shall be in cash or in the same form as the Interested Stockholder has previously paid for shares of such class or series of stock. If the Interested Stockholder has paid for shares of any class or series of stock with varying forms of consideration, the form of consideration given for such class or series of stock in the Business Combination shall be cash or the form used by the Interested Stockholder to acquire the largest number of shares of such class or series of stock previously acquired by it.

(d)No Extraordinary Event (as hereinafter defined) occurs after the Interested Stockholder has become an interested Stockholder and prior to the consummation of the Business Combination.

(e)A proxy or information statement describing the proposed Business Combination and complying with the requirements of

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the Securities Exchange Act of 1934, as amended (the “Act”), and the rules and regulations thereunder (or any subsequent provisions replacing such Act, rules and regulations) is mailed to public stockholders of the corporation at least 30 days prior to the consummation of such Business Combination, whether or not such proxy or information statement is required pursuant to such Act or subsequent provisions (although such proxy or information statement need only be filed with the Securities and Exchange Commission if a filing is required by such Act or subsequent provisions), and shall contain at the front thereof in a prominent place the recommendation, if any, of the Disinterested Directors as to the advisability or inadvisability of the Business Combination and the recommendation, opinion or evaluation of any investment banking firm selected by a majority of the Disinterested Directors as to the fairness of the Business Combination from the point of view of the stockholders of the corporation other than the Interested Stockholder.

C.Certain Definitions. For purposes of this Article SEVENTH:

(i)A “person” shall mean any individual, corporation, partnership, bank, association, joint stock company, trust, unincorporated organization or similar company, or a group of “persons” acting or agreeing to act together in the manner set forth in Rule 13d-5 under the Act as in effect on June 1, 1995.

(ii)“Business Combination” shall mean any of the following transactions, if entered into by this corporation or a subsidiary of this corporation with, or upon a proposal by, an Interested Stockholder:

(a)the merger or consolidation of this corporation or any subsidiary of this corporation; or

(b)the sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one or a series of transactions) of any assets of this corporation or any subsidiary of this corporation having an aggregate fair market value of $10 million or more; or

(c)the issuance or transfer by this corporation or any subsidiary of this corporation (in one or a series of transactions) of securities of this corporation or subsidiary of this corporation having an aggregate fair market value of $10 million or more; or

(d)the adoption of a plan or proposal for the liquidation or dissolution of any subsidiary of this corporation; or

(e)the reclassification of securities (including a reverse stock split), recapitalization, consolidation or any other transaction

5

(whether or not involving an Interested Stockholder) which has the direct or indirect effect of increasing the voting power, whether or not then exercisable, of an Interested Stockholder in any class or series of capital stock of this corporation or subsidiary of this corporation; or

(f)any agreement, contract or other arrangement providing directly or indirectly for any of the foregoing.

(iii)“Interested Stockholder” shall mean any person (other than this corporation, a subsidiary of this corporation, an employee stock ownership or other employee benefit plan of this corporation or subsidiary of this corporation or any trustee or fiduciary with respect to any such plan acting in such capacity) that is the direct or indirect beneficial owner (as defined in Rule 13d-3 and Rule 13d-5 under the Act as in effect on June 1, 1995) of more than 10% of the outstanding voting stock of the corporation, and any Affiliate or Associate of any such person.

(iv)“Disinterested Director” shall mean any member of the board of directors of this corporation who is not affiliated with an Interested Stockholder and who was a member of the board of directors of this corporation immediately prior to the time that any Interested Stockholder became an Interested Stockholder, and any, successor to a Disinterested Director who is not affiliated with an Interested Stockholder and is recommended to succeed a Disinterested Director by a majority of the Disinterested Directors who are then members of the board of directors of this corporation.

(v)“Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 under the Act as in effect on June 1, 1995.

(vi)“Extraordinary Event” shall mean, as to any Business Combination and Interested Stockholder, any of the following events that is not approved by a majority of all Disinterested Directors:

(a)any failure to declare and pay at the regular date therefor any full quarterly dividend (whether or not cumulative) on outstanding preferred stock; or

(b)any reduction in the annual rate of dividends paid on the common stock (except as necessary to reflect any subdivision of the common stock); or

(c)any failure to increase the annual rate of dividends paid on the common stock as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any

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similar transaction that has the effect of reducing the number of outstanding shares of the common stock; or

(d)the receipt by the Interested Stockholder, after the Determination Date, of a direct or indirect benefit (except proportionately as a stockholder) from any loans, advances, guarantees, pledges or other financial assistance or any tax credits or other tax advantages provided by this corporation or any subsidiary of this corporation, whether in anticipation of, or in connection with, the Business Combination or otherwise.

(vii)“Voting Stock” shall mean all outstanding shares of the common or preferred stock of this corporation entitled to vote generally in the election of directors, and each reference to a proportion of Voting Stock shall refer to shares having such proportion of the number of shares entitled to be cast, excluding all shares beneficially owned or controlled by the Interested Stockholder

(viii)In the event of any Business Combination in which this corporation survives, the phrase “consideration other than cash” as used in Subparagraphs B(iii)(a) and B(iii)(b) of this Article SEVENTH shall include the shares of common stock and the shares of any other class or series of preferred stock retained by the holders of such shares.

D.Determinations. A majority of all Disinterested Directors shall have the power to make all determinations with respect to this Article SEVENTH, including, without limitation, the transactions that are Business Combinations, the persons who are Interested Stockholders, the time at which an Interested Stockholder became an Interested Stockholder and the fair market value of any assets, securities (including any stock or other securities issued by this corporation) or other property; and any such determinations of such Disinterested Directors shall be conclusive and binding.

E.No Effect on Fiduciary Obligations of Interested Stockholders. Nothing contained in this Article SEVENTH shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law.

F.Amendment, Repeal. In addition to the vote required by Article NINTH of this Certificate of Incorporation, the affirmative vote of the holders of at least two-thirds of the Voting Stock of this corporation, voting together as a single class, shall be required to amend, repeal or adopt any provisions inconsistent with this Article SEVENTH.

EIGHTH:  Special meetings of the stockholders may only be called by a majority of the directors then in office.

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NINTH:  This corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereafter prescribed by statute. Notwithstanding the foregoing, the affirmative vote of the holders of at least two-thirds (or such greater proportion as may otherwise be required pursuant to any specific provision of this Certificate of Incorporation) of the total votes eligible to be cast at a legal meeting of stockholders shall be required to amend, repeal or adopt any provisions inconsistent with Articles SIXTH, SEVENTH, EIGHTH, this Article NINTH and Articles TENTH, ELEVENTH, TWELFTH, THIRTEENTH, and FIFTEENTH of this Certificate of Incorporation.

TENTH:  Bylaws may be adopted, amended or repealed by the affirmative vote of the holders of at least two-thirds of the total votes eligible to be cast at a legal meeting of stockholders or by a resolution adopted by a majority of the directors then in office.

ELEVENTH:  All action required to be taken or which may be taken at any annual or special meeting of the stockholders of this corporation may only be taken by written consent without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the stockholders of this corporation entitled to vote thereon.

TWELFTH:  A director of this corporation shall not be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as director, except: (i) for any breach of the director’s duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv) for any transaction from which the director derives any improper personal benefit.

Any repeal or modification of the foregoing paragraph by the stockholders of the corporation shall not adversely affect any right or protection of a director of the corporation existing at the time of such repeal or modification.

THIRTEENTH:  Notwithstanding anything contained in this Certificate of Incorporation or this corporation’s bylaws to the contrary, until five years from the completion of the Conversion of Broadway Federal Savings and Loan Association (“Broadway Federal”) to a stock savings bank and the concurrent acquisition of the capital stock of Broadway Federal by this corporation, the following provisions shall apply:

A.Beneficial Ownership Limitation. No person shall directly or indirectly offer to acquire or acquire the beneficial ownership of more than 10% of any class of Voting Stock (as defined below), nor shall the Pro Forma Equity (as defined below) represented by the equity securities (as defined below) of this corporation beneficially owned by any person exceed 10%.

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In the event Equity Securities are acquired in violation of this Article THIRTEENTH, all Equity Securities beneficially owned by any person in excess of either of the 10% limitations set forth in the previous paragraph shall be considered “excess securities” and any such Voting Stock in excess of either of such limitations shall not be counted as shares entitled to vote and shall not be voted by any person or counted as voting shares in connection with any matters submitted to the stockholders for a vote.

B.Certain Definitions. For purposes of this Article THIRTEENTH, the following definitions apply:

(i)A “person” shall mean any individual, corporation, partnership, bank, association, joint stock company, trust, unincorporated organization or similar company, or a group of “persons” acting or agreeing to act together in the manner set forth in Rule 13d-5 under the Act as in effect on June 1, 1995.

(ii)The term “offer” includes every offer to buy or otherwise acquire, solicitation of any offer to sell, tender offer for, or request or invitation for tenders of, a security or interest in a security, for value.

(iii)The term “acquire” includes every type of acquisition, whether effected by purchase, exchange, operation of law or otherwise.

(iv)The term “acting in concert” means (a) knowing participation in a joint activity or conscious parallel action towards a common goal whether or not pursuant to an express agreement or (b) a combination or pooling of voting or other interests in the securities of an issuer for a common purpose pursuant to any contract, understanding, relationship, agreement or other arrangements, whether written or otherwise.

(v)“Equity Security” means any stock or similar security; or any security, convertible, with or without consideration, into such a security, or carrying any warrant or right to subscribe to or purchase such security; or any such warrant or right.

(vi)“Voting Stock” means common or preferred stock or similar interests if the shares or interests, by statute, certificate of incorporation or in any manner, entitle the holder:

(a)to vote for or to select directors;

(b)to vote for or to direct the conduct of the operations or other significant policies of an issuer; provided, that notwithstanding the foregoing, preferred stock or similar interests are not “Voting Stock” if:

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(1)voting rights associated with the stock or interests are limited solely to the type customarily provided by statute or otherwise with regard to matters that would significantly and adversely affect the rights or preferences of the stock or other interest, such as the issuance of additional amounts or classes of senior securities, the modification of the terms of the stock, security or interest, the dissolution of the issuer, or the payment of dividends by the issuer when preferred dividends are in arrears;

(2)the stock or interest represent an essentially passive investment or financing device and do not otherwise provide the holder with control over the issuer; and

(3)the stock or interests do not entitle the holder, by statute, certificate of incorporation, or otherwise, to select or to vote for the selection of directors of the issuer generally.

(vii)“Pro Forma Equity” means a sum which shall be calculated as follows:

(1)the sum of

(A)the total number of shares of Voting Stock beneficially owned by any person, and

(B)the total number of shares of Voting Stock into which all Equity Securities, other than Voting Stock, beneficially owned by such person may be converted,

(2)shall be divided by the sum of

(A)the total number of shares of Voting Stock outstanding, and

(B)the total number of shares of Voting Stock into which the Equity Securities, other than Voting Stock, beneficially owned by such person may be converted.

FOURTEENTH:  A. Actions, Suits or Proceedings Other Than by or in the Right of the Corporation. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he or

10

she is or was or has agreed to become a director or officer of the corporation, or is or was serving or has agreed to serve at the request of the corporation as a director or officer of the corporation, or is or was serving or has agreed to serve at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action alleged to have been taken or omitted in such capacity, against costs, charges, expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him or her or on his or her behalf in connection with such action, suit or proceeding and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

B.Actions or Suits by or in the Right of the Corporation. The corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he or she is or was or has agreed to become a director or officer of the corporation or is or was serving or has agreed to serve at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, or by reason of any action, alleged to have been taken or omitted in such capacity, against costs, charges and expenses (including attorneys’ fees) actually and reasonably incurred by him or her or on his or her behalf in connection with the defense or settlement of such action or suit and any appeal therefrom, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of such liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such costs, charges and expenses which the Court of Chancery or such other court shall deem proper.

C.Indemnification for Costs. Charges and Expenses of Successful Party. Notwithstanding the other provisions of this Article FOURTEENTH, to the extent that a director or officer has been successful, on the merits or otherwise, including, without limitation, to the extent permitted by applicable law, the dismissal of an action without prejudice, in defense on any action, suit or proceeding referred to in Paragraphs A and B of this Article FOURTEENTH, or in defense of any claim,

11

issue or matter therein, he or she shall be indemnified against all costs, charges and expenses (including attorneys’ fees) actually and reasonably incurred by him or her or on his or her behalf in connection therewith.

D.Determination of Right to Indemnification. Any indemnification under Paragraphs A and B of this Article FOURTEENTH (unless ordered by a court) shall be paid by the corporation, if a determination is made that indemnification of the director or officer is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Paragraphs A and B of this Article  FOURTEENTH. Such determination shall be made (i) by the board of directors by a majority vote of the directors who were not parties to such action, suit or proceeding, or (ii) if such majority of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders.

E.Advance of Costs, Charges and Expenses. Costs, charges and expenses (including attorneys’ fees) incurred by a person referred to in Paragraphs A and B of this Article FOURTEENTH in defending a civil or criminal action, suit or proceeding shall be paid by the corporation in advance of the final disposition of such action or proceeding; provided, however, that the payment of such costs, charges and expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer) in advance of the final disposition of such action, suit or proceeding shall be made only upon receipt of an undertaking by or on behalf of such director or officer to repay all amounts so advanced in the event that it shall ultimately be determined that such director or officer is not entitled to be indemnified by the corporation as authorized in this Article FOURTEENTH. Such costs, charges and expenses incurred by other employees and agents may be so paid upon such terms and conditions, if any, as the majority of the directors deems appropriate. The majority of the directors may, in the manner set forth above, and upon approval of such director or officer of the corporation, authorize the corporation’s counsel to represent such person, in any action, suit or proceeding, whether or not the corporation is a party to such action, suit or proceeding.

F.Procedure for Indemnification. Any indemnification under Paragraphs A, B and C, or advance of costs, charges and expenses under Paragraph E of this Article FOURTEENTH, shall be made promptly, and in any event within 60 days, upon the written request of the director or officer. The right to indemnification or advances as granted by this Article FOURTEENTH shall be enforceable by the director or officer in any court of competent jurisdiction, if the corporation denies such request, in whole or in part, or if no disposition thereof is made within 60 days. Such person’s costs and expenses incurred in connection with successfully establishing his or her right to indemnification, in whole or in part, in any such action shall also be indemnified by the corporation. It shall be a defense to any such action (other than an action brought to enforce a claim for the advance of costs, charges and expenses under Paragraph E of this Article FOURTEENTH where the required undertaking, if any, has been received by the corporation) that the claimant has not met the standard of

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conduct set forth in Paragraphs A and B of this Article FOURTEENTH, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its board of directors, its independent legal counsel and its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in Paragraphs A and B of this Article FOURTEENTH, nor the fact that there has been an actual determination by the corporation (including its board of directors, its independent legal counsel and its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct.

G.Settlement. The corporation shall not be obligated to reimburse the costs of any settlement to which it has not agreed. If in any action, suit or proceeding, including any appeal, within the scope of Paragraphs A and B of this Article FOURTEENTH, the person to be indemnified shall have unreasonably failed to enter into a settlement thereof offered or assented to by the opposing party or parties in such action, suit or proceeding, then, notwithstanding any other provision hereof, the indemnification obligation of the corporation to such person in connection with such action, suit or proceeding shall not exceed the total of the amount at which settlement could have been made and the expenses incurred by such person prior to the time such settlement could reasonably have been effected.

H.Subsequent Amendment. No amendment, termination or repeal of this Article FOURTEENTH or of relevant provisions of the Delaware General Corporation Law or any other applicable law shall affect or diminish in any way the rights of any director or officer of the corporation to indemnification under the provisions hereof with respect to any action, suit or proceeding arising out of, or relating to, any actions, transactions or facts occurring prior to the final adoption of such amendment, termination or repeal.

I.Other Rights; Continuation of Right to Indemnification. The indemnification provided by this Article FOURTEENTH shall not be deemed exclusive of any other rights to which a director, officer, employee or agent seeking indemnification may be entitled under any law (common or statutory), agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in any other capacity while holding office or while employed by or acting as agent for the corporation, and shall continue as to a person who has ceased to be a director, officer, employee or agent, and shall inure to the benefit of the estate, heirs, executors and administrators of such person. Nothing contained in this Article FOURTEENTH shall be deemed to prohibit, and the corporation is specifically authorized to enter into, agreements with officers and directors providing indemnification rights and procedures different from those set forth herein. All rights to indemnification under this Article FOURTEENTH shall be deemed to be a contract between the corporation and each director or officer of the corporation who serves or served in such capacity at any time while this Article FOURTEENTH is in effect. The

13

corporation shall not consent to any acquisition, merger, consolidation or other similar transaction unless the successor corporation assumes by operation of law or by agreement the obligations set forth in this Article FOURTEENTH.

J.Savings Clause. If this Article FOURTEENTH or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the corporation shall nevertheless indemnify each director or officer of the corporation as to any costs, charges, expenses (including attorney’s fees), judgments, fines and amounts paid in settlement with respect to any action, suit or proceeding, whether civil, criminal, administrative or investigative, including an action by or in the right of the corporation, to the full extent permitted by any applicable portion of this Article FOURTEENTH that shall not have been invalidated and to the full extent permitted by applicable law.

K.Subsequent Legislation. If the Delaware General Corporation Law is amended after the date hereof to further expand the indemnification permitted to directors and officers of the corporation, then the corporation shall indemnify such person to the fullest extent permitted by the Delaware General Corporation Law, as so amended.

FIFTEENTH: Stockholder nominations of persons for election as directors of this corporation and stockholder proposals with respect to business to be conducted at an annual meeting of stockholders must, in order to be voted upon, be made in writing and delivered to the secretary of this corporation on or before 30 days (or such other period as may be established in the bylaws) in advance of the date (month and day) of the previous year’s annual meeting.

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THE UNDERSIGNED, being the sole incorporator hereinbefore named, for the purpose of forming a corporation pursuant to the General Corporation Law of the State of Delaware, does hereby make, file and record this Certificate of Incorporation, hereby declaring and certifying that this is my act and deed and that the facts stated herein are true and, accordingly, have hereunto set my hand this 25th day of September, 1995.

BROADWAY FEDERAL SAVINGS AND LOAN ASSOCIATION
By:	/s/ Paul C. Hudson
	Paul C. Hudson, Chief Executive Officer and President

15

STATE OF DELAWARE

SECRETARY OF STATE

DIVISION OF CORPORATIONS

FILED 09:00 AM 11/28/1995

950274760 - 2545755

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
BROADWAY FINANCIAL CORPORATION

Broadway Financial Corporation, a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify:

FIRST: The Corporation has not received payment for any of its stock.

SECOND:The amendment to the Corporation’s Certificate of Incorporation set forth in the following resolution was approved by a majority of the Corporation’s Board of Directors and was duly adopted in accordance with the provisions of Section 241 of the General Corporation Law of the State of Delaware:

“NOW THEREFORE, BE IT RESOLVED, that Subsection (C) of Article Sixth of the Corporation’s Certificate of Incorporation is hereby deleted;

RESOLVED FURTHER, that Subsection (C)(vii) of Article Seventh of the Corporation’s Certificate of Incorporation is hereby amended in its entirety to read as follows:

“(vii) “Voting Stock” shall mean all outstanding shares of the common or preferred stock of this corporation entitled to vote generally in the election of directors, end each reference to a proportion of Voting Stock shall refer to shares having such proportion of the number of shares entitled to be cast.”;

RESOLVED FURTHER, that Article Eighth of the Corporation’s Certificate of Incorporation is hereby amended in its entirety to read as follows:

“EIGHTH: RESERVED.””

IN WITNESS WHEREOF, Broadway Financial Corporation has caused this Certificate of Amendment to be signed and attested by its duly authorized officers, this 2nd day of November, 1995.

BROADWAY FINANCIAL CORPORATION
By:	/s/ Paul C. Hudson
	Paul C. Hudson, Chief Executive Officer and President

ATTEST:

/s/ Bob Adkins

Bob Adkins, Chief Financial Officer

2

State of Delaware

Secretary of State

Division of Corporations

Delivered 02:05 PM 08/25/2011

Filed 01:58 PM 08/25/2011

SRV 110953393 - 2545755 FILE

CERTIFICATE OF AMENDMENT
OF

CERTIFICATE OF INCORPORATION

OF

BROADWAY FINANCIAL CORPORATION

Broadway Financial Corporation, a corporation organized and existing under and by virtue of the laws of the State of Delaware (the “Corporation”), hereby certifies that:

1.Article FOURTH of the Certificate of Incorporation of the Corporation is hereby amended and restated in its entirety to read as follows:

FOURTH: The total number of shares of all classes of stock which this corporation shall have authority to issue is nine million (9,000,000), of which eight million (8,000,000) shall be common stock, par value $0.01 per share, and one million (1,000,000) shall be serial preferred stock, par value $0.01 per share.

The shares of preferred stock may be issued from time to time in one or more series. The board of directors of this corporation shall have authority to fix by resolution or resolutions the designations and the powers, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof, including without limitation the voting rights, the dividend rate, conversion rights, redemption price and liquidation preference, of any series of shares of preferred stock, to fix the number of shares constituting any such series and to increase or decrease the number of shares of any such series (but not below the number of shares thereof then outstanding). In case the number of shares of any such series shall be so decreased the shares constituting such decrease shall resume the status which they had prior to the adoption of the resolution or resolutions originally fixing the number of shares of such series.

2.           The foregoing amendment has been duly adopted in accordance with the provisions of Section 242 of the Delaware General Corporation Law.

In Witness Whereof, Broadway Financial Corporation has caused this Certificate of Amendment to Certificate of Incorporation to be signed by its duly authorized officer on this 17th day of August 2011.

BROADWAY FINANCIAL CORPORATION
By:	/s/ Daniele Johnson
	Daniele Johnson
	Secretary

EX-3.2

Exhibit 3.2

BYLAWS OF

BROADWAY FINANCIAL CORPORATION

ARTICLE I.

NAME

Section 1.1  Name.  The name of this corporation shall be “Broadway Financial Corporation.”

ARTICLE II.

OFFICES

Section 2.1  Registered Office.  The corporation shall at all times maintain a registered office in the State of Delaware, which, except as otherwise determined by the Board of Directors of the corporation (the “Board”), shall be in the City of Dover, County of Kent.

Section 2.2  Principal Office.  The principal office of the corporation shall be maintained at such place within or without the State of Delaware as the Board shall designate.

Section 2.3  Other Offices.  The corporation may also have offices at such other places within or without the State of Delaware as the Board shall from time to time designate or the business of the corporation shall require.

ARTICLE III.

MEETINGS OF STOCKHOLDERS

Section 3.1  Place of Meetings.  All annual and special meetings of stockholders shall be held at such places within or without the State of Delaware as the Board may determine.

Section 3.2  Annual Meetings.

3.2.1  Time and Place.  The regular annual meeting of stockholders for the election of directors and for the transaction of any other business of the corporation shall be held each year at 2:00 p.m. on the third Wednesday of June, if not a legal holiday, or, if a legal holiday, then on the next succeeding day not a Saturday, Sunday or legal holiday, or at such other time, date or place as the Board may determine.

3.2.2  New Business.  At the annual meetings, directors shall be elected and any other business properly proposed and filed with the Secretary of the corporation as in these Bylaws provided may be transacted which is within the powers of the stockholders.

Any new business to be conducted at the annual meeting of the stockholders shall be stated in writing and filed with the Secretary of the corporation on or before 30 days in advance of the date (month and day) of the previous year’s annual meeting, and all business so stated, proposed and filed shall, unless prior action thereon is required by the Board, be considered at the annual meeting.  Any stockholder may make any other proposal at the annual meeting and the same may be discussed and considered, but unless stated in writing and filed with the Secretary of the corporation on or before 30 days in advance of the date (month and day) of the previous year’s annual meeting, such proposal may only be voted upon at a meeting held at least 30 days after the annual meeting at which it is presented.  No other proposal may be acted upon at the annual meeting.  This provision shall not prevent the consideration, approval or disapproval at the annual meeting of the reports of officers and committees, but in connection with such reports no business shall be acted upon at such annual meeting unless stated and filed as herein provided.

Section 3.3  Notice.  Written notice stating the place, day and hour of the meeting and the purpose or purposes for which the meeting of the stockholders is called shall be given not less than 10 nor more than 60 days before the date of the meeting, either personally or by mail, to each stockholder of record entitled to vote at such meeting.  If mailed, such notice shall be deemed to be given when deposited in the U.S. mail, postage prepaid, and addressed to the stockholder at his or her address as it appears on the records of the corporation as of the record date prescribed in Section 3.9.1 and Section 10.1.1 of these Bylaws.

Section 3.4  Nominations For Director.  Nominations of candidates for election as directors at any meeting of stockholders may be made (a) by, or at the direction of, a majority of the Board, or (b) by any stockholder of record entitled to vote at such meeting; provided, that only persons nominated in accordance with procedures set forth in this Section 3.4 shall be eligible for election as directors.

Nominations, other than those made by, or at the direction of, the Board, may only be made pursuant to timely notice in writing to the Secretary of the corporation as set forth in this Section 3.4.  To be timely, a stockholder’s notice shall be delivered to, or mailed and received by the Secretary of the corporation, for an annual meeting, not less than 60 days nor more than 90 days in advance of the date (month and day) of the previous year’s annual meeting, and for a special meeting, not less than 60 days nor more than 90 days in advance of the date (month and day) of the special meeting, regardless of any postponement or adjournments of that meeting to a later date.  Such stockholder notice shall set forth (a) as to each person whom the stockholder proposes to nominate for election as a director, (i) the name, age, business address and residential address of such person, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of the corporation’s stock which are beneficially owned by such person on the date of such stockholder notice and (iv) any other information relating to such person that would be required to be disclosed on Schedule 13D pursuant to Regulation 13D-G under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in connection with the acquisition of stock, and pursuant to Regulation 14A under the Exchange Act, in connection with solicitation of

proxies with respect to nominees for election as directors, regardless of whether such person is subject to the provisions of such regulations, including, but not limited to, information required to be disclosed by Items 4(b) and 6 of Schedule 14A of Regulation 14A with the Securities and Exchange Commission; and (ii) as to the stockholder giving the notice (a) the name and address, as they appear on the corporation’s books, of such stockholder and the name and principal business or residential address of any other beneficial stockholders known by such stockholder to support such nominees and (b) the class and number of shares of the corporation’s stock which are beneficially owned by such stockholder on the date of such stockholder notice and the number of shares owned beneficially by any other record or beneficial stockholders known by such stockholder to be supporting such nominees on the date of such stockholder notice.  At the request of the Board, any person nominated by, or at the request of the Board for election as a director shall furnish to the Secretary of the corporation that information required to be set forth in a stockholder’s notice of nomination which pertains to the nominee.

The Board may reject any nomination by a stockholder not timely made in accordance with the requirements of this Section 3.4.  If the Board, or a committee designated by the Board, determines that the information provided in a stockholder’s notice does not satisfy the information requirements of this Section 3.4 in any material respect, the Secretary of the corporation shall promptly notify such stockholder of the deficiency of time, not less than five days from the date such deficiency notice is given to the stockholder, as the Board or such committee shall determine.  If the deficiency is not cured within such period, or if the Board or such committee determines that the additional information provided by the stockholder, together with information previously provided, does not satisfy the requirements of this Section 3.4 in any material respect, then the Board may reject such stockholder’s notice and the proposed nominations shall not be accepted if presented at the stockholder meeting to which the notice relates.  The Secretary of the corporation shall notify a stockholder in writing whether his or her nomination has been made in accordance with the time and informational requirements of this Section 3.4.  Notwithstanding the procedure set forth in this Section 3.4, if neither the Board nor such committee makes a determination as to the validity of any nominations by a stockholder, the presiding officer of the stockholder’s meeting shall determine and declare at the meeting whether a nomination was not made in accordance with the terms of this Section 3.4.  If the presiding officer determines that a nomination was not made in accordance with the terms of this Section 3.4 he or she shall so declare at the meeting and the defective nomination shall not be accepted.

Section 3.5  Special Meetings.  Special meetings of stockholders for the purpose of taking any action permitted the stockholders by law and the certificate of incorporation of this corporation may be called at any time by the Board.  Except in special cases where other express provision is made by statute, notice of such special meetings shall be given in the same manner as for annual meetings of stockholders.

Section 3.6  Voting Lists.  The officer having charge of the stock transfer books for shares of the capital stock of the corporation shall make, at least 10 days before each meeting of the stockholders, a complete list of the stockholders entitled to

vote at such meeting, with the address of and the number of shares registered in the name of, each stockholder.  Such list shall be subject to inspection by any stockholder, for any purpose germane to the meeting, at any time during the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified in the notice of the meeting, at the place where the meeting is to be held.  Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any stockholder during the whole time of the meeting.  The original stock transfer books shall be prima facie evidence as to who are the stockholders entitled to examine such list or transfer books or to vote at any meeting of stockholders.

Section 3.7  Quorum.  A majority of the shares entitled to vote, represented in person or by proxy, shall constitute a quorum for the transaction of business at a meeting of the stockholders.  The stockholders present at a duly called or held meeting at which a quorum is present may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum, if any action taken (other than adjournment) is approved by at least a majority of the shares required to constitute a quorum.

Section 3.8  Adjourned Meeting and Notice Thereof.  Any stockholders’ meeting, annual or special, whether or not a quorum is present, may be adjourned from time to time by the vote of a majority of the shares present, whether in person or represented by proxy, but in the absence of a quorum no other business may be transacted at such meeting, except as provided in Section 3.7 above.  When any stockholders’ meeting, either annual or special, is adjourned for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.  Except as provided above, it shall not be necessary to give any notice of the adjourned meeting if the time and place thereof are announced at the meeting at which such adjournment is taken.

Section 3.9  Voting.

3.9.1  Record Date.  Unless a record date for voting purposes be fixed as provided in Section 10.1.1 of these Bylaws then, subject to the provisions of Section 217 of the General Corporation Law of the State of Delaware (the “General Corporation Law”) (relating to voting of shares held by fiduciaries, pledgors and joint owners), only persons in whose names shares entitled to vote stand on the stock records of the corporation at the close of business on the business day next preceding the day on which notice of the meeting is given or, if such notice is waived, at the close of business on the business day next preceding the day on which the meeting of stockholders is held, shall be entitled to vote at such meeting, and such day shall be the record date for such meeting.

3.9.2  Method; Vote Required.  Unless otherwise required by law, voting may be oral or by written ballot; provided, however, that all elections for directors must be by ballot if demanded by a stockholder before such voting begins.  Except as

provided in Section 3.7 and except with respect to election of directors, the affirmative vote of the majority of the shares represented and voting at a duly held meeting at which a quorum is present (which shares voting affirmatively also constitute at least a majority of the required quorum) shall be the act of the stockholders, unless the vote of a greater number or voting by classes is required by the General Corporation Law or the certificate of incorporation or these bylaws.  Directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.

3.9.3  Voting of Shares by Certain Holders.  Shares standing in the name of another corporation may be voted by any officer, agent or proxy as the bylaws of such corporation may prescribe, or, in the absence of such provision, as the board of directors of such corporation may determine.  Shares held by an administrator, executor, guardian or conservator may be voted by him or her, either in person or by proxy, without a transfer of such shares into his or her name.  Shares standing in the name of a trustee may be voted by him or her, either in person or by proxy, but no trustee shall be entitled to vote shares held by him or her without a transfer of such shares into his or her name.

Neither treasury shares of its own stock held by the corporation, nor shares held by another corporation, if a majority of the shares entitled to vote for the election of directors of such other corporation are held directly or indirectly by the corporation, shall be voted at any meeting or counted in determining the total number of outstanding shares at any given time for purposes of any meeting.

Section 3.10  Conduct of Meeting.  The presiding officer at any meeting of stockholders, either annual or special, shall be the Chairman of the Board or, in his or her absence, the President or, in the absence of both the Chairman of the Board and the President, anyone selected by a majority of the Board.  The secretary at such meetings shall be the Secretary of the corporation or, in his or her absence, anyone appointed by the presiding officer.

Section 3.11  Proxies.  At all meetings of the stockholders, every stockholder having the right to vote shall be entitled to vote in person or by proxy appointed by an instrument in writing and complying with the requirements of the General Corporation Law.  No proxy shall be valid after the expiration of three years from the date thereof unless otherwise provided in the proxy.  A duly executed proxy shall be irrevocable and if, and only so long as, it is coupled with an interest in the stock of the corporation or in the corporation generally which is sufficient in law to support an irrevocable power.

Section 3.12  Informal Action by Stockholders.  Unless otherwise stated in the certificate of incorporation, any action required to be taken or which may be taken at any annual or special meeting of the stockholders of the corporation may only be taken by written consent without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the stockholders of the corporation entitled to vote thereon.

Section 3.13  Inspectors of Election.  In advance of any meeting of stockholders, the Board may appoint any persons other than nominees for office as inspectors of election to act at such meeting or any adjournment thereof.  If inspectors of election be not so appointed, or if any persons so appointed fail to appear or refuse to act, the presiding officer of any such meeting may, and on the request of any stockholder or a stockholder’s proxy shall, make such appointment at the meeting. The number of inspectors shall be either one or three. If appointed at a meeting on the request of one or more stock-holders or proxies, the majority of shares represented in person or by proxy shall determine whether one or three inspectors are to be appointed.  The duties of such inspectors shall include:  determining the number of shares of stock and the voting power of each share, the shares of stock represented at the meeting, the existence of a quorum, and the authenticity, validity and effect of the proxies; receiving votes, ballots or consents; hearing and determining all challenges and questions in any way arising in connection with the right to vote; counting and tabulating all votes or consents; determining the result, and such acts as may be proper to conduct the election or vote with fairness to all stockholders.

ARTICLE IV.

DIRECTORS

Section 4.1  Powers.  Subject to any limitations imposed by law, the certificate of incorporation and these Bylaws as to actions which shall be authorized or approved by the stockholders, and subject to the duties of directors as prescribed thereby, the business and affairs of the corporation shall be managed and all corporate powers shall be exercised by or under the direction of the Board.

Section 4.2  Number of Directors.  The exact number of directors shall be fixed from time to time by the Board pursuant to a resolution adopted by the affirmative vote of a majority of the full Board.

Section 4.3  Election and Term of Office.  The directors shall be divided into three classes: the first class, the second class and the third class.  Each director shall serve for a term ending on the third annual meeting following the annual meeting at which such director was elected; provided, however, that the directors first elected to the first class shall serve for a term ending upon the election of directors at the annual meeting next following the end of the calendar year 1995, the directors first elected to the second class shall serve for a term ending upon the election of directors at the second annual meeting next following the end of the calendar year 1995, and the directors first elected to the third class shall serve for a term ending upon the election of directors at the third annual meeting next following the end of the calendar year 1995.  At each annual election commencing at the first annual meeting of stockholders, the successors to the class of directors whose term expires at the time shall be elected by the stockholders to hold office for a term of three years to succeed those directors whose term expires, so that the term of one class of directors shall expire each year.

In the event of any change in the authorized number of directors, each director then continuing to serve as such shall continue as a director of the class of

which he or she is a member until the expiration of his or her current term, or his or her prior resignation, disqualification, disability or removal.

Section 4.4  Newly Created Directorships and Vacancies.  Any vacancies on the Board resulting from death, resignation, retirement, disqualification, removal from office or other cause may only be filled by the affirmative vote of a majority of directors then in office, although less than a quorum, or by the sole remaining director, or, in the event of the failure of the directors or the sole remaining director so to act, by the stockholders at the next annual meeting which occurs after the expiration of a 90-day period commencing on the day the vacancy is created.  Directors so chosen shall hold office for a term expiring at the annual meeting of stockholders at which the term of the class to which they have been elected expires.  A director elected to fill a vacancy by reason of an increase in the number of directorships may be elected by a majority vote of the directors then in office, although less than a quorum of the Board, to serve until the next election of the class for which such director shall have been chosen.  If the number of directors is changed, any increase or decrease may be allocated to any such class the Board selects in its discretion.  No decrease in the number of directors constituting the Board shall shorten the term of any incumbent director.

Section 4.5  Regular Meetings.  The Board shall meet regularly at the time and place designated in a resolution of the Board or by written consent of all members of the Board, whether within or without the State of Delaware, and no notice of such regular meetings need be given to the directors.

Section 4.6  Organization Meeting.  Following each annual meeting of stockholders, the Board shall hold a regular meeting at the place of said annual meeting or at such other place as shall be fixed by the Board, for the purpose of organization, election of officers, and the transaction of other business.  Call and notice of such meetings are hereby dispensed with.

Section 4.7  Special Meetings.  Special meetings of the Board may be called by the Chairman of the Board, the President, the Chief Executive Officer, the Secretary, or any two directors. Notice of each such meeting shall be given to each director by the secretary or by the person or persons calling the meeting. Such notice shall specify the time and place of the meeting, which may be within or without the State of Delaware, and the general nature of the business to be transacted, and no other business may be transacted at the meeting.  Such notice shall be deposited in the mail, postage prepaid at least four days prior to the meeting, directed to the address of the director on the records of the corporation or delivered in person or by telephone or telegram, telecopy or other means of electronic transmission to the director at least 48 hours before the meeting.  Notice of a meeting need not be given to any director who signs a waiver of notice or a consent to holding the meeting, or an approval of the minutes thereof, whether before or after such meeting, or who attends the meeting without protesting, prior thereto or at its commencement, the lack of notice to such director.  All such waivers, consents and approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

Section 4.8  Quorum; Majority Action.  A majority of the authorized number of directors shall constitute a quorum for the transaction of business at any meeting of the Board, but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time. Notice of any adjourned meeting shall be given in the same manner as prescribed in Section 4.7 of these Bylaws.  Every act or decision of a majority of the directors present at a meeting at which a quorum is present, made or done at a meeting duly held, shall be valid as the act of the Board, unless a greater number is required by law or the certificate of incorporation or these Bylaws.

Section 4.9  Action Without Meeting.  Any action required or permitted to be taken by the Board may be taken without a meeting if all members of the Board shall individually or collectively consent in writing to such action.  Such written consent or consents shall be filed with the minutes of the proceedings of the Board and shall have the same force and effect as an unanimous vote of the Board.

Section 4.10  Telephonic Meetings.  Members of the Board may participate in any regular or special meeting, including meetings of committees of the Board, through use of conference telephone or similar communications equipment, so long as all members participating in such meeting can hear one another.  Participation in a meeting pursuant to this section constitutes presence in person at such meeting.

Section 4.11  Fees and Compensation.  Fees and compensation of directors and members of committees for their services, and reimbursement for expenses, shall be fixed or determined by a resolution of the Board.  Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity as an officer, employee, agent or otherwise, and receiving compensation therefor.

Section 4.12  Removal.  A director may be removed only for cause as determined by the affirmative vote of the holders of at least a majority of the shares then entitled to vote in an election of directors, which vote may only be taken at an annual meeting or a special meeting.  Cause for removal shall be deemed to exist only if the director whose removal is proposed has been convicted of a felony by a court of competent jurisdiction or has been adjudged by a court of competent jurisdiction to be liable for gross negligence or misconduct in the performance of such director’s duty to the corporation and such adjudication is not longer subject to direct appeal.

Section 4.13  Directors Emeritus/Advisory Directors.  The board of directors may by resolution appoint directors emeritus or advisory directors who shall have such authority and receive such compensation and reimbursement as the board of directors shall provide.  Directors emeritus or advisory directors shall not have the authority to participate by vote in the transaction of business.

ARTICLE V.

OFFICERS

Section 5.1  Executive Officers.  The executive officers of the Corporation shall be the Chairman of the Board, the Chief Executive Officer, the President, each Senior Executive Vice President, each Executive Vice President, the Secretary, the Treasurer, the Chief Financial Officer and any other individual performing functions similar to those performed by the foregoing persons, including any Senior Vice President or Vice President designated by the Board as performing such functions.

Section 5.2  Election.  The Officers of the Corporation, except such Officers as may be appointed in accordance with the provisions of Section 5.3 or Section 5.5, shall be chosen annually by the Board.  Each officer shall hold his or her office until he or she shall resign or shall be removed or otherwise disqualified to serve, or his or her successor shall be elected and qualified, and shall perform such duties as are prescribed in the Bylaws or as the Board may from time to time determine.

Section 5.3  Subordinate Officers.  The corporation may have, at the discretion of the Board, one or more Senior Vice presidents, Vice Presidents and Assistant Vice Presidents, one or more Assistant Secretaries, one or more Assistant Financial Officers and such other officers as the Board may appoint, each of whom shall hold office for such period, have such authority and perform such duties as the Board may from time to time determine.  The Board may delegate the authority to appoint, and to fix the compensation of, any subordinate officer or officers to any executive officer of the corporation.  Any person may hold more than one office, executive or subordinate.

Section 5.4  Removal and Resignation.  Any officer may be removed, either with or without cause, by the Board, at any regular or special meeting thereof, or by any officer upon whom such power of removal may be conferred by the Board (without prejudice, however, to the rights, if any, of an officer under any contract of employment with the corporation).

Any officer may resign at any time by giving written notice to the Board or to the president or to the Secretary of the corporation, without prejudice, however, to the rights, if any, of the corporation under any contract to which such officer is a party.  Any such resignation shall take effect at the date of the receipt or at any later time specified therein.

Section 5.5  Vacancies.  A vacancy in any office because of death, resignation, removal, disqualification or any other cause shall be filled by the Board for the unexpired portion of the term.

Section 5.6  Compensation.  The Board shall fix the compensation of all of the officers of the corporation, except in the case of subordinate officers with respect to whom the authority to fix compensation has been delegated pursuant to Section 5.3 of these Bylaws.

Section 5.7  Chairman of the Board.  The Chairman of the Board, if there shall be such an officer, shall, if present, preside at all meetings of the Board and exercise and perform such other powers and duties as may be from time to time assigned to him or her by the Board or prescribed by these Bylaws.

Section 5.8  Chief Executive Officer.  Subject to any powers that may be given by the Board to the Chairman of the Board, the Chief Executive Officer shall be the chief executive officer of the corporation and shall have general supervision, direction and control of the business and affairs of the corporation.

Section 5.9  President.  Subject to any powers that may be given by the Board to the Chairman of the Board and to the Chief Executive Officer, the President shall be the chief operating officer of the corporation and shall, subject to the control of the Board, have the general powers and duties of management usually vested in the office of the president of a corporation, and shall have such other powers and duties as the Board shall from time to time prescribe.

Section 5.10  Secretary.  The Secretary shall keep, or cause to be kept, minutes of all meetings of the stockholders and Board in a book to be provided for that purpose, and shall attend to the giving and serving of all notices of meetings of stockholders and directors, and any other notices required by lain to be given.  The Secretary shall be custodian of the corporate seal, if any, and shall affix the seal to all documents and papers requiring such seal.  The Secretary shall have such other powers and duties as the Board from time to time shall prescribe.

Section 5.11  Chief Financial Officer.  The Chief Financial Officer shall keep and maintain, or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the corporation, shall receive and keep all the funds of the corporation and shall pay out corporate funds on the check of the corporation, signed in such manner as shall be authorized by the Board.  The Chief Financial Officer shall have such other powers and duties as the Board shall from time to time prescribe.

ARTICLE VI.

COMMITTEES

Section 6.1  Executive Committee.  The Board may, by a resolution adopted by a majority of the authorized number of directors, but shall not be required to, designate an executive committee consisting of four or more directors, one of which shall be the Chairman of the Board or the Chief Executive Officer, to serve at the pleasure of the Board.  If an executive committee is designated, it shall have, to the extent provided if the resolution of the Board or in these Bylaws, all the authority of the Board, except with respect to:

(a)The approval of any action for which approval of the stockholders is also required by law;

(b)The filling of vacancies of the Board or on any committee;

(c)The fixing of compensation of the directors for serving on the Board or on any committee;

(d)The amendment or repeal of Bylaws or the adoption of new Bylaws;

(e)The amendment or repeal of any resolution of the Board which by its express terms is not so amendable or repealable;

(f)A distribution to the stockholders of the corporation, except at a rate or in a periodic amount or within a price range determined by the Board;

(g)The appointment of other committees of the Board or the members thereof; and

(h)The election, removal or fixing of the compensation of the Chairman of the Board, the Chief Executive Officer or the President.

The Board may, by resolution, fix the regular meeting date of the executive committee, and notice of any such regular meeting date shall be dispensed with.  Special meetings of the executive committee may be held at the principal office of the corporation, or at any place which has been designated from time to time by resolution of the executive committee or by written consent of all members thereof and may be called by the Chairman of the Board, the president, any Vice president who is a member of the executive committee, or any two members thereof, upon written notice to the members of the executive committee of the time and place of such special meeting given in the manner provided for the giving of written notice to members of the Board of the time and place of special meetings of the Board.  Vacancies in the membership of the executive committee nay be filled by the Board.  A majority of the authorized number of members of the executive committee shall constitute a quorum for the transaction of business; and transactions of any meeting of the executive committee, however, called and noticed, or wherever held, shall be as valid as though at a meeting duly held after regular call and notice, if a quorum is present and if, either before or after the meeting, each of the members not present signs a written waiver of notice or a consent to holding such meeting or an approval of the minutes thereof.  All such waivers, consents or approvals shall be filed with the corporation’s records or made a part of the minutes of the meeting.

Any action required or permitted to be taken by the executive committee may be taken without a meeting, if all members of the executive committee shall individually or collectively consent in writing to such action.  Such written consent or consents shall be filed with the minutes of the proceedings of the executive committee.  Such action by written consent shall have the same force and effect as a unanimous vote of such members of the executive committee.  Any certificate or other document filed under any provision of the General Corporation Law which relates to action so taken shall state that the action was taken by unanimous written consent of the

executive committee without meeting, and that these Bylaws authorize the members of the executive committee to so act.

Section 6.2  Other Committees.  The Board may, but shall not be required to, designate any other committee consisting of two or more directors, to serve at the pleasure of the Board.  Any such committee shall possess such powers of the Board as the Board shall by its resolution provide, except that it shall not in any event have authority with respect to any of the transactions which are prohibited to the executive committee by Section 6.1.

Unless the Board shall otherwise prescribe the manner of proceedings of any other committee, meetings of such committee may be regularly scheduled in advance and may be called at any time by the Chairman of the Board, or the President, or any two members of the committee; otherwise, the provisions of these Bylaws with respect to notice and conduct of meetings of the Board shall govern.

ARTICLE VII.

RECORDS AND REPORTS

Section 7.1  Records.  The corporation shall maintain adequate and correct books and records of account of its business and properties.

Section 7.2  Checks and Drafts.  All checks, drafts and other orders for payment of money, notes or other evidences of indebtedness, issued in the name of or payable to the corporation, shall be signed or endorsed by such person or persons and in such manner as shall be determined from time to time by resolution of the Board.

Section 7.3  Execution of Instruments.  The Board may authorize any officer or officers or agent or agents to enter into any contract or execute any instrument in the name of and on behalf of the corporation.  Such authority may be general or confined to specific instances.  Unless so authorized by the Board, no officer, agent or employee shall have any power or to pledge its credit, or to render it liable for any purpose or for any amount.

Section 7.4  Fiscal Year.  The fiscal year of the corporation shall be a December 31 fiscal year.

Section 7.5  Annual Audit.  The corporation shall be subject to an annual audit as of the end of its fiscal year by independent public accountants appointed by, and responsible to, the Board.  The appointment of such accountants shall be subject to annual ratification by the stockholders.

ARTICLE VIII.

DIVIDENDS ON STOCK

Section 8.1  Dividends on Stock.  Subject to applicable law, the certificate of incorporation and these Bylaws, the Board may, from time to time, declare,

and the corporation may pay, dividends on the outstanding shares of capitol stock of the corporation.

ARTICLE IX.

SHARES; CERTIFICATES

Section 9.1  Issuance.  The corporation, as authorized by the Board, may issue shares in uncertificated form and may also issue any and all forms of certificates of stock not inconsistent with law.

Section 9.2  Certificates for Shares.  Every holder of shares of the stock of the corporation or shares of any other class or series of stock that may be validly authorized and issued by the corporation shall be entitled to have a certificate signed in the name of the corporation by the Chairman of the Board or the President or a Vice President and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, certifying the number of shares and the class or series of shares owned by the stockholder.  Any of the signatures on the certificate may be a facsimile.  In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were an officer, transfer agent or registrar at the date of issue.

Section 9.3  Statements on Certificates.  Any certificates for shares of stock shall contain such legend or other statement as may be required by law or applicable rule or regulation, by these Bylaws or by any agreements between the corporation and the issuee thereof.

Section 9.4  Lost or Destroyed Certificates.  In case any certificate for stock or other security issued by this corporation is lost or destroyed, the Board may authorize the issuance of a new certificate or instrument therefor, on such terms and conditions as it may determine, after proof of such loss or destruction satisfactory to the Board.  The Board may require a bond or other security in an adequate amount as indemnity for any such certificate or instrument when, in the Board’s judgment, it is proper to do so.

Section 9.5  Transfer.  Stock of the corporation shall be transferable on the books of the corporation by the person named in the certificate, or by the person entitled thereto, on surrender, in the case of shares issued in certificated form,  of the certificate for cancellation, accompanied by proper evidence of succession, assignment or authority to transfer.  The corporation shall be entitled to treat the holder of record of any stock certificate as owner thereof, and, accordingly, shall not be bound to recognize any equitable or other claim to, or interest In, such stock on the part of any other person, whether or not It shall have express or other notice thereof, save as expressly provided by the laws of the State of Delaware.

Section 9.6  Shares To Be Issued In Uncertificated Form. Except as otherwise provided in a resolution of the Board of Directors, or authorized by an officer of the corporation, all shares of the corporation shall be uncertificated shares beginning on April 3, 2010. Nothwithstanding the foregoing, shares represented by a certificate issued prior to April 3, 2010, shall be certificated shares until such certificate is surrendered to this corporation.

ARTICLE X.

MISCELLANEOUS

Section 10.1  Record Date.

10.1.1  Stockholders Meetings.  In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or adjournment thereof, the Board may fix, in advance, a record date, which shall not be more than 60 nor less than 10 days before the date of such meeting.  A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; providing, however, that the Board may fix a new record date for the adjourned meeting.

10.1.2  Other Actions.  In order that the corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, the Board may fix, in advance, a record date, which shall not be more than 60 days prior to such action.

10.1.3  Subsequent Transfers and Closing Transfer Books.  When a record date is fixed, only stockholders of record at the close of business on that date are entitled to notice and to vote or to receive the dividend, distribution or allotment of rights or to exercise the rights, as the case may be, notwithstanding any transfer of any shares on the books of the corporation after the record date, except as otherwise provided in the certificate of incorporation or by agreement or in the General Corporation Law.  The Board may close the books of the corporation against transfers of shares during the whole, or any part, of any such period.

Section 10.2  Inspection of Corporate Records.

10.2.1  By Stockholders.  Any stockholder, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours of business to inspect for any proper purpose the corporation’s stock ledger, a list of its stockholders, and its other books and records, and to make copies or extracts therefrom.  A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder.  In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder.

10.2.2  By Directors.  Each director shall have the right at any reasonable time to inspect all books, records, documents of every kind, and the physical properties of the corporation.  The inspection may be made in person or by agent or attorney, and the right of inspection includes the right to make extracts and copies thereof.

Section 10.3  Corporate Seal.  The corporate seal of the corporation, if any, shall be in such form as the Board shall prescribe.

ARTICLE XI.

AMENDMENT OF BYLAWS

These Bylaws may be adopted, amended or repealed by the affirmative vote of the holders of at least two-thirds of the total votes eligible to be cast at a legal meeting of the stockholders or by a resolution adopted by a majority of the directors then in office.

EX-4.3

Exhibit 4.3

STATE OF DELAWARE

SECRETARY OF STATE

DIVISION OF CORPORATIONS

FILED 09:01 AM 11/28/1995

950274761 - 2545755

CERTIFICATE OF DESIGNATION
OF
BROADWAY FINANCIAL CORPORATION
FOR
NONCUMULATIVE PERPETUAL PREFERRED STOCK,
SERIES A

BROADWAY FINANCIAL CORPORATION, a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Company”), in accordance with the provisions of Section 151(g) thereof,

HEREBY CERTIFIES:

That pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation, the Board of Directors on November 2, 1995 duly adopted the following resolution creating a series of preferred stock to be designated “Noncumulative Perpetual Preferred Stock, Series A” and to consist of 100,000 shares:

WHEREAS, the Certificate of Incorporation of Broadway Financial Corporation, a Delaware corporation (the “Company”), provides that the Company shall have authority to issue up to 1,000,000 shares of Preferred Stock;

WHEREAS, the Certificate of Incorporation of the Company provides that the Board of Directors is authorized to fix by resolution the designations and the powers, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof, including without limitation the voting rights, the dividend rate and preference, redemption rights and liquidation preference, of any series of shares of Preferred Stock, to fix the number of shares constituting any such series and to increase or decrease the number of shares of any such series;

NOW, THEREFORE, BE IT RESOLVED, that the designation, powers, preferences and relative, participating, optional and other special rights of the Noncumulative Perpetual Preferred Stock, Series A and such qualifications, limitations and restrictions thereof, are as set forth below:

Section 1.              Designation and Rank. There is hereby established a series of shares of Preferred Stock, which series of Preferred Stock shall be designated as the “Noncumulative Perpetual Preferred Stock, Series A” (the “Series A Preferred Stock”). The authorized number of shares of Series A Preferred Stock shall be

100,000. Each share of Series A Preferred Stock shall have a par value of $0.01 per share and a liquidation preference of $10.00 per share as hereinafter provided.

The Series A Preferred Stock shall be subordinate to all indebtedness of the Company. The Series A Preferred Stock shall be superior and prior in rank to the Common Stock and to all other Junior Stock to the extent set forth herein with respect to the declaration and payment of dividends and to distributions upon the liquidation, dissolution or winding up of the affairs of the Company. “Junior Stock” is defined for this purpose to mean the Common Stock and any other classes or series of equity securities of the Company not expressly designated as being on a parity with, or senior to, the Series A Preferred Stock. The Company shall have the power to create and issue additional Preferred Stock or other classes of stock ranking on a parity with the Series A Preferred Stock (“parity stock”), or that constitute Junior Stock, without any approval or consent of the Series A Preferred Stock.

The number of shares of Series A Preferred Stock may be increased or decreased from time to time by action of not loss than a majority of the members of the Board of Directors then in office; provided, that no decrease effected solely through such action of the Board of Directors shall reduce the number of shares of Series A Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants, if any, to purchase shares of Series A Preferred Stock, or upon the conversion of any outstanding securities issued by the Company that are convertible into shares of Series A Preferred Stock.

Section 2.Dividends.

A.            Payment of Dividends. The holders of shares of Series A Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available therefor, noncumulative quarterly cash dividends at an annual rate equal to 5% (the “Series A Dividend Rate”) of the $10.00 per share liquidation preference of such stock. Dividends on the Series A Preferred Stock (other than with respect to the Series A Initial Dividend Period, as defined below), shall be payable, if declared, in quarterly installments as of the first day of January, April, July and October of each year, or, if such day is not a business day, then on the next business day, to holders of record as of a date to be fixed by the Board of Directors of the Company not more than 60 days prior to the date any such dividend is paid. The initial period for dividends (the “Series A Initial Dividend Period”) shall commence on the date of initial issuance of the Series A Preferred Stock and shall end on and include February 29, 1996, and such dividend shall be payable as of April 1, 1996. Thereafter, quarterly dividend periods (each a “Series A Dividend Period,” which term also includes the Series A

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Initial Dividend Period) shall commence on and include December 1, March 1, June 1 and September 1 of each year and shall end on and include the date preceding commencement of the next following Series A Dividend Period.

The amount of dividends per share for each full Series A Dividend Period shall be computed by dividing by four an amount equal to (i) the Series A Dividend Rate, (ii) multiplied by the amount of the liquidation preference of such share. Dividends for any period of less than a full three months shall be computed on the basis of a 360-day year composed of twelve 30 day months and the actual number of days elapsed in such period.

B.Dividends Noncumulative. Dividends on the shares of Series A Preferred Stock shall be noncumulative. Accordingly, if a dividend on the shares of Series A Preferred Stock with respect to any Series A Dividend Period is not declared by the Board of Directors, then the Company shall not be obligated at any time to pay a dividend on the shares of Series A Preferred Stock in respect of such Series A Dividend Period, whether or not dividends are declared and paid in respect of any subsequent Series A Dividend Period.

C.Priority as to Dividends. Unless full cash dividends on the Series A Preferred Stock for a Series A Dividend Period have been or contemporaneously are declared and paid (or declared and a sum sufficient for the payment thereof set apart), no full dividends may be declared or paid or set apart for payment on the Preferred Stock of any series ranking, as to dividends, on a parity with the Series A Preferred Stock for any period. When cash dividends are not paid in full (or declared and a sum sufficient for such full payment so set apart) upon the Series A Preferred Stock or any series ranking, as to dividends, on a parity with the Series A Preferred Stock, no dividends may be declared on any series of stock ranking, as to dividends, junior to the Series A Preferred Stock and all dividends declared upon shares of Series A Preferred Stock and any such parity stock shall be declared pro rata based upon the respective amounts that would have been paid thereon had dividends been paid in full.

Unless (i) full cash dividends on the Series A Preferred Stock have been declared and paid or set aside for payment for the four most recent Series A Dividend Periods and (ii) the Company has declared a cash dividend on the Series A Preferred Stock at the annual dividend rate for the current Series A Dividend Period and sufficient funds have been set apart for the payment of such cash dividend, the Company may not declare or pay or set apart any funds for payment of any dividends (other than dividends payable in Junior Stock) or make any other distribution upon Junior Stock or redeem, purchase or otherwise acquire any Junior Stock for any consideration (and no monies may be paid to or made available for a sinking fund for the redemption of any shares of any such stock).

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Section 3.Liquidation Preference.

A.Liquidating Distributions. Upon liquidation, dissolution or winding up of the affairs of the Company, after payment or provision for payment of the debts and other liabilities of the Company, the holders of the Series A Preferred Stock shall be entitled to receive payment in full out of the assets of the Company, including its capital, $10.00 per share of Series A Preferred Stock, plus any dividends that have been declared but remain unpaid as of such date (the “Liquidation Amount”), before any amount shall be paid or distributed among the holders of the Common Stock or other Junior Stock.

If, upon any liquidation, dissolution or winding up of the Company, the amounts payable with respect to the Series A Preferred Stock and all other outstanding parity stock cannot be paid in full, the holders of each series of such stock shall share ratably in any such distribution of assets in proportion to the full respective preferential amount to which they are entitled.

After payment of the full preferential amount to which they are entitled upon any liquidation, dissolution or winding up, the holders of the Series A Preferred Stock shall have no right or claim to any of the remaining assets of the Company.

B.Consolidation, Merger or Certain Other Actions. The merger or consolidation of the Company into or with any other company or the merger of any other company into it, or the sale, lease or conveyance of all or part of the assets of the Company, shall not be deemed to be a voluntary or involuntary dissolution, liquidation or winding up of the Company.

Section 4.Redemption.

The shares of the Series A Preferred Stock shall not be redeemable at the option of the holders thereof; provided, that the shares of the Series A Preferred Stock shall be redeemable at the option of the holders thereof upon the effectiveness of a merger, acquisition or sale of substantially all of the assets of the Company or of the Company’s wholly-owned subsidiary, Broadway Federal Bank, f.s.b. (the “Bank”), in any of which events the Company or the Bank, as the case may be, is not in substance the surviving entity. The Company shall provide written notice of any such transaction to the holders of the Series A Preferred Stock of record as provided herein not less than 30 days prior to the date such transaction is to become effective. The shares of the Series A Preferred Stock shall be redeemable at the option of the Company upon 30 days notice at any time. The Company shall, not less than 30 days prior to each such redemption, mail a written notice to the holder of record of the Series A Preferred Stock to be

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regulation, the Company may not, without the affirmative vote or consent of the holders of two-thirds of all outstanding shares of Series A Preferred Stock voting as a separate class, amend or otherwise alter or repeal any provision of the Company’s Certificate of Incorporation, including any amendments thereto, which would materially and adversely affect the rights, preferences, powers or privileges of the Series A Preferred Stock, including any amendment which would (i) authorize, create, issue or increase the authorized or issued amount of any class or series of any equity securities of the Company ranking prior thereto as to dividends or upon liquidation, dissolution or winding up of the Company or (ii) authorize, create, issue or increase any warrants, options or other rights convertible or exchangeable into or evidencing a right to purchase any amount of any such class or series.

Section 7.No Sinking Fund.

No sinking fund shall be established for the retirement or redemption of shares of Series A Preferred Stock.

Section 8.Preemptive Rights.

No holder of shares of Series A Preferred Stock shall have any preemptive rights in respect of any shares of the Company that may be issued.

Section 9.No Other Rights.

The shares of Series A Preferred Stock shall not have any powers, designations, preferences or relative, participating, optional and other special rights except as set forth in the Certificate of Incorporation of the Company, including this Certificate of Designation or as otherwise required by law.

Section 10.Compliance with Applicable Law.

Payments by the Company to holders of Series A Preferred Stock in respect of dividends or the redemption of shares of Series A Preferred Stock shall be subject to any restrictions and limitations placed on capital distributions by the Company under applicable law and regulations.

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EX-4.5

Exhibit 4.5

CERTIFICATE OF DESIGNATION

OF

BROADWAY FINANCIAL CORPORATION

FOR

NONCUMULATIVE: PERPETUAL PREFERRED STOCK, SERIES B

BROADWAY FJNANCIAL CORPORATION, a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Company”) in accordance with the provisions of Section 151 (g) thereof,

HEREBY CERTIFIES:

That pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation, the Board of Directors on December 18, 2002 duly adopted the following resolution creating a series of preferred stock to be designated “Noncumulative Perpetual Preferred Stock, Series B” and to consist of 100,000 shares:

WHEREAS, the Certificate of Incorporation of Broadway Financial Corporation, a Delaware corporation (the “Company”), provides that the Company shall have authority to issue up to 1 ,000,000 shares of Preferred Stock;

WHEREAS, the Certificate of Incorporation of the Company provides that the Board of Directors is authorized to fix by resolution the designations and the powers, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof, including without limitation the voting rights, the dividend rate and preference, redemption rights and liquidation preference, of any series of shares of Preferred Stock, to fix the number of shares constituting any such series and to increase or decrease the number of shares of any such series;

NOW, THEREFORE, BE IT RESOLVED, that the designation, powers, preferences and relative, participating, optional and other special rights of the Noncumulative Perpetual Preferred Stock, Series B and the qualifications, imitations and restrictions thereof, are as set forth below:

Section 1.Designation and Rank. There is hereby established a series of shares of Preferred Stock, which series of Preferred Stock shall be designated as the “Noncumulative Perpetual Preferred Stock, Series B” (the “Series B Preferred Stock”). The authorized number of shares of Series B Preferred Stock shall be 100,000. Each share of Series B Preferred Stock shall have a par value of $0.01 per share and a liquidation preference of $10.00 per share as hereinafter provided.

The Series B Preferred Stock shall be subordinate to all indebtedness of the Company. The Series B Preferred Stock shall be superior and prior in rank to the Common Stock and to all other Junior Stock to the extent set forth herein with respect to the declaration and payment of dividends and to distributions upon the liquidation, dissolution or winding up of the affairs of the Company. The Series B Preferred Stock shall rank on a parity with the Series A Noncumulative

Perpetual Preferred Stock and with all other parity stock to the extent set forth herein with respect to the declaration and payment of dividends and to distributions upon the liquidation, dissolution or winding up of the affairs of the Company. “Junior Stock” is defined for this purpose to mean the Common Stock and any other classes or series of equity securities of the Company not expressly designated as being on a parity with, or senior to, the Series B Preferred Stock. The Company shall have the power to create and issue additional Preferred Stock or other c1asses of stock ranking on parity with the Series B Preferred Stock (“parity stock”), or that constitute Junior Stock, without any approval or consent of the Series B Preferred Stock.

The number of shares of Series B Preferred Stock may be increased or decreased from time to time by action of not less than a majority of the members of the Board of Directors then in office; provided, that no decrease effected solely through such action of the Board of Directors shall reduce the number of shares of Series B Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants, if any, to purchase shares of Series B Preferred Stock, or upon the conversion of any outstanding securities issued by the Company that are convertible into shares of Series B Preferred Stock.

Section 2.Dividends.

A.Payment of Dividends. The holders of shares of Series B Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available therefore, noncumulative quarterly cash dividends at an annual rate equal to 5% (the “Series B Dividend Rate”) of the $10.00 per share liquidation preference of such stock. Dividends on the Series B Preferred Stock (other than with respect to the Series B Initial Dividend Period, as defined below), shall be payable, if declared, in quarterly installments as of the first day of January, April, July and October of each year, or, if such day is not a business day, then on the next business day, to holders of record as of a date to be fixed by the Board of Directors of the Company not more than 60 days prior to the date any such dividend is paid. The initial period for dividends (the “Series B Initial Dividend Period”) shall commence on the date of initial issuance of the Series B Preferred Stock and shall end on and include March 31, 2003, and such dividend shall be payable as of May 1, 2003. Thereafter, quarterly dividend periods (each a “Series B Dividend Period,” which term also includes the Series B Initial Dividend Period) shall commence on and include December 1, March 1, June 1 and September 1 of each year and shall end on and include the day immediately preceding the commencement of the next following Series B Dividend Period.

The amount of dividends per share for each full Series B Dividend Period shall be computed by dividing by four an amount equal to (i) the amount of the liquidation preference of such share, (ii) multiplied by the Series B Dividend Rate. Dividends for any period of less than a full three months shall be computed on the basis of a 360-day year composed of twelve 30 day months and the actual number of days  elapsed in such period.

B.Dividends Noncumulative.Dividends on the shares of Series B Preferred Stock shall be noncumulative. Accordingly, if a dividend on the shares of Series B Preferred Stock with respect to any Series B Dividend Period is not declared by the Board of Directors, then the Company shall not be obligated at any time to pay a dividend on the shares of Series B Preferred Stock in respect of such Series B Dividend Period, whether or not dividends are declared and paid in respect of any subsequent Series B Dividend Period.

C.Priority as to Dividends. Unless full cash dividends on the Series B Preferred Stock for a Series B Dividend Period have been or contemporaneously are declared and paid (or declared and a sum sufficient for the payment thereof set apart), no full dividends may be declared or paid or set apart for payment on the Preferred Stock of any series ranking, as to dividends, on a parity with the Series B Preferred Stock for any period. When cash dividends are not paid in full (or declared and a sum sufficient for such full payment so set apart) upon the Series B Preferred Stock or any series ranking, as to dividends, on a parity with the Series B Preferred Stock, no dividends may be declared on any series of stock ranking, as to dividends, junior to the Series B Preferred Stock and all dividends declared upon shares of Series B Preferred Stock and any such parity stock shall be declared pro rata based upon the respective amounts that would have been paid thereon had dividends been paid in full.

Unless (i) full cash dividends on the Series B Preferred Stock have been declared and paid or set apart for payment for the four most recent Series B Dividend Periods and (ii) the Company has declared a cash dividend on the Series B Preferred Stock at the annual dividend rate for the current Series B Dividend Period and sufficient funds have been set apart for the payment of such cash dividend, the Company may not declare or pay or set apart any funds for payment of any dividends (other than dividends payable in Junior Stock) or make any other distribution upon Junior Stock or redeem, purchase or otherwise acquire any Junior Stock for any consideration (and no monies may be paid to or made available for a sinking fund for the redemption of any shares of any such stock).

Section 3.Liquidation Preference.

A.Liquidating Distributions. Upon liquidation, dissolution or winding up of the affairs of the Company, after payment or provision for payment of the debts and other 1iabilities of the Company, the holders of the Series B Preferred Stock shall be entitled to receive payment in full out of the assets of the Company, including its capital, $10.00 per share of Series B Preferred Stock, plus any dividends that have been declared but remain unpaid as of such date (the “Liquidation Amount”), before any amount shall be paid or distributed among the holders of the Common Stock or other Junior Stock.

If, upon any liquidation, dissolution or winding up of the Company, the amounts payable with respect to the Series B Preferred Stock and all other outstanding parity stock cannot be paid in full, the holders of each series of such stock shall share ratably in any such distribution of assets in proportion to the full respective preferential amount to which they are entitled.

After payment of the full preferential amount to which they are entitled upon any liquidation, dissolution or winding up, the holders of the Series B Preferred Stock shall have no right or claim to any of the remaining assets of the Company.

B.Consolidation, Merger or Certain Other Actions. The merger or consolidation of the Company into or with any other company or the merger of any other company into it, or the

sale, lease or conveyance of all or part of the assets of the Company, shall not be deemed to be a voluntary or involuntary dissolution, liquidation or winding up of the Company.

Section 4.Redemption.

The shares of the Series B Preferred Stock shall not be redeemable at the option of the holders thereof; provided, that the shares of the Series B Preferred Stock shall be redeemable at the option of the holders thereof upon the effectiveness of a merger, acquisition or sale of substantially all of the assets of the Company or of the Company’s wholly-owned subsidiary, Broadway Federal Bank, f.s.b. (the “Bank”), in any of which events the Company or the Bank, as the case may be, is not in substance the surviving entity. The Company shall provide written notice of any such transaction to the holders of the Series B Preferred Stock of record as provided herein not less than 30 days prior to the date such transaction is to become effective. The shares of the Series B Preferred Stock shall be redeemable) in whole or in part, at the option of the Company upon 30 days notice at any time. The Company shall, not less than 30 days prior to each such redemption, mail a written notice to the holder of record of the Series B Preferred Stock to be redeemed as provided herein, which notice shall state: (i) whether all or less than all of the outstanding shares of the Series B Preferred Stock are to be redeemed and the total number of such shares being redeemed; (ii) the number of shares of Series B Preferred Stock held by the holder which the Company intends to redeem; (iii) the redemption date and the redemption price; and (iv) the time and manner in which, and the place at which, the holder is to surrender to the Company the certificates representing the Series B Preferred Stock to be redeemed. On or before the redemption date, each holder of the Series B Preferred Stock to be redeemed shall surrender the certificate or certificates representing such shares to the Company, and thereupon the redemption price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof, and each surrendered certificate shall be cancelled and retired. In the event that less than all the shares represented by any such certificate are redeemed, a new certificate representing the unredeemed shares shall be issued to the holder of such shares. If the redemption notice is duly given, and upon the redemption date the redemption price is paid to the holder or set apart for that purpose, then notwithstanding the fact that the certificate representing any shares of the Series B Preferred Stock so called for redemption shall not have been surrendered, all rights and privileges with respect to such shares shall cease and terminate. The per share redemption price to be paid to any holder of Series B Preferred Stock upon any redemption as provided herein, whether at the option of the Company or at the option of such holder, shall be the Liquidation Amount applicable to the shares to be redeemed as of the date of such redemption.

Section 5. Notices, Record Owners.

The Company shall be entitled to treat the holder of record of the Series B Preferred Stock as the owner of such Series B Preferred Stock for all purposes. Any notice given by the Company to the holders of the Series B Preferred Stock shall be deemed to be properly given if sent by registered, certified or first class mai1, postage prepaid, to the holder’s address as shown on the records of the Company.

Section 6.Voting Rights.

Except for any voting rights required by applicable law or as set forth below, the holders of the Series B Preferred Stock shall not be entitled to vote as a separate class, or with the Common Stock, on any matters presented for action by the holders of the Common Stock or other securities of the Company.

So long as any Series B Preferred Stock is outstanding and unless the consent or approval of a greater number of shares is then required by law or regulation, the Company may not without the affirmative vote or consent of the holders of two-thirds of an outstanding shares of Series B Preferred Stock voting as a separate class, amend or otherwise alter or repeal any provision of the Company’s Certificate of Incorporation, including any amendments thereto, which would materially and adversely affect the rights, preferences, powers or privileges of the Series B Preferred Stock, including any amendment which would (i) authorize, create, issue or increase the authorized or issued amount of any class or series of any equity securities of the Company ranking prior thereto as to dividends or upon liquidation, dissolution or winding up of the Company or (ii) authorize, create, issue or increase any warrants, options or other rights convertible or exchangeable into or evidencing a right to purchase any amount of any such class or series.

Section 7.No Sinking Fund.

No sinking fund shall be established for the retirement or redemption of shares of Series B Preferred Stock.

Section 8.Preemptive Rights.

No holder of shares of Series B Preferred Stock shall have any preemptive rights in respect of any shares of the Company that may be issued.

Section 9.No Other Rights.

The shares of Series B Preferred Stock shall not have any powers, designations, preferences or relative, participating, optional or other special rights except as set forth in the Certificate of Incorporation of the Company, including this Certificate of Designation or as otherwise required by law.

Section 10.Compliance with Applicable Law.

Payments by the Company to holders of Series B Preferred Stock in respect of dividends or the redemption of shares of Series B Preferred Stock shall be subject to any restrictions and limitations placed on capital distributions by the Company under applicable law and regulations.

IN WITNESS WHEREOF, said Broadway Financial Corporation has caused this Certificate of Designation to be duly executed by Paul C. Hudson, its Chief Executive Officer and President, and attested to by Beverly Dyck, its Secretary, this 23rd day of December, 2002.

BROADWAY FINANCIAL CORPORATION
By	/s/
	Paul C. Hudson
	Chief Executive Officer and President

Attest:

/s/

Beverly Dyck, Secretary

EX-4.7

Exhibit 4.7

CERTIFICATE OF DESIGNATION

OF

BROADWAY FINANCIAL CORPORATION

FOR

SERIES C NONCUMULATIVE PERPETUAL

CONVERTIBLE PREFERRED STOCK

BROADWAY FINANCIAL CORPORATION, a corporation organized and existing under the General Corporation Law of the State of Delaware (the “Company”), in accordance with the provisions of Section 151(g) thereof,

HEREBY CERTIFIES:

That pursuant to the authority conferred upon the Board of Directors by the Certificate of Incorporation of the Company, the Board of Directors on January 24, 2006 duly adopted the following resolution creating a series of preferred stock to be designated “Series C Noncumulative Perpetual Convertible Preferred Stock” and to consist of 76,950 shares:

WHEREAS, the Certificate of Incorporation of Broadway Financial Corporation, a Delaware corporation (the “Company”), provides that the Company shall have authority to issue up to 1,000,000 shares of Preferred Stock; and

WHEREAS, the Certificate of Incorporation of the Company provides that the Board of Directors is authorized to fix by resolution the designations and the powers, preferences and relative, participating, optional or other special rights and qualifications, limitations or restrictions thereof, including without limitation the voting rights, the dividend rate and the liquidation preference, of any series of shares of Preferred Stock, to fix the number of shares constituting any such series and to increase or decrease the number of shares of any such series.

NOW, THEREFORE, BE IT RESOLVED, that the designation, powers, preferences and relative, participating, optional and other special rights of the Series C Noncumulative Perpetual Convertible Preferred Stock and the qualifications, limitations and restrictions thereof, are as set forth below:

Section 1.Designation and Rank.  There is hereby established a series of shares of Preferred Stock, which series of Preferred Stock shall be designated as the “Series C Noncumulative Perpetual Convertible Preferred Stock” (the “Series C Preferred Stock”).  The authorized number of shares of Series C Preferred Stock shall be 76,950.  Each share of Series C Preferred Stock shall have a par value of $0.01 per share and a liquidation preference of $13.00 per share as hereinafter provided.

The Series C Preferred Stock shall be subordinate to all indebtedness of the Company.  The Series C Preferred Stock shall be superior and prior in rank to the Common Stock and to all other Junior Stock to the extent set forth herein with respect to the declaration and payment of dividends and to distributions upon the liquidation, dissolution or winding up of the affairs of the Company.  The Series C Preferred Stock shall rank on a parity with the Noncumulative Perpetual Preferred Stock, Series B, and the Series A Noncumulative Perpetual Preferred Stock and with

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all other parity stock to the extent set forth herein with respect to the declaration and payment of dividends and to distributions upon the liquidation, dissolution or winding up of the affairs of the Company. “Junior Stock” is defined for this purpose to mean the Common Stock and any other classes or series of equity securities of the Company not expressly designated as being on a parity with, or senior to, the Series C Preferred Stock.  The Company shall have the power to create and issue additional Preferred Stock or other classes of stock ranking on parity with, but not superior or prior in rank in any respect to, the Series C Preferred Stock (“parity stock”), or that constitute Junior Stock, without any approval or consent of the Series C Preferred Stock.

The number of shares of Series C Preferred Stock may be increased or decreased from time to time by action of not less than a majority of the members of the Board of Directors then in office; provided, that no decrease effected solely through such action of the Board of Directors shall reduce the number of shares of Series C Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights or warrants, if any, to purchase shares of Series C Preferred Stock, or upon the conversion of any outstanding securities issued by the Company that are convertible into shares of Series C Preferred Stock.

Section 2.Dividends.

A.Payment of Dividends.  The holders of shares of Series C Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available therefor, noncumulative semiannual cash dividends at an annual rate equal to 5% (the “Series C Dividend Rate”) of the $13.00 per share (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series C Preferred Stock) liquidation preference of such stock.  Dividends on the Series C Preferred Stock (other than with respect to the Series C Initial Dividend Period, as defined below), shall be payable, if declared, in semiannual installments as of the thirty-first (31st) day of January and July of each year, or, if such day is not a business day, then on the next business day, to holders of record as of a date to be fixed by the Board of Directors of the Company not more than 60 days prior to the date any such dividend is paid.  The initial period for dividends (the “Series C Initial Dividend Period”) shall commence on the date of initial issuance of the Series C Preferred Stock and shall end on and include June 30, 2006, and such dividend shall be payable as of July 31, 2006.  Thereafter, semiannual dividend periods (each a “Series C Dividend Period,” which term also includes the Series C Initial Dividend Period) shall commence on and include January 1 and July 1 of each year and shall end on and include the day immediately preceding the commencement of the next following Series C Dividend Period.

The amount of dividends per share for each full Series C Dividend Period shall be computed by dividing by two (2) an amount equal to (i) the amount of the liquidation preference of such share, (ii) multiplied by the Series C Dividend Rate.  Dividends for any period of less than a full six (6) months shall be computed on the basis of a 360-day year composed of twelve 30 day months and the actual number of days elapsed in such period.

B.Dividends Noncumulative.  Dividends on the shares of Series C Preferred Stock shall be noncumulative.  Accordingly, if a dividend on the shares of Series C Preferred Stock with respect to any Series C Dividend Period is not declared by the Board of Directors, then the

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Company shall not be obligated at any time to pay a dividend on the shares of Series C Preferred Stock in respect of such Series C Dividend Period, whether or not dividends are declared and paid in respect of any subsequent Series C Dividend Period.

C.Priority as to Dividends.  Unless full cash dividends on the Series C Preferred Stock for a Series C Dividend Period have been or contemporaneously are declared and paid (or declared and a sum sufficient for the payment thereof set apart), no full dividends may be declared or paid or set apart for payment on the Preferred Stock of any series ranking, as to dividends, on a parity with the Series C Preferred Stock for any period.  When cash dividends are not paid in full (or declared and a sum sufficient for such full payment so set apart) upon the Series C Preferred Stock or any series ranking, as to dividends, on a parity with the Series C Preferred Stock, no dividends may be declared on any series of stock ranking, as to dividends, junior to the Series C Preferred Stock and all dividends declared upon shares of Series C Preferred Stock and any such parity stock shall be declared pro rata based upon the respective amounts that would have been paid thereon had dividends been paid in full.

Unless (i) full cash dividends on the Series C Preferred Stock have been declared and paid or set apart for payment for the two (2) most recent Series C Dividend Periods and (ii) the Company has declared a cash dividend on the Series C Preferred Stock at the Series C Dividend Rate for the current Series C Dividend Period and sufficient funds have been set apart for the payment of such cash dividend, the Company may not declare or pay or set apart any funds for payment of any dividends (other than dividends payable in Junior Stock) or make any other distribution upon Junior Stock or redeem, purchase or otherwise acquire any Junior Stock for any consideration (and no monies may be paid to or made available for a sinking fund for the redemption of any shares of any such stock).

Section 3.Liquidation Preference.

A.Liquidating Distributions.  Upon liquidation, dissolution or winding up of the affairs of the Company, after payment or provision for payment of the debts and other liabilities of the Company, the holders of the Series C Preferred Stock shall be entitled to receive payment in full out of the assets of the Company, including its capital, $13.00 per share of Series C Preferred Stock (subject to appropriate adjustment in the event of any stock dividend, stock split, combination or other similar recapitalization with respect to the Series C Preferred Stock) plus any dividends that have been declared but remain unpaid as of such date (the “Liquidation Amount”), before any amount shall be paid or distributed among the holders of the Common Stock or other Junior Stock.

If, upon any liquidation, dissolution or winding up of the Company, the amounts payable with respect to the Series C Preferred Stock and all other outstanding parity stock cannot be paid in full, the holders of each series of such stock shall share ratably in any such distribution of assets in proportion to the full respective preferential amount to which they are entitled.

After payment of the full preferential amount to which they are entitled upon any liquidation, dissolution or winding up, the holders of the Series C Preferred Stock shall have no right or claim to any of the remaining assets of the Company.

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B.Consolidation, Merger or Certain Other Actions.  The merger or consolidation of the Company into or with any other company or the merger of any other company into it, or the sale, lease or conveyance of all or part of the assets of the Company, shall not be deemed to be a voluntary or involuntary dissolution, liquidation or winding up of the Company.

Section 4.Conversion.

The holders of the Series C Preferred Stock shall have conversion rights as follows (the “Conversion Rights”):

A.Right to Convert.

1.Conversion Ratio.  Each share of Series C Preferred Stock shall be convertible, at the option of the holder thereof, at any time and from time to time, and without the payment of additional consideration by the holder thereof, into such number of fully paid and nonassessable shares of Common Stock (which shall have the same voting, dividend and other rights as the greatest of such rights granted by the Company with respect to any share of Common Stock) as is determined by dividing the Liquidation Amount by the Series C Conversion Price (as defined below) in effect at the time of conversion.  The “Series C Conversion Price” shall initially be equal to $13.00.   Such initial Series C Conversion Price, and the rate at which shares of Series C Preferred Stock may be converted into shares of Common Stock, shall be subject to adjustment as provided below.

2.Adjustment for Stock Splits and Combinations.   If the Company shall at any time or from time to time after the date of this Certificate of Designation effect a subdivision of the outstanding Common Stock, the Series C Conversion Price in effect immediately before that subdivision shall be proportionately decreased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be increased in proportion to such increase in the aggregate number of shares of Common Stock outstanding.  If the Company shall at any time or from time to time after the date of this Certificate of Designation combine the outstanding shares of Common Stock, the Series C Conversion Price in effect immediately before the combination shall be proportionately increased so that the number of shares of Common Stock issuable on conversion of each share of such series shall be decreased in proportion to such decrease in the aggregate number of shares of Common Stock outstanding.  Any adjustment under this subsection shall become effective at the close of business on the date the subdivision or combination becomes effective.

3.Termination of Conversion Rights.  In the event of a liquidation, dissolution or winding up of the Company, the Conversion Rights shall terminate at the close of business on the last full day preceding the date fixed for the payment of any amounts distributable in such event to the holders of Series C Preferred Stock.

4.Fractional Shares.  No fractional shares of Common Stock shall be issued upon conversion of the Series C Preferred Stock.  In lieu of any fractional shares to which the holder would otherwise be entitled, the Company shall pay cash equal to such fraction multiplied by the fair market value of a share of Common Stock as determined in good faith by the Board of Directors of the Company.  Whether or not fractional shares would be issuable upon such

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conversion shall be determined on the basis of the total number of shares of Series C Preferred Stock the holder is at the time converting into Common Stock and the aggregate number of shares of Common Stock issuable upon such conversion.

B.Mechanics of Conversion.

1.Notice of Conversion.  In order for a holder of Series C Preferred Stock to convert shares of Series C Preferred Stock into shares of Common Stock, such holder shall deliver to the Company’s transfer agent (or the Company if the Company serves as its own transfer agent for the Series C Preferred Stock) written notice (“Notice of Conversion”) that such holder elects to convert all or any number of the shares of the Series C Preferred Stock represented by such certificate or certificates and, if applicable, any event on which such conversion is contingent.  A Notice of Conversion shall state such holder’s name or the names of the nominees in which such holder wishes the certificate or certificates for shares of Common Stock to be issued.  The close of business on the date of receipt by the transfer agent (or by the Company if the Company serves as its own transfer agent for the Series C Preferred Stock) of such Notice of Conversion shall be the time of conversion (the “Conversion Time”), and the shares of Common Stock issuable upon conversion of the shares represented by such certificate shall be deemed to be outstanding of record as of such date.  As soon as reasonably practicable following the Conversion Time and in any event within three business days following the Conversion Time, the holder of Series C Preferred Stock shall surrender the certificate or certificates for such shares of Series C Preferred Stock (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate), at the office of the transfer agent for the Series C Preferred Stock (or at the principal office of the Company if the Company serves as its own transfer agent for the Series C Preferred Stock).  If required by the Company, certificates surrendered for conversion shall be endorsed or accompanied by a written instrument or written instruments of transfer, in form satisfactory to the Company, duly executed by the registered holder or such holder’s attorney duly authorized in writing.  The Company shall, as soon as practicable after the Conversion Time, and in no event later than the third business day following the Conversion Time, issue and deliver or cause its transfer agent to issue and deliver to such holder of Series C Preferred Stock, or to such holder’s nominees, a certificate or certificates for the number of full shares of Common Stock issuable upon such conversion in accordance with the provisions hereof,  a certificate for the number (if any) of the shares of Series C Preferred Stock represented by the surrendered certificate that were not converted into Common Stock, and cash as provided in subsection 4.A.3 above in lieu of any fraction of a share of Common Stock otherwise issuable upon such conversion and payment of any declared but unpaid dividends on the shares of Series C Preferred Stock converted.  In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, upon request of a holder of Series C Preferred Stock, the Company shall, if then possible, cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to such holder by crediting the account of holder’s prime broker with Depository Trust Company through its Deposit Withdrawal Agent Commission system.

2.Effect of Conversion.  All shares of Series C Preferred Stock which shall have been surrendered for conversion as herein provided shall no longer be deemed to be outstanding

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and all rights with respect to such shares shall immediately cease and terminate at the Conversion Time, except only the right of the holders thereof to receive shares of Common Stock in exchange therefor and to receive payment of any dividends declared but unpaid thereon.  Any shares of Series C Preferred Stock so converted shall be retired and cancelled and may not be reissued as shares of such series, and the Company may thereafter take such appropriate action (without the need for stockholder action) as may be necessary to reduce the authorized number of shares of Series C Preferred Stock accordingly.

3.Taxes.  The Company shall pay any and all issue and other similar taxes which may be imposed with respect to the issuance and delivery of the shares of Common Stock to the registered holder thereof pursuant to conversion of the Series C Preferred Stock.  The Company shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of shares of Common Stock in a name other than that in which the shares of Series C Preferred Stock so converted were registered, and no such issuance or delivery shall be made unless and until the person or entity requesting such issuance has paid to the Company the amount of any such tax or has established, to the satisfaction of the Company, that such tax has been paid.

Section 5.Redemption.

1.Notice of Redemption.  The shares of the Series C Preferred Stock shall not be redeemable at the option of the holders thereof.  The shares of the Series C Preferred Stock shall be redeemable, in whole but not in part, at the option of the Company upon sixty days prior written notice at any time.  The Company shall, not less than sixty days prior to each such redemption, mail a written notice to the holder of record of the Series C Preferred Stock to be redeemed as provided herein, which notice shall state: (i) the number of shares of Series C Preferred Stock held by the holder according to the stock ledger of the Company and (ii) the redemption date and the redemption price.  On or before the redemption date, each holder of the Series C Preferred Stock to be redeemed shall surrender the certificate or certificates representing such shares to the Company (or, if such holder alleges that such certificate has been lost, stolen or destroyed, a lost certificate affidavit and agreement reasonably acceptable to the Company to indemnify the Company against any claim that may be made against the Company on account of the alleged loss, theft or destruction of such certificate), and thereupon the redemption price for such shares shall be payable to the order of the person whose name appears on such certificate or certificates as the owner thereof, and each surrendered certificate shall be cancelled and retired.  If the redemption notice is duly given, and upon the redemption date the redemption price is paid to the holder or set apart for that purpose, then notwithstanding the fact that the certificate representing any shares of the Series C Preferred Stock so called for redemption shall not have been surrendered, all rights and privileges with respect to such shares shall cease and terminate on such redemption date, except only the right of the holder thereof to receive the applicable redemption price.  The per share redemption price to be paid to any holder of Series C Preferred Stock upon any redemption at the option of the Company as provided herein shall be an amount equal to the product of (a) the Adjustment Factor multiplied by (b) the Liquidation Amount applicable to the shares to be redeemed as of the date of such redemption.  The “Adjustment Factor” shall be (a) 1.03 in the case of a notice of redemption given prior to April 1, 2007, (b) 1.02 in the case of a notice of redemption given prior to April 1, 2008, (c) 1.01

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in the case of a notice of redemption given prior to April 1, 2009, and (d) 1.00 in the case of a notice of redemption given on or following April 1, 2009.

2.  Primacy of Conversion.  Notwithstanding anything to the contrary contained in this Section 5, holders may convert all or any part of their Series C Preferred Stock into Common Stock at the Conversion Price by delivering a Notice of Conversion to the Company at any time prior to any applicable effective time of redemption of such Series C Preferred Stock.

Section 6.Notices; Record Owners.

The Company shall be entitled to treat the holder of record of the Series C Preferred Stock as the owner of such Series C Preferred Stock for all purposes.  Any notice given by the Company to the holders of the Series C Preferred Stock shall be deemed to be properly given if sent by registered, certified or first class mail, postage prepaid, to the holder’s address as shown on the records of the Company.

The Company shall provide each holder of Series C Preferred Stock with notice of any meeting of the holders of Common Stock (and copies of proxy materials and all other information sent to stockholders) concurrent with the delivery thereof to the holders of Common Stock.  Without limiting the generality of the foregoing, if the Company takes a record of its holders of Common Stock for the purpose of determining stockholders entitled to (a) receive payment of any dividend (excluding the Company’s regular quarterly dividend payments) or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation or recapitalization) any share of any class or any other securities or property, or to receive any other right, or (b) to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Company, or any proposed merger, consolidation, liquidation, dissolution or winding up of the Company, the Company shall mail a notice to each holder of Series C Preferred Stock, concurrent with the delivery of any notice to the holders of Common Stock, of the date on which any such record is to be taken for the purpose of such vote, dividend, distribution, right or other event, and a brief statement regarding the amount and character of such vote, dividend, distribution, right or other event to the extent known at such time.

Section 7.Voting Rights.

Except for any voting rights required by applicable law or as set forth below, the holders of the Series C Preferred Stock shall not be entitled to vote as a separate class, or with the Common Stock, on any matters presented for action by the holders of the Common Stock or other securities of the Company.

So long as any Series C Preferred Stock is outstanding and unless the consent or approval of a greater number of shares is then required by law or regulation, the Company may not, without the affirmative vote or consent of the holders of a majority of all outstanding shares of Series C Preferred Stock voting as a separate class, amend or otherwise alter or repeal any provision of the Company’s Certificate of Incorporation, including any amendments thereto, which would materially and adversely affect the rights, preferences, powers or privileges of the Series C Preferred Stock, including any amendment which would (i) authorize, create, issue or

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increase the authorized or issued amount of any class or series of any equity securities of the Company ranking senior or prior thereto as to dividends or, upon liquidation, dissolution or winding up of the Company, or (ii) authorize, create, issue or increase any warrants, options or other rights convertible or exchangeable into or evidencing a right to purchase any amount of any such class or series.

Section 8.Reserved Amount.

The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock a sufficient number of shares of Common Stock to provide for the full conversion of all outstanding Series C Preferred Stock and issuance of the shares of Common Stock in connection therewith.

Section 9.No Sinking Fund.

No sinking fund shall be established for the retirement or redemption of shares of Series C Preferred Stock.

Section 10.Preemptive Rights.

No holder of shares of Series C Preferred Stock shall have any preemptive rights in respect of any shares of the Company that may be issued.

Section 11.No Other Rights.

The shares of Series C Preferred Stock shall not have any powers, designations, preferences or relative, participating, optional or other special rights except as set forth in the Certificate of Incorporation of the Company, including this Certificate of Designation or as otherwise required by law.

Section 12.Compliance with Applicable Law.

Payments by the Company to holders of Series C Preferred Stock in respect of dividends or the redemption of shares of Series C Preferred Stock shall be subject to any restrictions and limitations placed on capital distributions by the Company under applicable law and regulations.

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IN WITNESS WHEREOF, said Broadway Financial Corporation has caused this Certificate of Designation to be duly executed by Paul C. Hudson, its President and Chief Executive Officer, this 4th day of April, 2006.

BROADWAY FINANCIAL CORPORATION
By	/s/ Paul C. Hudson
	Paul C. Hudson
	President and Chief Executive Officer

EX-4.13

Exhibit 4.13

CORRECTED CERTIFICATE OF DESIGNATIONS OF

BROADWAY FINANCIAL CORPORATION

Broadway Financial Corporation, a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware, does hereby certify:

1.A Certificate of Designations was filed with the Secretary of State of the State of Delaware on August 21, 2013, which Certificate requires correction as permitted by subsection (f) of Section 103 of the General Corporation Law of the State of Delaware.

2.The inaccuracy in said Certificate is as follows:  the number “12,000” appearing in the second paragraph of the Certificate and in Part 1(a) of the text of the resolution set forth in the Certificate should in both cases be “14,000”.

3.The Certificate is corrected to read in its entirety as follows:

CERTIFICATE OF DESIGNATIONS

OF

SERIES F COMMON STOCK EQUIVALENT

OF

BROADWAY FINANCIAL CORPORATION

Broadway Financial Corporation, a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), in accordance with the provisions of Section 151 of the General Corporation Law of the State of Delaware, does hereby certify:

The board of directors of the Corporation (the “Board of Directors”), or a duly authorized committee of the Board of Directors, in accordance with the Charter and bylaws of the Corporation and applicable law, adopted the following resolution on August 12, 2013 creating a series of 14,000 shares of Preferred Stock of the Corporation designated as “Series F Common Stock Equivalent”.

RESOLVED, that pursuant to the provisions of the Charter and the bylaws of the Corporation and applicable law, a series of Preferred Stock, par value $0.01 per share, of the Corporation be and hereby is created, and that the designation and number of shares of such series, and the voting and other powers, preferences and relative, participating, optional or other rights, and the qualifications, limitations and restrictions thereof, of the shares of such series, are as follows:

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Part 1.Designation and Number of Shares; Fractional Shares.

(a)There is hereby created out of the authorized and unissued shares of Preferred Stock of the Corporation a series of Preferred Stock designated as the “Series F Common Stock Equivalent” (the “Designated Stock”).  The authorized number of shares of Designated Stock shall be 14,000.

(b)Each Holder of a fractional interest in a share of Designated Stock shall be entitled, proportionately, to all the rights, preferences and privileges of the Designated Stock (including the conversion, dividend, voting, redemption and liquidation rights contained in this Certificate of Designations).

Part 2.Standard Provisions.  The Standard Provisions contained in Annex A attached hereto are incorporated herein by reference in their entirety and shall be deemed to be a part of this “Certificate of Designations”) to the same extent as if such provisions had been set forth in full herein.

Part 3.Definitions.  The following terms are used in this Certificate of Designations (including the Standard Provisions in Annex A hereto) as defined below:

(a)“Common Stock” means the common stock, par value $0.01 per share, of the Corporation, or any other shares of the capital stock of the Corporation into which such shares of common stock shall be reclassified or changed.

(b)“Dividend Payment Date” means February 15, May 15, August 15, and November 15 of each year.

(c)“Junior Stock” means the Common Stock, and any other class or series of stock of the Corporation the terms of which expressly provide that it ranks junior to Designated Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Corporation.

(d)“Liquidation Amount” means $1,000 per share of Designated Stock.

(e)“Parity Stock” means any class or series of stock of the Corporation (other than Designated Stock) the terms of which do not expressly provide that such class or series shall rank senior or junior to Designated Stock as to dividend rights and/or as to rights on liquidation, dissolution or winding up of the Corporation (in each case without regard to whether dividends accrue cumulatively or non-cumulatively).

(f)“Signing Date” means February 10, 2012.

Part 4.Certain Voting Matters.

(a)Whether the vote or consent of the Holders of a plurality, majority or other portion of the shares of Designated Stock and any Common Stock has been cast or given on any matter on which under Sections 10(a) or 10(b) of the Standard Provisions forming part of this Certificate of Designations the Holders of shares of Designated Stock are entitled to vote shall be

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determined by the Corporation by reference to a number of votes per share of Designated Stock equal to the Conversion Rate (as defined in Section 2 of the Standard Provisions forming a part of this Certificate of Designations) in effect on the record date for such vote or consent, if any, or in the absence of a record date, on the date for such vote or consent.

(b)Whether the vote or consent of the Holders of a plurality, majority or other portion of the shares of Designated Stock and any Voting Parity Stock has been cast or given on any matter on which under Sections 10(c) and 10(d) of the Standard Provisions forming part of this Certificate of Designations the Holders of shares of Designated Stock are entitled to vote shall be determined by the Corporation by reference to the specified liquidation amount of the shares voted or covered by the consent as if the Corporation were liquidated on the record date for such vote or consent, if any, or, in the absence of a record date, on the date for such vote or consent.

(c)The Corporation shall aggregate any fractional interests in a share of Designated Stock with all other fractional interests having made the same voting or consent decision and shall count the number of whole votes resulting from such aggregation in accordance with the voting or consent decisions received.

[Remainder of Page Intentionally Left Blank]

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IN WITNESS WHEREOF, Broadway Financial Corporation has caused this Corrected Certificate of Designations to be signed by Wayne-Kent A. Bradshaw, its President and Chief Executive Officer, this 29th day of August, 2013.

BROADWAY FINANCIAL CORPORATION
By:
	/S/ Wayne-Kent A. Bradshaw
	Name: Wayne-Kent A. Bradshaw
	Title: President and Chief Executive Officer

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ANNEX A

STANDARD PROVISIONS

Section 1.General Matters.  Each share of Designated Stock shall be identical in all respects to every other share of Designated Stock.  The Designated Stock shall be perpetual.  The Designated Stock shall rank equally with Parity Stock and senior to Junior Stock with respect to the payment of dividends and the distribution of assets in the event of any dissolution, liquidation or winding up of the Corporation.

Section 2.Standard Definitions.  As used herein with respect to Designated Stock:

“Affiliate” of any specified “Person” means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For the purposes of this definition, “control” when used with respect to any specified Person, means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Agent Members” has the meaning set forth in Section 19(c).

“Alternate Dividend Amount” means an amount equal to the product of (1) the sum of (A) the Liquidation Amount plus (B) the amount of declared but unpaid dividends for any prior Dividend Period from and including the Second Dividend Payment Date and (2) (u) a per annum rate of 9% from and including the Second Dividend Payment Date to but excluding May 15, 2014; (v) a per annum rate of 11% from and including May 15, 2014 to but excluding August 15, 2014; (w) a per annum rate of 13% from and including August 15, 2014 to but excluding November 15, 2014; (x) a per annum rate of 15% from and including November 15, 2014 to but excluding February 15, 2015; (y) a per annum rate of 17% from and including February 15, 2015 to but excluding May 15, 2015; and a per annum rate of 19% from and including May 15, 2015.

“As-Converted Dividend Amount” means, with respect to any Dividend Period, the product of (i) the pro forma per share quarterly Common Stock dividend derived by (x) annualizing the last dividend declared during such Dividend Period on the Common Stock and (y) dividing such annualized dividend by four and (ii) the then-current Conversion Rate; provided that for any such Dividend Period during which no dividend has been declared on the Common Stock, the As-Converted Dividend Amount shall be deemed to be $0.00.

“As-Converted Liquidation Amount” has the meaning set forth in Section 4(c).

“Board of Directors” has the meaning set forth in the recitals to the Certificate of Designations.

“Business Day” means any day except Saturday, Sunday and any day on which banking institutions in the State of New York generally are authorized or required by law or other governmental actions to close.

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“Bylaws” means the bylaws of the Corporation, as they may be amended from time to time.

“Certificate of Amendment” means the amendment to the Charter of the Corporation reflecting the increase of the number of authorized shares of Common Stock to at least such number as shall be sufficient to permit the full conversion of the Designated Stock into Common Stock.

“Certificate of Designations” means the Certificate of Designations, of which these Standard Provisions form a part, as it may be amended from time to time.

“Charter” means the Corporation’s certificate or articles of incorporation, articles of association, or similar organizational document, as amended from time to time.

“Closing Price” of the Common Stock on any date of determination means the closing sale price or, if no closing sale price is reported, the last reported sale price of the shares of the Common Stock on the NASDAQ Stock Market on such date.  If the Common Stock is not traded on the NASDAQ Stock Market on any date of determination, the Closing Price of the Common Stock on such date of determination means the closing sale price as reported in the composite transactions for the principal U.S. national or regional securities exchange on which the Common Stock is so listed or quoted, or, if no closing sale price is reported, the last reported sale price on the principal U.S. national or regional securities exchange on which the Common Stock is so listed or quoted, or if the Common Stock is not so listed or quoted on a U.S. national or regional securities exchange, the last quoted bid price for the Common Stock in the over-the-counter market as reported by Pink Sheets LLC or similar organization, or, if that bid price is not available, the market price of the Common Stock on that date as determined by a nationally recognized investment banking firm (unaffiliated with the Corporation) retained by the Corporation for this purpose.

“Constituent Person” has the meaning set forth in Section 9(a).

“Conversion Agent” means the Transfer Agent, acting in its capacity as conversion agent for the Designated Stock, and its successors and assigns.

“Conversion Price” at any time means, for each share of Designated Stock, a dollar amount equal to $1.00.

“Conversion Rate” means for each share of Designated Stock, [1,000] shares of Common Stock, subject to adjustment as set forth herein.

“Corporation” has the meaning set forth in the recitals to the Certificate of Designations.

“Current Market Price” per share of Common Stock on any day means the average of the VWAP per share of Common Stock on each of the 10 consecutive Trading Days ending on the earlier of the day in question and the day before the Ex-date or other specified date with respect to the issuance or distribution requiring such computation, appropriately adjusted to take into account the occurrence during such period of any event described in Section 8.

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“Depositary” means The Depository Trust Company or its nominee or any successor depositary appointed by the Corporation.

“Designated Stock” has the meaning set forth in Part 1.

“Dividend Period” has the meaning set forth in Section 3(d).

“Dividend Record Date” has the meaning set forth in Section 3(d).

“Dividend Threshold Amount” has the meaning set forth in Section 8(a)(iv).

“Ex-date” when used with respect to any issuance or distribution, means the first date on which the shares of Common Stock or other securities trade without the right to receive an issuance or distribution.

“Exchange Property” has the meaning set forth in Section 9(a).

“Expiration Date” has the meaning set forth in Section 8(a)(v).

“Expiration Time” has the meaning set forth in Section 8(a)(v).

“Global Designated Stock” has the meaning set forth in Section 19(a).

“Holders” means the Persons in whose names the shares of the Designated Stock are registered, which may be treated by the Corporation, Transfer Agent, Registrar, paying agent and Conversion Agent as the absolute owners of the shares of Designated Stock for the purpose of making payment and settling the related conversions and for all other purposes.

“Liquidation Participation Amount” has the meaning set forth in Section 4(c).

“Liquidation Preference” has the meaning set forth in Section 4(a).

“Mandatory Conversion Date” means the later of (a) the fifth Business Day after the date on which the Shareholder Approval has been received and (b) the Original Issue Date.

“Market Disruption Event” means any of the following events that has occurred:

(i)any suspension of, or limitation imposed on, trading by any exchange or quotation system on which the Closing Price is determined pursuant to the definition of Closing Price (a “Relevant Exchange” during the one-hour period prior to the close of trading for the regular trading session on the Relevant Exchange (or for purposes of determining the VWAP per share of Common Stock any period or periods aggregating one half-hour or longer during the regular trading session on the relevant day) and whether by reason of movements in price exceeding limits permitted by the Relevant Exchange, or otherwise relating to Common Stock or in futures or options contracts relating to the Common Stock on the Relevant Exchange;

(ii)any event (other than an event described in clause (iii) below) that disrupts or impairs (as determined by the Corporation in its reasonable discretion) the ability of market participants during the one-hour period prior to the close of trading for the regular trading

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session on the Relevant Exchange (or for purposes of determining the VWAP per share of Common Stock any period or periods aggregating one half-hour or longer during the regular trading session on the relevant day) in general to effect transactions in, or obtain market values for, the Common Stock on the Relevant Exchange or to effect transactions in, or obtain market values for, futures or options contracts relating to the Common Stock on the Relevant Exchange; or

(iii)the failure to open of the exchange on which futures or options contracts relating to the Common Stock, are traded or the closure of such exchange prior to its respective scheduled closing time for the regular trading session on such day (without regard to after hours or any other trading outside of the regular trading session hours) unless such earlier closing time is announced by such exchange at least one hour prior to the earlier of the actual closing time for the regular trading session on such day, and the submission deadline for orders to be entered into such exchange for execution at the actual closing time on such day.

“Officer” means the Chief Executive Officer, the Chairman, the Chief Administrative Officer, any Vice Chairman, the Chief Financial Officer, the Controller, the Chief Accounting Officer, the Treasurer, any Assistant Treasurer, the General Counsel and Corporate Secretary and any Assistant Secretary of the Corporation.

“Officers’ Certificate” means a certificate signed (i) by the Chief Executive Officer, the Chairman, the Chief Administrative Officer, any Vice Chairman, the Chief Financial Officer, the Controller, the Chief Accounting Officer, or the Treasurer and (ii) by any Assistant Treasurer, the General Counsel and Corporate Secretary or any Assistant Secretary of the Corporation, and delivered to the Conversion Agent.

“Original Issue Date” means the date on which shares of Designated Stock are first issued.

“Person” means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint-stock company, limited liability company, common trust fund or trust.

“Preferred Director” has the meaning set forth in Section 10(c).

“Preferred Directors” has the meaning set forth in Section 10(c).

“Preferred Stock” means any and all series of preferred stock of the Corporation, including the Designated Stock.

“Purchased Shares” has the meaning set forth in Section 8(a)(v).

“Record Date” has the meaning set forth in Section 8(d).

“Registrar” means the Transfer Agent acting in its capacity as registrar for the Designated Stock, and its successors and assigns.

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“Relevant Exchange” has the meaning set forth above in the definition of Market Disruption Event.

“Reorganization Event” has the meaning set forth in Section 9(a).

“Second Dividend Payment Date” has the meaning set forth in Section 3(b).

“Series F Common Stock Equivalent” has the meaning set forth in the recitals above.

“Share Dilution Amount” has the meaning set forth in Section 3(e).

“Shareholder Approval” means the approval by the stockholders of the Corporation of an amendment to the Charter of the Corporation to increase the number of authorized shares of Common Stock to at least such number as shall be sufficient to permit the full conversion of the Designated Stock into Common Stock.

“Standard Provisions” mean these Standard Provisions that form a part of the Certificate of Designations relating to the Designated Stock.

“Trading Day” means, for purposes of determining a VWAP or Closing Price per share of Common Stock or a Closing Price, a Business Day on which the Relevant Exchange is scheduled to be open for business and on which there has not occurred or does not exist a Market Disruption Event.

“Transfer Agent” means the Corporation acting as Transfer Agent, Registrar, paying agent and Conversion Agent for the Designated Stock, and its successors and assigns.

“Voting Parity Stock” means, with regard to any matter as to which the Holders of Designated Stock are entitled to vote as specified in Section 10(c) of these Standard Provisions that form a part of the Certificate of Designations, any and all series of Parity Stock upon which like voting rights with respect to the election of directors have been conferred and are exercisable with respect to such matter.

“VWAP” per share of the Common Stock on any Trading Day means the per share volume-weighted average price as displayed under the heading Bloomberg VWAP on Bloomberg page C US <equity> AQR (or its equivalent successor if such page is not available) in respect of the period from the open of trading on the relevant Trading Day until the close of trading on the relevant Trading Day (or if such volume-weighted average price is unavailable, the market price of one share of Common Stock on such Trading Days determined, using a volume-weighted average method, by a nationally recognized investment banking firm (unaffiliated with the Corporation) retained for this purpose by the Corporation).

Section 3.Dividends.

(a)Rate.  Holders of Designated Stock shall be entitled to receive, on each share of Designated Stock if, as and when declared by the Board of Directors or a duly authorized committee of the Board of Directors, but only out of assets legally available therefor, dividends

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and any other distributions, whether payable in cash, securities or any other form of property or assets, in an amount determined as described in Sections 3(b) and 3(c) below.

(b)Subject to Section 3(a) above, from and including the Original Issue Date to but excluding February 15, 2014 (the “Second Dividend Payment Date”), the Board of Directors or a duly authorized committee of the Board of Directors may not declare and pay any dividend or make any distribution (including, but not limited to, regular quarterly dividends) in respect of Common Stock, whether payable in cash, securities or any other form of property or assets, unless the Board of Directors or a duly authorized committee of the Board of Directors declares and pays to the Holders of the Designated Stock, at the same time (irrespective of whether or not such time is a Dividend Payment Date) and on the same terms as holders of Common Stock, an amount per share of Designated Stock equal to the product of (i) any per share dividend or distribution, as applicable, declared and paid or made in respect of each share of Common Stock and (ii) the then-current Conversion Rate.

Dividends payable on the Designated Stock pursuant to this Section 3(b) are non-cumulative.  If the Board of Directors, the Preferred Stock Committee or any other duly authorized committee thereof does not declare a dividend on the Designated Stock during the period described in this Section 3(b), that dividend shall not accrue, and the Corporation shall have no obligation to pay, and Holders shall have no right to receive, a dividend for such period, whether or not dividends on the Designated Stock or any series of Preferred Stock or common stock are declared for any subsequent Dividend Period with respect to the Designated Stock, Parity Stock, Junior Stock or any other class or series of authorized Preferred Stock of the Corporation.  References herein to the “accrual” of non-cumulative dividends refer only to the determination of the amount of such dividend and do not imply that any right to a dividend arises prior to the date on which a dividend is declared.

(c)Subject to Section 3(a) above, for each Dividend Period from and including the Second Dividend Payment Date, non-cumulative cash dividends shall be payable in an amount equal to the greater of (i) the As-Converted Dividend Amount and (ii) the Alternate Dividend Amount.

Dividends payable on the Designated Stock pursuant to this Section 3(c) are non-cumulative.  If the Board of Directors, the Preferred Stock Committee or any other duly authorized committee thereof does not declare a dividend on the Designated Stock during the period described in this Section 3(b), that dividend shall not accrue, and the Corporation shall have no obligation to pay, and Holders shall have no right to receive, a dividend for such period, whether or not dividends on the Designated Stock or any series of Preferred Stock or common stock are declared for any subsequent Dividend Period with respect to the Designated Stock, Parity Stock, Junior Stock or any other class or series of authorized Preferred Stock of the Corporation.  References herein to the “accrual” of non-cumulative dividends refer only to the determination of the amount of such dividend and do not imply that any right to a dividend arises prior to the date on which a dividend is declared.

The dividends described in this Section 3(c) shall be payable quarterly in arrears on each Dividend Payment Date, commencing with the Dividend Period ending May 14, 2014.

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(d)In the event that any Dividend Payment Date would otherwise fall on a day that is not a Business Day, the dividend payment due on that date shall be postponed to the next day that is a Business Day and no additional dividends shall accrue as a result of that postponement.  The period from and including any Dividend Payment Date to, but excluding, the next Dividend Payment Date is a “Dividend Period”, provided that the initial Dividend Period shall be the period from and including the Second Dividend Payment Date to but excluding the next Dividend Payment Date.

Dividends that are payable pursuant to Section 3(c) on Designated Stock in respect of any Dividend Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months.  The amount of dividends payable pursuant to Section 3(c) on Designated Stock on any date prior to the end of a Dividend Period or on any Dividend Payment Date for a Dividend Period that is shorter than a full Dividend Period shall be computed on the basis of a 360-day year consisting of twelve 30-day months, and actual days elapsed over a 30-day month.

Dividends that are payable on Designated Stock shall be payable to Holders of record of Designated Stock as they appear on the stock register of the Corporation on the applicable record date, which (i) with respect to dividends payable pursuant to Section 3(b), shall be the same day as the record date for the payment of the corresponding dividends to the holders of shares of Common Stock and (ii) with respect to dividends payable pursuant to Section 3(c), shall be the 15th calendar day immediately preceding such Dividend Payment Date or such other record date fixed by the Board of Directors or any duly authorized committee of the Board of Directors that is not more than 60 nor less than 10 days prior to such Dividend Payment Date (each, a “Dividend Record Date”).  Any such day that is a Dividend Record Date shall be a Dividend Record Date whether or not such day is a Business Day.

Holders of Designated Stock shall not be entitled to any dividends, whether payable in cash, securities or other property, other than dividends (if any) declared and payable on Designated Stock as specified in this Section 3 (subject to the other provisions of the Certificate of Designations).

(e)Priority of Dividends.  So long as any share of Designated Stock remains outstanding, no dividend or distribution shall be declared or paid on the Common Stock or any other shares of Junior Stock (other than dividends payable solely in shares of Common Stock or in shares of the same series of the Junior Stock for which the dividend is being paid) or Parity Stock, subject to the immediately following paragraph in the case of Parity Stock, and no Common Stock, Junior Stock or Parity Stock shall be, directly or indirectly, purchased, redeemed or otherwise acquired for consideration by the Corporation or any of its subsidiaries unless all accrued and unpaid dividends for all past Dividend Periods, including the latest completed Dividend Period on all outstanding shares of Designated Stock have been or are contemporaneously declared and paid in full (or have been declared and a sum sufficient for the payment thereof has been set aside for the benefit of the holders of shares of Designated Stock on the applicable record date).  The foregoing limitation shall not apply to (i) redemptions, purchases or other acquisitions of shares of Common Stock or other Junior Stock in connection with the administration of any employee benefit plan in the ordinary course of business (including purchases to offset the Share Dilution Amount (as defined below) pursuant to a publicly announced repurchase plan) and consistent with past practice, provided that any purchases to offset the Share Dilution Amount shall in no event exceed the Share Dilution

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Amount; (ii) any dividends or distributions of rights of Junior Stock in connection with a stockholders’ rights plan or any redemption or repurchase of rights pursuant to any stockholders’ rights plan; (iii) the acquisition by the Corporation or any of its subsidiaries of record ownership in Junior Stock or Parity Stock for the beneficial ownership of any other persons (other than the Corporation or any of its subsidiaries), including as trustees or custodians; and (iv) the exchange or conversion of Junior Stock for or into other Junior Stock or of Parity Stock for or into other Parity Stock (with the same or lesser aggregate liquidation amount) or Junior Stock, in each case in this clause (iv), solely to the extent required pursuant to binding contractual agreements entered into prior to the Signing Date or any subsequent agreement for the accelerated exercise, settlement or exchange thereof for Common Stock.  “Share Dilution Amount” means the increase in the number of diluted shares outstanding (determined in accordance with generally accepted accounting principles in the United States, and as measured from the date of the Corporation’s consolidated financial statements most recently filed with the Securities and Exchange Commission prior to the Original Issue Date) resulting from the grant, vesting or exercise of equity-based compensation to employees and equitably adjusted for any stock split, stock dividend, reverse stock split, reclassification or similar transaction.

When dividends are not paid (or declared and a sum sufficient for payment thereof set aside for the benefit of the holders thereof on the applicable record date) on any Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within a Dividend Period related to such Dividend Payment Date) in full upon Designated Stock and any shares of Parity Stock, all dividends declared on Designated Stock and all such Parity Stock and payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) shall be declared pro rata so that the respective amounts of such dividends declared shall bear the same ratio to each other as all accrued and unpaid dividends per share on the shares of Designated Stock (including, if applicable as provided in Section 3(c) above, dividends on such amount) and all Parity Stock payable on such Dividend Payment Date (or, in the case of Parity Stock having dividend payment dates different from the Dividend Payment Dates, on a dividend payment date falling within the Dividend Period related to such Dividend Payment Date) (subject to their having been declared by the Board of Directors or a duly authorized committee of the Board of Directors out of legally available funds and including, in the case of Parity Stock that bears cumulative dividends, all accrued but unpaid dividends) bear to each other.  Any remaining accrued but unpaid cumulative dividends shall continue and be cumulative thereafter, shall compound on each subsequent Dividend Payment Date and shall be payable in arrears on each Dividend Payment Date, pursuant to Section 3(c) above.  If the Board of Directors or a duly authorized committee of the Board of Directors determines not to pay any dividend or a full dividend on a Dividend Payment Date, the Corporation shall provide written notice to the Holders of Designated Stock prior to such Dividend Payment Date.

Subject to the foregoing in this Section 3, and not otherwise, such dividends (payable in cash, securities or other property) as may be determined by the Board of Directors or any duly authorized committee of the Board of Directors may be declared and paid on any securities, including Common Stock and other Junior Stock, from time to time out of any funds legally

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available for such payment, and Holders of Designated Stock shall not be entitled to participate in any such dividends.

Section 4.Liquidation Rights.

(a)Voluntary or Involuntary Liquidation.  In the event of any liquidation, dissolution or winding up of the affairs of the Corporation, whether voluntary or involuntary, Holders of Designated Stock shall be entitled to receive for each share of Designated Stock, out of the assets of the Corporation or proceeds thereof (whether capital or surplus) available for distribution to stockholders of the Corporation, subject to the rights of any creditors of the Corporation, before any distribution of such assets or proceeds is made to or set aside for the holders of Common Stock or any other Junior Stock or other stock of the Corporation ranking junior to Designated Stock as to such distribution, payment in full in an amount (the “Liquidation Preference” equal to the sum of (x) the Liquidation Amount per share and (y) the amount of any accrued and unpaid dividends declared to the date of payment.

(b)Partial Payment.  If in any distribution described in Section 4(a) above the assets of the Corporation or proceeds thereof are not sufficient to pay in full the amounts payable with respect to all outstanding shares of Designated Stock and the corresponding amounts payable with respect to any other stock of the Corporation ranking equally with Designated Stock as to such distribution, Holders of Designated Stock and the holders of such other stock shall share ratably in any such distribution in proportion to the full respective distributions to which they are entitled.

(c)Residual Distributions.  If the Liquidation Preference has been paid in full to all Holders of Designated Stock and the corresponding amounts payable with respect to any other stock of the Corporation ranking equally with Designated Stock as to such distribution has been paid in full, the holders of other stock of the Corporation shall be entitled to receive all remaining assets of the Corporation (or proceeds thereof) according to their respective rights and preferences; provided that if the amount of such assets or proceeds to be distributed with respect to a number of shares of Common Stock equal to the then-current Conversion Rate (the “As-Converted Liquidation Amount” exceeds the Liquidation Preference, Holders of Designated Stock shall be entitled to receive, for each share of Designated Stock, an additional amount (the “Liquidation Participation Amount” out of such assets or proceeds such that the As-Converted Liquidation Amount equals the sum of the Liquidation Preference plus the Liquidation Participation Amount, after making appropriate adjustment such that the holders of Designated Stock receive the same amount on an as-converted basis as the holders of a number of shares of Common Stock equal to the then-current Conversion Rate.

(d)Merger, Consolidation and Sale of Assets Not Liquidation.  For purposes of this Section 4, the merger or consolidation of the Corporation with any other corporation or other entity, including a merger or consolidation in which the Holders of Designated Stock receive cash, securities or other property for their shares, or the sale, lease or exchange (for cash, securities or other property) of all or substantially all of the assets of the Corporation, shall not constitute a liquidation, dissolution or winding up of the Corporation.

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Section 5.Optional Redemption.  The Designated Stock shall not be redeemable either at the Corporation’s option or at the option of the Holders at any time.

Section 6.Mandatory Conversion on the Mandatory Conversion Date.  Effective as of the close of business on the Mandatory Conversion Date with respect to any share of Designated Stock, such share of Designated Stock shall automatically convert into shares of Common Stock at the then-current Conversion Rate.

Section 7.Conversion Procedures.

(a)Effect of Mandatory Conversion Date.  Effective immediately prior to the close of business on the Mandatory Conversion Date, dividends shall no longer be declared on any such converted shares of Designated Stock and such shares of Designated Stock shall cease to be outstanding, in each case, subject to the right of Holders to receive any (i) declared but unpaid dividends or distributions (with respect to dividends or distributions described in Section 3(b) above) on such shares, (ii) declared but unpaid dividends or distributions (with respect to dividends or distributions described in Section 3(c) above) on such shares in an amount calculated as if the Mandatory Conversion Date were a Dividend Payment Date and (iii) any other payments to which they are otherwise entitled pursuant to the terms hereof.

(b)Rights Prior to Conversion.  No allowance or adjustment, except pursuant to Section 8 below, shall be made in respect of dividends payable to holders of the Common Stock of record as of any date prior to the close of business on the Mandatory Conversion Date (except to the extent of the dividends described in Sections 3(b) and 3(c) above).  Prior to the close of business on the Mandatory Conversion Date, shares of Common Stock issuable upon conversion of, or other securities issuable upon conversion of, any shares of Designated Stock shall not be deemed outstanding for any purpose, and Holders shall have no rights with respect to the Common Stock or other securities issuable upon conversion (including voting rights, rights to respond to tender offers for the Common Stock or other securities issuable upon conversion and rights to receive any dividends or other distributions on the Common Stock or other securities issuable upon conversion) by virtue of holding shares of Designated Stock (except to the extent of the dividends described in Sections 3(b) and 3(c) above and the voting rights described in Section 10(a) below).

(c)Record Holder as of Conversion Date.  The Person or Persons entitled to receive the Common Stock and/or cash, securities or other property issuable upon conversion of Designated Stock shall be treated for all purposes as the record holder(s) of such shares of Common Stock and/or securities as of the close of business on the Mandatory Conversion Date.  In the event that a Holder shall not by written notice designate the name in which shares of Common Stock and/or cash, securities or other property to be issued or paid upon conversion of shares of Designated Stock should be registered or paid or the manner in which such shares should be delivered, the Corporation shall be entitled to register and deliver such shares, and make such payment, in the name of the Holder (as of the close of business on the Mandatory Conversion Date) and in the manner shown on the records of the Corporation or, in the case of global certificates, through book-entry transfer through the Depositary.

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(d)Reacquired Shares.  Shares of Designated Stock duly converted in accordance with this Certificate of Designations, or otherwise reacquired by the Corporation, will resume the status of authorized and unissued shares of Preferred Stock of the Corporation, undesignated as to series and available for future issuance; provided that any such shares of Designated Stock may be reissued only as shares of any series of Preferred Stock of the Corporation other than Designated Stock.  The Corporation may from time-to-time take such appropriate action as may be necessary to reduce the authorized number of shares of Designated Stock.

Section 8.Anti-Dilution Adjustments.

(a)Adjustments.  The Conversion Rate will be subject to adjustment, without duplication, under the following circumstances:

(i) the issuance of Common Stock as a dividend or distribution to all holders of Common Stock, or a subdivision or combination (including, without limitation, a reverse stock split) of Common Stock, in which event the Conversion Rate will be adjusted based on the following formula:

CR1 = CR0 x (OS1 / OS0) where,

CR0 = the Conversion Rate in effect at the close of business on the Record Date

CR1 = the Conversion Rate in effect immediately after the Record Date

OS0 = the number of shares of Common Stock outstanding at the close of business on the Record Date prior to giving effect to such event

OS’ = the number of shares of Common Stock that would be outstanding immediately after, and solely as a result of, such event

Notwithstanding the foregoing, with respect to any dividend or distribution subject to Section 3(b) above (but only with respect to such dividend or distribution), no adjustment will be made for the issuance of Common Stock as a dividend or distribution to all holders of Common Stock that is made in lieu of a quarterly or annual cash dividend or distribution to such holders.

(ii) the issuance to all holders of Common Stock of certain rights or warrants entitling them for a period expiring 60 days or less from the date of issuance of such rights or warrants to purchase shares of Common Stock (or securities convertible into Common Stock) at less than (or having a conversion price per share less than) the Current Market Price as of the Record Date, in which event each Conversion Rate will be adjusted based on the following formula:

CR1 = CR0 x (OS0 + X) / (OS0 + Y) where,

CR0 = the Conversion Rate in effect at the close of business on the Record Date

CR’ = the Conversion Rate in effect immediately after the Record Date

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OS0 = the number of shares of Common Stock outstanding at the close of business on the Record Date

X= the total number of shares of Common Stock issuable pursuant to such rights (or upon conversion of such securities)

Y= the aggregate price payable to exercise such rights (or the conversion price for such securities paid upon conversion) divided by the average of the VWAP of the Common Stock over each of the ten consecutive Trading Days prior to the Business Day immediately preceding the announcement of the issuance of such rights

However, the Conversion Rate will be readjusted to the extent that any such rights or warrants are not exercised prior to their expiration.

(iii) the dividend or other distribution to all holders of Common Stock of shares of capital stock of the Corporation (other than common stock) or evidences of its indebtedness or its assets (excluding any dividend, distribution or issuance covered by clauses (i) or (ii) above or (iv) or (v) below) in which event the Conversion Rate will be adjusted based on the following formula:

CR1 = CR0x SP0/ (SP 0 – FMV)

where,

CR0 = the Conversion Rate in effect at the close of business on the Record Date

CR1 = the Conversion Rate in effect immediately after the Record Date

SP0= the Current Market Price as of the Record Date

FMV = the fair market value (as determined in good faith by the Board of Directors or a duly authorized committee of the Board of Directors) on the Record Date of the shares of capital stock of the Corporation, evidences of indebtedness or assets so distributed, expressed as an amount per share of Common Stock

However, if the transaction that gives rise to an adjustment pursuant to this clause (iii) is one pursuant to which the payment of a dividend or other distribution on Common Stock consists of shares of capital stock of the Corporation or capital stock of, or similar equity interests in, a subsidiary or other business unit of the Corporation, (i.e., a spin-off) that are, or, when issued, will be, traded on the NASDAQ Stock Market or any other national or regional securities exchange or market, then the Conversion Rate will instead be adjusted based on the following formula:

CR1 = CR0 x (FMV0 + MP0) / MP0

where,

CR0= the Conversion Rate in effect at the close of business on the Record Date

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CR1= the Conversion Rate in effect immediately after the Record Date

FMV0 = the average of the VWAP of the capital stock of the Corporation, or the capital stock or similar equity interests in a subsidiary or other business unit of the Corporation, distributed to holders of Common Stock applicable to one share of Common Stock over each of the 10 consecutive Trading Days commencing on and including the third Trading Day after the date on which “ex-distribution trading” commences for such dividend or distribution on the NASDAQ Stock Market or such other national or regional exchange or market on which Common Stock, or the capital stock or similar equity interests in a subsidiary or other business unit of the Company, is then listed or quoted

MP0 = the average of the VWAP of the Common Stock over each of the 10 consecutive Trading Days commencing on and including the third Trading Day after the date on which “ex-distribution trading” commences for such dividend or distribution on the NASDAQ Stock Market or such other national or regional exchange or market on which Common Stock is then listed or quoted

(iv) the Corporation makes a distribution consisting exclusively of cash to all holders of Common Stock, excluding (a) any cash dividend on Common Stock to the extent that the aggregate cash dividend per share of Common Stock does not exceed $0.01 in any fiscal quarter (the “Dividend Threshold Amount” (b) any cash that is distributed as part of a distribution referred to in clause (iii) above, (c) any consideration payable in connection with a tender or exchange offer made by the Corporation or any of its subsidiaries referred to in clause (v) below and (d) any cash dividend on the Common Stock to the extent a corresponding cash dividend is paid on the Designated Stock pursuant to Section 3(b) above, in which event, the Conversion Rate will be adjusted based on the following formula:

CR1= CR0 x SP0 / (SP0 – C)

where,

CR0 = the Conversion Rate in effect at the close of business on the Record Date

CR1 = the Conversion Rate in effect immediately after the Record Date

SP0= the Current Market Price as of the Record Date

C= the amount in cash per share of Common Stock of the distribution, as determined pursuant to the following paragraph

If an adjustment is required to be made as set forth in this clause (iv) as a result of a distribution (a) that is a regularly scheduled quarterly dividend, such adjustment would be based on the amount by which such dividend exceeds the Dividend Threshold Amount or (b) that is not a regularly scheduled quarterly dividend, such adjustment would be based on the full amount of such distribution.

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The Dividend Threshold Amount is subject to adjustment on an inversely proportional basis whenever the Conversion Rate is adjusted, provided that no adjustment will be made to the Dividend Threshold Amount for any adjustment made to the Conversion Rate pursuant to this clause (iv).

(v) the Corporation or one or more of its subsidiaries makes purchases of Common Stock pursuant to a tender offer or exchange offer by the Corporation or a subsidiary of the Corporation for Common Stock to the extent that the cash and value of any other consideration included in the payment per share of Common Stock validly tendered or exchanged exceeds the VWAP per share of Common Stock on the Trading Day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer (the “Expiration Date” in which event the Conversion Rate will be adjusted based on the following formula:

CR1= CR0 x [(FMV + (SP1 x OS1)] / (SP1 x OS0)

where,

CR0 = the Conversion Rate in effect at the close of business on the Expiration Date

CR’ = the Conversion Rate in effect immediately after the Expiration Date

FMV = the fair market value (as determined in good faith by the Board of Directors or a duly authorized committee of the Board of Directors), on the Expiration Date, of the aggregate value of all cash and any other consideration paid or payable for shares validly tendered or exchanged and not withdrawn as of the Expiration Date (the “Purchased Shares”)

OS’ = the number of shares of Common Stock outstanding as of the last time tenders or exchanges may be made pursuant to such tender or exchange offer (the “Expiration Time”), less any Purchased Shares

OS0 = the number of shares of Common Stock outstanding at the Expiration Time, including any Purchased Shares

SP1= the average of the VWAP of the Common Stock over each of the ten consecutive Trading Days commencing with the Trading Day immediately after the Expiration Date.

(b)Calculation of Adjustments.  All adjustments to the Conversion Rate shall be calculated by the Corporation to the nearest 1/10,000th of one share of Common Stock (or if there is not a nearest 1/10,000th of a share, to the next lower 1/10,000th of a share).  No adjustment to the Conversion Rate will be required unless such adjustment would require an increase or decrease of at least one percent; provided, however, that any such minor adjustments that are not required to be made will be carried forward and taken into account in any subsequent adjustment, and provided further that any such adjustment of less than one percent that has not been made will be made upon (x) the end of each fiscal year of the Corporation and (y) the Mandatory Conversion Date.

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(c)When No Adjustment Required.

(i)Except as otherwise provided in this Section 8, the Conversion Rate will not be adjusted for the issuance of Common Stock or any securities convertible into or exchangeable for Common Stock or carrying the right to purchase any of the foregoing or for the repurchase of Common Stock.

(ii)No adjustment of the Conversion Rate need be made as a result of: (A) the issuance of the rights; (B) the distribution of separate certificates representing the rights; (C) the exercise or redemption of the rights in accordance with any rights agreement; or (D) the termination or invalidation of the rights, in each case, pursuant to the Corporation’s stockholder rights plan existing on the Signing Date, as amended, modified, or supplemented from time to time, or any newly adopted stockholder rights plans; provided, however, that to the extent that the Corporation (x) has a stockholder rights plan in effect on the Mandatory Conversion Date (including the Corporation’s rights plan, if any, existing on the Signing Date) or (y) had a stockholder rights plan take effect after the Signing Date that is no longer in effect on the Mandatory Conversion Date and the rights under such plan were exercised, the Holder shall receive, in addition to the shares of Common Stock, the rights under such rights plan, unless, prior to the Mandatory Conversion Date, the rights have separated from the Common Stock, in which case the Conversion Rate will be adjusted at the time of separation as if the Corporation made a distribution to all holders of Common Stock of shares of capital stock of the Corporation or evidences of its indebtedness or its assets as described in Section 8 (a)(iii), subject to readjustment in the event of the expiration, termination or redemption of the rights of a stockholder rights plan in effect on the Mandatory Conversion Date.

(iii)No adjustment to the Conversion Rate need be made:

(A)upon the issuance of any shares of Common Stock pursuant to any present or future plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and the investment of additional optional amounts in Common Stock under any plan;

(B)upon the issuance of any shares of Common Stock or options or rights to purchase those shares pursuant to any present or future employee, director or consultant benefit plan or program of or assumed by the Corporation or any of its subsidiaries; or

(C)upon the issuance of any shares of Common Stock pursuant to any option, warrant, right, or exercisable, exchangeable or convertible security outstanding as of the Signing Date.

(iv)No adjustment to the Conversion Rate need be made for a transaction referred to in Section 8 (a)(i), (ii), (iii), (iv) or (v) above if Holders may participate in the transaction that would otherwise require an adjustment on a basis and with notice that the Board of Directors or a duly authorized committee of the Board of Directors determines to be fair and appropriate in light of the basis and notice on which holders of Common Stock participate in the transaction.

(v)No adjustment to the Conversion Rate need be made for a change in the par value of the Common Stock.

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(vi)No adjustment to the Conversion Rate will be made to the extent that such adjustment would result in the Conversion Price being less than the par value of the Common Stock.

(d)Record Date.  For purposes of this Section 8, “Record Date”), means, with respect to any dividend, distribution or other transaction or event in which the holders of the Common Stock have the right to receive any cash, securities or other property or in which the Common Stock (or other applicable security) is exchanged for or converted into any combination of cash, securities or other property, the date fixed for determination of holders of the Common Stock entitled to receive such cash, securities or other property (whether such date is fixed by the Board of Directors or a duly authorized committee of the Board of Directors or by statute, contract or otherwise).

(e)Successive Adjustments.  After an adjustment to the Conversion Rate under this Section 8, any subsequent event requiring an adjustment under this Section 8 shall cause an adjustment to such Conversion Rate as so adjusted.

(f)Multiple Adjustments.  For the avoidance of doubt, if an event occurs that would trigger an adjustment to the Conversion Rate pursuant to this Section 8 under more than one subsection hereof, such event, to the extent fully taken into account in a single adjustment, shall not result in multiple adjustments hereunder.

(g)Other Events.  If any event occurs as to which the failure to make any adjustment to the Conversion Rate would adversely affect the conversion rights or conversion value represented by the Designated Stock, then the Board of Directors or a duly authorized committee of the Board of Directors, acting in good faith, shall determine the adjustment, if any, on a basis consistent with the essential intent and principles herein, necessary to preserve, without dilution, the conversion rights and conversion value represented by the Designated Stock.

(h)Notice of Adjustments.  Whenever a Conversion Rate is adjusted as provided under this Section 8, the Corporation shall within 10 Business Days following the occurrence of an event that requires such adjustment (or if the Corporation is not aware of such occurrence, as soon as reasonably practicable after becoming so aware):

(i)  compute the adjusted applicable Conversion Rate in accordance with this Section 8 and prepare and transmit to the Conversion Agent an Officers’ Certificate setting forth the applicable Conversion Rate, as the case may be, the method of calculation thereof in reasonable detail, and the facts requiring such adjustment and upon which such adjustment is based; and

(ii)  provide a written notice to the Holders of the occurrence of such event and a statement in reasonable detail setting forth the method by which the adjustment to the applicable Conversion Rate was determined and setting forth the adjusted applicable Conversion Rate.

(i)Conversion Agent.  The Conversion Agent shall not at any time be under any duty or responsibility to any Holder to determine whether any facts exist that may require any adjustment of the applicable Conversion Rate or with respect to the nature or extent or calculation of any such adjustment when made, or with respect to the method employed in making the same.  The Conversion Agent shall be fully authorized and

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protected in relying on any Officers’ Certificate delivered pursuant to Section 8(h) above and any adjustment contained therein and the Conversion Agent shall not be deemed to have knowledge of any adjustment unless and until it has received such certificate.  The Conversion Agent shall not be accountable with respect to the validity or value (or the kind or amount) of any shares of Common Stock, or of any securities or property, that may at the time be issued or delivered with respect to any Designated Stock; and the Conversion Agent makes no representation with respect thereto.  The Conversion Agent shall not be responsible for any failure of the Corporation to issue, transfer or deliver any shares of Common Stock pursuant to the conversion of Designated Stock or to comply with any of the duties, responsibilities or covenants of the Corporation contained in this Section 8.

(j)Fractional Shares.  No fractional shares of Common Stock will be issued to holders of the Designated Stock upon conversion.  In lieu of fractional shares otherwise issuable, holders will be entitled to receive an amount in cash equal to the fraction of a share of Common Stock, calculated on an aggregate basis in respect of the shares of Designated Stock being converted, multiplied by the Closing Price of the Common Stock on the Trading Day immediately preceding the Mandatory Conversion Date.

Section 9.Adjustment for Reorganization Events.

(a)Reorganization Events.  In the event of:

(i)any consolidation or merger of the Corporation with or into another Person (other than a merger or consolidation in which the Corporation is the continuing corporation and in which the shares of Common Stock outstanding immediately prior to the merger or consolidation are not exchanged for, or converted into, cash, securities, or other property of the Corporation or another corporation);

(ii)any sale, transfer, lease or conveyance to another Person of all or substantially all the property and assets of the Corporation; or

(iii)any statutory exchange of securities of the Corporation with another Person (other than in connection with a merger or acquisition), any reclassification or any binding share exchange which reclassifies or changes its outstanding Common Stock;

each of which is referred to as a “Reorganization Event”), each share of the Designated Stock outstanding immediately prior to such Reorganization Event will, without the consent of the holders of the Designated Stock, become convertible into the kind and amount of securities, cash and other property (the “Exchange Property”), receivable in such Reorganization Event (without any interest thereon, and, solely with respect to dividends or distributions described in Section 3(b) above, without any right (in connection with such Reorganization Event) to dividends or distribution thereon which have a record date that is prior to the Mandatory Conversion Date) per share of Common Stock by a holder of Common Stock that is not a Person with which the Corporation consolidated or into which the Corporation merged or which merged into the Corporation or to which such sale or transfer was made, as the case may be (any such Person, a “Constituent Person”), or an Affiliate of a Constituent Person to the extent such Reorganization Event provides for different treatment of Common Stock held by Affiliates of the

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Corporation and non-Affiliates; provided that if the kind and amount of Exchange Property receivable upon such Reorganization Event is not the same for each share of Common Stock held immediately prior to such Reorganization Event by a Person other than a Constituent Person or an Affiliate thereof, then for the purpose of this Section 9(a), the Exchange Property receivable upon such Reorganization Event will be deemed to be the weighted average of the types and amounts of consideration received by the holders of Common Stock that affirmatively make an election (or of all such holders if none make an election).  If the Mandatory Conversion Date follows a Reorganization Event, the Conversion Rate then in effect will be applied to the amount on the Mandatory Conversion Date of such Exchange Property received per share of Common Stock, as determined in accordance with this Section 9.

(b)Successive Reorganization Events.  The above provisions of this Section 9 shall similarly apply to successive Reorganization Events and the provisions of Section 8 shall apply to any shares of capital stock of the Corporation (or any successor) received by the holders of the Common Stock in any such Reorganization Event.

(c)Reorganization Event Notice.  The Corporation (or any successor) shall, within 20 days of the occurrence of any Reorganization Event, provide written notice to the Holders of such occurrence of such event and of the kind and amount of the cash, securities or other property that constitutes the Exchange Property.  Failure to deliver such notice shall not affect the operation of this Section 9.

Section 10.Voting Rights.

(a)General.  Each share of Designated Stock shall entitle the holder thereof to a number of votes equal to the Conversion Rate in effect on the record date for the vote or consent on all matters submitted to a vote of the stockholders of the Corporation.

(b)Single Class.  Except as otherwise provided herein, in the Charter or by applicable law, the Holders of shares of Designated Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation.

(c)Preferred Stock Directors.  Whenever, at any time or times, from and including the Second Dividend Payment Date, dividends payable on the shares of Designated Stock have not been paid for an aggregate of six quarterly Dividend Periods or more, whether or not consecutive, the authorized number of directors of the Corporation shall automatically be increased by two and the holders of the Designated Stock shall have the right, with holders of shares of any one or more other classes or series of Voting Parity Stock outstanding at the time, voting together as a class (and with voting rights allocated pro rata based on the liquidation preference of each such class or series), to elect two directors (hereinafter the “Preferred Directors”), and each a “Preferred Director”), to fill such newly created directorships at the Corporation’s next annual meeting of stockholders (or at a special meeting called for that purpose prior to such next annual meeting) and at each subsequent annual meeting of stockholders until all accrued and unpaid dividends for all past Dividend Periods, including the latest completed Dividend Period, on all outstanding shares of Designated Stock have been declared and paid in full, at which time such right shall terminate with respect to the Designated Stock, except as herein or by law expressly provided, subject to revesting in the event of each and every subsequent default

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of the character above mentioned; provided that it shall be a qualification for election for any Preferred Director that the election of such Preferred Director shall not cause the Corporation to violate any corporate governance requirements of any securities exchange or other trading facility on which securities of the Corporation may then be listed or traded that listed or traded companies must have a majority of independent directors.  Upon any termination of the right of the Holders of shares of Designated Stock and Voting Parity Stock as a class to vote for directors as provided above, the Preferred Directors shall cease to be qualified as directors, the term of office of all Preferred Directors then in office shall terminate immediately, and the authorized number of directors shall be reduced by the number of Preferred Directors elected pursuant hereto.  Any Preferred Director may be removed at any time, without cause, and any vacancy created thereby may be filled, only by the affirmative vote of the Holders of a majority of the shares of Designated Stock at the time outstanding voting separately as a class together with the holders of shares of Voting Parity Stock (and with voting rights allocated pro rata based on the liquidation preference of each such class or series), to the extent the voting rights of such holders described above are then exercisable.  If the office of any Preferred Director becomes vacant for any reason other than removal from office as aforesaid, the remaining Preferred Director may choose a successor who shall hold office for the unexpired term in respect of which such vacancy occurred.

(d)Class Voting Rights as to Particular Matters.  So long as any shares of Designated Stock are outstanding, in addition to any other vote or consent of stockholders required by law or by the Charter, the vote or consent of the Holders of at least 66 2/3% of the shares of Designated Stock at the time outstanding, voting as a separate class, given in person or by proxy, either in writing without a meeting or by vote at any meeting called for the purpose, shall be necessary for effecting or validating:

(i)Authorization of Senior Stock.  Any amendment or alteration of the Certificate of Designations for the Designated Stock or the Charter to authorize or create or increase the authorized amount of, or any issuance of, any shares of, or any securities convertible into or exchangeable or exercisable for shares of, any class or series of capital stock of the Corporation ranking senior to Designated Stock with respect to either or both the payment of dividends and/or the distribution of assets on any liquidation, dissolution or winding up of the Corporation;

(ii)Amendment of Designated Stock.  Any amendment, alteration or repeal of any provision of the Certificate of Designations for the Designated Stock or the Charter (including, unless no vote on such merger or consolidation is required by Section 10(d)(iii) below, any amendment, alteration or repeal by means of a merger, consolidation or otherwise) so as to adversely affect the rights, preferences, privileges or voting powers of the Designated Stock; or

(iii)Share Exchanges, Reclassifications, Mergers and Consolidations.  Any consummation of a binding share exchange or reclassification involving the Designated Stock, or of a merger or consolidation of the Corporation with another corporation or other entity, unless in each case (x) the shares of Designated Stock remain outstanding or, in the case of any such merger or consolidation with respect to which the Corporation is not the surviving or resulting entity, are converted into or exchanged for preference securities of the surviving or resulting entity or its ultimate parent that is an entity organized and existing under the laws of the United States of America, any state thereof or the District of Columbia and that is a corporation for U.S.

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federal income tax purposes (or if such entity is not a corporation, the Corporation having received an opinion of nationally recognized counsel experienced in such matters to the effect that Holders will be subject to tax for U.S. federal income tax purposes with respect to such new preference securities after such merger or consolidation in the same amount, at the same time and otherwise in the same manner as would have been the case under the Designated Stock prior to such merger or consolidation), and (y) such shares remaining outstanding or such preference securities, as the case may be, have such rights, preferences, privileges and voting powers, and limitations and restrictions thereof, taken as a whole, as are not materially less favorable to the holders thereof than the rights, preferences, privileges and voting powers, and limitations and restrictions thereof, of Designated Stock immediately prior to such consummation, taken as a whole; provided, however, that for all purposes of this Section 10(d), any increase in the amount of the authorized Preferred Stock, including any increase in the authorized amount of Designated Stock necessary to satisfy preemptive or similar rights granted by the Corporation to other persons prior to the Signing Date, or the creation and issuance, or an increase in the authorized or issued amount, whether pursuant to preemptive or similar rights or otherwise, of any other series of Preferred Stock, or any securities convertible into or exchangeable or exercisable for any other series of Preferred Stock, ranking equally with and/or junior to Designated Stock with respect to the payment of dividends (whether such dividends are cumulative or non-cumulative) and the distribution of assets upon liquidation, dissolution or winding up of the Corporation shall not be deemed to adversely affect the rights, preferences, privileges or voting powers, and shall not require the affirmative vote or consent of, the holders of outstanding shares of the Designated Stock.

(e)Procedures for Voting and Consents.  The rules and procedures for calling and conducting any meeting of the Holders of Designated Stock (including, without limitation, the fixing of a record date in connection therewith), the solicitation and use of proxies at such a meeting, the obtaining of written consents and any other aspect or matter with regard to such a meeting or such consents shall be governed by any rules that the Board of Directors or any duly authorized committee of the Board of Directors, in its discretion, may adopt from time to time, which rules and procedures shall conform to the requirements of the Charter, the Bylaws, and applicable law and the rules of any national securities exchange or other trading facility on which Designated Stock is listed or traded at the time.

Section 11.Record Holders.  To the fullest extent permitted by applicable law, the Corporation and the Transfer Agent may deem and treat the record Holder of any share of Designated Stock as the true and lawful owner thereof for all purposes, and neither the Corporation nor such Transfer Agent shall be affected by any notice to the contrary.

Section 12.Rank.  Notwithstanding anything set forth in the Charter or this Certificate of Designations to the contrary, the Board of Directors, the Preferred Stock Committee or any other duly authorized committee thereof, without the vote of the Holders, may authorize and issue additional shares of Junior Stock or Parity Stock.

Section 13.Listing.  The Corporation hereby covenants and agrees that it will use its reasonable best efforts to list and keep listed the Designated Stock on the NASDAQ Stock

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Market or another national securities exchange or automated quotation system, if permitted by the rules of such exchange or automated quotation system.

Section 14.No Preemptive Rights.  No share of Designated Stock shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities, or such warrants, rights or options, may be designated, issued or granted.

Section 15.Notice of Shareholder Approval.  The Corporation shall notify the Holders of the status of the Shareholder Approval on the Business Day immediately succeeding the date on which the Shareholder Approval has been received or the date on which the Shareholder Approval has been sought but not received, as applicable.  If the Shareholder Approval has been received, such notice will include (i) the Mandatory Conversion Date, (ii) the number of shares of Common Stock to be issued upon conversion of each share of Designated Stock and (iii) instructions regarding the surrender of certificates of Designated Stock for Common Stock.

Section 16.No Sinking Fund.  Shares of Designated Stock are not subject to the operation of a sinking fund.

Section 17.Reservation of Common Stock.

(a)Sufficient Shares.  In order to cause an effective date no later than 5 Business Days following the Shareholder Approval, the Corporation shall file the Certificate of Amendment with the Secretary of State of the State of Delaware as soon as practicable after the date of the Shareholder Approval.  As soon as practicable after the effective date of the Certificate of Amendment, the Corporation shall at all times reserve and keep available out of its authorized and unissued Common Stock or shares acquired by the Corporation, solely for issuance upon the conversion of shares of Designated Stock as provided in this Certificate of Designations, free from any preemptive or other similar rights, such number of shares of Common Stock as shall from time to time be issuable upon the conversion of all the shares of Designated Stock then outstanding at the then-current Conversion Price.  For purposes of this Section 17(a), the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of Designated Stock shall be computed as if at the time of computation all such outstanding shares were held by a single Holder.

(b)Use of Acquired Shares.  Notwithstanding the foregoing, the Corporation shall be entitled to deliver upon conversion of shares of Designated Stock, as herein provided, shares of Common Stock acquired by the Corporation (in lieu of the issuance of authorized and unissued shares of Common Stock), so long as any such acquired shares are free and clear of all liens, charges, security interests or encumbrances (other than liens, charges, security interests and other encumbrances created by the Holders).

(c)Free and Clear Delivery.  All shares of Common Stock or other securities delivered upon conversion of the Designated Stock shall be duly authorized, validly issued, fully paid and non-assessable, free of preemptive rights and free and clear of all liens, claims, security interests and other encumbrances (other than liens, charges, security interests and other encumbrances created by the Holders).

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(d)Compliance with Law.  Prior to the delivery of any securities that the Corporation shall be obligated to deliver upon conversion of the Designated Stock, the Corporation shall use its reasonable best efforts to comply with all federal and state laws and regulations thereunder requiring the registration of such securities with, or any approval of or consent to the delivery thereof by, any governmental authority.

(e)Listing.  The Corporation hereby covenants and agrees that, if at any time the Common Stock shall be listed on the NASDAQ Stock Market or any other national securities exchange or automated quotation system, the Corporation will, if permitted by the rules of such exchange or automated quotation system, list and keep listed, so long as the Common Stock shall be so listed on such exchange or automated quotation system, all the Common Stock issuable upon conversion of the Designated Stock; provided, however, that if the rules of such exchange or automated quotation system require the Corporation to defer the listing of such Common Stock until the mandatory conversion of Designated Stock into Common Stock in accordance with the provisions hereof, the Corporation covenants to list such Common Stock issuable upon conversion of the Designated Stock in accordance with the requirements of such exchange or automated quotation system at such time.

Section 18.Transfer Agent, Conversion Agent, Registrar and Paying Agent.

The duly appointed Transfer Agent, Conversion Agent, Registrar and paying agent for the Designated Stock initially shall be the Corporation.  The Corporation may, in its sole discretion, appoint a successor transfer agent, and may thereafter remove any such successor transfer agent and appoint a successor thereto; provided that in each case any such successor must accept such appointment prior to the effectiveness of such appointment or removal.  Upon any such removal or appointment, the Corporation shall send notice thereof to the Holders.

Section 19.Form.

(a)Global Designated Stock.  Designated Stock may be issued in the form of one or more permanent global shares of Designated Stock in definitive, fully registered form with a global legend in substantially the form attached hereto as Exhibit A (each, a “Global Designated Stock”), which is hereby incorporated in and expressly made a part of this Certificate of Designations.  The Global Designated Stock may have notations, legends or endorsements required by law, stock exchange rules, agreements to which the Corporation is subject, if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Corporation).  The aggregate number of shares represented by each Global Designated Stock may from time to time be increased or decreased by adjustments made on the records of the Registrar and the Depositary or its nominee as hereinafter provided.  This Section 19(a) shall apply only to a Global Designated Stock deposited with or on behalf of the Depositary.

(b)Delivery to Depositary.  If Global Designated Stock is issued, the Corporation shall execute and the Registrar shall, in accordance with this Section 19, countersign and deliver initially one or more Global Designated Stock that (i) shall be registered in the name of Cede & Co. or other nominee of the Depositary and (ii) shall be delivered by the Registrar to the Depositary or pursuant to instructions received from the

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Depositary or held by the Registrar as custodian for the Depositary pursuant to an agreement between the Depositary and the Registrar.

(c)Agent Members.  If Global Designated Stock is issued, members of, or participants in, the Depositary (“Agent Members”), shall have no rights under this Certificate of Designations with respect to any Global Designated Stock held on their behalf by the Depositary or by the Registrar as the custodian of the Depositary or under such Global Designated Stock, and the Depositary may be treated by the Corporation, the Registrar and any agent of the Corporation or the Registrar as the absolute owner of such Global Designated Stock for all purposes whatsoever.  Notwithstanding the foregoing, nothing herein shall prevent the Corporation, the Registrar or any agent of the Corporation or the Registrar from giving effect to any written certification, proxy or other authorization furnished by the Depositary or impair, as between the Depositary and its Agent Members, the operation of customary practices of the Depositary governing the exercise of the rights of a holder of a beneficial interest in any Global Designated Stock.  If Global Designated Stock is issued, the Depositary may grant proxies or otherwise authorize any Person to take any action that a Holder is entitled to take pursuant to the Designated Stock, this Certificate of Designations or the Charter.

(d)Physical Certificates.  Owners of beneficial interests in any Global Designated Stock shall not be entitled to receive physical delivery of certificated shares of Designated Stock, unless (x) the Depositary has notified the Corporation that it is unwilling or unable to continue as Depositary for the Global Designated Stock and the Corporation does not appoint a qualified replacement for the Depositary within 90 days, (y) the Depositary ceases to be a “clearing agency” registered under the Securities Exchange Act of 1934, as amended, and the Corporation does not appoint a qualified replacement for the Depositary within 90 days or (z) the Corporation decides to discontinue the use of book-entry transfer through the Depositary.  In any such case, the Global Designated Stock shall be exchanged in whole for definitive shares of Designated Stock in registered form, with the same terms and of an equal aggregate Liquidation Preference.  Such definitive shares of Designated Stock shall be registered in the name or names of the Person or Persons specified by the Depositary in a written instrument to the Registrar.

(e)Signature.  An Officer shall sign any Global Designated Stock for the Corporation, in accordance with the Corporation’s Bylaws and applicable law, by manual or facsimile signature.  If an Officer whose signature is on a Global Designated Stock no longer holds that office at the time the Transfer Agent countersigned the Global Designated Stock, the Global Designated Stock shall be valid nevertheless.  A Global Designated Stock shall not be valid until an authorized signatory of the Transfer Agent manually countersigns Global Designated Stock.  Each Global Designated Stock shall be dated the date of its countersignature.

Section 20.Replacement Certificates.  The Corporation shall replace any mutilated certificate at the Holder’s expense upon surrender of that certificate to the Corporation.  The Corporation shall replace certificates that become destroyed, stolen or lost at the Holder’s expense upon delivery to the Corporation of reasonably satisfactory evidence that the certificate has been destroyed, stolen or lost, together with any indemnity that may be reasonably required by the Corporation; provided that if physical certificates are issued, the Corporation shall not be

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required to issue any certificates representing the Designated Stock on or after the Mandatory Conversion Date.  In place of the delivery of a replacement certificate following the Mandatory Conversion Date, the Transfer Agent, upon delivery of the evidence and indemnity described in the second sentence above, shall deliver the shares of Common Stock pursuant to the terms of the Designated Stock formerly evidenced by the certificate.

Section 21.Taxes.

(a)Transfer Taxes.  The Corporation shall pay any and all stock transfer, documentary, stamp and similar taxes that may be payable in respect of any issuance or delivery of shares of Designated Stock or shares of Common Stock or other securities issued on account of Designated Stock pursuant hereto or certificates representing such shares or securities.  The Corporation shall not, however, be required to pay any such tax that may be payable in respect of any transfer involved in the issuance or delivery of shares of Designated Stock, shares of Common Stock or other securities in a name other than that in which the shares of Designated Stock with respect to which such shares or other securities are issued or delivered were registered, or in respect of any payment to any Person other than a payment to the registered holder thereof, and shall not be required to make any such issuance, delivery or payment unless and until the Person otherwise entitled to such issuance, delivery or payment has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid or is not payable.

(b)Withholding.  All payments and distributions (or deemed distributions) on the shares of Designated Stock (and on the shares of Common Stock received upon their conversion) shall be subject to withholding and backup withholding of tax to the extent required by law, subject to applicable exemptions, and amounts withheld, if any, shall be treated as received by Holders.

Section 22.Notices.  All notices referred to herein shall be in writing, and, unless otherwise specified herein, all notices hereunder shall be deemed to have been given upon the earlier of (a) receipt thereof or (b) for notices sent within the United States, three Business Days after the mailing thereof if sent by registered or certified mail (unless first class mail shall be specifically permitted for such notice under the terms of this Certificate of Designations) with postage prepaid or (c) for notices sent outside the United States, two Business Days after the sending thereof if sent by recognized next day courier service, addressed: (i) if to the Corporation, to its office at 5055 Wilshire Boulevard, Suite 500, Los Angeles, CA 90036 (Attention:  Chief Financial Officer), or (ii) if to any Holder, to such Holder at the address of such Holder as listed in the stock record books of the Corporation (which may include the records of the Transfer Agent) or (iii) to such other address and by such other means as the Corporation or any such Holder, as the case may be, shall have designated by notice similarly given.  Notwithstanding the foregoing, if shares of Designated Stock are issued in book-entry form through The Depositary Trust Company or any similar facility, such notices may be given to the Holders of Designated Stock in any manner permitted by such facility.

Section 23.Other Rights.  The shares of Designated Stock shall not have any rights, preferences, privileges or voting powers or relative, participating, optional, preemptive or other

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special rights, or qualifications, limitations or restrictions thereof, other than as set forth herein or in the Charter or as provided by applicable law.

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EXHIBIT A

FORM OF SERIES F STOCK CERTIFICATE

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.  EACH PURCHASER OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT IS NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.  ANY TRANSFEREE OF THE SECURITIES REPRESENTED BY THIS INSTRUMENT BY ITS ACCEPTANCE HEREOF (1) REPRESENTS THAT IT IS A “QUALIFIED INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT), (2) AGREES THAT IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THE SECURITIES REPRESENTED BY THIS INSTRUMENT EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT WHICH IS THEN EFFECTIVE UNDER THE SECURITIES ACT, (B) FOR SO LONG AS THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (C) TO THE ISSUER OR (D) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THE SECURITIES REPRESENTED BY THIS INSTRUMENT ARE TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.

Certificate Number [     ]	Number of Shares of Series F Common Stock
	Equivalent

BROADWAY FINANCIAL CORPORATION

Series F Common Stock Equivalent
(par value $0.01 per share)
(liquidation amount as specified below)

Broadway Financial Corporation, a Delaware corporation (the “Corporation”), hereby certifies that [             ] (the “Holder”), is the registered owner of [     ] ([     ]) fully paid and non-assessable shares of the Company’s designated Series F Common Stock Equivalent, with a par value of $0.01 per share and a liquidation amount of $1,000 per share (the “Series F Stock”).  The shares of Series F Stock are transferable on the books and records of the Registrar, in person

A-1

or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer.  The designations, rights, privileges, restrictions, preferences and other terms and provisions of the Series F Stock represented hereby are and shall in all respects be subject to the provisions of the Certificate of Designations dated August 19, 2013, as the same may be amended from time to time (the “Certificate of Designations”).  Capitalized terms used herein but not defined shall have the meaning given them in the Certificate of Designations.  The Corporation will provide a copy of the Certificate of Designations to a Holder without charge upon written request to the Corporation at its principal place of business.

Reference is hereby made to select provisions of the Series F Stock set forth on the reverse hereof, and to the Certificate of Designations, which select provisions and the Certificate of Designations shall for all purposes have the same effect as if set forth at this place.

Upon receipt of this executed certificate, the Holder is bound by the Certificate of Designations and is entitled to the benefits thereunder.

A-2

IN WITNESS WHEREOF, this certificate has been executed on behalf of the Corporation by its President  and Chief Executive Officer and countersigned by its Secretary this         day of August, 2013.

BROADWAY FINANCIAL CORPORATION

By:

Name:

Title: President and Chief Executive Officer

By:

Name: Daniele Johnson

Title: Secretary

A-3

REVERSE OF CERTIFICATE

Dividends on each share of Series F Stock shall be payable at the applicable rate provided in the Certificate of Designations.

The shares of Series F Stock shall be convertible in the manner and accordance with the terms set forth in the Certificate of Designations.

The Company shall furnish without charge to each holder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class or series of share capital issued by the Company and the qualifications, limitations or restrictions of such preferences and/or rights.

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers the shares of Series F Stock evidenced hereby to:

(Insert assignee’s social security or taxpayer identification number, if any)

(Insert address and zip code of assignee) and irrevocably appoints:

as agent to transfer the shares of Series F Stock evidenced hereby on the books of the Transfer Agent.  The agent may substitute another to act for him or her.

Date:

Signature:

(Sign exactly as your name appears on the other side of this Certificate)

Signature Guarantee:

(Signature must be guaranteed by an “eligible guarantor institution” that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Transfer Agent, which requirements include membership or participation in the Securities Transfer Agents Medallion Program (“STAMP”) or such other “signature guarantee program” as may be determined by the Transfer Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.)

A-4

EX-4.14

Exhibit 4.14

CERTIFICATE OF DESIGNATIONS

OF

SERIES G NON-VOTING PREFERRED STOCK

OF

BROADWAY FINANCIAL CORPORATION

Pursuant to Section 151 of the General
Corporation Law of the State of Delaware

Broadway Financial Corporation (the “Corporation”), a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “DGCL”), hereby certifies as follows:

FIRST:  The Corporation’s Certificate of Incorporation (as amended, supplemented and/or restated, the “Charter”) authorizes the issuance of up to 1,000,000 shares of serial preferred stock, par value $0.01 per share (the “Authorized Preferred Stock”), and further authorizes the Board of Directors of the Corporation by resolution or resolutions to provide for the issuance of Authorized Preferred Stock in series and to establish the number of shares to be included in each such series and to fix the designation, powers, preferences and relative, participating, optional or other rights and qualifications, limitations or restrictions of each such series.

SECOND:  On August 12, 2013, the Board of Directors of the Corporation adopted the following resolution authorizing the creation and issuance of a series of said Authorized Preferred Stock to be known as “Series G Non-Voting Preferred Stock”:

RESOLVED:  that, pursuant to authority conferred upon the Board of Directors by Article FOURTH of the Certificate of Incorporation of the Corporation, the Board of Directors hereby designates a new series of preferred stock and the number of shares constituting such series and fixes the rights, powers, preferences, privileges and the qualifications, limitations and restrictions relating to such series as set forth in Attachment A.

[Signature page follows.]

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designations to be executed by Wayne-Kent A. Bradshaw, its President and Chief Executive Officer, this 19th day of August, 2013.

BROADWAY FINANCIAL CORPORATION
By:	/S/ Wayne-Kent A. Bradshaw
Name:	Wayne-Kent A. Bradshaw
Title:	President and Chief Executive Officer

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ATTACHMENT A

Certificate of Designations of

the Series G Non-Voting Preferred Stock of

Broadway Financial Corporation

1.             Designation, Number and Rank.  A series of preferred stock is hereby created out of the authorized and unissued shares of preferred stock of the Corporation.  The shares of such series shall be designated as the Series G Non-Voting Preferred Stock, par value $0.01 per share (the “Series G Non-Voting Preferred Stock”).  The number of shares initially constituting the Series G Non-Voting Preferred Stock shall be 35,000.  The Series G Non-Voting Preferred Stock shall be subordinate and junior to all indebtedness of the Corporation and to all other series of preferred stock of the Corporation, other than any series of preferred stock the terms of which provide that such series is subordinate or junior to the Series G Non-Voting Preferred Stock in any respect, and shall rank on parity with the Common Stock with respect to the declaration and payment of dividends, except as provided in Section 2, and with respect to distributions upon the liquidation, dissolution or winding up of the Corporation.

2.             Dividends.   The holders of Series G Non-Voting Preferred Stock shall be entitled to receive ratable dividends as provided herein only if and when dividends are concurrently declared and payable on the shares of Common Stock of the Corporation, out of any assets legally available therefor, which dividends shall be payable when, as and if declared by the Board of Directors; provided, that no dividend may be declared or paid on the Common Stock of the Corporation unless a dividend of $0.001 per share of Series G Non-Voting Preferred Stock (the “Series G Dividend Preference”) is concurrently declared and paid in full on all outstanding shares of Series G Non-Voting Preferred Stock.  The right to receive dividends on the Series G Preferred Stock shall not be cumulative.  The full amount and form (whether cash, stock or other property) of dividends, if any, declared and payable on each share of Series G Non-Voting Preferred Stock in connection with declaration and payment of any dividend on the Common Stock of the Corporation shall be (i) an amount of cash equal to the Series G Dividend Preference, plus (ii) an amount equal to and in the same form or forms as the dividend concurrently declared and payable on the shares of Common Stock of the Corporation multiplied by the number of shares of Common Stock of the Corporation into which such share of Series G Non-Voting Preferred Stock would then be convertible if an event specified in Section 5 had occurred simultaneously therewith.

3.             Liquidation.

(a)           Upon the occurrence of a Liquidation Event (as defined in Section 3(b)), the assets of the Corporation or proceeds thereof (whether capital or surplus) remaining available for distribution to stockholders of the Corporation after payment, or provision for payment, in full of all claims of creditors of the Corporation and all amounts due on any preferred stock or other securities of the Corporation that are superior and prior in rank to the Common Stock and the Series G Non-Voting Preferred Stock shall be distributed to the holders of the Common Stock and the Series G Non-Voting Preferred Stock pro rata based, respectively, on the number

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of shares of Common Stock outstanding at such time and the number of shares of Common Stock into which the Series G Non-Voting Preferred Stock outstanding at such time is then convertible.

(b)           For purposes of this Section 3, a “Liquidation Event” means a liquidation, dissolution or winding up of the Corporation.

4.             Voting.  The Series G Non-Voting Preferred Stock shall not be entitled to vote on any matter except as required by the DGCL.  As to all matters for which voting by class is specifically required by the DGCL, each outstanding share of Series G Non-Voting Preferred Stock shall be entitled to one vote.

5.             Mandatory Conversion.

(a)           Bank Regulatory Conversion.  Each share of Series G Non-Voting Preferred Stock shall convert, automatically and without any action by any person, into one hundred (100) fully paid and nonassessable shares of Common Stock upon any transfer of such share to any person other than the Initial Holder (as defined in Section 3(c)(ii)) or any Affiliate (as defined in Section 3(ii)) of such Initial Holder pursuant to clause (iii), (iv) or (v) of the following sentence.  The shares of Series G Non-Voting Preferred Stock are not convertible into Common Stock by the Initial Holder or any Affiliate of such Initial Holder and may only be transferred by the Initial Holder or such Affiliate (i) to an Affiliate of such Initial Holder, (ii) to the Corporation, (iii) in a widespread public distribution, (iv) in a transfer in which no transferee (or group of associated transferees) would receive 2% or more of any class of voting securities of the Corporation, or (v) to a transferee that would control more than 50% of the voting securities of the Corporation without any transfer from the Initial Holder or any Affiliate of such Initial Holder.  Notwithstanding the foregoing, the Corporation may restrict such conversion to the extent it would be inconsistent with, or in violation of, the requirements of any Regulator (as defined below) with respect to the restrictions on the transfer of the Series G Non-Voting Preferred Stock that are required in order to preserve the “non-voting” classification of the Series G Non-Voting Preferred Stock for regulatory purposes.  Any such restriction shall be imposed and deemed effective immediately upon the transmittal by the Corporation of written notice to such holder specifying in reasonable detail the reason for such restriction; and in the event such notice is transmitted after the event giving rise to such automatic conversion, the restriction shall be deemed to have been imposed and effective retroactively to the time of such event, and such conversion shall be deemed not to have occurred, so long as such notice is transmitted within one hundred eighty (180) days after the event giving rise to such conversion.  Such notice may be dispatched by first class mail, by electronic transmission, or by any other means reasonably designed and in good faith intended to provide prompt delivery to an executive officer (or equivalent) of, or legal counsel to, such holder.

(b)           Conversion on Authorization of Non-Voting Common Stock.  Each share of Series G Non-Voting Preferred Stock shall convert, automatically and without any action by any person, into one hundred (100) fully paid and nonassessable shares of Non-Voting Common Stock as of the close of business on the fifth Business Day following the effective date of an amendment to the certificate of incorporation of the Corporation that authorizes the Corporation to issue Non-Voting Common Stock.  As used herein, the term “Non-Voting Common Stock”

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means capital stock of the Corporation having all of the rights and other attributes of the Common Stock that the Corporation is currently authorized to issue, except that such stock (i) shall not be entitled to vote on any matter, except as required by the DGCL and (ii) shall convert into Common Stock on a share for share basis, automatically and without any action by any person, upon the same events and be subject to the same restrictions on transfer as provided in Section 5(a) with respect to the Series G Non-Voting Preferred Stock.  No shares of Series G Non-Voting Preferred Stock shall be issuable by the Corporation after the date and time the amendment to the Certificate of Incorporation authorizing the Corporation to issue Non-Voting Common Stock becomes effective.

(c)           Certain Definitions.  For purposes of this Certificate of Designations and the Corporation’s Certificate of Incorporation as amended hereby:

(i)            the term “Initial Holder” shall mean any of CJA Private Equity Financial Restructuring Master Fund I LP, National Community Investment Fund or BBCN Bancorp, Inc., each in its capacity as an entity to which the Corporation originally issued shares of Series G Non-Voting Preferred Stock.

(ii)           the term “Affiliate” shall mean any person or entity that directly or indirectly controls, is controlled by, or is under common control with the person or entity to which the defined term refers.  For purposes of this definition, the term “control” means the ability, directly or indirectly, to direct or influence the direction of the management and policies of the person in question, whether such ability arises by virtue of ownership interest, contract right or otherwise.  Without limiting the generality of the foregoing, a person is an Affiliate of another person if the first person (i) is an executive officer (as such term is defined in Rule 405 of the Securities Act of 1933, as amended) of the second person; (ii) is a director of the second person where such second person is a corporation; (iii) is a manager (or an executive officer, director, general partner or manager of an entity that is a manager) of the second person where such second person is a limited liability company; (iv) is a general partner (or an executive officer, director, general partner or manager of an entity that is a general partner) of the second person where such second person is a partnership; or (v) directly or indirectly has or shares the power to vote, or direct the voting of, or to dispose of, or direct the disposition of, securities representing more than ten percent (10%) of the combined voting power of the securities of the second person.

(iii)          the term “Regulator” shall mean any of (i) the Board of Governors of the Federal Reserve System (whether acting directly or by or through the Federal Reserve Bank of San Francisco in such bank’s regulatory capacity); (ii) the Federal Deposit Insurance Corporation; (iii) the Office of the Comptroller of the Currency; (iv) any successor agency to any of the foregoing; or (v) any other federal regulatory authority, whether in existence as of the date hereof or hereafter established, having jurisdiction over the Corporation or its banking subsidiary as to matters of compliance with the Federal Deposit Insurance Company Act, the Bank Holding Company Act, the Federal Reserve Act, the Home Owners’ Loan Act, any successor statute or amendment to any of the foregoing, or any regulation adopted pursuant thereto.

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6.             Adjustments for Certain Events.

(a)           Changes in Capitalization.  In the event of any stock dividend, stock split, recombination or other similar event affecting the Common Stock, each share of Series G Non-Voting Preferred Stock shall be adjusted by multiplying such share by a fraction, (i) the numerator of which is the number of shares of Common Stock outstanding immediately after the effective time of such event (excluding for such purpose shares of Common Stock issuable upon the conversion of the Series G Non-Voting Preferred Stock but including any other securities convertible into or exchangeable for shares of Common Stock), and (ii) the denominator of which is the number of shares of Common Stock outstanding immediately prior to the effective time of such event (excluding for such purpose shares of Common Stock issuable upon the conversion of the Series G Non-Voting Preferred Stock but including any other securities convertible into or exchangeable for shares of Common Stock).  For avoidance of doubt, no issuance of securities shall give rise to the adjustment set forth in this Section 6(a) unless approved by the Board of Directors of the Corporation for the purpose of affecting all shares of Common Stock (including securities convertible into or exchangeable for Common Stock) proportionately.  In the event the adjustment required in this Section 6(a) would result in an unjust or disproportionate adjustment of the number of shares of Series G Non-Voting Preferred Stock, then such adjustment shall be revised to cause the result to be as nearly as possible equitable and just as among all holders of the Corporation’s capital stock.

(b)           Certain Corporate Transactions.  In the event of (A) the acquisition by any person (including a group of related persons within the meaning of Rule 13d-2 of the Securities Exchange Act of 1934, as amended, whether or not such regulation shall then be applicable to the Corporation or its securities) of (i) more than fifty percent (50%) of the outstanding capital stock of the Corporation, or (ii) all or substantially all of the assets of the Corporation (including without limitation the sale of more than two-thirds (2/3) of the capital stock held by the Corporation in Broadway Federal Bank, f.s.b.); or (B) a merger of the Corporation with or into any person, or of any person with or into the Corporation, immediately after which the stockholders of the Corporation (as measured immediately prior to completion of the transaction) own less than a majority of the combined capital stock or membership interests of the surviving entity, then, in each such case, proper provision shall be made so that the holders of the Series G Non-Voting Preferred Stock shall be entitled to receive in exchange for or in respect of their shares of Series G Non-Voting Preferred Stock the same form and amount of consideration, if any, as the holders of the Common Stock receive in exchange for or in respect of their shares of Common Stock, with the amount of such consideration, if any, to be received for or in respect of each share of Series G Non-Voting Preferred Stock to be equal to the amount that would be received by a holder of the number of shares of Common Stock into which one share of Series G Non-Voting Preferred Stock would then be convertible if an event specified in Section 5 had occurred simultaneously therewith.

(c)           Certain Other Rights.  In the event of the exercise by the Initial Holder or any Affiliate of any preemptive rights or antidilution protections, whether arising under the Certificate of Incorporation, this Certificate of Designations, or by any stockholder agreement, investor rights agreement or similar instrument to which the Corporation is a party, to acquire additional shares of Common Stock or Series G Non-Voting Preferred Stock, then and in each such event the Corporation shall take such actions as may be reasonably necessary in order to

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adjust the number of shares of Series G Non-Voting Preferred Stock as required to enable the Initial Investor or any Affiliate to hold such stock without making application for approval or non-objection by any Regulator, including without limitation, using its reasonable best efforts to (i) amend this Certificate of Designations or the Certificate of Incorporation to provide for additional shares of Series G Non-Voting Preferred Stock or shares of another class or series of preferred stock having rights, preferences and limitations identical in all material respects thereto; and (ii) amend the Certificate of Incorporation to authorize additional shares of preferred stock and, to the extent necessary, additional shares of Common Stock in order to permit the conversion of the Series G Non-Voting Preferred Stock pursuant to Section 5 hereof and any other class or series of preferred stock issued pursuant hereto.

7.             Amendment.  This Certificate of Designations constitutes an agreement between the Corporation and the holders of the Series G Non-Voting Preferred Stock and may be amended only by the affirmative vote of the Board of Directors of the Corporation and, in addition to any other vote of stockholders required by the DGCL, the holders of a majority of the outstanding shares of Series G Non-Voting Preferred Stock.

#          #          #

7

EX-10.21.1

Exhibit 10.21.1

EXCHANGE AGREEMENT

This Exchange Agreement (“Agreement”), dated as of August 22, 2013, is entered into by and among BBCN Bancorp, Inc., located at 3731 Wilshire Blvd, Suite 1000, Los Angeles, California 90010 (“BBCN”), and Broadway Financial Corporation, located at 5055 Wilshire Boulevard, Suite 500, Los Angeles, California 90036 (“Broadway”) with reference to the following facts:

WHEREAS, Broadway desires to acquire all of the issued and outstanding shares of its Noncumulative Perpetual Preferred Stock, Series B (the “Series B Preferred Stock”) in exchange for shares of its common stock (“Common Stock”) on the terms and conditions set forth in this Agreement; and

WHEREAS, BBCN is currently the owner of 100,000 shares, comprising all of the issued and outstanding shares, of the Series B Preferred Stock; and

WHEREAS, BBCN is willing to exchange the Series B Preferred Stock held by it for Common Stock on the terms and conditions set forth in this Agreement (the “BBCN Exchange”); and

WHEREAS, concurrently with the BBCN Exchange, Broadway proposes (i) to issue shares of its Common Stock to the United States Department of Treasury (the “Treasury Department”) in exchange for all of the issued and outstanding shares of Broadway’s Fixed Rate Cumulative Perpetual Preferred Stock, Series D and Broadway’s Fixed Rate Cumulative Perpetual Preferred Stock, Series E (collectively, the “TARP Preferred Stock”) held by the Treasury Department and comprising all of the issued and outstanding shares of the TARP Preferred Stock (the “Treasury Exchanges”), and (ii) to enter into and complete exchanges of its Common Stock for all of the issued and outstanding shares of Broadway’s Series A Noncumulative Perpetual Preferred Stock and Series C Noncumulative Perpetual Convertible Preferred Stock with the holders of such respective series of preferred stock (the “Other Preferred Stock Exchanges,” and, collectively with Treasury Exchanges, the “Other Exchanges”); and

WHEREAS, concurrently with the BBCN Exchange and the Other Exchanges described above, Broadway proposes to sell Common Stock to investors for cash in a private placement transaction (the “Equity Offering”).

NOW THEREFORE, in consideration of the mutual covenants herein set forth, the parties hereto agree as follows:

1.             SHARE EXCHANGE.  On the terms and subject to the conditions set forth herein, BBCN agrees to transfer to Broadway all of its right, title and interest in and to the shares of Series B Preferred Stock of which BBCN or a nominee is the registered owner (the “Shares”) in exchange for and against delivery of Common Stock at an exchange ratio equal to (A) 50% of the aggregate liquidation preference of all of the shares of Series B Preferred Stock exchanged, divided by (B) the per share value assigned to the Common Stock in connection with Broadway’s exchange of Common Stock with the Treasury Department for the TARP Preferred

Stock held by the Treasury Department, which value Broadway and the Treasury Department have agreed will be the lowest price per share paid by the investors in the Equity Offering.

2.             CLOSING.  The completion of the transactions contemplated by this Agreement (the “Closing”) shall take place concurrently with the completion of the Treasury Exchanges prior to August 31, 2013 (or such later date to which BBCN consents) (the “Closing Date”), as follows: BBCN shall deliver or cause to be delivered the Shares to be exchanged hereunder to Broadway or Broadway’s agent in such manner as shall be reasonably acceptable to Broadway and effective to convey all right, title and interest of BBCN in the Shares to Broadway against delivery by Broadway through the transfer agent for Broadway Common Stock, or such other means as shall be reasonably acceptable to BBCN, of the number of shares of Common Stock provided for herein, registered in such names as BBCN shall specify to Broadway at least three (3) business days prior to the Closing.

3.             CONDITIONS TO CLOSING.  The obligation of BBCN to consummate the BBCN Exchange is also subject to the fulfillment (or waiver by BBCN) at or prior to the Closing of each of the following conditions:

(a)           Broadway shall complete the Other Exchanges concurrently with the BBCN Exchange.

(b)           Broadway shall complete the Equity Offering concurrently with the BBCN Exchange.

(c)           Broadway shall complete the issuance of shares of Broadway Common Stock in partial satisfaction of indebtedness owed to BBCN Bank pursuant to that certain Agreement for the Partial Satisfaction of a Debt Previously Contracted concurrently with the BBCN Exchange.

(d)           Broadway shall complete the issuance of shares of Broadway Common Stock in complete satisfaction of the indebtedness of Broadway to National Community Investment Fund, acquired in connection herewith pursuant to the Loan Purchase and Sale Agreement entered into concurrently herewith between BBCN Bank, a California corporation, and National Community Investment Fund.

(e)           The representations and warranties of Broadway set forth in this Agreement shall be true and correct in all material respects as though made on and as of the Closing Date (other than representations and warranties that by their terms speak as of another date, which representations and warranties shall be true and correct in all respects as of such other date).

(f)            Broadway shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing.

4.             MUTUAL REPRESENTATIONS AND WARRANTIES.  Broadway hereby makes the following representations and warranties to BBCN, and BBCN hereby makes the following representations and warranties to Broadway:

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(a)           Broadway is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware.  BBCN is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware.

(b)           (i) Each has full power and authority to enter into this Agreement and to consummate the transactions contemplated hereby, and (ii) the person or entity who has executed this Agreement is duly authorized to do so and thereby bind the party on whose behalf he, she or it is purporting to act.

(c)           This Agreement is a valid and binding agreement, enforceable against each party in accordance with its terms.

5.             REPRESENTATIONS AND WARRANTIES OF BROADWAY.  Broadway hereby makes the following representations and warranties to BBCN:

(a)           Upon issuance, the Common Stock to be issued by Broadway pursuant hereto (i) will be duly and validly authorized and issued, fully paid and nonassessable, and BBCN will acquire such Common Stock free and clear of any liens, encumbrances, pledges, security interests or other restrictions or claims of third parties, and (ii) will, when combined with shares that may be issued to BBCN or its affiliates in connection with the partial exchange of the loan from BBCN Bank to Broadway comprise less than, or equal to, 9.90% of Broadway’s issued and outstanding shares of Common Stock.

(b)           Broadway is a certified Community Development Financial Institution and its business strategy emphasizes serving the credit and other banking needs of the low-to-moderate income communities it serves.

(c)           Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will violate, result in a breach of any of the terms or provisions of, constitute a default (or in any event that, with the giving of notice or the passage of time or both would constitute a default) under, accelerate any obligations under, or conflict with, (i) Broadway’s charter, articles or certificate of incorporation or bylaws, or other organizational documents, if applicable, or any agreement, indenture or other instrument to which Broadway is a party or by which Broadway or Broadway’s properties are bound, (ii) any judgment, decree, order or award of any court, governmental body or arbitrator to which Broadway is subject, or (iii) any law, rule or regulation applicable to Broadway.

(d)           Neither Broadway nor any person acting on its behalf has taken any action (including any offering of any securities of Broadway under circumstances which would require the integration of such offering with the offering of the Common Stock or Common Stock Equivalents (as defined below) under the Securities Act of 1933, as amended, (the “Act”) and the rules and regulations of the Securities and Exchange Commission promulgated thereunder), which might subject the offering, issuance or sale of the Common Stock or Common Stock Equivalents to BBCN pursuant to this Agreement to the registration requirements of the Act.

(e)           No broker, finder or investment banker is entitled to any financial advisory, brokerage, finder’s or other fee or commission in connection with this Agreement or the

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transactions contemplated hereby based upon arrangements made by or on behalf of Broadway or any subsidiary of Broadway for which BBCN could have any liability.

6.             REPRESENTATIONS AND WARRANTIES OF BBCN.  BBCN hereby represents and warrants to Broadway that it is the sole legal and beneficial owner of the Shares to be exchanged by it pursuant to this Agreement, and, upon the Closing, Broadway will acquire the Shares free and clear of any liens, encumbrances, pledges, security interests or other restrictions or claims of third parties.

7.             SURVIVAL OF REPRESENTATIONS AND WARRANTIES.  All representations, warranties and agreements of each party hereto shall survive the Closing.

8.             RETIREMENT OR PURCHASE OF COMMON STOCK.  Should Broadway at any time and for any reason desire to retire or repurchase shares of its outstanding Common Stock, Broadway shall give BBCN thirty (30) days’ prior written notice of such intent.  Such notice shall specify the number of outstanding shares of Common Stock prior to such retirement or repurchase, and the number of outstanding shares of Common Stock after giving effect to such retirement or repurchase.  Upon receipt of such notice, BBCN shall have the right to sell to Broadway, at the same price per share as that at which Broadway proposes to retire or repurchase its other shares of outstanding Common Stock, the minimum number of shares of Common Stock that would result in BBCN and its affiliates owning less than, or equal to, 9.90% of the outstanding shares of Common Stock of Broadway after giving effect to such retirement or repurchase and such sale by BBCN to Broadway; provided, that (i) Broadway shall not be required hereby to purchase more shares of Common Stock than were indicated in its notice of desired purchase sent to BBCN, (ii) Broadway may decide not to purchase any shares of Common Stock, and (iii) BBCN’s right to sell Common Stock pursuant hereto shall be subject to pro rata reduction to the extent that CJA Private Equity Financial Restructuring Master Fund I LP and/or National Community Investment Fund exercise the similar sale rights granted to them by Broadway, based on the respective numbers of shares of Common Stock requested to be sold by each.  Within ten (10) days after the receipt of such notice by BBCN, BBCN shall notify Broadway in writing of its intent to exercise its rights to sell shares of Common Stock to Broadway pursuant to this Section 8, which shall include the number of shares of Common Stock to be sold by BBCN to Broadway in accordance with this Section 8, the owner of such shares and the proposed closing date, which date shall be no later than the business day preceding the date of the retirement or repurchase. Such option shall be in effect as long as BBCN maintains a beneficial ownership in Broadway Common Stock.  The provisions of this Section 8 shall apply to any Common Stock Equivalents or non-voting preferred stock or non-voting common stock of Broadway theretofore issued in exchange for Common Stock at the request of BBCN.

9.             TRANSFER OF COMMON STOCK.  Subject to compliance with applicable securities laws, BBCN shall be permitted to transfer, sell, assign or otherwise dispose of (“Transfer”) all or a portion of BBCN’s Common Stock at any time, and Broadway shall take all steps as may be reasonably requested by BBCN to facilitate the Transfer of Common Stock.

10.          ISSUANCE OF EQUITY SECURITIES.  Broadway agrees not to issue equity securities ranking senior to the Common Stock for a period of two (2) years from the Closing Date, except in the following circumstances:  (i) in connection with the provisions of a

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shareholders’ rights plan of Broadway; (ii) in connection with a rights offering or other distribution to shareholders of Common Stock in proportion to their respective ownership interests; or (iii) if approved by the holders of a majority of the outstanding Common Stock.

11.          POSSIBLE COMMON STOCK EQUIVALENT TRANSACTION.

(a)           Broadway does not currently have sufficient authorized but unissued shares of Common Stock available under its certificate of incorporation to enable it to complete the BBCN Exchange, each of the Other Exchanges, and the Equity Offering.  In addition, issuance of Common Stock for such purposes would ordinarily require approval by Broadway’s stockholders pursuant to Rule 5635 of the corporate governance rules of the Nasdaq Stock Market.  Accordingly, Broadway has agreed with the Treasury Department that Broadway will, as a condition to completion of the Treasury Exchanges, either:  (i) obtain the required Broadway stockholder approval under the Nasdaq corporate governance rules and complete the other steps required to amend its certificate of incorporation to authorize the issuance of a sufficient number of shares of Common Stock for such purposes; or (ii) file a certificate of designations with the Secretary of State of the State of Delaware to designate a new series of preferred stock out of Broadway’s authorized but unissued preferred stock, to be designated Series F Common Stock Equivalent (the “Common Stock Equivalents”), the terms of which will include that, upon the affirmative vote of the stockholders of Broadway specified in such certificate and relating to an increase in the shares of Common Stock it is authorized to issue (the “Required Vote”), such preferred stock shall be mandatorily convertible into the number of shares of Common Stock that would be issued directly if the Treasury Exchanges were made for Common Stock and an escalating non-cumulative dividend requirement to provide an incentive to the stockholders of Broadway to provide such vote.  The certificate of designations for such series of preferred stock shall be substantially in the form attached as Exhibit A to this Agreement.  Broadway and the Treasury Department have further agreed in such event that the Treasury Exchanges shall be for shares of the Common Stock Equivalents rather than shares of Common Stock.  The number of shares of Common Stock Equivalents to be issued in such alternative transaction (excluding shares to be issued in respect of accrued cumulative dividends under the terms of the TARP Preferred Stock) shall be the number of shares of Common Stock Equivalents that has an aggregate liquidation preference equal to 50% of the liquidation preference of all of the TARP Preferred Stock to be exchanged.

(b)           BBCN hereby agrees that if the Treasury Exchanges are completed using Common Stock Equivalents, then BBCN will exchange all of its shares of Series B Preferred Stock for shares of Common Stock Equivalents on the same basis, as adjusted to reflect the different per share liquidation preferences of the Series B Preferred Stock and the TARP Preferred Stock, that is, the number of shares of Common Stock Equivalents to be issued to BBCN shall equal the number determined by dividing (A) 50% of the aggregate liquidation preference of all of the Shares exchanged by BBCN by (B) $1,000, which is the per share liquidation preference of the Common Stock Equivalents.  BBCN further agrees to vote all shares of Common Stock Equivalents and Common Stock that it owns or controls so as to obtain the Required Vote.

(c)           Broadway represents and warrants that the Common Stock Equivalents will have been duly and validly authorized by all necessary action, and, when issued and delivered

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pursuant to this Agreement, such Common Stock Equivalents will be duly and validly issued and fully paid and nonassessable, will not be issued in violation of any preemptive rights, will not subject the holder thereof to personal liability, and such shares will rank pari passu with or senior to all other series or classes of preferred stock, whether or not issued or outstanding.

12.          NOTICE.  Any notice required or permitted to be given to either party under this Agreement shall be deemed duly given and effective if such notice is either served personally or placed in the United States mail, postage prepaid, addressed as indicated below:

As to BBCN:

BBCN Bancorp, Inc.
3731 Wilshire Blvd, Suite 1000
Los Angeles, California 90010
Attn: Executive Vice President and Chief Financial Officer

As to Broadway:

Broadway Financial Corporation
5055 Wilshire Boulevard, Suite 500
Los Angeles, CA 90036
Attn: Senior Vice President and Chief Financial Officer

13.          FURTHER ASSURANCES.  Each party hereto shall promptly execute and deliver such further agreements and instruments, and take such further actions, as either of the other parties may reasonably request in order to carry out the purpose and intent of this Agreement.

14.          ASSIGNABILITY AND PARTIES IN INTEREST.  This Agreement shall not be assignable by any of the parties hereto without the prior written consent of all the other parties hereto.  This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns.

15.          GOVERNING LAW.  This Agreement shall be governed by and construed and enforced in accordance with the internal substantive law, and not the law pertaining to conflicts or choice of law, of the State of California.

16.          COUNTERPARTS.  This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

17.          COMPLETE AGREEMENT.  This Agreement is an integrated agreement containing the entire agreement between the parties hereto with respect to the subject matter hereof, and shall supersede all previous and all contemporaneous oral or written negotiations, commitments or understandings.

18.          MODIFICATIONS, AMENDMENTS AND WAIVERS.  This Agreement may be modified, amended, or otherwise supplemented only by a writing signed by the parties against

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whom it is sought to be enforced in such amended, modified or supplemented form.  No waiver of any right or power hereunder shall be deemed effective unless and until a writing waiving such right or power is executed by the parties waiving such right or power.

19.          NO THIRD PARTY BENEFICIARIES.  There are no third party beneficiaries under this Agreement or intended by any party hereto.

20.          CAPTIONS.  The paragraph captions contained in this Agreement are for convenience only and do not constitute a part of the provisions.

[signature page follows]

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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the first date written above.

BROADWAY FINANCIAL CORPORATION		BBCN BANCORP, INC.
By:	/S/ Wayne-Kent A. Bradshaw	By:	/S/ Mark Lee
Name:	Wayne-Kent A. Bradshaw	Name:	Mark Lee
Title:	Chief Executive Officer and President	Title:	Executive Vice President and Chief Credit Officer

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Exhibit A

Form of Certificate of Designations for Series F Common Stock Equivalent

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EX-10.21.2

Exhibit 10.21.2

BROADWAY FINANCIAL CORPORATION
4800 Wilshire Boulevard
Los Angeles, CA 90010

August 22, 2013

BBCN Bancorp, Inc.
3731 Wilshire Boulevard, Suite 1000
Los Angeles, CA  90010

Re:Investor Rights

Ladies and Gentlemen:

This letter will confirm our agreement that pursuant to and effective as of your purchase of capital stock of Broadway Financial Corporation, a Delaware corporation (the “Company”), the parent company of Broadway Federal Bank, F.S.B. (the “Bank”), BBCN Bancorp, Inc., a Delaware corporation (the “Investor”), shall be entitled to the following contractual rights, in addition to any other rights specifically provided to the Investor pursuant to that certain Exchange Agreement and that certain Agreement for Partial Satisfaction of Debt Previously Contracted, each dated as of the date hereof, by and between the Company and the Investor, including any amendments or supplements thereto, and such other agreements, instruments and certificates delivered in connection therewith (collectively, the “Transaction Documents”):

1.Board Observer Rights.  If the Investor is not represented on the Board (including during such time as regulatory approval is pending), as long as the Investor or any of its affiliates beneficially owns at least 4.0% of the total capital stock (including any common shares and non-voting shares) of the Company or any of its affiliates, the Company shall allow a representative of the Investor to attend all meetings of the Board in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents and other materials that it provides to its directors at the same time and in the same manner as provided to such directors; provided, however, that (i) such representative shall agree to hold in confidence and trust all information so provided; (ii) the representative may be excluded from access to any material or meeting or portion thereof if the Board determines in good faith, upon advice of counsel, that access to such material or attendance at such meeting would adversely affect the attorney-client privilege between the Company or the Bank and its counsel or would conflict with applicable banking laws or regulations or if such material or meeting relates to relations or negotiations with the Investor or require the consent or non-objection of any Regulator; and (iii) such observer shall be excluded from all “executive sessions” of the board of directors if any other persons who are not members of the board of directors, other than counsel to the Company, are also excluded.  Upon reasonable notice and at a scheduled meeting of the Board or such other time, if any, as the Board may determine in its sole discretion, such representative may address the Board with respect to the Investor’s concerns regarding significant business issues facing the Company.  For the avoidance of doubt, such representative shall not have access to any

“confidential supervisory information” (as such term or relevant similar term is defined under the regulations of any Regulator).

2.Terms of Agreements with Other Investors.  The Company represents and warrants that it has not entered into, and does not currently intend to enter into, any agreement with any other investor that provides rights to such investor related to its investment in capital stock of the Company, other than any such agreement as to which it has provided a copy to the Investor.   If the Company enters into any such agreement with a party that agrees to purchase capital stock issued by the Company after the date hereof, then the Company shall promptly provide a copy of any such agreement to the Investor.  As to any such agreement entered into with any other investor agreeing to purchase capital stock issued by the Company, any terms of such agreement that are more favorable to such investor than the terms of the Transaction Documents shall be added and incorporated into this letter agreement, unless the Investor provides written notice to the Company that it elects to waive its rights to any such additional or modified terms.

3.Capital Structure.

(a)Exchange Rights.  The Investor shall have the right, but not the obligation, from time to time, in its sole discretion, to exchange any voting common stock held by the Investor for non-voting common stock of the Company (“Non-Voting Common Stock”) if the Company’s certificate of incorporation then authorizes the Company to issue Non-Voting Common Stock, or the non-voting preferred stock of the Company referred to herein if the Company’s certificate of incorporation does not then authorize the issuance of Non-Voting Common Stock, in order to reduce its ownership of any class of voting securities of the Company to 4.9% of the voting securities of the Company on a fully-diluted basis.  The Non-Voting Common Stock shall have all of the rights and other attributes of the Company’s currently outstanding common stock, except as provided in this paragraph 3(a) and except that such stock shall not be entitled to vote on any matter, except as required by the Delaware General Corporation Law.  The non-voting preferred stock referred to herein shall be authorized by the Company prior to the closing of the transactions contemplated by the Transaction Documents and shall have the rights, powers and preferences set forth in a Certificate of Designation of Series G Non-Voting Preferred Stock substantially in the form attached as Exhibit A hereto and is referred to herein collectively with the Non-Voting Common Stock as the “Non-Voting Stock.”  Any such exchange shall be effected by way of an Exchange Agreement in form and substance substantially as set forth on Exhibit B hereto.  Any Non-Voting Stock of the Company held by the Investor shall, upon its transfer to any person other than the Investor, or one of its affiliates, immediately and without any further action on the part of any person, automatically convert into voting common stock of the Company, as provided for in the provisions of the Company’s certificate of incorporation relating to the Non-Voting Common Stock or the Certificate of Designation of the Series G Non-Voting Preferred Stock, subject as applicable, to compliance with the applicable requirements of the Regulators.  Any shares of Non-Voting Stock received by the Investor or any affiliate of the Investor pursuant to this paragraph shall not be convertible by the Investor into shares of voting common stock or any other voting security of the Company, and any such shares shall be subject to the restrictions set forth in the provisions of the Company’s certificate of incorporation relating to the Non-Voting Common Stock or the Certificate of Designation of the Series G Non-Voting Preferred Stock,

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including restrictions on transfer contained therein that are intended to cause such shares to qualify as non-voting shares under the applicable requirements and policies of the Regulators.  For the avoidance of doubt, it is the intention of the parties hereto that any shares of Series G Non-Voting Preferred Stock that are outstanding at the time the Company’s certificate of incorporation is amended to authorize the Company to issue Non-Voting Common Stock shall be converted into shares of Non-Voting Common Stock and that no shares of Series G Non-Voting Preferred Stock shall be issued to any person or entity after that time.

(b)Preemptive Rights.  If, following the consummation of the transactions contemplated by the Transaction Documents, the Company authorizes the issuance or sale of any securities comparable or identical to the securities issued in this offering pursuant to the Transaction Documents, the Investor shall be entitled,  in its sole discretion, to (i) purchase shares of common stock, Non-Voting Stock or any combination thereof, such that the Investor would maintain its percentage ownership interest in the Company’s capital stock on a fully-diluted basis; or (ii) exchange any Non-Voting Stock held by the Investor for voting common stock, such that the Investor would maintain its percentage ownership interest in the Company’s common stock on a fully-diluted basis, in each case, subject to compliance with the applicable requirements of the Regulators.  With respect to each of (i) and (ii) above (the “Preemptive Rights”), the Company shall give written notice of such proposed issuance or sale (including the terms and conditions thereof) to the Investor at least thirty (30) days prior to the anticipated issuance or sale date and the Investor shall have twenty (20) days from the receipt thereof to provide the Company with notice of the exercise of its Preemptive Rights with respect to such issuance or sale.  The Preemptive Rights described herein shall not apply to the issuance of securities of the Company (A) to employees or di rectors of, or consultants or advisors to, the Company or the Bank pursuant to a plan, agreement or arrangement approved by the Board, (B) in connection with the acquisition of another company by the Company by way of merger or other reorganization or the acquisition of all or substantially all of the assets or capital stock of such company, provided that such issuances are approved by the Board, or (C) in a transaction approved by the Board that results in a “Change of Control,” which for purposes of this letter agreement a “Change of Control” means the acquisition by any person (including a group of related persons within the meaning of Rule 13d-2 of the Securities Exchange Act of 1934, as amended) of (x) more than fifty percent (50%) of the outstanding capital stock of the Company; (y) all or substantially all of the assets of the Company (including without limitation the sale of more than two-thirds (2/3) of the capital stock held by the Company in the Bank); or (z) a merger of the Company with or into any person, or of any person with or into the Company, immediately after which the shareholders of the Company (as measured immediately prior to completion of the transaction) own less than a majority of the combined capital stock or membership interests of the surviving entity.   In the case of a Change of Control, the Investor’s non-voting securities shall be exchanged or purchased in the same manner as the voting common stock of the Company; provided, however, that in all cases, the aggregate ownership percentage of the Investor and its affiliates in the issued and outstanding voting securities of the Company shall not exceed 9.9%.  For the purpose of any such calculations of the percentage of voting securities owned by the Investor and its affiliates, the Investor shall include (i) any voting securities previously sold or transferred by the Investor and its affiliates, and (ii) any voting securities that were converted to Non-Voting P Stock pursuant to paragraph 3(a) above as if such non-voting preferred stock were still voting securities.  In addition, the total equity ownership of

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the Company by the Investor and its affiliates shall not exceed 9.9% of the Company’s issued and outstanding stock.

4.Registration Rights.  The Company shall provide a “shelf registration” for use by the Investor in the offer and sale of shares acquired by the Investor pursuant to the Transaction Documents, the registration statement for which shall be filed with the SEC by no later than the Filing Deadline (as defined in Section 1(a) of the Registration Rights Agreement referred to below).  In addition, the Investor shall be entitled to exercise “piggyback” registration rights to participate in the registration of shares pursuant to all registration statements proposed to be filed by the Company (except for the registration of securities (a) to be offered pursuant to an employee benefit plan on Form S-8 or pursuant to a registration made on Form S-4 or any successor forms then in effect or (b) in a transaction relating solely to the sale of debt or convertible debt instruments).  The rights and obligations of the Investor and the Company in respect of such registration rights shall be set forth in a Registration Rights Agreement in form and substance substantially as set forth on Exhibit C hereto.

5.Representations and Warranties; Indemnification.  The Company hereby makes the representations and warranties to the Investor set forth in Sections 1 and 2 of Annex A hereto and the Investor, hereby makes the representations and warranties to the Company set forth in Section 3 of Annex A hereto.  The Company and the Investor shall each indemnify the other, in the event of inaccuracies in or breaches of their respective representations and warranties set forth in Annex A, in accordance with the provisions of Sections 4 through 8 of Annex A hereto.

6.Regulatory Approval.  The Company and the Investor shall cooperate to obtain the appropriate approvals from the Regulators in accordance with this letter agreement and the Transaction Documents. If necessary, the Investor shall agree to certain passivity commitments imposed by the Regulators, provided, that the terms and conditions of such commitments are customary and are not deemed by the Investor (in its sole discretion) to be unreasonable and provided, further, that the Investor shall not be required to agree to any restrictions, conditions or commitments imposed or otherwise required by any Regulator that are determined by the Investor (in its sole discretion) to be unduly burdensome.

7.Miscellaneous.  The validity, construction and interpretation of this letter agreement and the rights and duties of the parties hereunder shall be governed by and construed in accordance with laws of the State of New York without regard to its conflicts of laws provisions.  This letter agreement (together with the Transaction Documents) constitutes the entire agreement among the parties hereto, and supersedes any and all prior representations, agreements and understandings, whether written or oral, with respect to the subject matter hereof.  This letter agreement shall not be modified, amended or waived, in whole or in part, except by written agreement of both parties.  The provisions hereof shall be binding upon, and shall inure to the benefit of, the parties hereto and their successors and assigns.  Each of the parties hereto shall, at the request of the other party, execute, deliver and acknowledge without any consideration, such additional documents, instruments or certificates or do or cause to be done such other things as are reasonably necessary or desirable to make effective the agreements and transactions contemplated by this letter agreement.  This letter agreement may be executed and delivered (including by facsimile or electronic transmission) in multiple counterparts, each

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of which shall constitute an original and all of which together shall be deemed to be one and the same instrument.

[Signature Page to Follow]

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Very truly yours,
Broadway Financial Corporation
By:	/s/ Wayne-Kent A. Bradshaw
Name: Wayne-Kent A. Bradshaw
Title: President and Chief Executive Officer

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******************************************************

ACKNOWLEDGED AND AGREED:
BBCN BANCORP, INC.
By:	/s/ Mark Lee
Name:	Mark Lee
Title:	Executive Vice President and Chief Credit Officer

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Exhibit A

Form of Series G Certificate of Designations

8

Exhibit B

Form of Series G Exchange Agreement

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Exhibit C

Registration Rights Agreement

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Annex A

1.Certain Terms.

(a)As used in this Annex A (also hereinafter referred to as “this Agreement”), the term “Material Adverse Effect” means any circumstance, event, change, development or effect that, individually or in the aggregate, would reasonably be expected to (i) result in a material adverse effect on the assets, liabilities, business, financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole, or (ii) materially impair or delay the ability of the Company or any of the Company Subsidiaries to perform its or their obligations under this Agreement to consummate the Closing or any of the transactions contemplated hereby; provided, however, that in determining whether a Material Adverse Effect has occurred under clause (i), there shall be excluded any circumstance, event, change, development or effect to the extent resulting from (A) actions or omissions of the Company or any Company Subsidiary expressly required or contemplated by the terms of this Agreement, (B) changes after the date hereof in general economic conditions in the United States, including financial market volatility or downturns, or in the markets in which the Company and the Company Subsidiaries operate, (C) changes after the date hereof affecting the banking industry generally, (D) any changes after the date hereof in applicable Laws or accounting rules or principles, including changes in GAAP, (E) changes in the market price or trading volume of the Common Stock or the Company’s other outstanding securities (but not the underlying causes of such changes) or (F) any failure by the Company or any of the Company Subsidiaries to meet any internal projections or forecasts with regard to the assets, liabilities, business, financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole (but not the underlying causes of such failure), in each case to the extent that such circumstance, event, change, development or effect referred to in clauses (B), (C) and (D) do not have a disproportionate effect on the Company and the Company Subsidiaries compared to other participants in the industries or markets in which the Company and the Company Subsidiaries operate.

(b)As used in this Annex A, the term “Previously Disclosed” (i) with regard to any party, means information set forth in its Disclosure Schedule under Section references corresponding with the provision of this Agreement to which such information relates (including, in the case of the Company, information identified in the Company’s Disclosure Schedule by reference to specific portions of the “virtual data room” website established by the Company for use by the Investor in its “due diligence” examination of the Company; provided, however, that if such information is disclosed in such a way as to make its relevance or applicability to another provision of this Agreement reasonably apparent on its face, such information shall be deemed to be responsive to such other provision of this Agreement and (ii) with regard to the Company, includes information publicly disclosed by the Company in (A) the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as filed by it with the Securities and Exchange Commission (the “SEC”), and subsequently amended by the filing of Forms 10-K/A on April 27, 2012 and September 14, 2012, or the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, as filed by it with the SEC on April 1, 2013, (B) the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2012, June 30,

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2012 and September 30, 2012 as filed by it with the SEC, (C) the Company’s Definitive Proxy Statement on Schedule 14A, as filed by it with the SEC on November 19, 2012, or (D) any Current Report on Form 8-K filed or furnished by it with the SEC since January 1, 2011, in each case available prior to the date of this Agreement (excluding any risk factor disclosures contained in such documents under the heading “Risk Factors” and any disclosure of risks included in any “forward-looking statements” disclaimer or other statements that are similarly non-specific and are predictive or forward-looking in nature).  Notwithstanding anything in this Agreement to the contrary, the mere inclusion of an item in a Disclosure Schedule shall not be deemed an admission that such item represents a material exception or material fact, event or circumstance or that such item has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(c)Terms having initial capitalized letters that are not otherwise defined in this Agreement shall have the meanings given to such terms in the form of Subscription Agreement entered into by the Company with certain investors in a subscription offering that is being conducted concurrently with the transactions contemplated in the letter agreement of which this Annex A forms a part, except that the term “Investor” means and refers to BBCN Bancorp, Inc.

2.Representations and Warranties of the Company.  Except as Previously Disclosed, the Company hereby represents and warrants to the Investor as of the date of this Agreement and as of the date of the Investor’s acquisition of shares of Common Stock pursuant to the Transaction Documents (except for the representations and warranties that are as of a specific date, which are made as of that date) that:

(a)Organization and Authority.  Each of the Company and the Company Subsidiaries is a corporation or other entity duly organized and validly existing under the laws of the jurisdiction of its incorporation or organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified except where any failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and has the corporate or other organizational power and authority to own its properties and assets and to carry on its business as it is now being conducted.  The Company has Previously Disclosed correct and complete copies of the certificate of incorporation and bylaws (or similar governing documents) as amended through the date of this Agreement for the Company and Broadway Federal Bank, f.s.b. (the “Bank”).  The Company is duly registered with the Board of Governors of the Federal Reserve System (the “Federal Reserve”) as a savings and loan holding company under the Savings and Loan Holding Company Act, as amended, 12 U.S.C. 1467a (the “SLHCA Act”).

(b)Company Subsidiaries.  The Company has Previously Disclosed a true, complete and correct list of all of its subsidiaries as of the date of this Agreement (each, a “Company Subsidiary” and, collectively, the “Company Subsidiaries”).  Except for the Company Subsidiaries, the Company does not own beneficially, directly or indirectly, more than 5% of any class of equity securities or similar interests of any corporation, business trust, association or similar organization, and is not, directly or indirectly, a partner in any partnership or party to any joint venture.  The Company owns, directly or indirectly, all of its interests in

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each Company Subsidiary free and clear of any and all Liens, except for the Lien of BBCN Bank on all assets of the Company, including the stock of the Bank owned by the Company.  The deposit accounts of the Bank are insured by the Federal Deposit Insurance Corporation (“FDIC”) to the fullest extent permitted by the Federal Deposit Insurance Act, as amended (the “FDI Act”), and the rules and regulations of the FDIC thereunder, and all premiums and assessments required to be paid in connection therewith have been paid when due (after giving effect to any applicable extensions).  The Company beneficially owns all of the outstanding capital securities of, and has sole control of, the Bank.

(c)Capitalization.

(i)As of the date hereof, (A) the authorized Capital Stock of the Company consists of 8,000,000 shares of Common Stock, par value $0.01 per share and 1,000,000 shares of preferred stock, par value $0.01 per share (the “Company Preferred Stock”) and (B) of the Company Preferred Stock, 100,000 shares have been designated as Non-Cumulative Perpetual Preferred Stock, Series A, having a liquidation preference of $10 per share (the “Series A Preferred Stock”); 100,000 shares have been designated as Non-Cumulative Perpetual Preferred Stock, Series B, having a liquidation preference of $10 per share (the “Series B Preferred Stock”); 76,950 shares have been designated as Non-Cumulative Perpetual Convertible Preferred Stock, Series C, having a liquidation preference of $13 per share (the “Series C Preferred Stock”); 9,000 shares have been designated as Fixed Rate Cumulative Perpetual Preferred Stock, Series D, having a liquidation preference of $1,000 per share (the “Series D Preferred Stock”); 6,000 shares have been designated as Fixed Rate Cumulative Perpetual Preferred Stock, Series E, having a liquidation preference of $1,000 per share (the “Series E Preferred Stock”); and 25,000 shares have been designated as Series A Junior Participating Preferred Stock, having a liquidation preference of $1.00 per share (the “Series A Junior Preferred Stock”).

(ii)As of the close of business on September 30, 2012 (the “Capitalization Date”), the Company had outstanding: 1,859,951 shares of Common Stock; 55,199 shares of Series A Preferred Stock; 100,000 shares of Series B Preferred Stock; 76,950 shares of Series C Preferred Stock; 9,000 shares of Series D Preferred Stock; and 6,000 shares of Series E Preferred Stock (the Series D Preferred Stock and Series E Preferred Stock being referred to herein as the “TARP Preferred Stock”).

(iii)As of the close of business on the Capitalization Date, other than in respect of awards outstanding under or issuable pursuant to the Company’s 1996 Long-Term Incentive Plan, 1996 Stock Option Plan and 2008 Long-Term Incentive Plan (the “Company Stock Plans”) in respect of which an aggregate of 437,390 shares of Common Stock have been reserved for issuance, 76,950 shares of Common Stock reserved for issuance upon conversion of the outstanding shares of the Series C Preferred Stock and 25,000 shares of Series A Junior Preferred Stock reserved for issuance pursuant to the Rights Agreement, dated January 31, 2003, entered into between the Company and US Stock Transfer

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Corporation (the “Rights Plan”), no shares of Common Stock or Company Preferred Stock were reserved for issuance.  Since the Capitalization Date and through the date of this Agreement, except in connection with this Agreement and the transactions contemplated hereby, including the Investment, the Other Private Placements, the TARP Exchange, the Other Preferred Exchanges, and the Rights Offering, the Company has not (A) issued or authorized the issuance of any shares of Common Stock or Company Preferred Stock, or any securities convertible into or exchangeable or exercisable for shares of Common Stock or Company Preferred Stock, except to Directors and certain executive officers of the Company and the Bank pursuant to the Stock Purchase Agreements copies of which are included in Section 2.2(c) of the Disclosure Schedule, (B) reserved for issuance any shares of Common Stock or Company Preferred Stock or (C) repurchased or redeemed, or authorized the repurchase or redemption of, any shares of Common Stock or Company Preferred Stock.

(iv)All of the issued and outstanding shares of Common Stock and Company Preferred Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights.  None of the outstanding shares of Capital Stock or other securities of the Company or any of the Company Subsidiaries was issued, sold or offered by the Company or any Company Subsidiary in violation of the Securities Act or the securities or blue sky laws of any state or jurisdiction.  No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which the shareholders of the Company may vote (“Voting Debt”) are issued and outstanding.

(v)As of the date of this Agreement, except for (x) the outstanding awards under the Company Stock Plans listed on Section 2.2(c) of the Disclosure Schedule, (y) as set forth elsewhere in this Section 2.2(c) and (z) the Agreements, the TARP Exchange Agreement, and the Other Preferred Exchange Agreements, the Company does not have and is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of, or securities or rights convertible into or exchangeable or exercisable for, any shares of Common Stock or Company Preferred Stock or any other equity securities of the Company or Voting Debt or any securities representing the right to purchase or otherwise receive any shares of Capital Stock of the Company.

(d)Authorization; No Conflicts; Shareholder Approval.

(i)The Company has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  Subject to the approval by the Nasdaq Stock Market (“NASDAQ”) of the Company’s application pursuant to Rule 5635(f) and other applicable provisions of the Nasdaq Listing Rules to issue Common Stock in connection with the Investment, the Other Private Placements, the TARP Exchange, the Other Preferred Exchanges and related transactions without prior shareholder approval, the execution, delivery and performance of this Agreement by the Company and the

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consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no further approval or authorization is required on the part of the Company or its shareholders.  The Board of Directors has unanimously approved the transactions contemplated by this Agreement, including the Investment, the Other Private Placements, the Other Preferred Exchanges, and the TARP Exchange and the Rights Offering.  This Agreement has been duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery by the Investor, is the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles (whether applied in equity or at law).

(ii)Neither the execution and delivery by the Company of this Agreement nor the consummation of the transactions contemplated hereby, nor compliance by the Company with any of the provisions hereof, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or result in the loss of any benefit or creation of any right on the part of any third party under, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any liens, charges, adverse rights or claims, pledges, covenants, title defects, security interests or other encumbrances of any kind (“Liens”) upon any of the properties or assets of the Company or any Company Subsidiary, under any of the terms, conditions or provisions of (1) the certificate of incorporation or bylaws (or similar governing documents) of the Company and each Company Subsidiary or (2) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Company or any of the Company Subsidiaries is a party or by which it may be bound, or to which the Company or any of the Company Subsidiaries, or any of the properties or assets of the Company or any of the Company Subsidiaries may be subject, or (B) violate any Law applicable to the Company or any of the Company Subsidiaries or any of their respective properties or assets except in the case of clauses (A)(2) and (B) for such violations, conflicts and breaches as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(e)Governmental Consents.  Except as set forth in the Disclosure Schedule, no Governmental Consents are necessary for the execution and delivery of this Agreement or for the sale by the Company of Common Stock to the Investor pursuant to this Agreement.

(f)Litigation and Other Proceedings.  Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there is no pending or, to the Knowledge of the Company, threatened claim, action, suit, arbitration, complaint, charge or investigation or proceeding (each an “Action”) against the Company or any Company Subsidiary or any of its assets, rights or properties, nor is the Company or any Company

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Subsidiary a party or named as subject to the provisions of any order, writ, injunction, settlement, judgment or decree of any court, arbitrator or government agency, or instrumentality.  There has not been, and to the Knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company or any current or former director or officer of the Company in his or her capacity as such.

(g)Financial Statements.  Each of the audited consolidated balance sheets of the Company and the Company Subsidiaries and the related consolidated statements of operations, changes in stockholders’ equity and cash flows, together with the notes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2011 as amended by the Form 10-K/A filed by the Company on September 14, 2012 (the “Company Financial Statements”), (i) have been prepared from, and are in accordance with, the books and records of the Company and the Company Subsidiaries, (ii) complied, as of their respective date of such filing, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, (iii) have been prepared in accordance with GAAP applied on a consistent basis and (iv) present fairly in all material respects the consolidated financial position of the Company and the Company Subsidiaries at the dates and the consolidated results of operations, changes in shareholders’ equity and cash flows of the Company and the Company Subsidiaries for the periods stated therein.

(h)Reports.  Since December 31, 2008, the Company and each Company Subsidiary have filed all material reports, registrations, documents, filings, statements and submissions, together with any required amendments thereto, that they were required to file with any Governmental Entity (the foregoing, collectively, being referred to herein as the “Company Reports”) and have paid all material fees and assessments due and payable in connection therewith.  As of their respective filing dates, or as subsequently amended prior to the date hereof, the Company Reports complied in all material respects with all statutes and applicable rules and regulations of the applicable Governmental Entities.  As of the date of this Agreement, there are no outstanding comments from the SEC or any other Governmental Entity with respect to any Company Report that were the subject of written correspondence that have not been resolved.  The Company Reports, including the documents incorporated by reference in each of them, each contained all the information required to be included in it and, when it was filed and, as of the date of each such Company Report filed with the SEC, or if amended prior to the date of this Agreement, as of the date of such amendment, did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made in it, in light of the circumstances under which they were made, not misleading and complied as to form in all material respects with the applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  No executive officer of the Company has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002.

(i)Internal Accounting and Disclosure Controls.  The records, systems, controls, data and information of the Company and the Company Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of the Company or the Company Subsidiaries or accountants (including all means

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of access thereto and therefrom) or reputable banking industry service providers, except for any non-exclusive ownership and non-direct control that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the system of internal accounting controls described below in this Section 2.2(i).  The Company (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) intended to ensure that material information relating to the Company, including its consolidated Subsidiaries, is made known to the chief executive officer or executive chairman and the chief financial officer of the Company by others within those entities, and (ii) has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s outside auditors and the audit committee of the Board of Directors (A) any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information, and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.  As of the date of this Agreement, the Company has no Knowledge of any reason that its outside auditors and its chief executive officer or executive chairman and chief financial officer shall not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, without qualification, when next due.  Since December 31, 2008, neither the Company nor any Company Subsidiary nor, to the Knowledge of the Company, any director, officer, employee, auditor, accountant or representative of the Company or any Company Subsidiary has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any Company Subsidiary or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or any Company Subsidiary has engaged in questionable accounting or auditing practices.

(j)Risk Management Instruments.  All material derivative instruments, including swaps, caps, floors and option agreements entered into for the Company’s or any of the Company Subsidiaries’ own account were entered into (i) only in the ordinary course of business, (ii) in accordance with prudent practices and in all material respects with all applicable Laws and (iii) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of the Company or any Company Subsidiary, as applicable, enforceable in accordance with its terms.  Neither the Company nor, to the Knowledge of the Company, any other party thereto is in breach of any of its material obligations under any such agreement or arrangement.

(k)No Undisclosed Liabilities.  There are no liabilities of the Company or any of the Company Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, except for (i) liabilities adequately reflected or reserved against in accordance with GAAP in the Company’s audited balance sheet as of December 31, 2011 and (ii) liabilities that have arisen in the ordinary and usual course of business and consistent with past practice since December 31, 2011 and that have not or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

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(l)Mortgage Lending.  The Company and each of the Company Subsidiaries have complied in all material respects with, and all documentation in connection with the origination, processing, underwriting and credit approval of any mortgage loan originated, purchased or serviced by the Company or any Company Subsidiary has satisfied, in all material respects (i) all Laws with respect to the origination, insuring, purchase, sale, servicing, or filing of claims in connection with mortgage loans, including all Laws relating to real estate settlement procedures, consumer credit protection, truth in lending laws, usury limitations, fair housing, transfers of servicing, collection practices, equal credit opportunity and adjustable rate mortgages, (ii) the responsibilities and obligations relating to mortgage loans set forth in any agreement between the Company and any Agency, Loan Investor or Insurer, (iii) the applicable rules, regulations, guidelines, handbooks and other requirements of any Agency, Loan Investor or Insurer and (iv) the terms and provisions of any mortgage or other collateral documents and other loan documents with respect to each mortgage loan.

(m)Bank Secrecy Act; Anti-Money Laundering; OFAC; and Customer Information.  The Company is not aware of, has not been advised of, and, to the Knowledge of the Company, has no reason to believe that any facts or circumstances exist that would cause it or any Company Subsidiary to be deemed to be not operating in compliance, in all material respects, with the Bank Secrecy Act of 1970, as amended, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (also known as the USA PATRIOT Act), any order or regulation issued by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), or any other applicable anti-money laundering or anti-terrorist-financing statute, rule or regulation.  The Company is not aware of any facts or circumstances that would cause it to believe that any nonpublic customer information has been disclosed to or accessed by an unauthorized third party in a manner that would cause it to undertake any material remedial action.  The Company and each of the Company Subsidiaries have adopted and implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that comply with the USA PATRIOT Act and such anti-money laundering program meets the requirements in all material respects of Section 352 of the USA PATRIOT Act and the regulations thereunder, and they have complied in all respects with any requirements to file reports and other necessary documents as required by the USA PATRIOT Act and the regulations thereunder.  The Company will not directly or indirectly use the proceeds of the sale of the Common Stock pursuant to transactions contemplated by this Agreement, or lend, contribute or otherwise make available such proceeds to any Company Subsidiary, joint venture partner or other Person, towards any sales or operations in any country appearing on the OFAC Specially Designated Nationals List (the “SDN List”) or for the purpose of financing the activities of any Person currently appearing on the SDN List.

(n)Certain Payments.  Neither the Company nor any of the Company Subsidiaries, nor any directors, officers, nor to the Knowledge of the Company, employees or any of their Affiliates or any other Person who to the Knowledge of the Company is associated with or acting on behalf of the Company or any of the Company Subsidiaries has directly or indirectly (i) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment in material violation of any Law to any Person, private or public, regardless of form, whether in money, property, or services (A) to obtain favorable treatment in securing business for the Company or any of the Company Subsidiaries, (B) to pay for favorable

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treatment for business secured by the Company or any of the Company Subsidiaries, or (C) to obtain special concessions or for special concessions already obtained, for or in respect of the Company or any of the Company Subsidiaries or (ii) established or maintained any fund or asset with respect to the Company or any of the Company Subsidiaries that was required by Law or GAAP to have been recorded and was not recorded in the books and records of the Company or any of the Company Subsidiaries.

(o)Absence of Certain Changes.  Since December 31, 2011 and except as Previously Disclosed or as required or contemplated by the terms of this Agreement, (i) the Company and the Company Subsidiaries have conducted their respective businesses in all material respects in the ordinary and usual course of business consistent with past practices, (ii) none of the Company or any Company Subsidiary has issued any securities (other than Common Stock and Company Options and other equity-based awards issued prior to the date of this Agreement pursuant to Company Stock Plans and reflected in the numbers set forth in Section 2.2(c)), (iii) the Company has not made or declared any distribution in cash or in kind to its shareholders or issued or repurchased any shares of its Capital Stock, (iv) through (and including) the date of this Agreement, no fact, event, change, condition, development, circumstance or effect has occurred that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and (v) no material default (or event which, with notice or lapse of time, or both, would constitute a material default) exists on the part of the Company or any Company Subsidiary in the due performance and observance of any term, covenant or condition of any agreement to which the Company or any Company Subsidiary is a party and which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(p)Compliance with Laws.  The Company and each Company Subsidiary have all material permits, licenses, franchises, authorizations, orders and approvals of, and have made all filings, applications and registrations with, Governmental Entities that are required in order to permit them to own or lease their properties and assets and to carry on their business as presently conducted and that are material to the business of the Company and each Company Subsidiary.  The Company and each Company Subsidiary have complied in all material respects and (i) are not in default or violation in any respect of, (ii) are not under investigation with respect to, and (iii) have not been threatened to be charged with or given notice of any material violation of, any applicable material domestic (federal, state or local) or foreign law, statute, ordinance, license, rule, regulation, policy or guideline, order, demand, writ, injunction, decree or judgment of any Governmental Entity (each, a “Law”), other than such noncompliance, defaults or violations as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  Except for statutory or regulatory restrictions of general application, restrictions applicable to recipients of funds under the Troubled Asset Relief Program of the Treasury, the respective Orders to Cease and Desist issued by the Office of Thrift Supervision to the Company and the Bank, with the consent of the Company and the Bank, effective September 9, 2010 (each, individually a “Regulatory Order” and, together, the “Regulatory Orders”), no Governmental Entity has placed any material restriction on the business or properties of the Company or any of the Company Subsidiaries.  As of the date hereof, the Bank has a Community Reinvestment Act rating of “outstanding.”

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(q)Agreements with Regulatory Agencies.  Except for the Regulatory Orders, (i) the Company and the Company Subsidiaries (A) are not subject to any cease-and-desist or other similar order or enforcement action issued by, (B) are not a party to any written agreement, consent agreement or memorandum of understanding with, (C) are not a party to any commitment letter or similar undertaking to, and (D) are not subject to any capital directive by, and (ii) since December 31, 2011, neither the Company nor any of the Company Subsidiaries has adopted any board resolutions at the request of, any Governmental Entity that currently restricts in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its liquidity and funding policies and practices, its ability to pay dividends, its credit, risk management or compliance policies, its internal controls, its management or its operations or business (each item in this sentence, including the Regulatory Orders, being referred to herein as a “Regulatory Agreement”), nor has the Company nor any of the Company Subsidiaries been advised since December 31, 2011 by any Governmental Entity that it is considering issuing, initiating, ordering, or requesting any such Regulatory Agreement, except that the Company and the Bank have been advised that they may receive revised Regulatory Orders from the Office of the Comptroller of the Currency and the Federal Reserve (either acting directly or by or through the Federal Reserve Bank of San Francisco).  Except as set forth in the Disclosure Schedule, the Company and the Company Subsidiaries are in compliance in all material respects with each Regulatory Agreement to which they are party or subject, and the Company and the Company Subsidiaries have not received any notice from any Governmental Entity indicating that either the Company or any of the Company Subsidiaries is not in compliance in all material respects with any such Regulatory Agreement.

(r)Contracts.  The Company has Previously Disclosed or provided (by hard copy, electronic data room or otherwise) to the Investor or its representatives true, correct and complete copies of each of the following to which the Company or any Company Subsidiary is a party, each of which is set forth on Section 2.2(r) of the Disclosure Schedule (each, a “Material Contract”):

(i)any contract or agreement relating to indebtedness of the Company or any Company Subsidiary for borrowed money, letters of credit, capital lease obligations, obligations secured by a Lien or interest rate or currency hedging agreements (including guarantees in respect of any of the foregoing, but in any event excluding trade payables, securities transactions and brokerage agreements arising in the ordinary course of business, intercompany indebtedness and immaterial leases for telephones, copy machines, facsimile machines and other office equipment) in excess of $200,000, except for those issued in the ordinary course of business;

(ii)any contract or agreement that is a “material contract” within the meaning of Item 601(b)(10) of Regulation S-K;

(iii)any contract or agreement limiting, in any material respect, the ability of the Company or any of the Company Subsidiaries to engage in any line of business or to compete, whether by restricting territories, customers or otherwise, or in any other material respect, with any Person;

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(iv)any contract or agreement that concerns the sale or acquisition of any material portion of the Company’s business;

(v)any alliance, cooperation, joint venture, shareholders, partnership or similar agreement involving a sharing of profits or losses relating to the Company or any Company Subsidiary;

(vi)any contract or agreement involving annual payments in excess of $200,000 that cannot be cancelled by the Company or a Company Subsidiary without penalty on not more than 90 days’ notice;

(vii)any material hedge, collar, option, forward purchasing, swap, derivative or similar agreement, understanding or undertaking;

(viii)any contract or agreement with respect to the employment or service of any current or former directors, officers, employees or consultants of the Company or any of the Company Subsidiaries other than, with respect to non-executive employees and consultants, in the ordinary course of business; and

(ix)any contract or agreement containing any (x) non-competition or exclusive dealing obligations or other obligation which purports to limit or restrict in any respect the ability of the Company or any Company Subsidiary to solicit customers or the manner in which, or the localities in which, all or any portion of the business of the Company or the Company Subsidiaries is or can be conducted, or (y) right of first refusal or right of first offer or similar right or that limits or purports to limit the ability of the Company or any of the Company Subsidiaries to own, operate, sell, transfer, pledge or otherwise dispose of any material assets or business.

Each Material Contract (A) is legal, valid and binding on the Company and the Company Subsidiaries which are a party to such contract, (B) is in full force and effect and enforceable in accordance with its terms and (C) will continue to be legal, valid, binding, enforceable, and in full force and effect in all material respects following the consummation of the transactions contemplated by this Agreement.  Neither the Company nor any of the Company Subsidiaries, nor to the Knowledge of the Company, any other party thereto is in material violation or default under any Material Contract.  No benefits under any Material Contract will be increased, and no vesting of any benefits under any Material Contract will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement, nor will the value of any of the benefits under any Material Contract be calculated on the basis of any of the transactions contemplated by this Agreement.  The Company and the Company Subsidiaries, and to the Knowledge of the Company, each of the other parties thereto, have performed in all material respects all material obligations required to be performed by them under each Material Contract, and to the Knowledge of the Company, no event has occurred that with notice or lapse of time would constitute a material breach or default or permit termination, modification, or acceleration, under the Material Contracts.

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(s)Insurance.  The Company and each of the Company Subsidiaries are presently insured, and have been insured for at least the past two years, for reasonable amounts with financially sound and reputable insurance companies against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured.  All of the policies, bonds and other arrangements providing for the foregoing (the “Company Insurance Policies”) are in full force and effect, the premiums due and payable thereon have been or will be timely paid through the Closing Date, and there is no material breach or default (and no condition exists or event has occurred that, with the giving of notice or lapse of time or both, would constitute such a material breach or default) by the Company or any of the Company Subsidiaries under any of the Company Insurance Policies or, to the Knowledge of the Company, by any other party to the Company Insurance Policies.  Neither the Company nor any of the Company Subsidiaries has received any written notice of cancellation or non-renewal of any Company Insurance Policy nor, to the Knowledge of the Company, is the termination of any such policies threatened in writing by the insurer, and there is no material claim for coverage by the Company, or any of the Company Subsidiaries, pending under any of such Company Insurance Policies as to which coverage has been denied or disputed by the underwriters of such Company Insurance Policies or in respect of which such underwriters have reserved their rights.

(t)Title.  The Company and the Company Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and valid title to all material personal property owned by them, in each case free and clear of all Liens, except for Liens which do not materially affect the value of such property or do not interfere with the use made and proposed to be made of such property by the Company or any Company Subsidiary.  Any real property and facilities held under lease by the Company or the Company Subsidiaries are valid, subsisting and enforceable leases with such exceptions that are not material and do not interfere with the use made and proposed to be made of such property and facilities by the Company or the Company Subsidiaries.

(u)Employee Benefits.

(i)Section 2.2(v) of the Disclosure Schedule sets forth a correct and complete list of each “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), including, without limitation, multiemployer plans within the meaning of Section 3(37) of ERISA), and all stock purchase, stock option, severance, employment, change-in-control, fringe benefit, bonus, incentive, deferred compensation and all other employee benefit plans, agreements, programs, policies or other arrangements, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise), whether formal or informal, oral or written, under which (A) any current or former employee or director of the Company or any of the Company Subsidiaries (the “Company Employees”) has any present or future right to benefits and which are contributed to, sponsored by or maintained by the Company or any of the Company Subsidiaries or (B) the Company or any Company Subsidiary has

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had or has any present or future liability.  All such plans, agreements, programs, policies and arrangements shall be collectively referred to as the “Benefit Plans.”

(ii)(A) Each Benefit Plan has been established and administered in all material respects in accordance with its terms, and in compliance with the applicable provisions of ERISA, the Code and other Laws; (B) no “reportable event” (as such term is defined in Section 4043 of ERISA) that could reasonably be expected to result in material liability has occurred with respect to any Benefit Plan, and (C) no non-exempt “prohibited transaction” (as such term is defined in Section 406 of ERISA and Section 4975 of the Code) has been engaged in by the Company or any Company Subsidiary with respect to any Benefit Plan that has or is expected to result in any material liability or “accumulated funding deficiency” (as such term is defined in Section 302 of ERISA and Section 412 of the Code (whether or not waived)).

(iii)The Company and the Company Subsidiaries will be in compliance, as of the Closing Date, with Sections 111 and 302 of the Emergency Economic Stabilization Act of 2008, as amended by the U.S. American Recovery and Reinvestment Act of 2009, including all guidance issued thereunder by a Governmental Entity (collectively “EESA”).

(v)Taxes.  All material Tax Returns required to be filed by, or on behalf of, Company or the Company Subsidiaries have been timely filed, or will be timely filed, in accordance with all Laws, and all such Tax Returns are, or shall be at the time of filing, complete and correct in all material respects.  The Company and the Company Subsidiaries have timely paid all material Taxes due and payable (whether or not shown on such Tax Returns), or, where payment is not yet due, have made adequate provisions in accordance with GAAP.  There are no Liens with respect to Taxes upon any of the assets or properties of either the Company or the Company Subsidiaries other than with respect to Taxes not yet due and payable.

(w)Labor.

(i)Employees of the Company and the Company Subsidiaries are not represented by any labor union nor are any collective bargaining agreements otherwise in effect with respect to such employees.  No labor organization or group of employees of the Company or any Company Subsidiary has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions presently pending or threatened to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority, nor have there been in the last three years.  There are no strikes, work stoppages, slowdowns, labor picketing lockouts, material arbitrations or material grievances, or other material labor disputes pending or, to the Knowledge of the Company, threatened against or involving the Company or any Company Subsidiary, nor have there been any in the past year.

(ii)Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company and the Company

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Subsidiaries are in compliance with all federal and state Laws and requirements respecting employment and employment practices, terms and conditions of employment, collective bargaining, disability, immigration, health and safety, wages, hours and benefits, non-discrimination in employment, workers’ compensation and the collection and payment of withholding and/or payroll taxes and similar taxes.

(iii)Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there is no charge or complaint pending or threatened before any Governmental Entity alleging unlawful discrimination in employment practices, unfair labor practices or other unlawful employment practices by the Company or any Company Subsidiary.

(x)Brokers and Finders.  Except for PGP Capital Advisors, LLC (the “Placement Agent”) and the fees payable thereto (which fees are to be paid by the Company), neither the Company nor any of its officers, directors, employees or agents has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Company in connection with this Agreement or the transactions contemplated hereby.

(y)Loan Portfolio.  As of the date of this Agreement, the characteristics of the loan portfolio of the Company have not materially and adversely changed from the characteristics of the loan portfolio as of December 31, 2011.

(z)Offering of Securities.  Neither the Company nor any Person acting on its behalf has taken any action (including any offering of any securities of the Company under circumstances which would require the integration of such offering with the offering of any of the Common Stock to be issued pursuant to this Agreement under the Securities Act and the rules and regulations of the SEC promulgated thereunder) which would subject the offering, issuance or sale of any of the Common Stock to be issued pursuant to this Agreement to be subject to the registration requirements of the Securities Act.  Neither the Company nor any Person acting on its behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with any offer or sale of the Common Stock pursuant to the transactions contemplated by this Agreement.  Assuming the accuracy of the Investor’s representations and warranties set forth in this Agreement, no registration under the Securities Act is required for the offer and sale of the Common Stock by the Company to the Investor.

(aa)Investment Company Status.  The Company is not, and upon consummation of the transactions contemplated by this Agreement will not be, an “investment company,” a company controlled by an “investment company” or an “affiliated Person” of, or “promoter” or “principal underwriter” of, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.

(bb)Affiliate Transactions.  No officer, director, five percent (5%) shareholder or other Affiliate of the Company (or any Company Subsidiary), or any individual who, to the Knowledge of the Company, is related by marriage or adoption to or shares the same

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home as any such Person, or any entity which, to the Knowledge of the Company, is controlled by any such Person (collectively, an “Insider”), is a party to any contract or transaction with the Company (or any Company Subsidiary) which pertains to the business of the Company (or any Company Subsidiary) or has any interest in any property, real or personal or mixed, tangible or intangible, used in or pertaining to the business of the Company (or any Company Subsidiary).  The foregoing representation and warranty does not include deposits at the Company (or any Company Subsidiary) or loans of $250,000 or less made in the ordinary course of business in compliance with Regulation O and other applicable Law.

(cc)Anti-takeover Provisions Not Applicable.  The Board of Directors has taken all necessary action to ensure that the transactions contemplated by this Agreement and the consummation of the transactions contemplated hereby will be exempt from any anti-takeover or similar provisions of the Company’s certificate of incorporation and bylaws, the Rights Plan and any provisions of any applicable “moratorium”, “control share”, “fair price”, “interested shareholder” or other anti-takeover Laws and regulations of any jurisdiction.

(dd)Issuance of the Common Stock.  The issuance of the Common Stock in connection with the transactions contemplated by this Agreement has been duly authorized and such Common Stock, when issued and paid for in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable and free and clear of all Liens, other than restrictions on transfer imposed by applicable securities Laws, and shall not be subject to preemptive or similar rights.

3.Representations and Warranties of the Investor.  Except as Previously Disclosed, the Investor hereby represents and warrants to the Company, as of the date hereof and as of the Closing Date (except for the representations and warranties that are as of a specific date which are made as of that date) that:

(a)Organization and Authority.  The Investor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified and where failure to be so qualified would be reasonably expected to materially and adversely impair or delay its ability to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.

(b)Authorization; No Conflicts.

(i)The Investor has the necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by its board of directors, general partner or managing members, investment committee, investment adviser or other authorized person, as the case may be, and no further approval or authorization by any of its shareholders, partners or other equity owners, as the case may be, is required.  This Agreement has been duly and validly executed and delivered by the Investor and, assuming due authorization,

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execution and delivery by the Company is the valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles).

(ii)Neither the execution, delivery and performance by the Investor of this Agreement nor the consummation of the transactions contemplated hereby, nor compliance by the Investor with any of the provisions hereof, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any Liens upon any of the properties or assets of the Investor under any of the terms, conditions or provisions of (1) its certificate of incorporation or bylaws, its certificate of limited partnership or partnership agreement or its similar governing documents or (2) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Investor is a party or by which the Investor may be bound, or to which the Investor or any of the properties or assets of the Investor may be subject, or (B) violate any Law applicable to the Investor or any of its properties or assets except in the case of clauses (A)(2) and (B) for such violations, conflicts and breaches as would not reasonably be expected to materially adversely affect the Investor’s ability to perform its obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis.

(c)Governmental Consents.  Except as set forth in the Disclosure Schedule, no Governmental Consents are necessary for the execution and delivery of this Agreement or for the purchase by the Investor of the Common Stock pursuant to this Agreement.

(d)Purchase for Investment; Accredited Investor Status.  The Investor acknowledges that the Common Stock to be purchased by the Investor pursuant to this Agreement has not been registered under the Securities Act or under any state securities laws and may not be resold or transferred by the Investor without such registration or appropriate reliance on any available exemption from such requirements.  The Investor (i) is acquiring the Common Stock pursuant to an exemption from the registration requirements of the Securities Act and other applicable securities laws solely for investment with no present intention to distribute any of the Common Stock to any Person, (ii) will not sell or otherwise dispose of any of the Common Stock, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable securities laws, (iii) has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of its investment in the Common Stock and of making an informed investment decision and (iv) is an “accredited investor” (as that term is defined by Rule 501 of the Securities Act).

(e)Brokers and Finders.  Neither the Investor, nor its respective Affiliates nor any of their respective officers or directors, has employed any broker or finder or incurred

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any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Investor in connection with this Agreement or the transactions contemplated hereby.  The Investor acknowledges that it is purchasing the Common Stock directly from the Company and not from the Placement Agent.

(f)Investment Decision.  The Investor, or the duly appointed investment manager to the Investor (the “Investment Manager”), if applicable, has independently evaluated the merits of its decision to purchase the Common Stock pursuant to this Agreement, and the Investor confirms that neither it, nor its Investment Manager, if applicable, has relied on the advice of any other person’s business and/or legal counsel in making such decision.  The Investor understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Investor in connection with the purchase of the Common Stock constitutes legal, tax or investment advice.  The Investor has consulted such accounting, legal, tax and investment advisors as it has deemed necessary or appropriate in connection with its purchase of the Common Stock.  The Investor understands that the Placement Agent has acted solely as the agent of the Company in this placement of the Common Stock and the Investor has not relied on the business or legal advice of the Placement Agent or any of its agents, counsel or Affiliates in making its investment decision hereunder, and confirms that none of such persons has made any representations or warranties to the Investor in connection with the transactions contemplated by this Agreement.  Except as Previously Disclosed and except for this Agreement, there are no agreements or understandings with respect to the transactions contemplated by this Agreement and the Side Letter between the Investor or any of its Affiliates, on the one hand, and (i) any of the Other Investors or any of their respective Affiliates, in each case, the identity of which is known to the Investor, (ii) the Company or (iii) the Company Subsidiaries, on the other hand.

(g)Financial Capability.  At the Closing, the Investor shall have available all funds necessary to consummate the purchase of Common Stock on the terms and conditions contemplated by this Agreement.

(h)Access to Information.  The Investor acknowledges that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Common Stock and the merits and risks of investing in the Common Stock; (ii) access to information about the Company and the Company Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the Investment; and (iv) the opportunity to ask questions of management.

(i)No Reliance.  The Investor has not relied on any representation or warranty in connection with the Investment other than those contained in this Agreement.

(j)No Coordinated Acquisition.  Except as Previously Disclosed, the Investor (i) reached its decision to invest in the Common Stock independently from any other Person known by the Investor to be a potential investor in the Company, other than any Affiliates

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of the Investor that are also investing in the Other Private Placements, (any such person, a “Potential Investor”), (ii) is not affiliated with any other Potential Investor, (iii) is not advised or managed by an advisor or manager that advises or manages any other Potential Investor, other than any Affiliates of the Investor that are also investing in the Other Private Placements, (iv) has not entered into any agreement or understanding, whether written or not reduced to writing, with any other Potential Investor to act in concert for the purpose of exercising a controlling influence over the Company or any Company Subsidiaries, including, but not limited to, any agreements or understandings regarding the voting or transfer of shares of the Company, (v) has not shared due diligence materials prepared by such Investor or any of its advisors or representatives with respect to the Company or any Company Subsidiaries with any other Potential Investor, (vi) has not been induced, nor has induced any other Potential Investor, to enter into the transactions contemplated by this Agreement by any other Potential Investor, (vii) was not notified of or provided the opportunity to enter into the transactions contemplated by this Agreement pursuant to the terms of any agreement or informal understanding with, or otherwise acting in concert with, any other Potential Investor and was not required by the terms of any agreement or informal understanding to so notify any other Potential Investor, (viii) is not a party to any formal or informal understanding with any other Potential Investor to make a coordinated acquisition of stock of the Company, and the investment decision of the Investor is not based on the investment decision of any other Potential Investor, (ix) is not a party to any formal or informal agreement or understanding concerning the appointment of any individual to the Board of Directors, (x) will not, by reason of the Investment, file, be required to file, or be required to be included in a Schedule 13D or Schedule 13G pursuant to the United States federal securities laws, (xi) has not engaged as part of a group consisting of substantially the same entities as the Potential Investors, in substantially the same combination of interests, in any additional banking or nonbanking activities or business ventures in the United States and (xii) will not pay any other Potential Investor any fee in connection with the transactions contemplated hereby.  Except as Previously Disclosed, the Investor does not presently hold any capital stock of the Company.

4.Indemnification by the Company.

(a)After the Closing, and subject to Section 4(b), the Company shall indemnify, defend and hold harmless to the fullest extent permitted by Law the Investor and its Affiliates, and their successors and assigns, officers, directors, partners, members and employees, as applicable, (the “Investor Indemnified Parties”) against, and reimburse any of the Investor Indemnified Parties for, all Losses that any of the Investor Indemnified Parties may at any time suffer or incur, or become subject to, as a result of or in connection with (1) the inaccuracy or breach of any representation or warranty made by the Company in this Agreement or any certificate delivered pursuant hereto or (2) any breach or failure by the Company to perform any of its covenants or agreements contained in this Agreement.  Notwithstanding anything herein to the contrary, the obligations of the Company under this Section 4(a) shall not be applicable to or inure to the benefit of any transferee of the Common Stock sold pursuant to this Agreement who is not an Affiliate of the Investor.

(b)Notwithstanding anything to the contrary contained herein, the Company shall not be required to indemnify, defend or hold harmless any of the Investor Indemnified Parties against, or reimburse any of the Investor Indemnified Parties for, any Losses pursuant to Section 4(a) (other than Losses arising out of the inaccuracy or breach of any Company

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Specified Representations) until the aggregate amount of the Investor Indemnified Parties’ Losses for which the Investor Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 4(a) exceeds $100,000 (the “Deductible”), after which the Company shall be obligated for all of the Investor Indemnified Parties’ Losses for which the Investor Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 4(a) that are in excess of the Deductible.  Notwithstanding anything to the contrary contained herein, the Company shall not be required to indemnify, defend or hold harmless the Investor Indemnified Parties against, or reimburse the Investor Indemnified Parties for, any Losses pursuant to Section 4(a) in a cumulative aggregate amount exceeding the aggregate purchase price paid by the Investor to the Company pursuant to Section 1.1 (other than Losses arising out of the inaccuracy or breach of any Company Specified Representations).

(c)For purposes of Section 4(a), in determining whether there has been a breach of a representation or warranty, the parties hereto shall ignore any “materiality,” “Material Adverse Effect” or similar qualifications.

5.Indemnification by the Investor.

(a)After the Closing, and subject to Section 5(b), the Investor shall indemnify, defend and hold harmless to the fullest extent permitted by Law the Company, the Placement Agent and their respective Affiliates and their respective successors and assigns, officers, directors, partners, members and employees (collectively, the “Company Indemnified Parties”) against, and reimburse any of the Company Indemnified Parties for, all Losses that the Company Indemnified Parties may at any time suffer or incur, or become subject to, as a result of or in connection with (1) the inaccuracy or breach of any representation or warranty made by the Investor in this Agreement or any certificate delivered pursuant hereto or (2) any breach or failure by such Investor to perform any of its covenants or agreements contained in this Agreement.

(b)Notwithstanding anything to the contrary contained herein, the Investor shall not be required to indemnify, defend or hold harmless any of the Company Indemnified Parties against, or reimburse any of the Company Indemnified Parties for any Losses pursuant to Section 5(a) (other than Losses arising out of the inaccuracy or breach of any Investor Specified Representations) until the aggregate amount of the Company Indemnified Parties’ Losses for which the Company Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5(a) exceeds the Deductible, after which the Investor shall be obligated for all of the Company Indemnified Parties’ Losses for which the Company Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5(a) that are in excess of such Deductible.  Notwithstanding anything to the contrary contained herein, the Investor shall not be required to indemnify, defend or hold harmless the Company Indemnified Parties against, or reimburse the Company Indemnified Parties for, any Losses pursuant to Section 5(a) in a cumulative aggregate amount exceeding the aggregate purchase paid by the Investor to the Company pursuant to Section 1.1 hereof (other than Losses arising out of the inaccuracy or breach of any of the Investor Specified Representations).

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(c)For purposes of Section 5(a), in determining whether there has been a breach of a representation or warranty, the parties hereto shall ignore any “materiality” or similar qualifications.

6.Notification of Claims.

(a)Any Person that may be entitled to be indemnified under this Article 5 (the “Indemnified Party”) shall promptly notify the party or parties liable for such indemnification (the “Indemnifying Party”) in writing of any claim in respect of which indemnity may be sought hereunder, including any pending or threatened claim or demand by a third party that the Indemnified Party has determined has given or could reasonably give rise to a right of indemnification under this Agreement (including a pending or threatened claim or demand asserted by a third party against the Indemnified Party) (each, a “Third Party Claim”), describing in reasonable detail the facts and circumstances with respect to the subject matter of such claim or demand; provided, however, that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations under this Agreement except to the extent that the Indemnifying Party is materially prejudiced by such failure.  The parties agree that notices for claims in respect of a breach of a representation, warranty, covenant or agreement must be delivered prior to the expiration of any applicable survival period specified in Section 6 for such representation, warranty, covenant or agreement; provided, that if, prior to such applicable date, a party hereto shall have notified the other parties hereto in accordance with the requirements of Section 4 or 5, as applicable, of a claim for indemnification under this Agreement (whether or not formal legal action shall have been commenced based upon such claim), such claim shall continue to be subject to indemnification in accordance with this Agreement notwithstanding the passing of such applicable date.

(b)Upon receipt of a notice of a claim for indemnity from an Indemnified Party pursuant to Section 6(a) in respect of a Third Party Claim, the Indemnifying Party may, by notice to the Indemnified Party delivered within twenty (20) Business Days of the receipt of notice of such Third Party Claim, assume the defense and control of any Third Party Claim, with its own counsel reasonably acceptable to the Indemnified Party and at its own expense.  The Indemnified Party shall have the right to employ counsel on its own behalf for, and otherwise participate in the defense of, any such Third Party Claim, but the fees and expenses of its counsel will be at its own expense unless (A) the employment of counsel by the Indemnified Party at the Indemnifying Party’s expense has been authorized in writing by the Indemnifying Party, as applicable, (B) the Indemnified Party reasonably believes there may be a conflict of interest between the Indemnified Party and the Indemnifying Party in the conduct of the defense of such Third Party Claim, (C) the Indemnified Party reasonably believes there are legal defenses available to it that are different from, additional to or inconsistent with those available to the Indemnifying Party, or (D) the Indemnifying Party has not in fact employed counsel to assume the defense of such Third Party Claim within a reasonable time after receipt of notice of the commencement of such Third Party Claim, in each of which cases the fees and expenses of such Indemnified Party’s counsel shall be at the expense of the Indemnifying Party; provided, however, that in the event any Investor Indemnified Party is similarly situated with any other “Investor Indemnified Party” under any of the other Agreements with respect to any Third Party Claim, and does not have any conflict of interest with such Person in the conduct of the defense of such Third Party Claim or have legal defenses available to it that are different from, additional

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to or inconsistent with those available to such Person, such Investor Indemnified Party shall be required to employ the same counsel as such Person and the Company shall be responsible for the fees and expenses of only one such counsel for such Investor Indemnified Party and such other Person or Persons (assuming any of clauses (A) through (D) is satisfied).  The Indemnified Party may take any actions reasonably necessary to defend such Third Party Claim prior to the time that it receives a notice from the Indemnifying Party as contemplated by the immediately preceding sentence.  The Indemnified Party shall, and shall cause each of their Affiliates and representatives to, use reasonable best efforts to cooperate with the Indemnifying Party in the defense of any Third Party Claim.  The Indemnifying Party shall not, without the prior written consent of the Indemnified Party (which shall not be unreasonably withheld), consent to a settlement, compromise or discharge of, or the entry of any judgment arising from, any Third Party Claim, unless such settlement, compromise, discharge or entry of any judgment does not involve any statement, finding or admission of any fault, culpability, failure to act, violation of Law or admission of any wrongdoing by or on behalf of the Indemnified Party, and the Indemnifying Party shall (i) pay or cause to be paid all amounts arising out of such settlement or judgment concurrently with the effectiveness of such settlement or judgment (unless otherwise provided in such judgment), (ii) not encumber any of the assets of any Indemnified Party or agree to any restriction or condition that would apply to or materially adversely affect any Indemnified Party or the conduct of any Indemnified Party’s business and (iii) obtain, as a condition of any settlement, compromise, discharge, entry of judgment (if applicable), or other resolution, a complete and unconditional release of each Indemnified Party in form and substance reasonably satisfactory to such  Indemnified Party from any and all liabilities in respect of such Third Party Claim.  An Indemnified Party shall not settle, compromise or consent to the entry of any judgment with respect to any claim or demand for which it is seeking indemnification from the Indemnifying Party or admit to any liability with respect to such claim or demand without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed); provided that such consent shall not be required if the Indemnifying Party has not fulfilled any material obligations under this Section 6(b).

(c)In the event any Indemnifying Party receives a notice of a claim for indemnity from an Indemnified Party pursuant to Section 6(a) that does not involve a Third Party Claim, the Indemnifying Party shall notify the Indemnified Party within twenty (20) Business Days following its receipt of such notice whether the Indemnifying Party disputes its liability to the Indemnified Party under this Agreement.  The Indemnified Party shall reasonably cooperate with and assist the Indemnifying Party in determining the validity of any such claim for indemnity by the Indemnified Party.

7.Indemnification Payment.  In the event a claim or any Action for indemnification hereunder has been finally determined, the amount of such final determination shall be paid by the Indemnifying Party to the Indemnified Party on demand in immediately available funds; provided, however, that any reasonable and documented out-of-pocket expenses incurred by the Indemnified Party as a result of such claim or Action shall be reimbursed promptly by the Indemnifying Party upon receipt of an invoice describing such costs incurred by the Indemnified Party.  A claim or an Action, and the liability for and amount of damages therefor, shall be deemed to be “finally determined” for purposes of this Agreement when the parties hereto have so determined by mutual agreement or, if disputed, when a final non-appealable judicial order has been entered into with respect to such claim or Action.

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8.Exclusive Remedies.  Each party hereto acknowledges and agrees that following the Closing, the indemnification provisions hereunder shall be the sole and exclusive remedies of the parties hereto for any breach of the representations, warranties or covenants contained in the this Agreement.  No investigation of the Company by the Investor, or of the Investor by the Company, whether prior to or after the date of this Agreement, shall limit any Indemnified Party’s exercise of any right hereunder or be deemed to be a waiver of any such right.  The parties agree that any indemnification payment made pursuant to this Agreement shall be treated as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

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EX-10.22.1

Exhibit 10.22.1

EXCHANGE AGREEMENT

This Exchange Agreement (“Agreement”), dated as of August 22, 2013, is entered into by and among National Community Investment Fund, located at 135 South LaSalle, Suite 2040, Chicago, IL 60603 (“NCIF”), and Broadway Financial Corporation, located at 5055 Wilshire Boulevard, Suite 500, Los Angeles, California 90036 (“Broadway”) with reference to the following facts:

WHEREAS, Broadway desires to acquire all of the issued and outstanding shares of its Noncumulative Perpetual Preferred Stock, Series C (the “Series C Preferred Stock”) in exchange for shares of its common stock (“Common Stock”) on the terms and conditions set forth in this Agreement; and

WHEREAS, NCIF is currently the owner of 76,950 shares, comprising all of the issued and outstanding shares, of the Series C Preferred Stock; and

WHEREAS, NCIF is willing to exchange the Series C Preferred Stock held by it for Common Stock on the terms and conditions set forth in this Agreement (the “NCIF Exchange”); and

WHEREAS, concurrently with the NCIF Exchange, Broadway proposes (i) to issue shares of its Common Stock, which may include non-voting common stock, to the United States Department of Treasury (the “Treasury Department”) in exchange for all of the issued and outstanding shares of Broadway’s Fixed Rate Cumulative Perpetual Preferred Stock, Series D and Broadway’s Fixed Rate Cumulative Perpetual Preferred Stock, Series E (collectively, the “TARP Preferred Stock”) held by the Treasury Department and comprising all of the issued and outstanding shares of the TARP Preferred Stock (the “Treasury Exchanges”), and (ii) to enter into and complete exchanges of its Common Stock for all of the issued and outstanding shares of Broadway’s Series A Noncumulative Perpetual Preferred Stock and Series B Noncumulative Perpetual Preferred Stock with the holders of such respective series of preferred stock (the “Other Preferred Stock Exchanges,” and, collectively with Treasury Exchanges, the “Other Exchanges”, all on the terms and conditions set forth in the agreements listed in Exhibit A to this Agreement, complete copies of which have been provided to NCIF); and

WHEREAS, concurrently with the NCIF Exchange and the Other Exchanges described above, Broadway proposes to sell Common Stock to investors for cash in a private placement transaction raising gross proceeds of $3.5 million or more (the “Equity Offering”).

NOW THEREFORE, in consideration of the mutual covenants herein set forth, the parties hereto agree as follows:

1.SHARE EXCHANGE.  On the terms and subject to the conditions set forth herein, NCIF agrees to transfer to Broadway all of its right, title and interest in and to the shares of Series C Preferred Stock of which NCIF or a nominee is the registered owner (the “Shares”) in exchange for and against delivery of Common Stock at an exchange ratio equal to (A) 50% of the aggregate liquidation preference of all of the shares of Series C Preferred Stock exchanged, divided by (B) the per share value assigned to the Common Stock in connection with

Broadway’s exchange of Common Stock with the Treasury Department for the TARP Preferred Stock held by the Treasury Department, which value Broadway and the Treasury Department have agreed will be the lowest price per share paid by the investors in the Equity Offering.

2.CLOSING.  The completion of the transactions contemplated by this Agreement (the “Closing”) shall take place concurrently with the completion of the Treasury Exchanges prior to August 31, 2013 (or such later date to which NCIF consents) (the “Closing Date”), as follows: NCIF shall deliver or cause to be delivered the Shares to be exchanged hereunder to Broadway or Broadway’s agent in such manner as shall be reasonably acceptable to Broadway and effective to convey all right, title and interest of NCIF in the Shares to Broadway against delivery by Broadway through the transfer agent for Common Stock, or such other means as shall be reasonably acceptable to NCIF, of the number of shares of Common Stock provided for herein, registered in such names as NCIF shall specify to Broadway at least three (3) business days prior to the Closing.

3.CONDITIONS TO CLOSING.  The obligation of NCIF to consummate the NCIF Exchange is also subject to the fulfillment (or waiver by NCIF) at or prior to the Closing of each of the following conditions:

(a)Broadway shall complete the Other Exchanges concurrently with the NCIF Exchange.

(b)Broadway shall complete the Equity Offering concurrently with the NCIF Exchange.

(c)Broadway shall complete the issuance of shares of Common Stock in partial satisfaction of indebtedness owed by Broadway to BBCN Bank pursuant to that certain Agreement for the Partial Satisfaction of a Debt Previously Contracted, dated August     , 2013, entered into between BBCN Bank and Broadway concurrently with the NCIF Exchange.

(d)Broadway shall complete the issuance of shares of Common Stock in complete satisfaction of the indebtedness of Broadway to NCIF, acquired in connection herewith pursuant to the Loan Purchase and Sale Agreement dated August     , 2013 entered into between BBCN Bank and NCIF (the “Loan Sale Agreement”).

(e)The representations and warranties of Broadway set forth in this Agreement shall be true and correct in all material respects as though made on and as of the Closing Date (other than representations and warranties that by their terms speak as of another date, which representations and warranties shall be true and correct in all respects as of such other date).

(f)Broadway shall have obtained such stockholder and other corporate approvals, and shall have taken all such other action as shall be necessary to authorize Common Stock or Common Stock Equivalents necessary to comply with its obligations under this Agreement.

(g)Broadway shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing.

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4.MUTUAL REPRESENTATIONS AND WARRANTIES.  Broadway hereby makes the following representations and warranties to NCIF, and NCIF hereby makes the following representations and warranties to Broadway:

(a)Broadway is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware.  NCIF is duly constituted as a trust under the laws of Illinois.

(b)(i) Each has full power and authority to enter into this Agreement and to consummate the transactions contemplated hereby, and (ii) the person or entity who has executed this Agreement is duly authorized to do so and thereby bind the party on whose behalf he, she or it is purporting to act.

(c)This Agreement is a valid and binding agreement, enforceable against each party in accordance with its terms.

5.REPRESENTATIONS AND WARRANTIES OF BROADWAY.  Broadway hereby makes the following representations and warranties to NCIF:

(a)Upon issuance, the Common Stock to be issued by Broadway pursuant hereto (i) will be duly and validly authorized and issued, fully paid and nonassessable, and NCIF will acquire such Common Stock free and clear of any liens, encumbrances, pledges, security interests or other restrictions or claims of third parties, and (ii) will, when combined with shares that may be issued to NCIF or its affiliates in connection with the partial exchange of the loan from NCIF Bank to Broadway comprise less than, or equal to, 9.90% of Broadway’s issued and outstanding shares of Common Stock.

(b)Broadway is a certified Community Development Financial Institution and its business strategy emphasizes serving the credit and other banking needs of the low-to-moderate income communities it serves.

(c)Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will violate, result in a breach of any of the terms or provisions of, constitute a default (or in any event that, with the giving of notice or the passage of time or both would constitute a default) under, accelerate any obligations under, or conflict with, (i) Broadway’s charter, articles or certificate of incorporation or bylaws, or other organizational documents, if applicable, or any agreement, indenture or other instrument to which Broadway is a party or by which Broadway or Broadway’s properties are bound, (ii) any judgment, decree, order or award of any court, governmental body or arbitrator to which Broadway is subject, or (iii) any law, rule or regulation applicable to Broadway.

(d)Neither Broadway nor any person acting on its behalf has taken any action (including any offering of any securities of Broadway under circumstances which would require the integration of such offering with the offering of the Common Stock or Common Stock Equivalents (as defined below) under the Securities Act of 1933, as amended, (the “Act”) and the rules and regulations of the Securities and Exchange Commission promulgated thereunder), which might subject the offering, issuance or sale of the Common Stock or Common Stock Equivalents to NCIF pursuant to this Agreement to the registration requirements of the Act.

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(e)No broker, finder or investment banker is entitled to any financial advisory, brokerage, finder’s or other fee or commission in connection with this Agreement or the transactions contemplated hereby based upon arrangements made by or on behalf of Broadway or any subsidiary of Broadway for which NCIF could have any liability.

6.REPRESENTATIONS AND WARRANTIES OF NCIF.  NCIF hereby represents and warrants to Broadway that it is the sole legal and beneficial owner of the Shares to be exchanged by it pursuant to this Agreement, and, upon the Closing, Broadway will acquire the Shares free and clear of any liens, encumbrances, pledges, security interests or other restrictions or claims of third parties.

7.SURVIVAL OF REPRESENTATIONS AND WARRANTIES.  All representations, warranties and agreements of each party hereto shall survive the Closing.

8.RETIREMENT OR PURCHASE OF COMMON STOCK.  Should Broadway at any time and for any reason desire to retire or repurchase shares of its outstanding Common Stock, Broadway shall give NCIF thirty (30) days’ prior written notice of such intent.  Such notice shall specify the number of outstanding shares of Common Stock prior to such retirement or repurchase, and the number of outstanding shares of Common Stock after giving effect to such retirement or repurchase.  Upon receipt of such notice, NCIF shall have the right to sell to Broadway, at the same price per share as that at which Broadway proposes to retire or repurchase its other shares of outstanding Common Stock, the minimum number of shares of Common Stock that would result in NCIF and its affiliates owning less than, or equal to, 4.90% of the outstanding shares of Common Stock of Broadway after giving effect to such retirement or repurchase and such sale by NCIF to Broadway; provided, that (i) Broadway shall not be required hereby to purchase from NCIF more shares of Common Stock than were indicated in its notice of desired purchase sent to NCIF, (ii) Broadway may decide not to repurchase or retire any shares of Common Stock, and (iii) NCIF’s right to sell Common Stock pursuant hereto shall be subject to pro rata reduction to the extent that CJA Private Equity Financial Restructuring Master Fund I LP and/or BBCN Bancorp, Inc. exercise the similar sale rights granted to them by Broadway, based on the respective numbers of shares of Common Stock requested to be sold by each.  Within ten (10) days after the receipt of such notice by NCIF, NCIF shall notify Broadway in writing of its intent to exercise its rights to sell shares of Common Stock to Broadway pursuant to this Section 8, which shall include the number of shares of Common Stock to be sold by NCIF to Broadway in accordance with this Section 8, the owner of such shares and the proposed closing date, which date shall be no later than the business day preceding the date of the retirement or repurchase. Such option shall be in effect as long as NCIF maintains a beneficial ownership in Broadway Common Stock.  The provisions of this Section 8 shall apply on an as-converted basis to any Common Stock Equivalents or non-voting preferred stock or non-voting common stock of Broadway theretofore issued in exchange for Common Stock at the request of NCIF.

9.TRANSFER OF COMMON STOCK.  Subject to compliance with applicable securities laws, NCIF shall be permitted to transfer, sell, assign or otherwise dispose of (“Transfer”) all or a portion of the Common Stock acquired by NCIF pursuant to this Agreement or the Loan Sale Agreement at any time, and Broadway shall take all steps as may be reasonably requested by NCIF to facilitate the Transfer of Common Stock.

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10.ISSUANCE OF EQUITY SECURITIES.  Broadway agrees not to issue equity securities ranking senior to the Common Stock for a period of two (2) years from the Closing Date, except in the following circumstances:  (i) in connection with the provisions of a shareholders’ rights plan of Broadway; (ii) in connection with a rights offering or other distribution to shareholders of Common Stock in proportion to their respective ownership interests; or (iii) if approved by the holders of a majority of the outstanding Common Stock.

11.POSSIBLE COMMON STOCK EQUIVALENT TRANSACTION.

(a)Broadway does not currently have sufficient authorized but unissued shares of Common Stock available under its certificate of incorporation to enable it to complete the NCIF Exchange, each of the Other Exchanges, and the Equity Offering.  In addition, issuance of Common Stock for such purposes would ordinarily require approval by Broadway’s stockholders pursuant to Rule 5635 of the corporate governance rules of the Nasdaq Stock Market.  Accordingly, Broadway has agreed with the Treasury Department that Broadway will, as a condition to completion of the Treasury Exchanges, either:  (i) obtain the required Broadway stockholder approval under the Nasdaq corporate governance rules and complete the other steps required to amend its certificate of incorporation to authorize the issuance of a sufficient number of shares of Common Stock for such purposes; or (ii) file a certificate of designations with the Secretary of State of the State of Delaware to designate a new series of preferred stock out of Broadway’s authorized but unissued preferred stock, to be designated Series F Common Stock Equivalent (the “Common Stock Equivalents”), the terms of which will include that, upon the affirmative vote of the stockholders of Broadway specified in such certificate and relating to an increase in the shares of Common Stock it is authorized to issue (the “Required Vote”), such preferred stock shall be mandatorily convertible into the number of shares of Common Stock that would be issued directly if the Treasury Exchanges were made for Common Stock and an escalating cumulative dividend requirement to provide an incentive to the stockholders of Broadway to provide such vote.  The certificate of designations for such series of preferred stock shall be substantially in the form attached as Exhibit B to this Agreement.  Broadway and the Treasury Department have further agreed in such event that the Treasury Exchanges shall be for shares of the Common Stock Equivalents rather than shares of Common Stock.  The number of shares of Common Stock Equivalents to be issued in such alternative transaction (excluding shares to be issued in respect of accrued cumulative dividends under the terms of the TARP Preferred Stock) shall be the number of shares of Common Stock Equivalents that has an aggregate liquidation preference equal to 50% of the liquidation preference of all of the TARP Preferred Stock to be exchanged.

(b)NCIF hereby agrees that if the Treasury Exchanges are completed using Common Stock Equivalents, then NCIF will exchange all of its shares of Series C Preferred Stock for shares of Common Stock Equivalents on the same basis, as adjusted to reflect the different per share liquidation preferences of the Series C Preferred Stock and the TARP Preferred Stock, that is, the number of shares of Common Stock Equivalents to be issued to NCIF shall equal the number determined by dividing (A) 50% of the aggregate liquidation preference of all of the Shares exchanged by NCIF by (B) $1,000, which is the per share liquidation preference of the Common Stock Equivalents.  NCIF further agrees to vote all shares of Common Stock Equivalents and Common Stock that it owns or controls so as to obtain the Required Vote.

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(c)Broadway represents and warrants that the Common Stock Equivalents will have been duly and validly authorized by all necessary action, and, when issued and delivered pursuant to this Agreement, such Common Stock Equivalents will be duly and validly issued and fully paid and nonassessable, will not be issued in violation of any preemptive rights, will not subject the holder thereof to personal liability, and such shares will rank pari passu with or senior to all other series or classes of preferred stock, whether or not issued or outstanding.

12.NOTICE.  Any notice required or permitted to be given to either party under this Agreement shall be deemed duly given and effective if such notice is either served personally or placed in the United States mail, postage prepaid, addressed as indicated below:

As to NCIF:

National Community Investment Fund
135 South LaSalle
Chicago, IL  60603
Attn: Saurabh Narain

As to Broadway:

Broadway Financial Corporation
5055 Wilshire Boulevard, Suite 500
Los Angeles, CA 90036
Attn: Senior Vice President and Chief Financial Officer

13.FURTHER ASSURANCES.  Each party hereto shall promptly execute and deliver such further agreements and instruments, and take such further actions, as either of the other parties may reasonably request in order to carry out the purpose and intent of this Agreement.

14.ASSIGNABILITY AND PARTIES IN INTEREST.  This Agreement shall not be assignable by any of the parties hereto without the prior written consent of all the other parties hereto.  This Agreement shall inure to the benefit of and be binding upon the parties and their respective permitted successors and assigns.

15.GOVERNING LAW.  This Agreement shall be governed by and construed and enforced in accordance with the internal substantive law, and not the law pertaining to conflicts or choice of law, of the State of Delaware.

16.COUNTERPARTS.  This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

17.COMPLETE AGREEMENT.  This Agreement is an integrated agreement containing the entire agreement between the parties hereto with respect to the subject matter hereof, and shall supersede all previous and all contemporaneous oral or written negotiations, commitments or understandings.

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18.MODIFICATIONS, AMENDMENTS AND WAIVERS.  This Agreement may be modified, amended, or otherwise supplemented only by a writing signed by the parties against whom it is sought to be enforced in such amended, modified or supplemented form.  No waiver of any right or power hereunder shall be deemed effective unless and until a writing waiving such right or power is executed by the parties waiving such right or power.

19.NO THIRD PARTY BENEFICIARIES.  There are no third party beneficiaries under this Agreement or intended by any party hereto.

20.CAPTIONS.  The paragraph captions contained in this Agreement are for convenience only and do not constitute a part of the provisions.

[signature page follows]

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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the first date written above.

BROADWAY FINANCIAL CORPORATION		NATIONAL COMMUNITY INVESTMENT FUND
By:	/s/ Wayne-Kent A. Bradshaw	By:	/s/ /Saurabh Narain
Name:	Wayne-Kent A. Bradshaw	Name:	Saurabh Narain
Title:	Chief Executive Officer and President	Title:	Chief Executive

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Exhibit A

1.Exchange Agreement, dated February 10, 2012, between the Company and the United States Treasury Department.

2.Exchange Agreement, dated March 15, 2012, among the Company, the Automobile Club of Southern California and the Interinsurance Exchange of the Automobile Club.

3.Exchange Agreement, dated August 22, 2013, between the Company and BBCN Bancorp, Inc.

Exhibit B

Form of Certificate of Designations for Series F Common Stock Equivalent

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EX-10.22.2

Exhibit 10.22.2

BROADWAY FINANCIAL CORPORATION
4800 Wilshire Boulevard
Los Angeles, CA 90010

August 22, 2013

National Community Investment Fund
135 South LaSalle, Suite 2040
Chicago, IL 60603

Re:Investor Rights

Ladies and Gentlemen:

This letter will confirm our agreement that pursuant to and effective as of your acquisition of capital stock of Broadway Financial Corporation, a Delaware corporation (the “Company”), the parent company of Broadway Federal Bank, F.S.B. (the “Bank”) pursuant to the following named agreements, National Community Investment Fund, a trust (the “Investor”), shall be entitled to the following contractual rights, in addition to any other rights specifically provided to the Investor pursuant to that certain Exchange Agreement by and between the Company and the Investor (the “Exchange Agreement”) and that certain Loan Purchase and Sale Agreement by and between BBCN Bancorp, Inc. and the Investor (the “Loan Sale Agreement”), each dated as of the date hereof, including any amendments or supplements thereto, and such other agreements, instruments and certificates delivered in connection therewith (collectively, the “Transaction Documents”):

1.Right to Designate Board Member.  As long as the Investor (together with its affiliates) beneficially owns at least 4% of the total capital stock (including any common shares and non-voting shares) of the Company or any of its affiliates, and subject to any required approvals or non-objections of the Board of Governors of the Federal Reserve System (whether acting directly or through the Federal Reserve Bank of San Francisco in such reserve bank’s regulatory capacity), the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and/or any other regulatory body having jurisdiction over the Company or the Bank (collectively, the “Regulators”), the Company shall use its reasonable best efforts to cause one person nominated by the Investor to be elected to serve on the Board of Directors of the Company, and any direct or indirect subsidiary thereof, including the Bank (collectively, the “Board”), which efforts shall include, without limitation, soliciting proxies for the Investor’s nominee in the same manner as it does for the Company’s other nominees.  Any director nominated by the Investor pursuant to this paragraph 1 shall be entitled to indemnification rights in his or her capacity as a member of the Board pursuant to an indemnification agreement in such form as shall be agreed to between the Company and the Investor.  The Investor’s Board representative shall receive compensation from the Company equal in form and value to compensation paid to other Board members (such compensation to be paid as directed by the Investor).  To facilitate the in-person attendance of the Investor’s Board representative (as a member of the Board pursuant to this paragraph 1 or as an observer pursuant to paragraph 2

below), the Company shall reimburse the Investor for all reasonable travel expenses of such representative promptly upon receiving documentation thereof reasonably acceptable to the Company; provided, however, that the Company shall not be obligated to reimburse expenses in excess of $20,000 in any calendar year.

2.Board Observer Rights.  If the Investor is not represented on the Board (including during such time as regulatory approval is pending), as long as the Investor (together with its affiliates) beneficially owns at least 4.0% of the total capital stock (including any common shares and non-voting shares) of the Company or any of its affiliates, the Company shall allow a representative of the Investor to attend all meetings of the Board in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents and other materials that it provides to its directors, including in their capacity as members of committees of the Board, at the same time and in the same manner as provided to such directors; provided, however, that (i) such representative shall agree to hold in confidence and trust all information so provided; (ii) the representative may be excluded from access to any material or meeting or portion thereof if the Board determines in good faith, upon advice of counsel, that access to such material or attendance at such meeting would adversely affect the attorney-client privilege between the Company or the Bank and its counsel or would conflict with applicable banking laws or regulations or if such material or meeting relates to relations or negotiations with the Investor or require the consent or non-objection of any Regulator; and (iii) such observer shall be excluded from all “executive sessions” of the board of directors if any other persons who are not members of the board of directors, other than counsel to the Company, are also excluded.  Upon reasonable notice and at a scheduled meeting of the Board or such other time, if any, as the Board may determine in its sole discretion, such representative may address the Board with respect to the Investor’s concerns regarding significant business issues facing the Company.  For the avoidance of doubt, such representative shall not have access to any “confidential supervisory information” (as such term or relevant similar term is defined under the regulations of any Regulator).

3.Terms of Agreements with Other Investors.  The Company represents and warrants that it has not entered into, and does not currently intend to enter into, any agreement with any other investor that provides rights to such investor related to its investment in capital stock of the Company, other than any such agreement listed in Exhibit A hereto, copies of which have been provided to the Investor.  If the Company enters into any such agreement with a party that agrees to purchase capital stock issued by the Company after the date hereof, then the Company shall promptly provide a copy of any such agreement to the Investor.  As to any such agreement entered into with any other investor agreeing to purchase capital stock issued by the Company, any terms of such agreement that are more favorable to such investor than the terms of the Transaction Documents shall be added and incorporated into this letter agreement, unless the Investor provides written notice to the Company that it elects to waive its rights to any such additional or modified terms.

4.Capital Structure.

(a)Exchange Rights.  The Investor shall have the right, but not the obligation, from time to time, in its sole discretion, to exchange any voting common stock held by the Investor for non-voting common stock of the Company (“Non-Voting Common Stock”) if the

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Company’s certificate of incorporation then authorizes the Company to issue Non-Voting Common Stock, or the non-voting preferred stock of the Company referred to herein if the Company’s certificate of incorporation does not then authorize the issuance  of Non-Voting Common Stock, in order to reduce its ownership of any class of voting securities of the Company to as low as 4.9% of the voting securities of the Company on a fully-diluted basis.  The Non-Voting Common Stock shall have all of the rights and other attributes of the Company’s currently outstanding common stock, except as provided in this paragraph 4(a) and except that such stock shall not be entitled to vote on any matter, except as required by the Delaware General Corporation Law.  The non-voting preferred stock referred to herein shall be authorized by the Company prior to the closing of the transactions contemplated by the Transaction Documents and shall have the rights, powers and preferences set forth in a Certificate of Designation of Series G Non-Voting Preferred Stock substantially in the form attached as Exhibit B hereto and is referred to herein collectively with the Non-Voting Common Stock as the “Non-Voting Stock.”  Any such exchange shall be effected by way of an Exchange Agreement in form and substance substantially as set forth on Exhibit C hereto.  Any Non-Voting Stock of the Company held by the Investor shall, upon its transfer to any person other than the Investor, or one of its affiliates, immediately and without any further action on the part of any person, automatically convert into voting common stock of the Company, as provided for in the provisions of the Company’s certificate of incorporation relating to the Non-Voting Common Stock or the Certificate of Designation of the Series G Non-Voting Preferred Stock, as applicable, subject to compliance with the applicable requirements of the Regulators.  Any shares of Non-Voting Stock received by the Investor or any affiliate of the Investor pursuant to this paragraph shall not be convertible by the Investor into shares of voting common stock or any other voting security of the Company, and any such shares shall be subject to the restrictions set forth in the provisions of the Company’s certificate of incorporation relating to the Non-Voting Common Stock or the Certificate of Designation of the Series G Non-Voting Preferred Stock, including restrictions on transfer contained therein that are intended to cause such shares to qualify as non-voting shares under the applicable requirements and policies of the Regulators.  For the avoidance of doubt, it is the intention of the parties hereto that any shares of Series G Non-Voting Preferred Stock that are outstanding at the time the Company’s certificate of incorporation is amended to authorize the Company to issue Non-Voting Common Stock shall be converted into shares of Non-Voting Common Stock and that no shares of Series G Non-Voting Preferred Stock shall be issued to any person or entity after that time.

(b)Preemptive Rights.  If, following the consummation of the transactions contemplated by the Transaction Documents, the Company authorizes the issuance or sale of any securities comparable or identical to the securities issued in this offering pursuant to the Transaction Documents, the Investor shall be entitled,  in its sole discretion, to (i) purchase shares of common stock, Non-Voting Stock or any combination thereof, such that the Investor would maintain its percentage ownership interest in the Company’s capital stock on a fully-diluted basis; or (ii) exchange any Non-Voting Stock held by the Investor for voting common stock, such that the Investor would maintain its percentage ownership interest in the Company’s common stock on a fully-diluted basis, in each case, subject to compliance with the applicable requirements of the Regulators.  With respect to each of (i) and (ii) above (the “Preemptive Rights”), the Company shall give written notice of such proposed issuance or sale (including the terms and conditions thereof) to the Investor at least thirty (30) days prior to the anticipated issuance or sale date and the Investor shall have twenty (20) days from the receipt thereof to

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provide the Company with notice of the exercise of its Preemptive Rights with respect to such issuance or sale.  The Preemptive Rights described herein shall not apply to the issuance of securities of the Company (A) to employees or directors of, or consultants or advisors to, the Company or the Bank pursuant to a plan, agreement or arrangement approved by the Board, (B) in connection with the acquisition of another company by the Company by way of merger or other reorganization or the acquisition of all or substantially all of the assets or capital stock of such company, provided that such issuances are approved by the Board, or (C) in a transaction approved by the Board that results in a “Change of Control,” which for purposes of this letter agreement a “Change of Control” means the acquisition by any person (including a group of related persons within the meaning of Rule 13d-2 of the Securities Exchange Act of 1934, as amended) of (x) more than fifty percent (50%) of the outstanding capital stock of the Company; (y) all or substantially all of the assets of the Company (including without limitation the sale of more than two-thirds (2/3) of the capital stock held by the Company in the Bank); or (z) a merger of the Company with or into any person, or of any person with or into the Company, immediately after which the shareholders of the Company (as measured immediately prior to completion of the transaction) own less than a majority of the combined capital stock or membership interests of the surviving entity.  In the case of a Change of Control, the Investor’s non-voting securities shall be exchanged or purchased in the same manner as the voting common stock of the Company; provided, however, that in all cases, the aggregate ownership percentage of the Investor and its affiliates in the issued and outstanding voting securities of the Company shall not exceed 9.9%.  For the avoidance of doubt, the Investor may purchase additional shares of Series G Non-Voting Preferred Stock if the purchase of additional shares of common stock would increase its ownership of common stock to more than 4.9% of the Company’s outstanding common stock.  For the purpose of any such calculations of the percentage of voting securities owned by the Investor and its affiliates, the Investor shall include (i) any voting securities previously sold or transferred by the Investor and its affiliates, and (ii) any voting securities that were converted to Non-Voting Stock pursuant to paragraph 4(a) above as if such non-voting preferred stock were still voting securities.  In addition, the total equity ownership of the Company by the Investor and its affiliates shall not exceed 9.9% of the Company’s issued and outstanding stock.

5.Expense Reimbursement.  The Company shall pay the fees and expenses incurred by the Investor in connection with its evaluation of the Company and negotiation of the Transaction Documents (including, without limitation, legal and travel expenses), regardless of whether the transactions contemplated by the Transaction Documents are consummated promptly upon receiving documentation thereof reasonably acceptable to the Company; provided, however, that the Company shall not be obligated to reimburse expenses in excess of $40,000.

6.Registration Rights.  The Company shall provide a “shelf registration” for use by the Investor in the offer and sale of shares acquired by the Investor pursuant to the Transaction Documents, the registration statement for which shall be filed with the SEC by not later than the Filing Deadline (as defined in Section 1(a) of the Registration Rights Agreement referred to below).  In addition, the Investor shall be entitled to exercise “piggyback” registration rights to participate in the registration of shares pursuant to all registration statements proposed to be filed by the Company (except for the registration of securities (a) to be offered pursuant to an employee benefit plan on Form S-8 or pursuant to a registration made on Form S-4 or any

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successor forms then in effect or (b) in a transaction relating solely to the sale of debt or convertible debt instruments).  The rights and obligations of the Investor and the Company in respect of the registration rights provided hereby shall be set forth in a Registration Rights Agreement in form and substance substantially as set forth on Exhibit C hereto.

7.Regulatory Approval.  The Company and the Investor shall cooperate to obtain the appropriate approvals from the Regulators in accordance with this letter agreement and the Transaction Documents. If necessary, the Investor shall agree to certain passivity commitments imposed by the Regulators, provided, that the terms and conditions of such commitments are customary and are not deemed by the Investor (in its sole discretion) to be unreasonable and provided, further, that the Investor shall not be required to agree to any restrictions, conditions or commitments imposed or otherwise required by any Regulator that are determined by the Investor (in its sole discretion) to be unduly burdensome.

8.Representations and Warranties; Indemnification.  The Company hereby makes the representations and warranties to the Investor set forth in Sections 1 and 2 of Annex A hereto and the Investor, hereby makes the representations and warranties to the Company set forth in Section 3 of Annex A hereto.  The Company and the Investor shall each indemnify the other, in the event of inaccuracies in or breaches of their respective representations and warranties set forth in Annex A, in accordance with the provisions of Sections 4 through 8 of Annex A hereto.

9.Community Development Matters.

(a)CDBI Status.  Throughout the period that NCIF owns the shares of Common Stock contemplated herein, the Bank will remain a Community Development Banking Institution (a “CDBI”).  A CDBI is defined for this purpose as a financial institution that meets the following five conditions:

(i)It has a primary mission of promoting community development;

(ii)It serves either an investment area which meets objective criteria of economic distress and which has significant unmet needs for loans or equity investments, or a targeted population of low-income persons or of individuals who otherwise lack adequate access to loans or equity investments;

(iii)It provides development services in conjunction with equity investments or loans, directly or through subsidiaries or affiliates;

(iv)It maintains, through representation on its governing board or otherwise, accountability to its residents of its investment areas or targeted populations; and,

(v)It is not an agency or instrumentality of the United States or of any State or political subdivision of a State.

(b)Impact Reporting.  The Company or the Bank will submit development impact data, including, but not limited to, loans originated, purchased or sold by type and census tracts and other financial products and services focused on low and moderate income

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communities.  Impact reporting formats may be as provided by NCIF from time to time, with reporting to be done within 120 days after each fiscal year end.

(c)Quarterly Reporting.  The Company or the Bank will provide all information reasonably required by NCIF to meet its quarterly reporting requirements under the American Recovery and Reinvestment Act of 2009, including but not limited to, reporting on the following:

(i)Nature of projects financed or to be financed; and

(ii)Permanent and part time jobs created and retained at Broadway and by the borrowers funded by the Bank.

(d)The NCIF Network.  Throughout NCIF’s ownership of Common Stock, the Bank will be an active member of The NCIF Network, participating in the Annual Conference, and various other initiatives designed to strengthen the CDBI Banking community.  The Bank commits to paying $2,500 per year to NCIF for this participation.  The first payment of $2,500 will be made concurrently with the investment.

(e)Ongoing Engagement.  Throughout NCIF’s ownership of Common Stock contemplated herein, the Company will make itself available to NCIF for quarterly update discussions on both financial and social performance.  Upon request, this discussion may include any and all members of senior management of the Company, as well as the Chairman of the Board and/or Lead Independent Board Director of the Company.

10.Loan Sale Agreement.  Investor undertakes for the benefit of Broadway, and hereby covenants with Broadway, that Investor will timely perform its obligations under the Loan Sale Agreement.

11.Miscellaneous.  The validity, construction and interpretation of this letter agreement and the rights and duties of the parties hereunder shall be governed by and construed in accordance with laws of the State of New York without regard to its conflicts of laws provisions.  This letter agreement (together with the Transaction Documents) constitutes the entire agreement among the parties hereto, and supersedes any and all prior representations, agreements and understandings, whether written or oral, with respect to the subject matter hereof.  This letter agreement shall not be modified, amended or waived, in whole or in part, except by written agreement of both parties.  The provisions hereof shall be binding upon, and shall inure to the benefit of, the parties hereto and their successors and assigns.  Each of the parties hereto shall, at the request of the other party, execute, deliver and acknowledge without any consideration, such additional documents, instruments or certificates or do or cause to be done such other things as are reasonably necessary or desirable to make effective the agreements and transactions contemplated by this letter agreement.  This letter agreement may be executed and delivered (including by facsimile or electronic transmission) in multiple counterparts, each of which shall constitute an original and all of which together shall be deemed to be one and the same instrument.

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[Signature Page to Follow]

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Very truly yours,
Broadway Financial Corporation
By:	/s/ Wayne-Kent A. Bradshaw
Name:	Wayne-Kent A. Bradshaw
Title:	President and Chief Executive Officer

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******************************************************

ACKNOWLEDGED AND AGREED:

NATIONAL COMMUNITY INVESTMENT FUND

By:	/s/Saurabh Narain
Name:	Saurabh Narain
Title:	Chief Executive

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Exhibit A

1.Exchange Agreement, dated February 10, 2012, between the Company and the United States Treasury Department.

2.Exchange Agreement, dated March 15, 2012, among the Company, the Automobile Club of Southern California and the Interinsurance Exchange of the Automobile Club.

3.Exchange Agreement, dated August 22, 2013, between the Company and BBCN Bancorp, Inc.

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Exhibit B

Form of Series G Certificate of Designations

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Exhibit C

Form of Series G Exchange Agreement

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Exhibit D

Form of Registration Rights Agreement

A-1

Annex A

1.Certain Terms.

(a)As used in this Annex A (also hereinafter referred to as “this Agreement”), the term “Material Adverse Effect” means any circumstance, event, change, development or effect that, individually or in the aggregate, would reasonably be expected to (i) result in a material adverse effect on the assets, liabilities, business, financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole, or (ii) materially impair or delay the ability of the Company or any of the Company Subsidiaries to perform its or their obligations under this Agreement to consummate the Closing or any of the transactions contemplated hereby; provided, however, that in determining whether a Material Adverse Effect has occurred under clause (i), there shall be excluded any circumstance, event, change, development or effect to the extent resulting from (A) actions or omissions of the Company or any Company Subsidiary expressly required or contemplated by the terms of this Agreement, (B) changes after the date hereof in general economic conditions in the United States, including financial market volatility or downturns, or in the markets in which the Company and the Company Subsidiaries operate, (C) changes after the date hereof affecting the banking industry generally, (D) any changes after the date hereof in applicable Laws or accounting rules or principles, including changes in GAAP, (E) changes in the market price or trading volume of the Common Stock or the Company’s other outstanding securities (but not the underlying causes of such changes) or (F) any failure by the Company or any of the Company Subsidiaries to meet any internal projections or forecasts with regard to the assets, liabilities, business, financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole (but not the underlying causes of such failure), in each case to the extent that such circumstance, event, change, development or effect referred to in clauses (B), (C) and (D) do not have a disproportionate effect on the Company and the Company Subsidiaries compared to other participants in the industries or markets in which the Company and the Company Subsidiaries operate.

(b)As used in this Annex A, the term “Previously Disclosed” (i) with regard to any party, means information set forth in its Disclosure Schedule under Section references corresponding with the provision of this Agreement to which such information relates (including, in the case of the Company, information identified in the Company’s Disclosure Schedule by reference to specific portions of the “virtual data room” website established by the Company for use by the Investor in its “due diligence” examination of the Company; provided, however, that if such information is disclosed in such a way as to make its relevance or applicability to another provision of this Agreement reasonably apparent on its face, such information shall be deemed to be responsive to such other provision of this Agreement and (ii) with regard to the Company, includes information publicly disclosed by the Company in (A) the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as filed by it with the Securities and Exchange Commission (the “SEC”), and subsequently amended by the filing of Forms 10-K/A on April 27, 2012 and September 14, 2012, or the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, as filed by it with the SEC on April 1, 2013, (B) the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2012, June 30,

A-1

2012 and September 30, 2012 as filed by it with the SEC, (C) the Company’s Definitive Proxy Statement on Schedule 14A, as filed by it with the SEC on November 19, 2012, or (D) any Current Report on Form 8-K filed or furnished by it with the SEC since January 1, 2011, in each case available prior to the date of this Agreement (excluding any risk factor disclosures contained in such documents under the heading “Risk Factors” and any disclosure of risks included in any “forward-looking statements” disclaimer or other statements that are similarly non-specific and are predictive or forward-looking in nature).  Notwithstanding anything in this Agreement to the contrary, the mere inclusion of an item in a Disclosure Schedule shall not be deemed an admission that such item represents a material exception or material fact, event or circumstance or that such item has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(c)Terms having initial capitalized letters that are not otherwise defined in this Agreement shall have the meanings given to such terms in the form of Subscription Agreement entered into by the Company with certain investors in a subscription offering that is being conducted concurrently with the transactions contemplated in the letter agreement of which this Annex A forms a part, except that the term “Investor” means and refers to National Community Investment Fund.

2.Representations and Warranties of the Company.  Except as Previously Disclosed, the Company hereby represents and warrants to the Investor as of the date of this Agreement and as of the date of the Investor’s acquisition of shares of Common Stock pursuant to the Transaction Documents (except for the representations and warranties that are as of a specific date, which are made as of that date) that:

(a)Organization and Authority.  Each of the Company and the Company Subsidiaries is a corporation or other entity duly organized and validly existing under the laws of the jurisdiction of its incorporation or organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified except where any failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and has the corporate or other organizational power and authority to own its properties and assets and to carry on its business as it is now being conducted.  The Company has Previously Disclosed correct and complete copies of the certificate of incorporation and bylaws (or similar governing documents) as amended through the date of this Agreement for the Company and Broadway Federal Bank, f.s.b. (the “Bank”).  The Company is duly registered with the Board of Governors of the Federal Reserve System (the “Federal Reserve”) as a savings and loan holding company under the Savings and Loan Holding Company Act, as amended, 12 U.S.C. 1467a (the “SLHCA Act”).

(b)Company Subsidiaries.  The Company has Previously Disclosed a true, complete and correct list of all of its subsidiaries as of the date of this Agreement (each, a “Company Subsidiary” and, collectively, the “Company Subsidiaries”).  Except for the Company Subsidiaries, the Company does not own beneficially, directly or indirectly, more than 5% of any class of equity securities or similar interests of any corporation, business trust, association or similar organization, and is not, directly or indirectly, a partner in any partnership or party to any joint venture.  The Company owns, directly or indirectly, all of its interests in

A-2

each Company Subsidiary free and clear of any and all Liens, except for the Lien of BBCN Bank on all assets of the Company, including the stock of the Bank owned by the Company.  The deposit accounts of the Bank are insured by the Federal Deposit Insurance Corporation (“FDIC”) to the fullest extent permitted by the Federal Deposit Insurance Act, as amended (the “FDI Act”), and the rules and regulations of the FDIC thereunder, and all premiums and assessments required to be paid in connection therewith have been paid when due (after giving effect to any applicable extensions).  The Company beneficially owns all of the outstanding capital securities of, and has sole control of, the Bank.

(c)Capitalization.

(i)As of the date hereof, (A) the authorized Capital Stock of the Company consists of 8,000,000 shares of Common Stock, par value $0.01 per share and 1,000,000 shares of preferred stock, par value $0.01 per share (the “Company Preferred Stock”) and (B) of the Company Preferred Stock, 100,000 shares have been designated as Non-Cumulative Perpetual Preferred Stock, Series A, having a liquidation preference of $10 per share (the “Series A Preferred Stock”); 100,000 shares have been designated as Non-Cumulative Perpetual Preferred Stock, Series B, having a liquidation preference of $10 per share (the “Series B Preferred Stock”); 76,950 shares have been designated as Non-Cumulative Perpetual Convertible Preferred Stock, Series C, having a liquidation preference of $13 per share (the “Series C Preferred Stock”); 9,000 shares have been designated as Fixed Rate Cumulative Perpetual Preferred Stock, Series D, having a liquidation preference of $1,000 per share (the “Series D Preferred Stock”); 6,000 shares have been designated as Fixed Rate Cumulative Perpetual Preferred Stock, Series E, having a liquidation preference of $1,000 per share (the “Series E Preferred Stock”); and 25,000 shares have been designated as Series A Junior Participating Preferred Stock, having a liquidation preference of $1.00 per share (the “Series A Junior Preferred Stock”).

(ii)As of the close of business on September 30, 2012 (the “Capitalization Date”), the Company had outstanding: 1,859,951 shares of Common Stock; 55,199 shares of Series A Preferred Stock; 100,000 shares of Series B Preferred Stock; 76,950 shares of Series C Preferred Stock; 9,000 shares of Series D Preferred Stock; and 6,000 shares of Series E Preferred Stock (the Series D Preferred Stock and Series E Preferred Stock being referred to herein as the “TARP Preferred Stock”).

(iii)As of the close of business on the Capitalization Date, other than in respect of awards outstanding under or issuable pursuant to the Company’s 1996 Long-Term Incentive Plan, 1996 Stock Option Plan and 2008 Long-Term Incentive Plan (the “Company Stock Plans”) in respect of which an aggregate of 437,390 shares of Common Stock have been reserved for issuance, 76,950 shares of Common Stock reserved for issuance upon conversion of the outstanding shares of the Series C Preferred Stock and 25,000 shares of Series A Junior Preferred Stock reserved for issuance pursuant to the Rights Agreement, dated January 31, 2003, entered into between the Company and US Stock Transfer

A-3

Corporation (the “Rights Plan”), no shares of Common Stock or Company Preferred Stock were reserved for issuance.  Since the Capitalization Date and through the date of this Agreement, except in connection with this Agreement and the transactions contemplated hereby, including the Investment, the Other Private Placements, the TARP Exchange, the Other Preferred Exchanges, and the Rights Offering, the Company has not (A) issued or authorized the issuance of any shares of Common Stock or Company Preferred Stock, or any securities convertible into or exchangeable or exercisable for shares of Common Stock or Company Preferred Stock, except to Directors and certain executive officers of the Company and the Bank pursuant to the Stock Purchase Agreements copies of which are included in Section 2.2(c) of the Disclosure Schedule, (B) reserved for issuance any shares of Common Stock or Company Preferred Stock or (C) repurchased or redeemed, or authorized the repurchase or redemption of, any shares of Common Stock or Company Preferred Stock.

(iv)All of the issued and outstanding shares of Common Stock and Company Preferred Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights.  None of the outstanding shares of Capital Stock or other securities of the Company or any of the Company Subsidiaries was issued, sold or offered by the Company or any Company Subsidiary in violation of the Securities Act or the securities or blue sky laws of any state or jurisdiction.  No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which the shareholders of the Company may vote (“Voting Debt”) are issued and outstanding.

(v)As of the date of this Agreement, except for (x) the outstanding awards under the Company Stock Plans listed on Section 2.2(c) of the Disclosure Schedule, (y) as set forth elsewhere in this Section 2.2(c) and (z) the Agreements, the TARP Exchange Agreement, and the Other Preferred Exchange Agreements, the Company does not have and is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of, or securities or rights convertible into or exchangeable or exercisable for, any shares of Common Stock or Company Preferred Stock or any other equity securities of the Company or Voting Debt or any securities representing the right to purchase or otherwise receive any shares of Capital Stock of the Company.

(d)Authorization; No Conflicts; Shareholder Approval.

(i)The Company has the corporate power and authority to execute and deliver this Agreement and the Transaction Documents and to perform its obligations thereunder.  Subject to the approval by the Nasdaq Stock Market (“NASDAQ”) of the Company’s application pursuant to Rule 5635(f) and other applicable provisions of the Nasdaq Listing Rules to issue Common Stock in connection with the Investment, the Other Private Placements, the TARP Exchange, the Other Preferred Exchanges and related transactions without prior shareholder approval, the execution, delivery and performance of this Agreement

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by the Company and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no further approval or authorization is required on the part of the Company or its shareholders.  The Board of Directors has unanimously approved the transactions contemplated by this Agreement, including the Investment, the Other Private Placements, the Other Preferred Exchanges, and the TARP Exchange and the Rights Offering.  This Agreement has been duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery by the Investor, is the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles (whether applied in equity or at law).

(ii)Neither the execution and delivery by the Company of this Agreement nor the consummation of the transactions contemplated hereby, nor compliance by the Company with any of the provisions hereof, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or result in the loss of any benefit or creation of any right on the part of any third party under, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any liens, charges, adverse rights or claims, pledges, covenants, title defects, security interests or other encumbrances of any kind (“Liens”) upon any of the properties or assets of the Company or any Company Subsidiary, under any of the terms, conditions or provisions of (1) the certificate of incorporation or bylaws (or similar governing documents) of the Company and each Company Subsidiary or (2) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Company or any of the Company Subsidiaries is a party or by which it may be bound, or to which the Company or any of the Company Subsidiaries, or any of the properties or assets of the Company or any of the Company Subsidiaries may be subject, or (B) violate any Law applicable to the Company or any of the Company Subsidiaries or any of their respective properties or assets except in the case of clauses (A)(2) and (B) for such violations, conflicts and breaches as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(e)Governmental Consents.  Except as set forth in the Disclosure Schedule, no Governmental Consents are necessary for the execution and delivery of this Agreement or for the transactions contemplated hereby.

(f)Litigation and Other Proceedings.  Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there is no pending or, to the Knowledge of the Company, threatened claim, action, suit, arbitration, complaint, charge or investigation or proceeding (each an “Action”) against the Company or any Company Subsidiary or any of its assets, rights or properties, nor is the Company or any Company

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Subsidiary a party or named as subject to the provisions of any order, writ, injunction, settlement, judgment or decree of any court, arbitrator or government agency, or instrumentality.  There has not been, and to the Knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company or any current or former director or officer of the Company in his or her capacity as such.

(g)Financial Statements.  Each of the audited consolidated balance sheets of the Company and the Company Subsidiaries and the related consolidated statements of operations, changes in stockholders’ equity and cash flows, together with the notes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2011 as amended by the Form 10-K/A filed by the Company on September 14, 2012 (the “Company Financial Statements”), (i) have been prepared from, and are in accordance with, the books and records of the Company and the Company Subsidiaries, (ii) complied, as of their respective date of such filing, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, (iii) have been prepared in accordance with GAAP applied on a consistent basis and (iv) present fairly in all material respects the consolidated financial position of the Company and the Company Subsidiaries at the dates and the consolidated results of operations, changes in shareholders’ equity and cash flows of the Company and the Company Subsidiaries for the periods stated therein.

(h)Reports.  Since December 31, 2008, the Company and each Company Subsidiary have filed all material reports, registrations, documents, filings, statements and submissions, together with any required amendments thereto, that they were required to file with any Governmental Entity (the foregoing, collectively, being referred to herein as the “Company Reports”) and have paid all material fees and assessments due and payable in connection therewith.  As of their respective filing dates, or as subsequently amended prior to the date hereof, the Company Reports complied in all material respects with all statutes and applicable rules and regulations of the applicable Governmental Entities.  As of the date of this Agreement, there are no outstanding comments from the SEC or any other Governmental Entity with respect to any Company Report that were the subject of written correspondence that have not been resolved.  The Company Reports, including the documents incorporated by reference in each of them, each contained all the information required to be included in it and, when it was filed and, as of the date of each such Company Report filed with the SEC, or if amended prior to the date of this Agreement, as of the date of such amendment, did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made in it, in light of the circumstances under which they were made, not misleading and complied as to form in all material respects with the applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  No executive officer of the Company has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002.

(i)Internal Accounting and Disclosure Controls.  The records, systems, controls, data and information of the Company and the Company Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of the Company or the Company Subsidiaries or accountants (including all means

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of access thereto and therefrom) or reputable banking industry service providers, except for any non-exclusive ownership and non-direct control that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the system of internal accounting controls described below in this Section 2.2(i).  The Company (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) intended to ensure that material information relating to the Company, including its consolidated Subsidiaries, is made known to the chief executive officer or executive chairman and the chief financial officer of the Company by others within those entities, and (ii) has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s outside auditors and the audit committee of the Board of Directors (A) any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information, and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.  As of the date of this Agreement, the Company has no Knowledge of any reason that its outside auditors and its chief executive officer or executive chairman and chief financial officer shall not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, without qualification, when next due.  Since December 31, 2008, neither the Company nor any Company Subsidiary nor, to the Knowledge of the Company, any director, officer, employee, auditor, accountant or representative of the Company or any Company Subsidiary has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any Company Subsidiary or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or any Company Subsidiary has engaged in questionable accounting or auditing practices.

(j)Risk Management Instruments.  All material derivative instruments, including swaps, caps, floors and option agreements entered into for the Company’s or any of the Company Subsidiaries’ own account were entered into (i) only in the ordinary course of business, (ii) in accordance with prudent practices and in all material respects with all applicable Laws and (iii) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of the Company or any Company Subsidiary, as applicable, enforceable in accordance with its terms.  Neither the Company nor, to the Knowledge of the Company, any other party thereto is in breach of any of its material obligations under any such agreement or arrangement.

(k)No Undisclosed Liabilities.  There are no liabilities of the Company or any of the Company Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, except for (i) liabilities adequately reflected or reserved against in accordance with GAAP in the Company’s audited balance sheet as of December 31, 2011 and (ii) liabilities that have arisen in the ordinary and usual course of business and consistent with past practice since December 31, 2011 and that have not or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

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(l)Mortgage Lending.  The Company and each of the Company Subsidiaries have complied in all material respects with, and all documentation in connection with the origination, processing, underwriting and credit approval of any mortgage loan originated, purchased or serviced by the Company or any Company Subsidiary has satisfied, in all material respects (i) all Laws with respect to the origination, insuring, purchase, sale, servicing, or filing of claims in connection with mortgage loans, including all Laws relating to real estate settlement procedures, consumer credit protection, truth in lending laws, usury limitations, fair housing, transfers of servicing, collection practices, equal credit opportunity and adjustable rate mortgages, (ii) the responsibilities and obligations relating to mortgage loans set forth in any agreement between the Company and any Agency, Loan Investor or Insurer, (iii) the applicable rules, regulations, guidelines, handbooks and other requirements of any Agency, Loan Investor or Insurer and (iv) the terms and provisions of any mortgage or other collateral documents and other loan documents with respect to each mortgage loan.

(m)Bank Secrecy Act; Anti-Money Laundering; OFAC; and Customer Information.  The Company is not aware of, has not been advised of, and, to the Knowledge of the Company, has no reason to believe that any facts or circumstances exist that would cause it or any Company Subsidiary to be deemed to be not operating in compliance, in all material respects, with the Bank Secrecy Act of 1970, as amended, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (also known as the USA PATRIOT Act), any order or regulation issued by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), or any other applicable anti-money laundering or anti-terrorist-financing statute, rule or regulation.  The Company is not aware of any facts or circumstances that would cause it to believe that any nonpublic customer information has been disclosed to or accessed by an unauthorized third party in a manner that would cause it to undertake any material remedial action.  The Company and each of the Company Subsidiaries have adopted and implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that comply with the USA PATRIOT Act and such anti-money laundering program meets the requirements in all material respects of Section 352 of the USA PATRIOT Act and the regulations thereunder, and they have complied in all respects with any requirements to file reports and other necessary documents as required by the USA PATRIOT Act and the regulations thereunder.  The Company will not directly or indirectly use the proceeds of the sale of the Common Stock pursuant to transactions contemplated by this Agreement, or lend, contribute or otherwise make available such proceeds to any Company Subsidiary, joint venture partner or other Person, towards any sales or operations in any country appearing on the OFAC Specially Designated Nationals List (the “SDN List”) or for the purpose of financing the activities of any Person currently appearing on the SDN List.

(n)Certain Payments.  Neither the Company nor any of the Company Subsidiaries, nor any directors, officers, nor to the Knowledge of the Company, employees or any of their Affiliates or any other Person who to the Knowledge of the Company is associated with or acting on behalf of the Company or any of the Company Subsidiaries has directly or indirectly (i) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment in material violation of any Law to any Person, private or public, regardless of form, whether in money, property, or services (A) to obtain favorable treatment in securing business for the Company or any of the Company Subsidiaries, (B) to pay for favorable

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treatment for business secured by the Company or any of the Company Subsidiaries, or (C) to obtain special concessions or for special concessions already obtained, for or in respect of the Company or any of the Company Subsidiaries or (ii) established or maintained any fund or asset with respect to the Company or any of the Company Subsidiaries that was required by Law or GAAP to have been recorded and was not recorded in the books and records of the Company or any of the Company Subsidiaries.

(o)Absence of Certain Changes.  Since December 31, 2011 and except as Previously Disclosed or as required or contemplated by the terms of this Agreement, (i) the Company and the Company Subsidiaries have conducted their respective businesses in all material respects in the ordinary and usual course of business consistent with past practices, (ii) none of the Company or any Company Subsidiary has issued any securities (other than Common Stock and Company Options and other equity-based awards issued prior to the date of this Agreement pursuant to Company Stock Plans and reflected in the numbers set forth in Section 2.2(c)), (iii) the Company has not made or declared any distribution in cash or in kind to its shareholders or issued or repurchased any shares of its Capital Stock, (iv) through (and including) the date of this Agreement, no fact, event, change, condition, development, circumstance or effect has occurred that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and (v) no material default (or event which, with notice or lapse of time, or both, would constitute a material default) exists on the part of the Company or any Company Subsidiary in the due performance and observance of any term, covenant or condition of any agreement to which the Company or any Company Subsidiary is a party and which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(p)Compliance with Laws.  The Company and each Company Subsidiary have all material permits, licenses, franchises, authorizations, orders and approvals of, and have made all filings, applications and registrations with, Governmental Entities that are required in order to permit them to own or lease their properties and assets and to carry on their business as presently conducted and that are material to the business of the Company and each Company Subsidiary.  The Company and each Company Subsidiary have complied in all material respects and (i) are not in default or violation in any respect of, (ii) are not under investigation with respect to, and (iii) have not been threatened to be charged with or given notice of any material violation of, any applicable material domestic (federal, state or local) or foreign law, statute, ordinance, license, rule, regulation, policy or guideline, order, demand, writ, injunction, decree or judgment of any Governmental Entity (each, a “Law”), other than such noncompliance, defaults or violations as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  Except for statutory or regulatory restrictions of general application, restrictions applicable to recipients of funds under the Troubled Asset Relief Program of the Treasury, the respective Orders to Cease and Desist issued by the Office of Thrift Supervision to the Company and the Bank, with the consent of the Company and the Bank, effective September 9, 2010 (each, individually a “Regulatory Order” and, together, the “Regulatory Orders”), no Governmental Entity has placed any material restriction on the business or properties of the Company or any of the Company Subsidiaries.  As of the date hereof, the Bank has a Community Reinvestment Act rating of “outstanding.”

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(q)Agreements with Regulatory Agencies.  Except for the Regulatory Orders, (i) the Company and the Company Subsidiaries (A) are not subject to any cease-and-desist or other similar order or enforcement action issued by, (B) are not a party to any written agreement, consent agreement or memorandum of understanding with, (C) are not a party to any commitment letter or similar undertaking to, and (D) are not subject to any capital directive by, and (ii) since December 31, 2011, neither the Company nor any of the Company Subsidiaries has adopted any board resolutions at the request of, any Governmental Entity that currently restricts in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its liquidity and funding policies and practices, its ability to pay dividends, its credit, risk management or compliance policies, its internal controls, its management or its operations or business (each item in this sentence, including the Regulatory Orders, being referred to herein as a “Regulatory Agreement”), nor has the Company nor any of the Company Subsidiaries been advised since December 31, 2011 by any Governmental Entity that it is considering issuing, initiating, ordering, or requesting any such Regulatory Agreement, except that the Company and the Bank have been advised that they may receive revised Regulatory Orders from the Office of the Comptroller of the Currency and the Federal Reserve (either acting directly or by or through the Federal Reserve Bank of San Francisco).  Except as set forth in the Disclosure Schedule, the Company and the Company Subsidiaries are in compliance in all material respects with each Regulatory Agreement to which they are party or subject, and the Company and the Company Subsidiaries have not received any notice from any Governmental Entity indicating that either the Company or any of the Company Subsidiaries is not in compliance in all material respects with any such Regulatory Agreement.

(r)Contracts.  The Company has Previously Disclosed or provided (by hard copy, electronic data room or otherwise) to the Investor or its representatives true, correct and complete copies of each of the following to which the Company or any Company Subsidiary is a party, each of which is set forth on Section 2.2(r) of the Disclosure Schedule (each, a “Material Contract”):

(i)any contract or agreement relating to indebtedness of the Company or any Company Subsidiary for borrowed money, letters of credit, capital lease obligations, obligations secured by a Lien or interest rate or currency hedging agreements (including guarantees in respect of any of the foregoing, but in any event excluding trade payables, securities transactions and brokerage agreements arising in the ordinary course of business, intercompany indebtedness and immaterial leases for telephones, copy machines, facsimile machines and other office equipment) in excess of $200,000, except for those issued in the ordinary course of business;

(ii)any contract or agreement that is a “material contract” within the meaning of Item 601(b)(10) of Regulation S-K;

(iii)any contract or agreement limiting, in any material respect, the ability of the Company or any of the Company Subsidiaries to engage in any line of business or to compete, whether by restricting territories, customers or otherwise, or in any other material respect, with any Person;

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(iv)any contract or agreement that concerns the sale or acquisition of any material portion of the Company’s business;

(v)any alliance, cooperation, joint venture, shareholders, partnership or similar agreement involving a sharing of profits or losses relating to the Company or any Company Subsidiary;

(vi)any contract or agreement involving annual payments in excess of $200,000 that cannot be cancelled by the Company or a Company Subsidiary without penalty on not more than 90 days’ notice;

(vii)any material hedge, collar, option, forward purchasing, swap, derivative or similar agreement, understanding or undertaking;

(viii)any contract or agreement with respect to the employment or service of any current or former directors, officers, employees or consultants of the Company or any of the Company Subsidiaries other than, with respect to non-executive employees and consultants, in the ordinary course of business; and

(ix)any contract or agreement containing any (x) non-competition or exclusive dealing obligations or other obligation which purports to limit or restrict in any respect the ability of the Company or any Company Subsidiary to solicit customers or the manner in which, or the localities in which, all or any portion of the business of the Company or the Company Subsidiaries is or can be conducted, or (y) right of first refusal or right of first offer or similar right or that limits or purports to limit the ability of the Company or any of the Company Subsidiaries to own, operate, sell, transfer, pledge or otherwise dispose of any material assets or business.

Each Material Contract (A) is legal, valid and binding on the Company and the Company Subsidiaries which are a party to such contract, (B) is in full force and effect and enforceable in accordance with its terms and (C) will continue to be legal, valid, binding, enforceable, and in full force and effect in all material respects following the consummation of the transactions contemplated by this Agreement.  Neither the Company nor any of the Company Subsidiaries, nor to the Knowledge of the Company, any other party thereto is in material violation or default under any Material Contract.  No benefits under any Material Contract will be increased, and no vesting of any benefits under any Material Contract will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement, nor will the value of any of the benefits under any Material Contract be calculated on the basis of any of the transactions contemplated by this Agreement.  The Company and the Company Subsidiaries, and to the Knowledge of the Company, each of the other parties thereto, have performed in all material respects all material obligations required to be performed by them under each Material Contract, and to the Knowledge of the Company, no event has occurred that with notice or lapse of time would constitute a material breach or default or permit termination, modification, or acceleration, under the Material Contracts.

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(s)Insurance.  The Company and each of the Company Subsidiaries are presently insured, and have been insured for at least the past two years, for reasonable amounts with financially sound and reputable insurance companies against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured.  All of the policies, bonds and other arrangements providing for the foregoing (the “Company Insurance Policies”) are in full force and effect, the premiums due and payable thereon have been or will be timely paid through the Closing Date, and there is no material breach or default (and no condition exists or event has occurred that, with the giving of notice or lapse of time or both, would constitute such a material breach or default) by the Company or any of the Company Subsidiaries under any of the Company Insurance Policies or, to the Knowledge of the Company, by any other party to the Company Insurance Policies.  Neither the Company nor any of the Company Subsidiaries has received any written notice of cancellation or non-renewal of any Company Insurance Policy nor, to the Knowledge of the Company, is the termination of any such policies threatened in writing by the insurer, and there is no material claim for coverage by the Company, or any of the Company Subsidiaries, pending under any of such Company Insurance Policies as to which coverage has been denied or disputed by the underwriters of such Company Insurance Policies or in respect of which such underwriters have reserved their rights.

(t)Title.  The Company and the Company Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and valid title to all material personal property owned by them, in each case free and clear of all Liens, except for Liens which do not materially affect the value of such property or do not interfere with the use made and proposed to be made of such property by the Company or any Company Subsidiary.  Any real property and facilities held under lease by the Company or the Company Subsidiaries are valid, subsisting and enforceable leases with such exceptions that are not material and do not interfere with the use made and proposed to be made of such property and facilities by the Company or the Company Subsidiaries.

(u)Employee Benefits.

(i)Section 2.2(v) of the Disclosure Schedule sets forth a correct and complete list of each “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), including, without limitation, multiemployer plans within the meaning of Section 3(37) of ERISA), and all stock purchase, stock option, severance, employment, change-in-control, fringe benefit, bonus, incentive, deferred compensation and all other employee benefit plans, agreements, programs, policies or other arrangements, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise), whether formal or informal, oral or written, under which (A) any current or former employee or director of the Company or any of the Company Subsidiaries (the “Company Employees”) has any present or future right to benefits and which are contributed to, sponsored by or maintained by the Company or any of the Company Subsidiaries or (B) the Company or any Company Subsidiary has

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had or has any present or future liability.  All such plans, agreements, programs, policies and arrangements shall be collectively referred to as the “Benefit Plans.”

(ii)(A) Each Benefit Plan has been established and administered in all material respects in accordance with its terms, and in compliance with the applicable provisions of ERISA, the Code and other Laws; (B) no “reportable event” (as such term is defined in Section 4043 of ERISA) that could reasonably be expected to result in material liability has occurred with respect to any Benefit Plan, and (C) no non-exempt “prohibited transaction” (as such term is defined in Section 406 of ERISA and Section 4975 of the Code) has been engaged in by the Company or any Company Subsidiary with respect to any Benefit Plan that has or is expected to result in any material liability or “accumulated funding deficiency” (as such term is defined in Section 302 of ERISA and Section 412 of the Code (whether or not waived)).

(iii)The Company and the Company Subsidiaries will be in compliance, as of the Closing Date, with Sections 111 and 302 of the Emergency Economic Stabilization Act of 2008, as amended by the U.S. American Recovery and Reinvestment Act of 2009, including all guidance issued thereunder by a Governmental Entity (collectively “EESA”).

(v)Taxes.  All material Tax Returns required to be filed by, or on behalf of, Company or the Company Subsidiaries have been timely filed, or will be timely filed, in accordance with all Laws, and all such Tax Returns are, or shall be at the time of filing, complete and correct in all material respects.  The Company and the Company Subsidiaries have timely paid all material Taxes due and payable (whether or not shown on such Tax Returns), or, where payment is not yet due, have made adequate provisions in accordance with GAAP.  There are no Liens with respect to Taxes upon any of the assets or properties of either the Company or the Company Subsidiaries other than with respect to Taxes not yet due and payable.

(w)Labor.

(i)Employees of the Company and the Company Subsidiaries are not represented by any labor union nor are any collective bargaining agreements otherwise in effect with respect to such employees.  No labor organization or group of employees of the Company or any Company Subsidiary has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions presently pending or threatened to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority, nor have there been in the last three years.  There are no strikes, work stoppages, slowdowns, labor picketing lockouts, material arbitrations or material grievances, or other material labor disputes pending or, to the Knowledge of the Company, threatened against or involving the Company or any Company Subsidiary, nor have there been any in the past year.

(ii)Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company and the Company

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Subsidiaries are in compliance with all federal and state Laws and requirements respecting employment and employment practices, terms and conditions of employment, collective bargaining, disability, immigration, health and safety, wages, hours and benefits, non-discrimination in employment, workers’ compensation and the collection and payment of withholding and/or payroll taxes and similar taxes.

(iii)Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there is no charge or complaint pending or threatened before any Governmental Entity alleging unlawful discrimination in employment practices, unfair labor practices or other unlawful employment practices by the Company or any Company Subsidiary.

(x)Brokers and Finders.  Except for PGP Capital Advisors, LLC (the “Placement Agent”) and the fees payable thereto (which fees are to be paid by the Company), neither the Company nor any of its officers, directors, employees or agents has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Company in connection with this Agreement or the transactions contemplated hereby.

(y)Loan Portfolio.  As of the date of this Agreement, the characteristics of the loan portfolio of the Company have not materially and adversely changed from the characteristics of the loan portfolio as of December 31, 2011.

(z)Offering of Securities.  Neither the Company nor any Person acting on its behalf has taken any action (including any offering of any securities of the Company under circumstances which would require the integration of such offering with the offering of any of the Common Stock to be issued pursuant to this Agreement under the Securities Act and the rules and regulations of the SEC promulgated thereunder) which would subject the offering, issuance or sale of any of the Common Stock to be issued pursuant to this Agreement to be subject to the registration requirements of the Securities Act.  Neither the Company nor any Person acting on its behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with any offer or sale of the Common Stock pursuant to the transactions contemplated by this Agreement.  Assuming the accuracy of the Investor’s representations and warranties set forth in this Agreement, no registration under the Securities Act is required for the offer and sale of the Common Stock by the Company to the Investor.

(aa)Investment Company Status.  The Company is not, and upon consummation of the transactions contemplated by this Agreement will not be, an “investment company,” a company controlled by an “investment company” or an “affiliated Person” of, or “promoter” or “principal underwriter” of, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.

(bb)Affiliate Transactions.  No officer, director, five percent (5%) shareholder or other Affiliate of the Company (or any Company Subsidiary), or any individual who, to the Knowledge of the Company, is related by marriage or adoption to or shares the same

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home as any such Person, or any entity which, to the Knowledge of the Company, is controlled by any such Person (collectively, an “Insider”), is a party to any contract or transaction with the Company (or any Company Subsidiary) which pertains to the business of the Company (or any Company Subsidiary) or has any interest in any property, real or personal or mixed, tangible or intangible, used in or pertaining to the business of the Company (or any Company Subsidiary).  The foregoing representation and warranty does not include deposits at the Company (or any Company Subsidiary) or loans of $250,000 or less made in the ordinary course of business in compliance with Regulation O and other applicable Law.

(cc)Anti-takeover Provisions Not Applicable.  The Board of Directors has taken all necessary action to ensure that the transactions contemplated by this Agreement and the consummation of the transactions contemplated hereby will be exempt from any anti-takeover or similar provisions of the Company’s certificate of incorporation and bylaws, the Rights Plan and any provisions of any applicable “moratorium”, “control share”, “fair price”, “interested shareholder” or other anti-takeover Laws and regulations of any jurisdiction.

(dd)Issuance of the Common Stock.  The issuance of the Common Stock in connection with the transactions contemplated by this Agreement has been duly authorized and such Common Stock, when issued and paid for in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable and free and clear of all Liens, other than restrictions on transfer imposed by applicable securities Laws, and shall not be subject to preemptive or similar rights.

3.Representations and Warranties of the Investor.  Except as Previously Disclosed, the Investor hereby represents and warrants to the Company, as of the date hereof and as of the Closing Date (except for the representations and warranties that are as of a specific date which are made as of that date) that:

(a)Organization and Authority.  The Investor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified and where failure to be so qualified would be reasonably expected to materially and adversely impair or delay its ability to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.

(b)Authorization; No Conflicts.

(i)The Investor has the necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by its board of directors, general partner or managing members, investment committee, investment adviser or other authorized person, as the case may be, and no further approval or authorization by any of its shareholders, partners or other equity owners, as the case may be, is required.  This Agreement has been duly and validly executed and delivered by the Investor and, assuming due authorization,

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execution and delivery by the Company is the valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles).

(ii)Neither the execution, delivery and performance by the Investor of this Agreement nor the consummation of the transactions contemplated hereby, nor compliance by the Investor with any of the provisions hereof, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any Liens upon any of the properties or assets of the Investor under any of the terms, conditions or provisions of (1) its certificate of incorporation or bylaws, its certificate of limited partnership or partnership agreement or its similar governing documents or (2) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Investor is a party or by which the Investor may be bound, or to which the Investor or any of the properties or assets of the Investor may be subject, or (B) violate any Law applicable to the Investor or any of its properties or assets except in the case of clauses (A)(2) and (B) for such violations, conflicts and breaches as would not reasonably be expected to materially adversely affect the Investor’s ability to perform its obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis.

(c)Governmental Consents.  Except as set forth in the Disclosure Schedule, no Governmental Consents are necessary for the execution and delivery of this Agreement or for the purchase by the Investor of the Common Stock pursuant to this Agreement.

(d)Purchase for Investment; Accredited Investor Status.  The Investor acknowledges that the Common Stock to be purchased by the Investor pursuant to this Agreement has not been registered under the Securities Act or under any state securities laws and may not be resold or transferred by the Investor without such registration or appropriate reliance on any available exemption from such requirements.  The Investor (i) is acquiring the Common Stock pursuant to an exemption from the registration requirements of the Securities Act and other applicable securities laws solely for investment with no present intention to distribute any of the Common Stock to any Person, (ii) will not sell or otherwise dispose of any of the Common Stock, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable securities laws, (iii) has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of its investment in the Common Stock and of making an informed investment decision and (iv) is an “accredited investor” (as that term is defined by Rule 501 of the Securities Act).

(e)Brokers and Finders.  Neither the Investor, nor its respective Affiliates nor any of their respective officers or directors, has employed any broker or finder or incurred

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any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Investor in connection with this Agreement or the transactions contemplated hereby.  The Investor acknowledges that it is purchasing the Common Stock directly from the Company and not from the Placement Agent.

(f)Investment Decision.  The Investor, or the duly appointed investment manager to the Investor (the “Investment Manager”), if applicable, has independently evaluated the merits of its decision to purchase the Common Stock pursuant to this Agreement, and the Investor confirms that neither it, nor its Investment Manager, if applicable, has relied on the advice of any other person’s business and/or legal counsel in making such decision.  The Investor understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Investor in connection with the purchase of the Common Stock constitutes legal, tax or investment advice.  The Investor has consulted such accounting, legal, tax and investment advisors as it has deemed necessary or appropriate in connection with its purchase of the Common Stock.  The Investor understands that the Placement Agent has acted solely as the agent of the Company in this placement of the Common Stock and the Investor has not relied on the business or legal advice of the Placement Agent or any of its agents, counsel or Affiliates in making its investment decision hereunder, and confirms that none of such persons has made any representations or warranties to the Investor in connection with the transactions contemplated by this Agreement.  Except as Previously Disclosed and except for this Agreement, there are no agreements or understandings with respect to the transactions contemplated by this Agreement and the Side Letter between the Investor or any of its Affiliates, on the one hand, and (i) any of the Other Investors or any of their respective Affiliates, in each case, the identity of which is known to the Investor, (ii) the Company or (iii) the Company Subsidiaries, on the other hand.

(g)Financial Capability.  At the Closing, the Investor shall have available all funds necessary to consummate the purchase of Common Stock on the terms and conditions contemplated by this Agreement.

(h)Access to Information.  The Investor acknowledges that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Common Stock and the merits and risks of investing in the Common Stock; (ii) access to information about the Company and the Company Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the Investment; and (iv) the opportunity to ask questions of management.

(i)No Reliance.  The Investor has not relied on any representation or warranty in connection with the Investment other than those contained in this Agreement.

(j)No Coordinated Acquisition.  Except as Previously Disclosed, the Investor (i) reached its decision to invest in the Common Stock independently from any other Person known by the Investor to be a potential investor in the Company, other than any Affiliates

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of the Investor that are also investing in the Other Private Placements, (any such person, a “Potential Investor”), (ii) is not affiliated with any other Potential Investor, (iii) is not advised or managed by an advisor or manager that advises or manages any other Potential Investor, other than any Affiliates of the Investor that are also investing in the Other Private Placements, (iv) has not entered into any agreement or understanding, whether written or not reduced to writing, with any other Potential Investor to act in concert for the purpose of exercising a controlling influence over the Company or any Company Subsidiaries, including, but not limited to, any agreements or understandings regarding the voting or transfer of shares of the Company, (v) has not shared due diligence materials prepared by such Investor or any of its advisors or representatives with respect to the Company or any Company Subsidiaries with any other Potential Investor, (vi) has not been induced, nor has induced any other Potential Investor, to enter into the transactions contemplated by this Agreement by any other Potential Investor, (vii) was not notified of or provided the opportunity to enter into the transactions contemplated by this Agreement pursuant to the terms of any agreement or informal understanding with, or otherwise acting in concert with, any other Potential Investor and was not required by the terms of any agreement or informal understanding to so notify any other Potential Investor, (viii) is not a party to any formal or informal understanding with any other Potential Investor to make a coordinated acquisition of stock of the Company, and the investment decision of the Investor is not based on the investment decision of any other Potential Investor, (ix) is not a party to any formal or informal agreement or understanding concerning the appointment of any individual to the Board of Directors, (x) will not, by reason of the Investment, file, be required to file, or be required to be included in a Schedule 13D or Schedule 13G pursuant to the United States federal securities laws, (xi) has not engaged as part of a group consisting of substantially the same entities as the Potential Investors, in substantially the same combination of interests, in any additional banking or nonbanking activities or business ventures in the United States and (xii) will not pay any other Potential Investor any fee in connection with the transactions contemplated hereby.  Except as Previously Disclosed, the Investor does not presently hold any capital stock of the Company.

4.Indemnification by the Company.

(a)After the Closing, and subject to Section 4(b), the Company shall indemnify, defend and hold harmless to the fullest extent permitted by Law the Investor and its Affiliates, and their successors and assigns, officers, directors, partners, members and employees, as applicable, (the “Investor Indemnified Parties”) against, and reimburse any of the Investor Indemnified Parties for, all Losses that any of the Investor Indemnified Parties may at any time suffer or incur, or become subject to, as a result of or in connection with (1) the inaccuracy or breach of any representation or warranty made by the Company in this Agreement or any certificate delivered pursuant hereto or (2) any breach or failure by the Company to perform any of its covenants or agreements contained in this Agreement.  Notwithstanding anything herein to the contrary, the obligations of the Company under this Section 4(a) shall not be applicable to or inure to the benefit of any transferee of the Common Stock sold pursuant to this Agreement who is not an Affiliate of the Investor.

(b)Notwithstanding anything to the contrary contained herein, the Company shall not be required to indemnify, defend or hold harmless any of the Investor Indemnified Parties against, or reimburse any of the Investor Indemnified Parties for, any Losses pursuant to Section 4(a) (other than Losses arising out of the inaccuracy or breach of any Company

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Specified Representations) until the aggregate amount of the Investor Indemnified Parties’ Losses for which the Investor Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 4(a) exceeds $50,000 (the “Deductible”), after which the Company shall be obligated hereunder for all of the Investor Indemnified Parties’ Losses for which the Investor Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 4(a).  Notwithstanding anything to the contrary contained herein, the Company shall not be required to indemnify, defend or hold harmless the Investor Indemnified Parties against, or reimburse the Investor Indemnified Parties for, any Losses pursuant to Section 4(a) in a cumulative aggregate amount exceeding the aggregate purchase price paid by the Investor to the Company pursuant to Section 1.1.

(c)For purposes of Section 4(a), in determining whether there has been a breach of a representation or warranty, the parties hereto shall ignore any “materiality,” “Material Adverse Effect” or similar qualifications.

5.Indemnification by the Investor.

(a)After the Closing, and subject to Sections 5(b), the Investor shall indemnify, defend and hold harmless to the fullest extent permitted by Law the Company, the Placement Agent and their respective Affiliates and their respective successors and assigns, officers, directors, partners, members and employees (collectively, the “Company Indemnified Parties”) against, and reimburse any of the Company Indemnified Parties for, all Losses that the Company Indemnified Parties may at any time suffer or incur, or become subject to, as a result of or in connection with (1) the inaccuracy or breach of any representation or warranty made by the Investor in this Agreement or any certificate delivered pursuant hereto or (2) any breach or failure by such Investor to perform any of its covenants or agreements contained in this Agreement.

(b)Notwithstanding anything to the contrary contained herein, the Investor shall not be required to indemnify, defend or hold harmless any of the Company Indemnified Parties against, or reimburse any of the Company Indemnified Parties for any Losses pursuant to Section 5(a) until the aggregate amount of the Company Indemnified Parties’ Losses for which the Company Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5(a) exceeds the Deductible, after which the Investor shall be obligated hereunder for all of the Company Indemnified Parties’ Losses for which the Company Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5(a).  Notwithstanding anything to the contrary contained herein, the Investor shall not be required to indemnify, defend or hold harmless the Company Indemnified Parties against, or reimburse the Company Indemnified Parties for, any Losses pursuant to Section 5(a) in a cumulative aggregate amount exceeding the aggregate purchase paid by the Investor to the Company pursuant to Section 1.1 hereof (other than Losses arising out of the inaccuracy or breach of any of the Investor Specified Representations).

(c)For purposes of Section 5(a), in determining whether there has been a breach of a representation or warranty, the parties hereto shall ignore any “materiality,” “Material Adverse Effect” or similar qualifications.

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6.Notification of Claims.

(a)Any Person that may be entitled to be indemnified pursuant to Section 4 or Section 5 hereof (an “Indemnified Party”) shall promptly notify the party or parties liable for such indemnification (an “Indemnifying Party”) in writing of any claim in respect of which indemnity may be sought hereunder, including any pending or threatened claim or demand by a third party that the Indemnified Party has determined has given or could reasonably give rise to a right of indemnification under this Agreement (including a pending or threatened claim or demand asserted by a third party against the Indemnified Party) (each, a “Third Party Claim”), describing in reasonable detail the facts and circumstances with respect to the subject matter of such claim or demand; provided, however, that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations under this Agreement except to the extent that the Indemnifying Party is materially prejudiced by such failure.  The parties agree that notices for claims in respect of a breach of a representation, warranty, covenant or agreement must be delivered prior to the expiration of two years after the closing of the transactions contemplated by this Agreement; provided, that if, prior to such applicable date, a party hereto shall have notified the other parties hereto in accordance with the requirements of Section 4 or 5, as applicable, of a claim for indemnification under this Agreement (whether or not formal legal action shall have been commenced based upon such claim), such claim shall continue to be subject to indemnification in accordance with this Agreement notwithstanding the passing of such applicable date.

(b)Upon receipt of a notice of a claim for indemnity from an Indemnified Party in respect of a Third Party Claim, the Indemnifying Party may, by notice to the Indemnified Party delivered within twenty (20) Business Days of the receipt of notice of such Third Party Claim, assume the defense and control of any Third Party Claim, with its own counsel reasonably acceptable to the Indemnified Party and at its own expense.  The Indemnified Party shall have the right to employ counsel on its own behalf for, and otherwise participate in the defense of, any such Third Party Claim, but the fees and expenses of its counsel will be at its own expense unless (A) the employment of counsel by the Indemnified Party at the Indemnifying Party’s expense has been authorized in writing by the Indemnifying Party, as applicable, (B) the Indemnified Party reasonably believes there may be a conflict of interest between the Indemnified Party and the Indemnifying Party in the conduct of the defense of such Third Party Claim, (C) the Indemnified Party reasonably believes there are legal defenses available to it that are different from, additional to or inconsistent with those available to the Indemnifying Party, or (D) the Indemnifying Party has not in fact employed counsel to assume the defense of such Third Party Claim within a reasonable time after receipt of notice of the commencement of such Third Party Claim, in each of which cases the fees and expenses of such Indemnified Party’s counsel shall be at the expense of the Indemnifying Party; provided, however, that in the event any Investor Indemnified Party is similarly situated with any other “Investor Indemnified Party” under any of the other Agreements with respect to any Third Party Claim, and does not have any conflict of interest with such Person in the conduct of the defense of such Third Party Claim or have legal defenses available to it that are different from, additional to or inconsistent with those available to such Person, such Investor Indemnified Party shall be required to employ the same counsel as such Person and the Company shall be responsible for the fees and expenses of only one such counsel for such Investor Indemnified Party and such other Person or Persons (assuming any of clauses (A) through (D) is satisfied).  The Indemnified

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Party may take any actions reasonably necessary to defend such Third Party Claim prior to the time that it receives a notice from the Indemnifying Party as contemplated by the immediately preceding sentence.  The Indemnified Party shall, and shall cause each of their Affiliates and representatives to, use reasonable best efforts to cooperate with the Indemnifying Party in the defense of any Third Party Claim.  The Indemnifying Party shall not, without the prior written consent of the Indemnified Party (which shall not be unreasonably withheld), consent to a settlement, compromise or discharge of, or the entry of any judgment arising from, any Third Party Claim, unless such settlement, compromise, discharge or entry of any judgment does not involve any statement, finding or admission of any fault, culpability, failure to act, violation of Law or admission of any wrongdoing by or on behalf of the Indemnified Party, and the Indemnifying Party shall (i) pay or cause to be paid all amounts arising out of such settlement or judgment concurrently with the effectiveness of such settlement or judgment (unless otherwise provided in such judgment), (ii) not encumber any of the assets of any Indemnified Party or agree to any restriction or condition that would apply to or materially adversely affect any Indemnified Party or the conduct of any Indemnified Party’s business and (iii) obtain, as a condition of any settlement, compromise, discharge, entry of judgment (if applicable), or other resolution, a complete and unconditional release of each Indemnified Party in form and substance reasonably satisfactory to such  Indemnified Party from any and all liabilities in respect of such Third Party Claim.  An Indemnified Party shall not settle, compromise or consent to the entry of any judgment with respect to any claim or demand for which it is seeking indemnification from the Indemnifying Party or admit to any liability with respect to such claim or demand without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed); provided, that such consent shall not be required if the Indemnifying Party has not fulfilled any material obligations under this Section 6(b).

(c)In the event any Indemnifying Party receives a notice of a claim for indemnity from an Indemnified Party that does not involve a Third Party Claim, the Indemnifying Party shall notify the Indemnified Party within twenty (20) Business Days following its receipt of such notice whether the Indemnifying Party disputes its liability to the Indemnified Party under this Agreement.  The Indemnified Party shall reasonably cooperate with and assist the Indemnifying Party in determining the validity of any such claim for indemnity by the Indemnified Party.

7.Indemnification Payment.  In the event a claim or any Action for indemnification hereunder has been finally determined, the amount of such final determination shall be paid by the Indemnifying Party to the Indemnified Party on demand in immediately available funds; provided, however, that any reasonable and documented out-of-pocket expenses incurred by the Indemnified Party as a result of such claim or Action shall be reimbursed promptly by the Indemnifying Party upon receipt of an invoice describing such costs incurred by the Indemnified Party.  A claim or an Action, and the liability for and amount of damages therefor, shall be deemed to be “finally determined” for purposes of this Agreement when the parties hereto have so determined by mutual agreement or, if disputed, when a final non-appealable judicial order has been entered into with respect to such claim or Action.

8.Exclusive Remedies.  Each party hereto acknowledges and agrees that following the Closing, the indemnification provisions hereunder shall be the sole and exclusive remedies of the parties hereto for any breach of the representations, warranties or covenants contained in the

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this Agreement.  No investigation of the Company by the Investor, or of the Investor by the Company, whether prior to or after the date of this Agreement, shall limit any Indemnified Party’s exercise of any right hereunder or be deemed to be a waiver of any such right.  The parties agree that any indemnification payment made pursuant to this Agreement shall be treated as an adjustment to the Purchase Price for tax purposes, unless otherwise required by Law.

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EX-10.22.3

Exhibit 10.22.3

EXCHANGE AGREEMENT

THIS EXCHANGE AGREEMENT (this “Agreement”) is made as of August 22, 2013 by and between Broadway Financial Corporation (the “Company”), a Delaware corporation and parent company of Broadway Federal Bank, f.s.b., and National Community Investment Fund (“Investor”).

W I T N E S S E T H

WHEREAS, Investor owns, or has a contractual right to receive, shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”) or, in lieu thereof, shares of the Company’s Series F Common Stock Equivalent;

WHEREAS, pursuant to the terms of that certain letter agreement (the “Letter Agreement”) dated August 22, 2013 between the Company and Investor, Investor and its successors and assigns (collectively hereinafter referred to as “Investor”) have the right to exchange any voting common stock held by them for Non-Voting Stock (as defined in the Letter Agreement), in order to effect a reduction of its or their ownership of voting securities to 4.9% of the voting securities of the Company, as determined on a fully-diluted basis; and

WHEREAS, Investor wishes to exercise its right pursuant to the Letter Agreement to exchange 698 shares of the Company’s Series F Common Stock Equivalent (the “Exchanged Shares”) which it has a contractual right to receive from the Company for 6,982 shares of Non-Voting Stock (the “Replacement Shares”).

NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements set forth herein, the parties hereby agree as follows:

ARTICLE 1
 EXCHANGE TRANSACTION

1.1          Exchange.  Subject to the terms and conditions of this Agreement, at the Closing (as defined below), Investor shall deliver to the Company the Exchanged Shares, and, in exchange therefor, the Company shall issue and deliver to Investor the Replacement Shares, delivered in certificated form, registered in Investor’s name and address.

ARTICLE 2
 REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company represents and warrants to Investor as follows:

2.1          Organization; Qualification. The Company is a corporation duly incorporated and validly existing under the laws of the State of Delaware. The Company has all requisite corporate power to execute and deliver this Agreement, to issue and exchange the Replacement Shares for the Exchanged Shares and otherwise to carry out the provisions of this Agreement.

2.2          Authorization; Valid and Binding Obligation. All corporate action on the part of the Company, its officers, directors and stockholders necessary for the authorization of this

Agreement, the performance of all obligations of the Company hereunder and the authorization and exchange of the Replacement Shares for the Exchanged Shares pursuant hereto has been taken. The Replacement Shares, including the Common Stock issuable upon conversion of the Replacement Shares, when so issued, sold and delivered against receipt of the consideration therefor in accordance with the provisions of this Agreement, shall be duly and validly issued, fully paid and non-assessable. This Agreement has been duly executed and delivered by the Company and constitutes the valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

2.3          Capitalization.    The Company has disclosed to Investor in writing the capitalization of the Company that will be in effect immediately after the Closing.

ARTICLE 3
 REPRESENTATIONS AND WARRANTIES OF INVESTOR

Investor represents and warrants to the Company as follows:

3.1          Authorization; Valid and Binding Obligation. Investor has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  This Agreement constitutes the valid and binding obligation of Investor, enforceable against it in accordance with its terms, assuming the due authorization, execution and delivery hereof by the Company.

3.2          Title to Shares.  Investor has valid title to the Exchanged Shares, free and clear of all liens, restrictions, proxies, voting trusts, voting agreements, encumbrances and claims of any kind. At the Closing, the Company shall acquire valid title to and beneficial and record ownership of the Exchanged Shares being transferred by Investor pursuant to this Agreement.

ARTICLE 4
CLOSING

4.1          Closing.  The Closing of the transactions contemplated by this Agreement (“Closing”) shall take place simultaneously with the execution of this Agreement either by mail, virtually through the Internet, or at the offices of Arnold & Porter LLP, 777 South Figueroa Street, 44th Floor, Los Angeles, California, or at such other time and place as may be mutually agreed upon by the parties hereto.

4.2          Deliveries at the Closing.

(a)           By Investor. At the Closing, Investor shall deliver or cause to be delivered to the Company or, if applicable, the transfer agent for the Replacement Shares, certificates representing the Exchanged Shares owned by Investor free and clear of all liens, encumbrances, pledges and claims of any kind, accompanied by instruments of transfer sufficient to transfer such stock to the Company.

(b)           By the Company. At the Closing, the Company shall deliver the Replacement Shares to Investor, including the certificates specified in Section 1.1.

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ARTICLE 5
MISCELLANEOUS

5.1          Survival of Representations, Warranties and Covenants.  The representations, warranties, agreements and covenants made by each party in this Agreement shall survive execution and delivery of this Agreement and the consummation of the transactions contemplated hereby notwithstanding any investigation, audit or review made at any time by any party to this Agreement and notwithstanding the delivery of any documents, exhibits, schedules or certificates pursuant to this Agreement.

5.2          Further Assurances.  Each party will at any time and from time to time execute, acknowledge, deliver and perform all such further acts, deeds, assignments, transfers, conveyances, powers of attorney and assurances as may be necessary to carry out the provisions and intent of this Agreement.

5.3          Notices.  All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earliest of: (i) personal delivery to the party to be notified; (ii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iii) one (1) business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. All communications shall be sent to each party as follows:

If to the Company:

Broadway Financial Corporation

5055 Wilshire Boulevard, Suite 500

Los Angeles, CA 90036

Attention: Wayne-Kent A. Bradshaw, President and CEO

with a copy to:

Arnold & Porter LLP

777 South Figueroa Street, 44th Floor

Los Angeles, CA 90017

Attention: James R. Walther, Esq.

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If to Investor:

National Community Investment Fund

135 South LaSalle

Chicago, IL  60603

Attention:  Saurobh Narain

with copies to:

Dentons

1301 K Street, N.W.

Suite 600, East Tower

Washington, D.C.  20005-3364

Attention:  Matthew Dyckman

5.4          Entire Agreement.  This Agreement contains the entire understanding of the parties in respect of its subject matter and supersedes all prior agreements and understandings between or among the parties with respect to such subject matter.

5.5          Expenses. The parties shall pay their own fees and expenses, including their own counsel fees, incurred in connection with this Agreement or any transaction contemplated by this Agreement.

5.6          Amendment; Waiver. This Agreement may not be modified, amended, supplemented, cancelled or discharged, except by written instrument executed by each of the parties. The rights and remedies of the parties to this Agreement are cumulative and not alternative. Neither the failure nor any delay by any party in exercising any right, power or privilege under this Agreement or the documents referred to in this Agreement will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege.

5.7          Binding Effect; Assignment. Except as otherwise provided herein, the rights and obligations of this Agreement shall bind and inure to the benefit of the parties and their respective successors and legal assigns. The rights and obligations of this Agreement may not be assigned by any of the parties without the prior written consent of the other parties. Any assignment in violation of this Section 5.7 shall be void and of no force or effect.

5.8          Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Facsimile or PDF signatures shall be deemed originals for all purposes.

5.9          Headings. The headings contained in this Agreement are for convenience of reference only and are not to be given any legal effect and shall not affect the meaning or interpretation of this Agreement.

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5.10        Governing Law. This Agreement shall be governed by, and construed in accordance with the laws of the State of Delaware, all rights and remedies being governed by said laws, regardless of the laws that might otherwise govern under applicable principles of conflicts of laws.

IN WITNESS WHEREOF, each of the parties, intending to be legally bound, has executed this Agreement or have caused this Agreement to be executed by their duly authorized representatives as of the date first above written.

BROADWAY FINANCIAL CORPORATION
By:	/S/ Wayne-Kent A. Bradshaw
Name:	Wayne-Kent A. Bradshaw
Title:	Chief Executive Officer and President
NATIONAL COMMUNITY INVESTMENT FUND
By:	/S/Saurabh Narain
Name:	Saurabh Narain
Title:	Chief Executive

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EX-10.23

Exhibit 10.23

REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of August 22, 2013, between Broadway Financial Corporation, a Delaware corporation and parent company of Broadway Federal Bank, F.S.B (the “Company”) on the one hand, and each of CJA Private Equity Financial Restructuring Master Fund I LP, a Cayman Islands limited partnership, National Community Investment Fund, a trust, and BBCN Bancorp, Inc., a Delaware corporation (each an “Investor” and, collectively, the “Investors”) on the other hand.  For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Investors hereby agree as follows:

1.REGISTRATION RIGHTS

(a)           Shelf Registration.

(i)            Subject to the terms and conditions of this Agreement, the Company covenants and agrees that upon the expiration of ninety (90) days after the date on which the first of the transactions provided for in the agreements listed in Schedule I hereto is completed (the “Filing Deadline”), the Company shall have prepared and filed with the Securities and Exchange Commission (the “SEC”) one or more Shelf Registration Statements covering the resale of all of the Registrable Securities (or, if permitted by the rules of the SEC, otherwise designated an existing Shelf Registration Statement filed with the SEC to cover such Registrable Securities), and, to the extent the Shelf Registration Statement has not theretofore been declared effective or is not automatically effective upon such filing, the Company shall use reasonable best efforts to cause such Shelf Registration Statement to be declared or become effective as soon as practicable (and in any event no later than the Effectiveness Deadline) and to keep such Shelf Registration Statement continuously effective and in compliance with the Securities Act and usable for resale of such Registrable Securities until the date that is 12 months after the initial effective date thereof (the “Registration Termination Date”).

(ii)           Any registration pursuant to this Section 1(a) shall be effected by means of a shelf registration under the Securities Act (a “Shelf Registration Statement”) in accordance with the methods and distribution set forth in the Shelf Registration Statement and Rule 415.

(b)           Piggyback Registration.

(i)            As long as an Investor holds Registrable Securities (as defined below), if at any time or from time to time, the Company shall determine to register any of its securities under the Securities Act of 1933, as amended (the “Securities Act”) (except for the registration of securities (x) to be offered pursuant to an employee benefit plan on Form S-8 or pursuant to a registration made on Form S-4 or any successor forms then in effect or (y) in a transaction relating solely to the sale of debt or convertible debt instruments), at any time, and the registration form to be used may be used for the registration of the Registrable Securities (a “Piggyback Registration”), the Company shall:

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(A)          give to the Investor thirty (30) days written notice prior to filing the registration statement (the “Piggyback Registration Notice”); and

(B)          include in such registrations, and in any underwriting involved therein, all the Registrable Securities specified in a written request  made by the Investor within fifteen (15) days after receipt of such written notice from the Company, except as set forth in subsection (ii) below.

(ii)           If the registration is for a registered public offering involving an underwriting, the Company shall so advise the Investor as a part of the Piggyback Registration Notice.  In such event, the right of the Investor to registration shall be conditioned upon the Investor’s participation in such underwriting and the inclusion of the Investor’s Registrable Securities in the underwriting to the extent provided herein.  If the Investor proposes to distribute its securities through such underwriting, it shall (together with the Company and any other holders distributing their securities through such underwriting) enter into an underwriting agreement in the form agreed to by the Company with the underwriter(s) selected for such underwriting by the Company.  The Investor and its legal counsel shall have the right to review and comment on such underwriting agreement but shall not have any approval rights with respect thereto.  Notwithstanding any other provision of this Agreement, if the managing underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the managing underwriter may limit the number of Registrable Securities to be included in the registration and underwriting.  The Company shall so advise the Investor and the other holders distributing their securities through such underwriting pursuant to a Piggyback Registration, and the number of shares of Registrable Securities and other securities that may be included in the registration and underwriting, after first including all securities proposed to be offered and sold by the United States Treasury Department or its permitted transferees and by the Company, shall be allocated among the Investor and other holders otherwise entitled to registration rights in proportion, as nearly as practicable, to the respective amounts of Registrable Securities sought to be registered by the Investor and other securities held by other holders at the time of filing the registration statement.  If the Investor disapproves of the terms of any such underwriting, the Investor may elect to withdraw therefrom by written notice to the Company and the managing underwriter.

2.EXPENSES OF REGISTRATION

All expenses incurred in connection with the registrations pursuant to Section 1 hereof, including all registration, filing and qualification fees, printing expenses, fees and disbursements of counsel for the Company and expenses of any special audits of the Company’s financial statements incidental to or required by such registration, shall be borne by the Company, except that the Company shall not be required to pay underwriters’ fees, discounts or commissions relating to Registrable Securities or fees of separate legal counsel for Investors.

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3.REGISTRATION PROCEDURES

(a)           Company Obligations.

In the case of each registration effected by the Company pursuant to this Agreement, the Company will keep the Investors who have rights with respect thereto pursuant to this Agreement advised in writing as to the initiation of each registration and as to the completion thereof.  In addition, at its expense the Company will:

(i)            In the case of Piggyback Registrations, keep such registration pursuant to this Agreement continuously effective for a period of ninety (90) days, or such reasonable period necessary to permit Investors to complete the distribution described in the registration statement relating thereto, whichever first occurs;

(ii)           Prepare and file with the SEC a prospectus supplement with respect to a proposed offering of Registrable Securities pursuant to an effective registration statement and, subject to this Section 3(a), keep such registration statement effective and such prospectus supplement current.

(iii)          Prepare and file with the SEC such amendments and supplements to the applicable registration statement and the prospectus or prospectus supplement used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.

(iv)          Furnish to the Holders such number of correct and complete copies of the applicable registration statement and each such amendment and supplement thereto (including in each case all exhibits) and of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned or to be distributed by them.

(v)           Use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as shall be reasonably requested by the Holders, to keep such registration or qualification in effect for so long as such registration statement remains in effect, and to take any other action which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such Holder; provided, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

(vi)          Notify each Holder of Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the applicable prospectus, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing (which notice shall not contain any material non-public information).

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(vii)         Give written notice to the Holders (which notice shall not contain any material, non-public information):

(A)          when any registration statement filed pursuant to Section 1A or any amendment thereto has been filed with the SEC (except for any amendment effected by the filing of a document with the SEC pursuant to the Exchange Act) and when such registration statement or any post-effective amendment thereto has become effective;

(B)          of any request by the SEC for amendments or supplements to any registration statement or the prospectus included therein or for additional information;

(C)          of the issuance by the SEC of any stop order suspending the effectiveness of any registration statement or the initiation of any proceedings for that purpose;

(D)          of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Common Stock for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

(E)           of the happening of any event that requires the Company to make changes in any effective registration statement or the prospectus related to the registration statement in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made).

(viii)        Use its commercially reasonable best efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of any registration statement referred to in Section 3(a)(vii)(C) at the earliest practicable time.

(ix)          Upon the occurrence of any event contemplated by Section 3(a)(vii)(C) or 3(a)(vii)(E) and subject to the Company’s rights under Section 3(b), promptly prepare a post-effective amendment to such registration statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to the Holders, the prospectus shall not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(x)           Cause all such Registrable Securities to be listed on each securities exchange on which the same class of securities issued by the Company are then listed.

(xi)          If requested by Holders of a majority of the Registrable Securities being registered and/or sold in connection therewith, promptly include in a prospectus supplement or amendment such information as the Holders of a majority of the Registrable Securities being registered and/or sold in connection therewith may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such prospectus supplement or such amendment as soon as practicable after the Company has received such request.

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(xii)         Timely provide to its security holders earnings statements satisfying the provisions of Section 9(a) of the Securities Act and Rule 158 thereunder.

(b)           Suspension of Sales.  Upon receipt of written notice from the Company that a registration statement, prospectus or prospectus supplement contains or may contain an untrue statement of a material fact or omits or may omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that circumstances exist that make use of such registration statement, prospectus or prospectus supplement inadvisable, each Holder of Registrable Securities shall forthwith discontinue disposition of Registrable Securities pursuant to such registration statement until such Holder has received copies of a supplemented or amended prospectus or prospectus supplement, or until such Holder is advised in writing by the Company that the use of the prospectus and, if applicable, prospectus supplement may be resumed, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the prospectus and, if applicable, prospectus supplement covering such Registrable Securities current at the time of receipt of such notice (each such suspension, a “Suspension Period”).  No single Suspension Period shall exceed forty-five (45) consecutive days and the aggregate of all Suspension Periods shall not exceed one hundred twenty (120) days during any twelve (12) month period.

(c)           Termination of Registration Rights.  A Holder’s registration rights as to any securities held by such Holder (and its Affiliates, partners, members and former members) shall not be available unless such securities are Registrable Securities.

(d)           Furnishing Information.

(i)            Neither the Investor nor any Holder shall use any free writing prospectus (as defined in Rule 405) in connection with the sale of Registrable Securities without the prior written consent of the Company.

(ii)           It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 1 as to a selling Holder that such selling Holder shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the registered offering of their Registrable Securities.

4.INDEMNIFICATION

(a)           In the event of a registration of any of the Registrable Securities under the Securities Act pursuant to this Agreement, the Company will (i) indemnify and hold harmless each Investor whose shares are so registered and each other person, if any, who controls such Investor or Investors within the meaning of the Securities Act, against any losses, claims, damages or liabilities, costs and expenses (including reasonable fees, expenses and disbursements of attorneys and other professionals involved) joint or several (collectively, “Losses”), to which such Investor or Investors, such underwriter or controlling person may become subject under the Securities Act or otherwise, insofar as such Losses (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement

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of any material fact contained in any registration statement under which such Registrable Securities were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof or in any free writing prospectus (as such term is defined in Rule 405) or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated under the Securities Act or any state securities law applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, and (ii) will reimburse Investor, each of its officers, directors and partners, and each person controlling such Investor or Investors, each such underwriter and each person who controls any such underwriter, for any reasonable legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action.  Notwithstanding the foregoing, the Company will not be liable in any such case to the extent that any such Loss arises out of or is based on any untrue statement or omission based upon written information furnished to the Company in an instrument duly executed by an Investor specifically for use therein.

(b)           Each Investor will, if Registrable Securities held by or issuable to such Investor are included in the securities for which a registration is being effected, (i) indemnify and hold harmless the Company, each of its directors and officers, each underwriter, if any, of the Company’s securities covered by such registration statement, each person who controls the Company and each underwriter within the meaning of the Securities Act, against all Losses, (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and (ii) will reimburse the Company, such directors, officers, partners, persons or underwriters for any reasonable legal or any other expenses incurred in connection with investigating, defending or settling any such Loss, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company in an instrument duly executed by the Investor specifically for use therein.  Notwithstanding the foregoing, the total amount for which the Investor, its officers, directors and partners, and any person controlling the Investor, shall be liable under this Section 4(b) shall not in any event exceed the aggregate proceeds received by the Investor from the sale of its Registrable Securities in such registration.

(c)           If the indemnification provided for in this Section 4 is unavailable to an Indemnified Party with respect to any Losses, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnified Party, on the one hand, and the Indemnifying Party, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations.  The relative fault of the Indemnifying Party, on the one hand, and of the Indemnified Party, on the other hand, shall be determined by reference to, among other factors, whether the untrue statement of a material fact or omission to state a material fact relates to information supplied by the Indemnifying Party or by the Indemnified

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Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such misstatement or omission; the Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 4 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in this Section 4(c).  No Indemnified Party guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from the Company or any other Indemnifying Party if the Company or such other Indemnifying Party was not guilty of such fraudulent misrepresentation.

(d)           Each party entitled to indemnification under this Section 4 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claims as to which indemnity may be sought, and shall permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom; provided, however, that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party’s expense.  Notwithstanding the foregoing, the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations hereunder, unless such failure resulted in actual detriment to the Indemnifying Party.  No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect of such claim or litigation.

(e)           Notwithstanding the foregoing, to the extent that the provisions on indemnification contained in the underwriting agreements entered into among one or more Investors, the Company and the underwriters in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall be controlling as to the Registrable Securities included in the public offering.

(f)            The indemnification provided by this Section 4 shall be a continuing right to indemnification and shall survive the registration and sale of any securities by any person entitled to indemnification hereunder and the expiration or termination of this Agreement.

5.REPORTS UNDER THE EXCHANGE ACT

With a view to making available to the Investors the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit Investor to sell securities of the Company to the public without registration, the Company agrees to use its commercially reasonable efforts to:

(a)           make and keep public information available, within the meaning of Rule 144, including by filing all reports required under the Exchange Act in a timely manner, at all times after the effective date of the Shelf Registration Statement;

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(b)           furnish to the Investors forthwith upon request a written statement by the Company that it has complied with the reporting requirements of Rule 144 (at any time after the effective date of the Shelf Registration Statement), and of the Securities Act and the Exchange Act, a copy of the most recent annual or quarterly report of the Company, and such other reports and documents filed by the Company with the SEC as may be reasonably requested to enable any such holder to take advantage of any rule or regulation of the SEC permitting the selling of any such securities without registration.

6.LIMITATIONS IN CONNECTION WITH FUTURE GRANTS OF REGISTRATION RIGHTS

From and after the date of this Agreement, the Company shall not, without the prior written consent of the Investors who then hold Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder to include such securities in any registration filed under Section 1 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his securities will not reduce the amount of the Registrable Securities of Investor to be included in such registration.

7.TRANSFER OF REGISTRATION RIGHTS

The registration rights of the Investors (and of any permitted transferee of Investor) under this Agreement with respect to any Registrable Securities may be assigned in whole or in part as provided in Section 8(b) below.

8.CERTAIN DEFINITIONS

(a)           As used in this Agreement, the following terms shall have the following respective meanings:

(i)            “Exchange Act” means the Securities Exchange Act of 1934, as amended.

(ii)           “Effectiveness Deadline” means, with respect to the Shelf Registration Statement required to be filed pursuant to Section 1(a), the earlier of (i) the 90th calendar day following the Filing Deadline and (ii) the 5th Business Day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Shelf Registration Statement will not be “reviewed” or will not be subject to further review; provided, that if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the SEC is closed for business, the Effectiveness Deadline shall be extended to the next Business Day on which the SEC is open for business.

(iii)          “Holder” means any Investor and any other holder of Registrable Securities to whom the registration rights conferred by this Agreement have been transferred in compliance with Section 7.

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(iv)          “Register,” “registered” and “registration” shall refer to a registration effected by preparing and (A) filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of effectiveness of such registration statement or (B) filing a prospectus and/or prospectus supplement in respect of an appropriate effective registration statement.

(v)           “Registrable Securities” means any and all shares of (i) common stock, par value $0.01 per share, of the Company (“Common Stock”), including any non-voting common stock, issued or issuable to the Investor pursuant to the Subscription Agreement or other agreement listed in Schedule I to this Agreement, (ii) Series F Common Stock Equivalent, par value $0.01 per share, of the Company (the “Series F Preferred Stock”), (iii) Series G Non-Voting Preferred Stock, par value $0.01 per share, of the Company (such stock and the Series F Preferred Stock being collectively referred to herein as the “Preferred Stock”) issued or issuable upon exchange of Common Stock pursuant to any agreement listed in Schedule I to this Agreement by and between the Company and an Investor, (iv) Common Stock, including any non-voting common stock, issued or issuable upon conversion of the Preferred Stock in accordance with the Company’s Certificate of Incorporation, as amended, supplemented and/or restated, or pursuant to an agreement between the Company and an Investor, (v) capital stock issued in respect of the Common Stock, including any non-voting common stock, or the Preferred Stock in any reorganization, and (vi) capital stock issued in respect of the stock referred to in clauses (i), (ii), (iii), (iv) or (v) above as a result of a stock split, stock dividend, recapitalization or combination; provided, that the Company may, in its discretion, require as a condition to offers and sales of any of the foregoing pursuant to any registration that such securities be offered and sold as, and converted into or exchanged for Common Stock on the closing of, any such sale.  Notwithstanding the foregoing, Registrable Securities shall not include any securities that would otherwise be Registrable Securities if the same are (A) sold by a person in a transaction in which the person’s rights under this Agreement are not properly assigned; or (B)(1) sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, or (2) sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act, under Section 4(1) thereof so that all transfer restrictions, and restrictive legends with respect thereto, if any, are removed upon the consummation of such sale.

(vi)          “Rule 158,” “Rule 159A,” “Rule 405” and “Rule 415” mean, in each case, such rule promulgated under the Securities Act (or any successor provision), as the same shall be amended from time to time.

9.MISCELLANEOUS

(a)           Except as otherwise expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated, except by a written instrument signed by the Company and Investor.

(b)           This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, legal representatives, successors and permitted assigns.  This Agreement, and the rights and obligations of the Investor hereunder, may be assigned by the Investor to any person or entity to which Registrable

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Securities are transferred by the Investor, and such transferee shall be deemed to have acquired all of the rights and obligations of the Investor for purposes of this Agreement; provided, that the transferee provides written notice of such assignment to the Company and provided that any such transfer shall be made strictly in accordance with all applicable laws; and provided, further, that such rights may not be held or exercised by more than one transferee of a single original Investor named herein at any one time.  The Company may not assign its rights under this Agreement except to its successors-in-interest as a result of a merger, reorganization or a sale of all or substantially all of the assets of the Company.

(c)           This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement (notwithstanding that all of the parties are not signatories to the original or the same counterpart, or that signature pages from different counterparts are combined), and it shall not be necessary when making proof of this Agreement or any counterpart thereof to account for any other counterpart, and the signature of any party to any counterpart shall be deemed to be a signature to and may be appended to any other counterpart.  For purposes of this Agreement, a document (or signature page thereto) signed and transmitted by facsimile machine or other electronic means is to be treated as an original document.  The signature of any party on any such document, for purposes hereof, is to be considered as an original signature, and the document transmitted is to be considered to have the same binding effect as an original signature on an original document.  At the request of any party, any facsimile or other electronic signature is to be re-executed in original form by the parties which executed the facsimile or other electronic signature.  No party may raise the use of a facsimile machine or other electronic means, or the fact that any signature was transmitted through the use of a facsimile machine or other electronic means, as a defense to the enforcement of this Agreement.

(d)           All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or:  (i) personal delivery to the party to be notified; (ii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iii) one (1) business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt.  All communications to Investors shall be sent to the address of such Investor set forth on such Investor’s signature page to this Agreement and all communications sent to the Company shall be sent as follows:

If to the Company:

Broadway Financial Corporation

5055 Wilshire Boulevard, Suite 500

Los Angeles, CA 90036

Attention:  Wayne-Kent A. Bradshaw, President and CEO

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with a copy to:

Arnold & Porter LLP

777 South Figueroa Street, 44th Floor

Los Angeles, CA 90017

Facsimile No:  213-243-4199

Attention:  James R. Walther, Esq.

(e)           Wherever the term “including” is used herein, it shall be deemed to mean “including, without limitation.”

(f)            In case any one or more of the provisions contained in this Agreement, or any of the documents or agreements contemplated hereby, should be determined to be invalid, illegal or unenforceable in any respect, the validity, legality, and enforceability of the remaining provisions contained herein, or therein, shall not be in any way affected or impaired thereby.

(g)           If, and as often as, there is any change in the Common Stock or the Non-Voting Preferred Stock by way of a stock split, stock dividend, combination or reclassification, or through a merger, consolidation, reorganization or recapitalization, or by any other means, appropriate adjustment shall be made in the provisions hereof so that the rights and privileges granted hereby shall continue with respect to the Common Stock and the Non-Voting Preferred Stock as so changed.

(h)           This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to conflicts of law principles that would result in the application of any law other than the law of the State of Delaware.  The parties agree to submit to the jurisdiction of the courts of the State of Delaware in any proceeding involving this Agreement.

(i)            THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR UNDER ANY AGREEMENT, INSTRUMENT OR OTHER DOCUMENT CONTEMPLATED HEREBY OR RELATED HERETO AND IN ANY ACTION DIRECTLY OR INDIRECTLY RELATED TO OR CONNECTED WITH THE OBLIGATIONS OF THIS AGREEMENT.  THE COMPANY ACKNOWLEDGES THAT THIS WAIVER MAY DEPRIVE IT OF AN IMPORTANT RIGHT AND THAT SUCH WAIVER HAS BEEN KNOWINGLY AND VOLUNTARILY MADE BY THE COMPANY AFTER CONSULTATION WITH ITS LEGAL COUNSEL.

(j)            The headings or captions of the various Sections and other divisions of this Agreement are intended for convenient reference only and neither form a part hereof nor are to be relied upon to interpret or modify any of the provisions of this Agreement.

(k)           The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms.  It is accordingly agreed that the parties hereto shall be entitled, without the

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necessity of posting a bond, to specific performance of the terms hereof, this being in addition to any other remedies to which a party is entitled at law or equity.

[Signature page follows.]

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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date set forth above.

BROADWAY FINANCIAL CORPORATION
By:	/s/ Wayne-Kent A. Bradshaw
	Name:			Wayne-Kent A. Bradshaw
	Title:			President and Chief Executive Officer
CJA PRIVATE EQUITY FINANCIAL RESTRUCTURING MASTER FUND I LP
	By:		CJA Private Equity Financial Restructuring GP I Ltd., its General Partner
By:		/s/ Christopher J. Acito
		Name: Christopher J. Acito
		Title: Managing Member
Address for Notices:
CJA Private Equity Financial Restructuring
Master Fund I LP
c/o Hedgserv, Ltd.
Attention: Mr. Donal Murphy
75 St Stephens Green - 2nd Floor
Dublin 2 Ireland
with copies to:
CJA Private Equity Financial Restructuring
Master Fund I LP
c/o Gapstow Capital Partners LP
Attention: Virginia Hathorn
130 East 59th Street - 12th Floor
New York, NY 10022
Wiggin and Dana LLP
2 Stamford Plaza
281 Tresser Boulevard
Stamford, CT 06901
Facsimile No: 203-363-7676
Attention: Mark Kaduboski, Esq.

[Signature Page to Registration Rights Agreement]

NATIONAL COMMUNITY INVESTMENT FUND
By:	/s/ Saurabh Narain
	Name:	Saurabh Narain
	Title:	Chief Executive
Address for Notices:
National Community Investment Fund
135 South La Salle, Suite 2040
Chicago, IL 60603
Attention: Saurabh Narain

BBCN BANCORP, INC.
By:	/s/ Mark Lee
	Name: Mark Lee
	Title:	Executive Vice President and Chief Credit
		Officer
Address for Notices:
BBCN Bancorp, Inc.
3731 Wilshire Boulevard, Suite 1000
Los Angeles, CA 90010
Attention:  Executive Vice President and Chief Financial Officer

Schedule I

1.Subscription Agreement, dated August 22, 2013, between the Company and CJA Private Equity Financial Restructuring Master Fund I, L.P.

2.Exchange Agreement, dated August 22, 2013, between the Company and National Community Investment Fund.

3.Loan Purchase and Sale Agreement, dated August 22, 2013, between BBCN Bank and National Community Investment Fund.

4.Exchange Agreement, dated August 22, 2013, between the Company and BBCN Bancorp, Inc.

5.Agreement for Partial Satisfaction of Debt Previously Contracted, dated August 22, 2013, between the Company and BBCN Bank.

EX-10.24

Exhibit 10.24

SUBSCRIPTION AGREEMENT

August 22, 2013

Broadway Financial Corporation
5055 Wilshire Boulevard, Suite 500
Los Angeles, California  90036

Ladies and Gentlemen:

The undersigned (the “Investor”) hereby confirms its agreement with you as follows:

1.This Subscription Agreement (this “Agreement”) is entered into between Broadway Financial Corporation, a Delaware corporation (the “Company”), and the Investor whose name appears on the signature page hereto and is made as of the date of the Company’s acceptance hereof (the “Acceptance Date”).

2.The Company is proposing to issue and sell shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”, to certain investors in a private offering at a purchase price of U.S. $·1.00 per share (the “Per Share Purchase Price”).  The Common Stock is being offered only to persons who are accredited investors within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to a private placement exemption from the securities registration requirements of the Securities Act.  The Investor acknowledges and agrees that the Company may, as provided in Section 6.17 of the attached Terms and Conditions, issue Common Stock Equivalents (as defined in the Terms and Conditions) in lieu of Common Stock in connection with certain of the exchanges for outstanding preferred stock of the Company that are to be completed concurrently with the Closing under this Agreement, all as described in the Terms and Conditions.

3.The Company and the Investor agree that, upon the terms and subject to the conditions set forth herein, the Investor will purchase from the Company and the Company will issue and sell to the Investor, the number of shares of Common Stock equal to the dollar amount subscribed as indicated on the signature page hereto divided by the Per Share Purchase Price, pursuant to the Terms and Conditions for the Purchase of Common Stock attached hereto as Annex A and incorporated herein by reference as if fully set forth herein. The Common Stock purchased by the Investor will be delivered in certificated form, registered in the Investor’s name and address as set forth below, and will be released by Computershare Inc., the Company’s transfer agent (the “Transfer Agent”), to the Investor at the Closing (as defined in the Terms and Conditions for the Purchase of Common Stock) or, if uncertificated, the Transfer Agent for the Common Stock will register the shares of Common Stock purchased in the name of the Investor and deliver evidence of such registration to the Investor.

4.In agreeing to purchase Common Stock pursuant hereto, the Investor is making the representations and warranties set forth in the attached Terms and Conditions for the Purchase of Common Stock (the “Terms and Conditions”), including representations and warranties that the Investor is an “accredited investor” (as that term is defined by Rule 501 under

the Securities Act) and that the Investor has not taken actions regarding a coordinated acquisition of Common Stock as set forth in Section 2.3(f) or Section 2.3(j).

Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose.

Subscription amount in shares and U.S. dollars:

$

Shares:

Name of Investor:

By:

Print Name:

Title:

Mailing Address:

Type of Entity:

Jurisdiction of Organization:

Tax ID No.:

Contact Name :

Telephone:

Email Address:

Name under which Common Stock is to be issued (if different from above):  same as above

Address to which share certificates or statement of ownership are to be sent (if different from mailing address above):

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Agreed and Accepted as of August     , 2013:

BROADWAY FINANCIAL CORPORATION
By:
Name:	Wayne-Kent A. Bradshaw
Title:	President and Chief Executive Officer

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INSTRUCTION SHEET FOR INVESTOR

(to be read in conjunction with the entire Agreement)

Complete the following items in the Agreement:

1.Provide the information regarding the Investor requested on the signature page to the Agreement. The Agreement must be executed by an individual authorized to bind the Investor.

2.If the Investor is purchasing Common Stock for more than one investor account, it may either (i) complete a separate Agreement for each such account, in which case a separate wire transfer (or other acceptable form of payment) must be made by or on behalf of such account for the Common Stock it will purchase and a separate issuance of Common Stock will be made by the Transfer Agent to each account, or (ii) complete a single Agreement for all such accounts, in which case only one wire transfer (or other acceptable form of payment) need be made for the Common Stock to be purchased for all such accounts (but all such Common Stock will be issued to a single account specified by the Investor) and the information called for on the signature page hereof must be completed for each account.

3.Return the signed Agreement to:

Broadway Financial Corporation
5055 Wilshire Boulevard, Suite 500
Los Angeles, California  90036
Attn:Wayne-Kent A. Bradshaw, President and Chief

Executive Officer

Fax:(323) 556-3216

Email:    WBradshaw@broadwayfederalbank.com

4.Please note that all payments must be made in U.S. dollars by wire transfer of immediately available funds to the following account, which has been established to hold funds received from investors, which funds shall be released to the Company only upon the Closing of the transactions referred to and described herein:

Bank Name:Broadway Federal Bank, f.s.b.

Bank Account Name:Broadway Federal Bank for the benefit of Broadway Financial Corporation

Bank ABA #:322070145

Bank Account #:80-000820-4

An executed Agreement or a facsimile transmission thereof must be received by such time on such date as you are advised. The Company reserves all rights to reject any subscription before it is accepted by the Company.

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ANNEX A

TERMS AND CONDITIONS FOR THE PURCHASE OF COMMON STOCK

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TABLE OF CONTENTS

		Page
ARTICLE 1PURCHASE; CLOSING		2
1.1	Issuance, Sale and Purchase	2
1.2	Closing; Deliverables for the Closing; Conditions to the Closing	2
ARTICLE 2REPRESENTATIONS AND WARRANTIES		4
2.1	Certain Terms	4
2.2	Representations and Warranties of the Company	6
2.3	Representations and Warranties of the Investor	19
ARTICLE 3COVENANTS		22
3.1	Conduct of Business Prior to Closing	22
3.2	Confidentiality	22
3.3	Commercially Reasonable Efforts	22
3.4	Legend	23
3.5	Certain Other Transactions	23
3.6	Exchange Listing	24
3.7	Stockholders Meeting	24
3.8	Registration Rights	25
ARTICLE 4TERMINATION		32
4.1	Termination	32
4.2	Effects of Termination	33
ARTICLE 5INDEMNITY		33
5.1	Indemnification by the Company	33
5.2	Indemnification by the Investor	34
5.3	Notification of Claims	35
5.4	Indemnification Payment	36
5.5	Exclusive Remedies	37
ARTICLE 6MISCELLANEOUS		37
6.1	Survival	37
6.2	Other Definitions	37
6.3	Amendment and Waivers	40
6.4	Counterparts and Facsimile	40
6.5	Governing Law	40

i

TABLE OF CONTENTS

(continued)

		Page
6.6	Jurisdiction	40
6.7	WAIVER OF JURY TRIAL	41
6.8	Notices	41
6.9	Entire Agreement	42
6.10	Successors and Assigns	42
6.11	Captions	42
6.12	Severability	42
6.13	Third Party Beneficiaries	43
6.14	Public Announcements	43
6.15	Specific Performance	43
6.16	No Recourse	43
6.17	Possible Common Stock Equivalent Transactions	43

INDEX OF DEFINED TERMS

Defined Term	Section
Acceptance Date	Subscription Agreement
Action	2.2(f)
Affiliate	6.2(a)
Agency	6.2(b)
Agreement	Subscription Agreement
Agreements	Recital B
Bank	2.2(a)
Benefit Plans	2.2(u)(i)
Board of Directors	6.2(c)
Business Day	6.2(d)
Capital Stock	6.2(e)
Capitalization Date	2.2(c)(ii)
Change in Control	6.2(f)
Closing	1.2(a)
Closing Date	1.2(a)
Code	6.2(g)
Common Stock	Subscription Agreement
Common Stock Equivalents	6.17(a)
Company	Subscription Agreement
Company Employees	2.2(u)(i)
Company Financial Statements	2.2(g)

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Defined Term	Section
Company Indemnified Parties	5.2(a)
Company Insurance Policies	2.2(s)
Company Preferred Stock	2.2(c)(i)
Company Reports	2.2(h)
Company Specified Representations	6.2(h)
Company Stock Plans	2.2(c)(iii)
Company Subsidiaries	2.2(b)
Company Subsidiary	2.2(b)
Confidentiality Agreement	3.2
control, controlling, controlled by and under common control with	6.2(a)
Deductible	5.1(b)
Disclosure Schedule	6.2(i)
EESA	2.2(u)(iii)
Effective Date	3.8(j)(i)
Effectiveness Deadline	3.8(j)(ii)
employee benefit plan	2.2(u)(i)
ERISA	2.2(u)(i)
Exchange Act	2.2(h)
FDI Act	2.2(b)
FDIC	2.2(b)
Filing Deadline	3.8(a)(i)
finally determined	5.4
GAAP	6.2(j)
Governmental Consent	6.2(k)
Governmental Entity	6.2(l)
Holder	3.8(j)(iii)
Indemnified Party	5.3(a)
Indemnifying Party	5.3(a)
Indemnitee	3.8(g)(i)
Insider	2.2(bb)
Insurer	6.2(m)
Investment	Recital A
Investment Manager	2.3(f)
Investor	Subscription Agreement
Investor Indemnified Parties	5.1(a)
Investor Specified Representations	6.2(n)
Investors	Recital B
Knowledge	6.2(o)
Law	2.2(p)
Liens	2.2(d)(ii)
Loan Investor	6.2(p)
Losses	6.2(q)
Material Adverse Effect	2.1(a)
Material Contract	2.2(r)
NASDAQ	2.2(d)
OFAC	2.2(m)

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Defined Term	Section
Other Investors	Recital B
Other Preferred Exchange Agreement	Recital C
Other Preferred Exchange Agreements	Recital C
Other Preferred Exchanges	Recital C
Other Private Placements	Recital B
Per Share Purchase Price	Subscription Agreement
Person	6.2(r)
Placement Agent	2.2(x)
Potential Investor	2.3(j)
Previously Disclosed	2.1(b)
Purchase Price	1.1
Register, registered and registration	3.8(j)(iv)
Registrable Securities	3.8(j)(v)
Registration Expenses	3.8(j)(vi)
Registration Termination Date	3.8(a)(i)
Regulatory Agreement	2.2(q)
Regulatory Order or Regulatory Orders	2.2(p)
Rights Offering	Recital D
Rights Plan	2.2(c)(iii)
Rule 158, Rule 159A, Rule 405 and Rule 415	3.8(j)(vii)
SEC	2.1(b)
Securities Act	Subscription Agreement
Selling Expenses	3.8(j)(viii)
Series A Junior Preferred Stock	2.2(c)(i)
Series A Preferred Stock	2.2(c)(i)
Series B Preferred Stock	2.2(c)(i)
Series C Preferred Stock	2.2(c)(i)
Series D Preferred Stock	2.2(c)(i)
Series E Preferred Stock	2.2(c)(i)
Shelf Registration Statement	3.8(a)(ii)
SLHCA Act	2.2(a)
Subsidiary	6.2(s)
Suspension Period	3.8(d)
TARP Exchange	Recital C
TARP Exchange Agreement	Recital C
TARP Preferred Stock	2.2(c)(ii)
Tax or Taxes	6.2(t)
Tax Return	6.2(u)
Third Party Claim	5.3(a)
Transfer Agent	Subscription Agreement
Treasury	Recital C
Voting Debt	2.2(c)(iv)
Voting Securities	6.2(v)

iv

RECITALS

A.            The Investment.  The Company intends to issue and sell to the Investor, and the Investor intends to purchase from the Company, on the terms and conditions described herein, the number of shares of Common Stock set forth on such Investor’s signature page hereto for the aggregate purchase price set forth on such signature page (the “Investment”).

B.            Other Private Placements.  The Company also intends to enter into agreements similar to this Agreement with certain other investors (the “Other Investors”) and expects to complete sales of Common Stock to them, with the closing of such sales to occur simultaneously with the Closing (the “Other Private Placements”).  The Investor and the Other Investors are hereinafter sometimes collectively referred to as the “Investors”, and this Agreement and the subscription agreements executed by the Other Investors are hereinafter sometimes collectively referred to as the “Agreements.”

C.            TARP Exchange; Other Preferred Stock Exchanges.  The United States Department of Treasury (the “Treasury”) holds 15,000 shares of TARP Preferred Stock (as defined herein).  On the terms and subject to the conditions set forth in an Exchange Agreement, dated as of February 10, 2012, entered into by the Company and the Treasury, as amended (the “TARP Exchange Agreement”), the Company intends to exchange the TARP Preferred Stock for a new series of mandatorily convertible preferred stock), which shares shall automatically convert into Common Stock having an aggregate value (valuing the Common Stock at the Per Share Purchase Price) equal to the sum of (x) 50% of the aggregate liquidation preference of the TARP Preferred Stock and (y) 100% of the amount of accrued and unpaid dividends on the TARP Preferred Stock as of the Closing Date (the “TARP Exchange”) upon receipt of any necessary shareholder approvals, as provided in Section 3.7 of this Agreement.  The Company has entered into, or will enter into simultaneously herewith, similar exchange agreements providing for exchanges of all of the outstanding shares of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock of the Company (each as defined herein) on substantially the same economic terms as provided in the TARP Exchange Agreement with the respective holders of such other series of preferred stock of the Company (such other exchange agreements being referred to herein individually as an “Other Preferred Exchange Agreement” and collectively as the “Other Preferred Exchange Agreements”).  The exchanges referred to in each of the Other Preferred Exchange Agreements (collectively the “Other Preferred Exchanges”) and the TARP Exchange are to occur prior to or simultaneously with the Closing.

D.            The Rights Offering.  Following the Closing, the Company may commence a rights offering (the “Rights Offering”) providing holders of record of the Common Stock as of the close of business on a record date prior to the Closing to be selected by the Company with the right to purchase Common Stock at the same price per share as that paid by the Investor.  The rights would not be transferable and would provide for the purchase of up to $2 million of Common Stock in the aggregate by such existing stockholders.

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ARTICLE 1

PURCHASE; CLOSING

1.1          Issuance, Sale and Purchase.  On the terms and subject to the conditions set forth herein, the Company agrees to issue and sell to the Investor, and the Investor agrees to purchase from the Company, free and clear of any Liens, a number of shares of Common Stock (including any associated preferred share purchase rights issuable with respect to such Common Stock pursuant to the Rights Plan) equal to the dollar amount subscribed as indicated on the signature page hereto divided by the Per Share Purchase Price payable by the Investor to the Company.  The aggregate purchase price payable pursuant to this Section 1.1 is referred to herein as the “Purchase Price”).

1.2          Closing; Deliverables for the Closing; Conditions to the Closing.

(a)           Closing.  Unless this Agreement has been terminated pursuant to Article 4, and subject to the satisfaction or, to the extent permitted by Law and this Agreement, the written waiver of the conditions set forth in Section 1.2(c), the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Arnold & Porter LLP, located at 777 South Figueroa Street, 44th Floor, Los Angeles, California 90017, or remotely via the electronic or other exchange of documents and signature pages, on a date to be specified by the Company on no less than two Business Days’ notice to the Investor (which date shall be the same date as the date of closing of the TARP Exchange, the Other Preferred Exchanges and the Other Private Placements), or at such other place or such other date as agreed to in writing by the parties hereto (the “Closing Date”).

(b)           Closing Deliverables.  Subject to the satisfaction or waiver on the Closing Date of the conditions to the Closing set forth in Section 1.2(c), at the Closing the parties shall make the following deliveries:

(i)            the Company shall deliver to the Investor one or more certificates evidencing the Common Stock to be purchased pursuant to Section 1.1 registered in the name of the Investor (or if the shares of the Common Stock being purchased are to be uncertificated, the Company shall cause the Transfer Agent to register such shares in the name of the Investor and deliver evidence of such registration to the Investor); and

(ii)           the Investor shall deliver the Purchase Price, by wire transfer of immediately available funds to the account set forth in the Instruction Sheet for Investor provided with this Agreement.

(c)           Closing Conditions.

(i)            The obligations of the Investor, on the one hand, and the Company, on the other hand, to consummate the purchase and sale of Common Stock provided for in this Agreement are each subject to the satisfaction or, to the extent permitted by Law and this Agreement, the written waiver by the Company or the Investor, as applicable, of the following conditions at the Closing:

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(A)          No provision of any Law and no judgment, injunction, order or decree shall prohibit the Closing or shall prohibit or restrict the Investor from owning or voting any Common Stock to be purchased pursuant to this Agreement; and

(B)          All Governmental Consents required to have been obtained at or prior to the Closing Date in connection with the execution, delivery or performance of this Agreement and the consummation of the transactions contemplated hereby shall have been obtained and shall be in full force and effect.

(ii)           The obligation of the Investor to consummate the purchase of Common Stock provided for in this Agreement is also subject to the satisfaction or written waiver by the Investor of the following conditions at the Closing:

(A)          The representations and warranties of the Company set forth in this Agreement shall be true and correct in all respects on and as of the date of this Agreement and on and as of the Closing Date as though made on and as of the Closing Date, except to the extent that the failure to be true and correct (without regard to any materiality or Material Adverse Effect qualifications contained therein), would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and except that representations and warranties made as of a specified date shall be true and correct as of such date;

(B)          The Company shall have performed and complied with, in all material respects, all agreements, covenants and conditions required by this Agreement to be performed by it on or prior to the Closing Date;

(C)          The Investor shall have received a certificate, dated as of the Closing Date, signed on behalf of the Company by a senior executive officer certifying to the effect that the conditions set forth in Section 1.2(c)(ii)(A) and Section 1.2(c)(ii)(B) have been satisfied on and as of the Closing Date;

(D)          Since the date of this Agreement, a Material Adverse Effect shall not have occurred and no change or other event shall have occurred that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(E)           The Common Stock to be purchased pursuant to this Agreement shall have been authorized for listing on the NASDAQ Capital Market or such other market on which the Common Stock is then listed or quoted, subject to official notice of issuance;

(F)           The Company shall have received (or shall receive concurrently with the Closing) gross proceeds from the Other Private

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Placements in an aggregate amount, together with the Purchase Price, of not less than $3,500,000;

(G)          The Company shall have completed the TARP Exchange in accordance in all material respects with the terms and conditions set forth in the TARP Exchange Agreement, except that the gross proceeds received from the Equity Offering referred to therein shall be not less than $3,500,000; and

(H)          The Company shall have completed each of the Other Preferred Exchanges in accordance in all material respects with the respective Other Preferred Exchange Agreements.

(iii)          The obligation of the Company to consummate the sale of Common Stock provided for in this Agreement is also subject to the satisfaction or written waiver by the Company of the following conditions at the Closing:

(A)          The representations and warranties of the Investor set forth in this Agreement shall be true and correct in all respects on and as of the date of this Agreement and on and as of the Closing Date as though made on and as of the Closing Date except where the failure to be true and correct (without regard to any materiality qualifications contained therein) would not materially adversely affect the ability of the Investor to perform its obligations hereunder (and except that (1) representations and warranties made as of a specified date shall be true and correct as of such date and (2) the representations and warranties of the Investor set forth in Sections 2.3(d) and 2.3(h) shall be true and correct in all respects);

(B)          The Investor shall have performed and complied with, in all material respects, all agreements, covenants and conditions required by this Agreement to be performed by it on or prior to the Closing Date; and

(C)          The Company shall have received a certificate, dated as of the Closing Date, signed on behalf of the Investor by a duly authorized person certifying to the effect that the conditions set forth in Section 1.2(c)(iii)(A) and Section 1.2(c)(iii)(B) have been satisfied on and as of the Closing Date.

ARTICLE 2

REPRESENTATIONS AND WARRANTIES

2.1          Certain Terms.

(a)           As used in this Agreement, the term “Material Adverse Effect” means any circumstance, event, change, development or effect that, individually or in the aggregate, would reasonably be expected to (i) result in a material adverse effect on the assets, liabilities, business, financial condition or results of operations of the Company and the Company

4

Subsidiaries, taken as a whole, or (ii) materially impair or delay the ability of the Company or any of the Company Subsidiaries to perform its or their obligations under this Agreement to consummate the Closing or any of the transactions contemplated hereby; provided, however, that in determining whether a Material Adverse Effect has occurred under clause (i), there shall be excluded any circumstance, event, change, development or effect to the extent resulting from (A) actions or omissions of the Company or any Company Subsidiary expressly required or contemplated by the terms of this Agreement, (B) changes after the date hereof in general economic conditions in the United States, including financial market volatility or downturns, or in the markets in which the Company and the Company Subsidiaries operate, (C) changes after the date hereof affecting the banking industry generally, (D) any changes after the date hereof in applicable Laws or accounting rules or principles, including changes in GAAP, (E) changes in the market price or trading volume of the Common Stock or the Company’s other outstanding securities (but not the underlying causes of such changes) or (F) any failure by the Company or any of the Company Subsidiaries to meet any internal projections or forecasts with regard to the assets, liabilities, business, financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole (but not the underlying causes of such failure), in each case to the extent that such circumstance, event, change, development or effect referred to in clauses (B), (C) and (D) do not have a disproportionate effect on the Company and the Company Subsidiaries compared to other participants in the industries or markets in which the Company and the Company Subsidiaries operate.

(b)           As used in this Agreement, the term “Previously Disclosed” (i) with regard to any party, means information set forth in its Disclosure Schedule under Section references corresponding with the provision of this Agreement to which such information relates (including, in the case of the Company, information identified in the Company’s Disclosure Schedule by reference to specific portions of the “virtual data room” website established by the Company for use by the Investor in its “due diligence” examination of the Company; provided, however, that if such information is disclosed in such a way as to make its relevance or applicability to another provision of this Agreement reasonably apparent on its face, such information shall be deemed to be responsive to such other provision of this Agreement and (ii) with regard to the Company, includes information publicly disclosed by the Company in (A) the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as filed by it with the Securities and Exchange Commission (the “SEC”) and subsequently amended by the filing of Forms 10-K/A on April 27, 2012 and September 14, 2012, or the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, as filed by it with the SEC on April 1, 2013, (B) the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2012, June 30, 2012, September 30, 2012 and March 31, 2013 as filed by it with the SEC, (C) the Company’s Definitive Proxy Statement on Schedule 14A, as filed by it with the SEC on November 19, 2012, or (D) any Current Report on Form 8-K filed or furnished by it with the SEC since January 1, 2011, in each case available prior to the date of this Agreement (excluding any risk factor disclosures contained in such documents under the heading “Risk Factors” and any disclosure of risks included in any “forward-looking statements” disclaimer or other statements that are similarly non-specific and are predictive or forward-looking in nature).  Notwithstanding anything in this Agreement to the contrary, the mere inclusion of an item in a Disclosure Schedule shall not be deemed an admission that such item represents a material exception or material fact, event or circumstance or that such item has had

5

or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

2.2          Representations and Warranties of the Company.  Except as Previously Disclosed, the Company hereby represents and warrants to the Investor, as of the date of this Agreement and as of the Closing Date (except for the representations and warranties that are as of a specific date, which are made as of that date) that:

(a)           Organization and Authority.  Each of the Company and the Company Subsidiaries is a corporation or other entity duly organized and validly existing under the laws of the jurisdiction of its incorporation or organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified except where any failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and has the corporate or other organizational power and authority to own its properties and assets and to carry on its business as it is now being conducted.  The Company has Previously Disclosed correct and complete copies of the certificate of incorporation and bylaws (or similar governing documents) as amended through the date of this Agreement for the Company and Broadway Federal Bank, f.s.b. (the “Bank”).  The Company is duly registered with the Board of Governors of the Federal Reserve System (the “Federal Reserve”) as a savings and loan holding company under the Savings and Loan Holding Company Act, as amended, 12 U.S.C. 1467a (the “SLHCA Act”).

(b)           Company Subsidiaries.  The Company has Previously Disclosed a true, complete and correct list of all of its subsidiaries as of the date of this Agreement (each, a “Company Subsidiary” and, collectively, the “Company Subsidiaries”).  Except for the Company Subsidiaries, the Company does not own beneficially, directly or indirectly, more than 5% of any class of equity securities or similar interests of any corporation, business trust, association or similar organization, and is not, directly or indirectly, a partner in any partnership or party to any joint venture.  The Company owns, directly or indirectly, all of its interests in each Company Subsidiary free and clear of any and all Liens, except for the Lien of BBCN Bank on all assets of the Company, including the stock of the Bank owned by the Company.  The deposit accounts of the Bank are insured by the Federal Deposit Insurance Corporation (“FDIC”) to the fullest extent permitted by the Federal Deposit Insurance Act, as amended (the “FDI Act”), and the rules and regulations of the FDIC thereunder, and all premiums and assessments required to be paid in connection therewith have been paid when due (after giving effect to any applicable extensions).  The Company beneficially owns all of the outstanding capital securities of, and has sole control of, the Bank.

(c)           Capitalization.

(i)            As of the date hereof, (A) the authorized Capital Stock of the Company consists of 8,000,000 shares of Common Stock, par value $0.01 per share and 1,000,000 shares of preferred stock, par value $0.01 per share (the “Company Preferred Stock”) and (B) of the Company Preferred Stock, 100,000 shares have been designated as Non-Cumulative Perpetual Preferred Stock, Series A, having a liquidation preference of $10 per share (the “Series A Preferred

6

Stock”); 100,000 shares have been designated as Non-Cumulative Perpetual Preferred Stock, Series B, having a liquidation preference of $10 per share (the “Series B Preferred Stock”); 76,950 shares have been designated as Series C Non-Cumulative Perpetual Convertible Preferred Stock, having a liquidation preference of $13 per share (the “Series C Preferred Stock”); 9,000 shares have been designated as Fixed Rate Cumulative Perpetual Preferred Stock, Series D, having a liquidation preference of $1,000 per share (the “Series D Preferred Stock”); 6,000 shares have been designated as Fixed Rate Cumulative Perpetual Preferred Stock, Series E, having a liquidation preference of $1,000 per share (the “Series E Preferred Stock”); and 25,000 shares have been designated as Series A Junior Participating Preferred Stock, having a liquidation preference of $1.00 per share (the “Series A Junior Preferred Stock”).

(ii)           As of the close of business on May 31, 2013 (the “Capitalization Date”), the Company had outstanding: 1,917,422 shares of Common Stock; 55,199 shares of Series A Preferred Stock; 100,000 shares of Series B Preferred Stock; 76,950 shares of Series C Preferred Stock; 9,000 shares of Series D Preferred Stock; and 6,000 shares of Series E Preferred Stock (the Series D Preferred Stock and Series E Preferred Stock being referred to herein as the “TARP Preferred Stock”).

(iii)          As of the close of business on the Capitalization Date, other than in respect of awards outstanding under or issuable pursuant to the Company’s 1996 Long-Term Incentive Plan, 1996 Stock Option Plan and 2008 Long-Term Incentive Plan (the “Company Stock Plans”) in respect of which an aggregate of 437,390 shares of Common Stock have been reserved for issuance, 76,950 shares of Common Stock reserved for issuance upon conversion of the outstanding shares of the Series C Preferred Stock and 25,000 shares of Series A Junior Preferred Stock reserved for issuance pursuant to the Rights Agreement, dated January 31, 2003, entered into between the Company and US Stock Transfer Corporation (the “Rights Plan”), no shares of Common Stock or Company Preferred Stock were reserved for issuance.  Since the Capitalization Date and through the date of this Agreement, except in connection with this Agreement and the transactions contemplated hereby, including the Investment, the Other Private Placements, the TARP Exchange, the Other Preferred Exchanges, and the Rights Offering, the Company has not (A) issued or authorized the issuance of any shares of Common Stock or Company Preferred Stock, or any securities convertible into or exchangeable or exercisable for shares of Common Stock or Company Preferred Stock, except to Directors and certain executive officers of the Company and the Bank pursuant to the Stock Purchase Agreements copies of which are included in Section 2.2(c) of the Disclosure Schedule, (B) reserved for issuance any shares of Common Stock or Company Preferred Stock or (C) repurchased or redeemed, or authorized the repurchase or redemption of, any shares of Common Stock or Company Preferred Stock.

(iv)          All of the issued and outstanding shares of Common Stock and Company Preferred Stock have been duly authorized and validly issued and are

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fully paid, nonassessable and free of preemptive rights.  None of the outstanding shares of Capital Stock or other securities of the Company or any of the Company Subsidiaries was issued, sold or offered by the Company or any Company Subsidiary in violation of the Securities Act or the securities or blue sky laws of any state or jurisdiction.  No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which the shareholders of the Company may vote (“Voting Debt”) are issued and outstanding.

(v)           As of the date of this Agreement, except for (x) the outstanding awards under the Company Stock Plans listed on Section 2.2(c) of the Disclosure Schedule, (y) as set forth elsewhere in this Section 2.2(c) and (z) the Agreements, the TARP Exchange Agreement, and the Other Preferred Exchange Agreements, the Company does not have and is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of, or securities or rights convertible into or exchangeable or exercisable for, any shares of Common Stock or Company Preferred Stock or any other equity securities of the Company or Voting Debt or any securities representing the right to purchase or otherwise receive any shares of Capital Stock of the Company.

(d)           Authorization; No Conflicts; Shareholder Approval.

(i)            The Company has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  Subject to the approval by the Nasdaq Stock Market (“NASDAQ”) of the Company’s application pursuant to Rule 5635(f) and other applicable provisions of the Nasdaq Listing Rules to issue Common Stock in connection with the Investment, the Other Private Placements, the TARP Exchange, the Other Preferred Exchanges and related transactions without prior shareholder approval, the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no further approval or authorization is required on the part of the Company or its shareholders.  The Board of Directors has unanimously approved the transactions contemplated by this Agreement, including the Investment, the Other Private Placements, the Other Preferred Exchanges, and the TARP Exchange and the Rights Offering.  This Agreement has been duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery by the Investor, is the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles (whether applied in equity or at law).

(ii)           Neither the execution and delivery by the Company of this Agreement nor the consummation of the transactions contemplated hereby, nor

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compliance by the Company with any of the provisions hereof, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or result in the loss of any benefit or creation of any right on the part of any third party under, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any liens, charges, adverse rights or claims, pledges, covenants, title defects, security interests or other encumbrances of any kind (“Liens”) upon any of the properties or assets of the Company or any Company Subsidiary, under any of the terms, conditions or provisions of (1) the certificate of incorporation or bylaws (or similar governing documents) of the Company and each Company Subsidiary or (2) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Company or any of the Company Subsidiaries is a party or by which it may be bound, or to which the Company or any of the Company Subsidiaries, or any of the properties or assets of the Company or any of the Company Subsidiaries may be subject, or (B) violate any Law applicable to the Company or any of the Company Subsidiaries or any of their respective properties or assets except in the case of clauses (A)(2) and (B) for such violations, conflicts and breaches as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(e)           Governmental Consents.  Except as set forth in the Disclosure Schedule, no Governmental Consents are necessary for the execution and delivery of this Agreement or for the sale by the Company of Common Stock to the Investor pursuant to this Agreement.

(f)            Litigation and Other Proceedings.  Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there is no pending or, to the Knowledge of the Company, threatened claim, action, suit, arbitration, complaint, charge or investigation or proceeding (each an “Action”) against the Company or any Company Subsidiary or any of its assets, rights or properties, nor is the Company or any Company Subsidiary a party or named as subject to the provisions of any order, writ, injunction, settlement, judgment or decree of any court, arbitrator or government agency, or instrumentality.  There has not been, and to the Knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company or any current or former director or officer of the Company in his or her capacity as such.

(g)           Financial Statements.  The audited consolidated balance sheets of the Company and the Company Subsidiaries and the related consolidated statements of operations, changes in stockholders’ equity and cash flows, together with the notes thereto, included in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2012 (the “Company Financial Statements,”), (i) have been prepared from, and are in accordance with, the books and records of the Company and the Company Subsidiaries, (ii) complied, as of their respective date of such filing, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, (iii) have been prepared in accordance with GAAP applied on a consistent basis and (iv) present fairly in all material respects the consolidated financial position of the Company and the Company Subsidiaries at the dates and the consolidated results of operations, changes in

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shareholders’ equity and cash flows of the Company and the Company Subsidiaries for the periods stated therein.

(h)           Reports.  Since December 31, 2008, the Company and each Company Subsidiary have filed all material reports, registrations, documents, filings, statements and submissions, together with any required amendments thereto, that they were required to file with any Governmental Entity (the foregoing, collectively, being referred to herein as the “Company Reports”) and have paid all material fees and assessments due and payable in connection therewith.  As of their respective filing dates, or as subsequently amended prior to the date hereof, the Company Reports complied in all material respects with all statutes and applicable rules and regulations of the applicable Governmental Entities.  As of the date of this Agreement, there are no outstanding comments from the SEC or any other Governmental Entity with respect to any Company Report that were the subject of written correspondence that have not been resolved.  The Company Reports, including the documents incorporated by reference in each of them, each contained all the information required to be included in it and, when it was filed and, as of the date of each such Company Report filed with the SEC, or if amended prior to the date of this Agreement, as of the date of such amendment, did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made in it, in light of the circumstances under which they were made, not misleading and complied as to form in all material respects with the applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  No executive officer of the Company has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002.

(i)            Internal Accounting and Disclosure Controls.  The records, systems, controls, data and information of the Company and the Company Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of the Company or the Company Subsidiaries or accountants (including all means of access thereto and therefrom) or reputable banking industry service providers, except for any non-exclusive ownership and non-direct control that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the system of internal accounting controls described below in this Section 2.2(i).  The Company (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) intended to ensure that material information relating to the Company, including its consolidated Subsidiaries, is made known to the chief executive officer or executive chairman and the chief financial officer of the Company by others within those entities, and (ii) has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s outside auditors and the audit committee of the Board of Directors (A) any significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information, and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.  As of the date of this Agreement, the Company has no Knowledge of any reason that its outside auditors and its chief executive officer or executive chairman and chief financial officer shall not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to

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Section 404 of the Sarbanes-Oxley Act of 2002, without qualification, when next due.  Since December 31, 2008, neither the Company nor any Company Subsidiary nor, to the Knowledge of the Company, any director, officer, employee, auditor, accountant or representative of the Company or any Company Subsidiary has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any Company Subsidiary or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or any Company Subsidiary has engaged in questionable accounting or auditing practices.

(j)            Risk Management Instruments.  All material derivative instruments, including swaps, caps, floors and option agreements entered into for the Company’s or any of the Company Subsidiaries’ own account were entered into (i) only in the ordinary course of business, (ii) in accordance with prudent practices and in all material respects with all applicable Laws and (iii) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of the Company or any Company Subsidiary, as applicable, enforceable in accordance with its terms.  Neither the Company nor, to the Knowledge of the Company, any other party thereto is in breach of any of its material obligations under any such agreement or arrangement.

(k)           No Undisclosed Liabilities.  There are no liabilities of the Company or any of the Company Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, except for (i) liabilities adequately reflected or reserved against in accordance with GAAP in the Company’s audited balance sheet as of December 31, 2011 and (ii) liabilities that have arisen in the ordinary and usual course of business and consistent with past practice since December 31, 2011 and that have not or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(l)            Mortgage Lending.  The Company and each of the Company Subsidiaries have complied in all material respects with, and all documentation in connection with the origination, processing, underwriting and credit approval of any mortgage loan originated, purchased or serviced by the Company or any Company Subsidiary has satisfied, in all material respects (i) all Laws with respect to the origination, insuring, purchase, sale, servicing, or filing of claims in connection with mortgage loans, including all Laws relating to real estate settlement procedures, consumer credit protection, truth in lending laws, usury limitations, fair housing, transfers of servicing, collection practices, equal credit opportunity and adjustable rate mortgages, (ii) the responsibilities and obligations relating to mortgage loans set forth in any agreement between the Company and any Agency, Loan Investor or Insurer, (iii) the applicable rules, regulations, guidelines, handbooks and other requirements of any Agency, Loan Investor or Insurer and (iv) the terms and provisions of any mortgage or other collateral documents and other loan documents with respect to each mortgage loan.

(m)          Bank Secrecy Act; Anti-Money Laundering; OFAC; and Customer Information.  The Company is not aware of, has not been advised of, and, to the Knowledge of the Company, has no reason to believe that any facts or circumstances exist that would cause it or any Company Subsidiary to be deemed to be not operating in compliance, in all material respects, with the Bank Secrecy Act of 1970, as amended, the Uniting and Strengthening

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America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (also known as the USA PATRIOT Act), any order or regulation issued by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), or any other applicable anti-money laundering or anti-terrorist-financing statute, rule or regulation.  The Company is not aware of any facts or circumstances that would cause it to believe that any nonpublic customer information has been disclosed to or accessed by an unauthorized third party in a manner that would cause it to undertake any material remedial action.  The Company and each of the Company Subsidiaries have adopted and implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that comply with the USA PATRIOT Act and such anti-money laundering program meets the requirements in all material respects of Section 352 of the USA PATRIOT Act and the regulations thereunder, and they have complied in all respects with any requirements to file reports and other necessary documents as required by the USA PATRIOT Act and the regulations thereunder.  The Company will not directly or indirectly use the proceeds of the sale of the Common Stock pursuant to transactions contemplated by this Agreement, or lend, contribute or otherwise make available such proceeds to any Company Subsidiary, joint venture partner or other Person, towards any sales or operations in any country appearing on the OFAC Specially Designated Nationals List (“SDN List”) or for the purpose of financing the activities of any Person currently appearing on the SDN List.

(n)           Certain Payments.  Neither the Company nor any of the Company Subsidiaries, nor any directors, officers, nor to the Knowledge of the Company, employees or any of their Affiliates or any other Person who to the Knowledge of the Company is associated with or acting on behalf of the Company or any of the Company Subsidiaries has directly or indirectly (i) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment in material violation of any Law to any Person, private or public, regardless of form, whether in money, property, or services (A) to obtain favorable treatment in securing business for the Company or any of the Company Subsidiaries, (B) to pay for favorable treatment for business secured by the Company or any of the Company Subsidiaries, or (C) to obtain special concessions or for special concessions already obtained, for or in respect of the Company or any of the Company Subsidiaries or (ii) established or maintained any fund or asset with respect to the Company or any of the Company Subsidiaries that was required by Law or GAAP to have been recorded and was not recorded in the books and records of the Company or any of the Company Subsidiaries.

(o)           Absence of Certain Changes.  Since December 31, 2012 and except as Previously Disclosed or as required or contemplated by the terms of this Agreement, (i) the Company and the Company Subsidiaries have conducted their respective businesses in all material respects in the ordinary and usual course of business consistent with past practices, (ii) none of the Company or any Company Subsidiary has issued any securities (other than Common Stock and Company Options and other equity-based awards issued prior to the date of this Agreement pursuant to Company Stock Plans and reflected in the numbers set forth in Section 2.2(c)), (iii) the Company has not made or declared any distribution in cash or in kind to its shareholders or issued or repurchased any shares of its Capital Stock, (iv) through (and including) the date of this Agreement, no fact, event, change, condition, development, circumstance or effect has occurred that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and (v) no material default (or event

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which, with notice or lapse of time, or both, would constitute a material default) exists on the part of the Company or any Company Subsidiary in the due performance and observance of any term, covenant or condition of any agreement to which the Company or any Company Subsidiary is a party and which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(p)           Compliance with Laws.  The Company and each Company Subsidiary have all material permits, licenses, franchises, authorizations, orders and approvals of, and have made all filings, applications and registrations with, Governmental Entities that are required in order to permit them to own or lease their properties and assets and to carry on their business as presently conducted and that are material to the business of the Company and each Company Subsidiary.  The Company and each Company Subsidiary have complied in all material respects and (i) are not in default or violation in any respect of, (ii) are not under investigation with respect to, and (iii) have not been threatened to be charged with or given notice of any material violation of, any applicable material domestic (federal, state or local) or foreign law, statute, ordinance, license, rule, regulation, policy or guideline, order, demand, writ, injunction, decree or judgment of any Governmental Entity (each, a “Law”), other than such noncompliance, defaults or violations as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  Except for statutory or regulatory restrictions of general application, restrictions applicable to recipients of funds under the Troubled Asset Relief Program of the Treasury, the respective Orders to Cease and Desist issued by the Office of Thrift Supervision to the Company and the Bank, with the consent of the Company and the Bank, effective September 9, 2010 (each, individually a “Regulatory Order” and, together, the “Regulatory Orders”), no Governmental Entity has placed any material restriction on the business or properties of the Company or any of the Company Subsidiaries.  As of the date hereof, the Bank has a Community Reinvestment Act rating of “outstanding.”

(q)           Agreements with Regulatory Agencies.  Except for the Regulatory Orders, (i) the Company and the Company Subsidiaries (A) are not subject to any cease-and-desist or other similar order or enforcement action issued by, (B) are not a party to any written agreement, consent agreement or memorandum of understanding with, (C) are not a party to any commitment letter or similar undertaking to, and (D) are not subject to any capital directive by, and (ii) since December 31, 2012, neither the Company nor any of the Company Subsidiaries has adopted any board resolutions at the request of, any Governmental Entity that currently restricts in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its liquidity and funding policies and practices, its ability to pay dividends, its credit, risk management or compliance policies, its internal controls, its management or its operations or business (each item in this sentence, including the Regulatory Orders, being referred to herein as a “Regulatory Agreement”), nor has the Company nor any of the Company Subsidiaries been advised since December 31, 2012 by any Governmental Entity that it is considering issuing, initiating, ordering, or requesting any such Regulatory Agreement, except that the Company and the Bank have been advised that they may receive revised Regulatory Orders from the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System (either acting directly or by or through the Federal Reserve Bank of San Francisco).  Except as set forth in the Disclosure Schedule, the Company and the Company Subsidiaries are in compliance in all material respects with each Regulatory Agreement to which they are party or subject, and the Company and the Company Subsidiaries have not received any

13

notice from any Governmental Entity indicating that either the Company or any of the Company Subsidiaries is not in compliance in all material respects with any such Regulatory Agreement.

(r)            Contracts.  The Company has Previously Disclosed or provided (by hard copy, electronic data room or otherwise) to the Investor or its representatives true, correct and complete copies of each of the following to which the Company or any Company Subsidiary is a party, each of which is set forth on Section 2.2(r) of the Disclosure Schedule (each, a “Material Contract”):

(i)            any contract or agreement relating to indebtedness of the Company or any Company Subsidiary for borrowed money, letters of credit, capital lease obligations, obligations secured by a Lien or interest rate or currency hedging agreements (including guarantees in respect of any of the foregoing, but in any event excluding trade payables, securities transactions and brokerage agreements arising in the ordinary course of business, intercompany indebtedness and immaterial leases for telephones, copy machines, facsimile machines and other office equipment) in excess of $200,000, except for those issued in the ordinary course of business;

(ii)           any contract or agreement that is a “material contract” within the meaning of Item 601(b)(10) of Regulation S-K;

(iii)          any contract or agreement limiting, in any material respect, the ability of the Company or any of the Company Subsidiaries to engage in any line of business or to compete, whether by restricting territories, customers or otherwise, or in any other material respect, with any Person;

(iv)          any contract or agreement that concerns the sale or acquisition of any material portion of the Company’s business;

(v)           any alliance, cooperation, joint venture, shareholders, partnership or similar agreement involving a sharing of profits or losses relating to the Company or any Company Subsidiary;

(vi)          any contract or agreement involving annual payments in excess of $200,000 that cannot be cancelled by the Company or a Company Subsidiary without penalty on not more than 90 days’ notice;

(vii)         any material hedge, collar, option, forward purchasing, swap, derivative or similar agreement, understanding or undertaking;

(viii)        any contract or agreement with respect to the employment or service of any current or former directors, officers, employees or consultants of the Company or any of the Company Subsidiaries other than, with respect to non-executive employees and consultants, in the ordinary course of business; and

(ix)          any contract or agreement containing any (x) non-competition or exclusive dealing obligations or other obligation which purports to limit or restrict

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in any respect the ability of the Company or any Company Subsidiary to solicit customers or the manner in which, or the localities in which, all or any portion of the business of the Company or the Company Subsidiaries is or can be conducted, or (y) right of first refusal or right of first offer or similar right or that limits or purports to limit the ability of the Company or any of the Company Subsidiaries to own, operate, sell, transfer, pledge or otherwise dispose of any material assets or business.

Each Material Contract (A) is legal, valid and binding on the Company and the Company Subsidiaries which are a party to such contract, (B) is in full force and effect and enforceable in accordance with its terms and (C) will continue to be legal, valid, binding, enforceable, and in full force and effect in all material respects following the consummation of the transactions contemplated by this Agreement.  Neither the Company nor any of the Company Subsidiaries, nor to the Knowledge of the Company, any other party thereto is in material violation or default under any Material Contract.  No benefits under any Material Contract will be increased, and no vesting of any benefits under any Material Contract will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement, nor will the value of any of the benefits under any Material Contract be calculated on the basis of any of the transactions contemplated by this Agreement.  The Company and the Company Subsidiaries, and to the Knowledge of the Company, each of the other parties thereto, have performed in all material respects all material obligations required to be performed by them under each Material Contract, and to the Knowledge of the Company, no event has occurred that with notice or lapse of time would constitute a material breach or default or permit termination, modification, or acceleration, under the Material Contracts.

(s)            Insurance.  The Company and each of the Company Subsidiaries are presently insured, and have been insured for at least the past two years, for reasonable amounts with financially sound and reputable insurance companies against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured.  All of the policies, bonds and other arrangements providing for the foregoing (the “Company Insurance Policies”) are in full force and effect, the premiums due and payable thereon have been or will be timely paid through the Closing Date, and there is no material breach or default (and no condition exists or event has occurred that, with the giving of notice or lapse of time or both, would constitute such a material breach or default) by the Company or any of the Company Subsidiaries under any of the Company Insurance Policies or, to the Knowledge of the Company, by any other party to the Company Insurance Policies.  Neither the Company nor any of the Company Subsidiaries has received any written notice of cancellation or non-renewal of any Company Insurance Policy nor, to the Knowledge of the Company, is the termination of any such policies threatened in writing by the insurer, and there is no material claim for coverage by the Company, or any of the Company Subsidiaries, pending under any of such Company Insurance Policies as to which coverage has been denied or disputed by the underwriters of such Company Insurance Policies or in respect of which such underwriters have reserved their rights.

(t)            Title.  The Company and the Company Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and valid title to all material personal property owned by them, in each case free and clear of all Liens, except for

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Liens which do not materially affect the value of such property or do not interfere with the use made and proposed to be made of such property by the Company or any Company Subsidiary.  Any real property and facilities held under lease by the Company or the Company Subsidiaries are valid, subsisting and enforceable leases with such exceptions that are not material and do not interfere with the use made and proposed to be made of such property and facilities by the Company or the Company Subsidiaries.

(u)           Employee Benefits.

(i)            Section 2.2(v) of the Disclosure Schedule sets forth a correct and complete list of each “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), including, without limitation, multiemployer plans within the meaning of Section 3(37) of ERISA), and all stock purchase, stock option, severance, employment, change-in-control, fringe benefit, bonus, incentive, deferred compensation and all other employee benefit plans, agreements, programs, policies or other arrangements, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise), whether formal or informal, oral or written, under which (A) any current or former employee or director of the Company or any of the Company Subsidiaries (the “Company Employees”) has any present or future right to benefits and which are contributed to, sponsored by or maintained by the Company or any of the Company Subsidiaries or (B) the Company or any Company Subsidiary has had or has any present or future liability.  All such plans, agreements, programs, policies and arrangements shall be collectively referred to as the “Benefit Plans.”

(ii)           (A) Each Benefit Plan has been established and administered in all material respects in accordance with its terms, and in compliance with the applicable provisions of ERISA, the Code and other Laws; (B) no “reportable event” (as such term is defined in Section 4043 of ERISA) that could reasonably be expected to result in material liability has occurred with respect to any Benefit Plan, and (C) no non-exempt “prohibited transaction” (as such term is defined in Section 406 of ERISA and Section 4975 of the Code) has been engaged in by the Company or any Company Subsidiary with respect to any Benefit Plan that has or is expected to result in any material liability or “accumulated funding deficiency” (as such term is defined in Section 302 of ERISA and Section 412 of the Code (whether or not waived)).

(iii)          The Company and the Company Subsidiaries will be in compliance, as of the Closing Date, with Sections 111 and 302 of the Emergency Economic Stabilization Act of 2008, as amended by the U.S. American Recovery and Reinvestment Act of 2009, including all guidance issued thereunder by a Governmental Entity (collectively “EESA”).

(v)           Taxes.  All material Tax Returns required to be filed by, or on behalf of, Company or the Company Subsidiaries have been timely filed, or will be timely filed, in

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accordance with all Laws, and all such Tax Returns are, or shall be at the time of filing, complete and correct in all material respects.  The Company and the Company Subsidiaries have timely paid all material Taxes due and payable (whether or not shown on such Tax Returns), or, where payment is not yet due, have made adequate provisions in accordance with GAAP.  There are no Liens with respect to Taxes upon any of the assets or properties of either the Company or the Company Subsidiaries other than with respect to Taxes not yet due and payable.

(w)          Labor.

(i)            Employees of the Company and the Company Subsidiaries are not represented by any labor union nor are any collective bargaining agreements otherwise in effect with respect to such employees.  No labor organization or group of employees of the Company or any Company Subsidiary has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions presently pending or threatened to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority, nor have there been in the last three years.  There are no strikes, work stoppages, slowdowns, labor picketing lockouts, material arbitrations or material grievances, or other material labor disputes pending or, to the Knowledge of the Company, threatened against or involving the Company or any Company Subsidiary, nor have there been any in the past year.

(ii)           Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company and the Company Subsidiaries are in compliance with all federal and state Laws and requirements respecting employment and employment practices, terms and conditions of employment, collective bargaining, disability, immigration, health and safety, wages, hours and benefits, non-discrimination in employment, workers’ compensation and the collection and payment of withholding and/or payroll taxes and similar taxes.

(iii)          Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there is no charge or complaint pending or threatened before any Governmental Entity alleging unlawful discrimination in employment practices, unfair labor practices or other unlawful employment practices by the Company or any Company Subsidiary.

(x)           Brokers and Finders.  Except for PGP Capital Advisors, LLC (the “Placement Agent”) and the fees payable thereto or to its assigns (which fees are to be paid by the Company), neither the Company nor any of its officers, directors, employees or agents has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Company in connection with this Agreement or the transactions contemplated hereby.

(y)           Loan Portfolio.  As of the date of this Agreement, the characteristics of the loan portfolio of the Company have not materially and adversely changed from the characteristics of the loan portfolio as of December 31, 2012.

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(z)           Offering of Securities.  Neither the Company nor any Person acting on its behalf has taken any action (including any offering of any securities of the Company under circumstances which would require the integration of such offering with the offering of any of the Common Stock to be issued pursuant to this Agreement under the Securities Act and the rules and regulations of the SEC promulgated thereunder) which would subject the offering, issuance or sale of any of the Common Stock to be issued pursuant to this Agreement to be subject to the registration requirements of the Securities Act.  Neither the Company nor any Person acting on its behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with any offer or sale of the Common Stock pursuant to the transactions contemplated by this Agreement.  Assuming the accuracy of the Investor’s representations and warranties set forth in this Agreement, no registration under the Securities Act is required for the offer and sale of the Common Stock by the Company to the Investor.

(aa)         Investment Company Status.  The Company is not, and upon consummation of the transactions contemplated by this Agreement will not be, an “investment company,” a company controlled by an “investment company” or an “affiliated Person” of, or “promoter” or “principal underwriter” of, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.

(bb)         Affiliate Transactions.  No officer, director, five percent (5%) shareholder or other Affiliate of the Company (or any Company Subsidiary), or any individual who, to the Knowledge of the Company, is related by marriage or adoption to or shares the same home as any such Person, or any entity which, to the Knowledge of the Company, is controlled by any such Person (collectively, an “Insider”), is a party to any contract or transaction with the Company (or any Company Subsidiary) which pertains to the business of the Company (or any Company Subsidiary) or has any interest in any property, real or personal or mixed, tangible or intangible, used in or pertaining to the business of the Company (or any Company Subsidiary).  The foregoing representation and warranty does not include deposits at the Company (or any Company Subsidiary) or loans of $250,000 or less made in the ordinary course of business in compliance with Regulation O and other applicable Law.

(cc)         Anti-takeover Provisions Not Applicable.  The Board of Directors has taken all necessary action to ensure that the transactions contemplated by this Agreement and the consummation of the transactions contemplated hereby will be exempt from any anti-takeover or similar provisions of the Company’s certificate of incorporation and bylaws, the Rights Plan and any provisions of any applicable “moratorium”, “control share”, “fair price”, “interested shareholder” or other anti-takeover Laws and regulations of any jurisdiction.

(dd)         Issuance of the Common Stock.  The issuance of the Common Stock in connection with the transactions contemplated by this Agreement has been duly authorized and such Common Stock, when issued and paid for in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable and free and clear of all Liens, other than restrictions on transfer imposed by applicable securities Laws, and shall not be subject to preemptive or similar rights.

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2.3          Representations and Warranties of the Investor.  Except as Previously Disclosed, the Investor hereby represents and warrants to the Company, as of the date hereof and as of the Closing Date (except for the representations and warranties that are as of a specific date which are made as of that date) that:

(a)           Organization and Authority.  The Investor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified and where failure to be so qualified would be reasonably expected to materially and adversely impair or delay its ability to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.

(b)           Authorization; No Conflicts.

(i)            The Investor has the necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by its board of directors, general partner or managing members, investment committee, investment adviser or other authorized person, as the case may be, and no further approval or authorization by any of its shareholders, partners or other equity owners, as the case may be, is required.  This Agreement has been duly and validly executed and delivered by the Investor and, assuming due authorization, execution and delivery by the Company is the valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles).

(ii)           Neither the execution, delivery and performance by the Investor of this Agreement nor the consummation of the transactions contemplated hereby, nor compliance by the Investor with any of the provisions hereof, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any Liens upon any of the properties or assets of the Investor under any of the terms, conditions or provisions of (1) its certificate of incorporation or bylaws, its certificate of limited partnership or partnership agreement or its similar governing documents or (2) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Investor is a party or by which the Investor may be bound, or to which the Investor or any of the properties or assets of the Investor may be subject, or (B) violate any Law applicable to the Investor or any of its properties or assets except in the case of clauses (A)(2) and (B) for such violations, conflicts and breaches as would not reasonably be expected to materially adversely affect the Investor’s ability to

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perform its obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis.

(c)           Governmental Consents.  Except as set forth in the Disclosure Schedule, no Governmental Consents are necessary for the execution and delivery of this Agreement or for the purchase by the Investor of the Common Stock pursuant to this Agreement.

(d)           Purchase for Investment; Accredited Investor Status.  The Investor acknowledges that the Common Stock to be purchased by the Investor pursuant to this Agreement has not been registered under the Securities Act or under any state securities laws and may not be resold or transferred by the Investor without such registration or appropriate reliance on any available exemption from such requirements.  The Investor (i) is acquiring the Common Stock pursuant to an exemption from the registration requirements of the Securities Act and other applicable securities laws solely for investment with no present intention to distribute any of the Common Stock to any Person, (ii) will not sell or otherwise dispose of any of the Common Stock, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable securities laws, (iii) has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of its investment in the Common Stock and of making an informed investment decision and (iv) is an “accredited investor” (as that term is defined by Rule 501 of the Securities Act).

(e)           Brokers and Finders.  Neither the Investor, nor its respective Affiliates nor any of their respective officers or directors, has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Investor in connection with this Agreement or the transactions contemplated hereby.  The Investor acknowledges that it is purchasing the Common Stock directly from the Company and not from the Placement Agent.

(f)            Investment Decision.  The Investor, or the duly appointed investment manager to the Investor (the “Investment Manager”), if applicable, has independently evaluated the merits of its decision to purchase the Common Stock pursuant to this Agreement, and the Investor confirms that neither it, nor its Investment Manager, if applicable, has relied on the advice of any other person’s business and/or legal counsel in making such decision.  The Investor understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Investor in connection with the purchase of the Common Stock constitutes legal, tax or investment advice.  The Investor has consulted such accounting, legal, tax and investment advisors as it has deemed necessary or appropriate in connection with its purchase of the Common Stock.  The Investor understands that the Placement Agent has acted solely as the agent of the Company in this placement of the Common Stock and the Investor has not relied on the business or legal advice of the Placement Agent or any of its agents, counsel or Affiliates in making its investment decision hereunder, and confirms that none of such persons has made any representations or warranties to the Investor in connection with the transactions contemplated by this Agreement.  Except as Previously Disclosed and except for this Agreement, there are no agreements or understandings with respect to the transactions contemplated by this Agreement between the Investor or any of its Affiliates, on the one hand, and (i) any of the Other

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Investors or any of their respective Affiliates, in each case, the identity of which is known to the Investor, (ii) the Company or (iii) the Company Subsidiaries, on the other hand.

(g)           Financial Capability.  At the Closing, the Investor shall have available all funds necessary to consummate the purchase of Common Stock on the terms and conditions contemplated by this Agreement.

(h)           Access to Information.  The Investor acknowledges that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Common Stock and the merits and risks of investing in the Common Stock; (ii) access to information about the Company and the Company Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the Investment; and (iv) the opportunity to ask questions of management.

(i)            No Reliance.  The Investor has not relied on any representation or warranty in connection with the Investment other than those contained in this Agreement.

(j)            No Coordinated Acquisition.  Except as Previously Disclosed, the Investor (i) reached its decision to invest in the Common Stock independently from any other Person known by the Investor to be a potential investor in the Company, other than any Affiliates of the Investor that are also investing in the Other Private Placements, (any such person, a “Potential Investor”), (ii) is not affiliated with any other Potential Investor, (iii) is not advised or managed by an advisor or manager that advises or manages any other Potential Investor, other than any Affiliates of the Investor that are also investing in the Other Private Placements, (iv) has not entered into any agreement or understanding, whether written or not reduced to writing, with any other Potential Investor to act in concert for the purpose of exercising a controlling influence over the Company or any Company Subsidiaries, including, but not limited to, any agreements or understandings regarding the voting or transfer of shares of the Company, (v) has not shared due diligence materials prepared by such Investor or any of its advisors or representatives with respect to the Company or any Company Subsidiaries with any other Potential Investor, (vi) has not been induced, nor has induced any other Potential Investor, to enter into the transactions contemplated by this Agreement by any other Potential Investor, (vii) was not notified of or provided the opportunity to enter into the transactions contemplated by this Agreement pursuant to the terms of any agreement or informal understanding with, or otherwise acting in concert with, any other Potential Investor and was not required by the terms of any agreement or informal understanding to so notify any other Potential Investor, (viii) is not a party to any formal or informal understanding with any other Potential Investor to make a coordinated acquisition of stock of the Company, and the investment decision of the Investor is not based on the investment decision of any other Potential Investor, (ix) is not a party to any formal or informal agreement or understanding concerning the appointment of any individual to the Board of Directors, (x) will not, by reason of the Investment, file, be required to file, or be required to be included in a Schedule 13D or Schedule 13G pursuant to the United States federal securities laws, (xi) has not engaged as part of a group consisting of substantially the same entities as the

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Potential Investors, in substantially the same combination of interests, in any additional banking or nonbanking activities or business ventures in the United States and (xii) will not pay any other Potential Investor any fee in connection with the transactions contemplated hereby.  Except as Previously Disclosed, the Investor does not presently hold any capital stock of the Company.

ARTICLE 3

COVENANTS

3.1          Conduct of Business Prior to Closing.  Except as otherwise expressly required or contemplated by this Agreement or applicable Law or in the performance of any Material Contract that was Previously Disclosed, or with the prior written consent of the Investor, between the date of this Agreement and the Closing, the Company shall, and the Company shall cause each Company Subsidiary to:

(a)           use commercially reasonable efforts to conduct its business only in the ordinary course of business; and

(b)           use commercially reasonable efforts to (i) preserve the present business operations, organization (including officers and employees) and goodwill of the Company and any Company Subsidiary and (ii) preserve business relationships with customers, suppliers, consultants and others having business dealings with the Company; provided, however, that nothing in this clause (b) shall place any limit on the ability of the Board of Directors to act, or require any actions that the Board of Directors may, in good faith, determine to be inconsistent with their duties or the Company’s obligations under applicable Law or imposed by any Governmental Entity.

3.2          Confidentiality.  The Investor acknowledges that the information being provided to it in connection with the transactions contemplated hereby is subject to the terms of the Confidentiality Agreement heretofore entered into between the Investor and the Company (the “Confidentiality Agreement”), the terms of which are incorporated herein by reference.

3.3          Commercially Reasonable Efforts.  Upon the terms and subject to the conditions herein provided, except as otherwise provided in this Agreement, each of the parties hereto agrees to use its commercially reasonable efforts to take or cause to be taken all action, to do or cause to be done and to assist and cooperate with the other parties hereto in doing all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated hereby, including but not limited to: (a) the satisfaction of the conditions precedent to the obligations of the parties hereto; (b) the obtaining of applicable Governmental Consents, and consents, waivers and approvals of any other third parties; (c) defending of any claim, action, suit, investigation or proceeding, whether judicial or administrative, challenging this Agreement or the performance of the obligations hereunder; and (d) the execution and delivery of such instruments, and the taking of such other actions as the other parties hereto may reasonably request in order to carry out the intent of this Agreement.  Notwithstanding the foregoing, under no circumstances will the Investor be required to disclose to the Company, the Company Subsidiaries or any third party any information the disclosure of which is prohibited by Law, nor shall it be required to agree to any restrictions, conditions or

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commitments imposed or otherwise required by any Government Entity that are determined by the Investor in its sole discretion to be unduly burdensome, other than customary passivity commitments, in order to consummate and make effective the transactions contemplated hereby.

3.4          Legend.

(a)           The Investor agrees that all certificates or other instruments representing the Common Stock subject to this Agreement shall bear a legend substantially to the following effect, until such time as they are not required under Section 3.4(b):

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.”

(b)           Upon request of the Investor, the Company shall promptly cause such legend to be removed from any certificate for any Common Stock to be so transferred if (i) such Common Stock is being transferred pursuant to a registration statement in effect with respect to such transfer or (ii) such Common Stock is being transferred pursuant to an exemption from registration under the Securities Act and applicable state laws subject to receipt by the Company of an opinion of counsel for the Investor reasonably satisfactory to the Company to the effect that such legend is no longer required under the Securities Act and applicable state laws.  The Investor acknowledges that the Common Stock has not been registered under the Securities Act or under any state securities laws and agrees that it shall not sell or otherwise dispose of any of the Common Stock, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable securities laws.

3.5          Certain Other Transactions.

(a)           Prior to the Closing, notwithstanding anything in this Agreement to the contrary, the Company shall not directly or indirectly effect or cause to be effected any transaction with a third party that would reasonably be expected to result in a Change in Control unless such third party shall have provided prior assurance in writing to the Investor (in a form that is reasonably satisfactory to the Investor) that the terms of this Agreement shall be fully performed (i) by the Company or (ii) by such third party if it is the successor of the Company or if the Company is its direct or indirect Subsidiary.  For the avoidance of doubt, it is understood and agreed that, in the event that a Change in Control occurs on or prior to the Closing, the Investor shall maintain the right under this Agreement to acquire, pursuant to the terms and conditions of this Agreement, the Common Stock that is to be purchased by the Investor pursuant to this Agreement (or such other securities or property (including cash) into which the Common Stock that is to be purchased by Investor pursuant to this Agreement may have become exchangeable as a result of such Change in Control), as if the Closing had occurred immediately prior to such Change in Control.

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(b)           In the event that, at or prior to the Closing, (i) the number of shares of Common Stock, or securities convertible or exchangeable into or exercisable for shares of Common Stock, issued and outstanding is changed as a result of any reclassification, stock split (including reverse split), stock dividend or distribution (including any dividend or distribution of securities convertible or exchangeable into or exercisable for shares of Common Stock), merger, tender or exchange offer or other similar transaction, or (ii) the Company fixes a record date that is at or prior to the Closing Date for the payment of any non-stock dividend or distribution on the Common Stock (excluding the rights to be issued in the Rights Offering), then the number of shares of Common Stock to be issued to the Investor at the Closing under this Agreement, together with the applicable implied per share price (and the number of shares and per share price pursuant to the Rights Offering), shall be equitably adjusted and/or the shares of Common Stock to be issued to the Investor at the applicable Closing under this Agreement shall be equitably replaced with shares of other stock or securities or property (including cash), in each case, to provide the Investor with substantially the same economic benefit from this Agreement as the Investor had prior to the applicable transaction.  Notwithstanding anything in this Agreement to the contrary, in no event shall the Purchase Price or any component thereof, or the aggregate percentage of shares to be purchased by the Investor, be changed by the foregoing.

(c)           Notwithstanding anything in the foregoing to the contrary, the provisions of this Section 3.5 shall not be implicated by (i) the transactions contemplated by this Agreement, the Other Private Placements, the TARP Exchange and the Other Preferred Exchanges, and the Rights Offering, or (ii) any issuances of options, restricted stock units or other equity-based awards granted to newly-appointed directors, employees or consultants of the Company at or around the same time as the transactions contemplated by this Agreement to such Persons, including upon exercise of any such options.

3.6          Exchange Listing.  The Company shall use its reasonable best efforts to cause the Common Stock to be issued pursuant to this Agreement to be approved for listing on NASDAQ or such other market on which the Common Stock is then listed or quoted, subject to official notice of issuance, as promptly as possible and in any event prior to the Closing.

3.7          Stockholders Meeting.  Promptly after the Closing Date, the Company shall give notice of and hold a meeting of its stockholders in accordance with applicable law and the corporate governance rules of NASDAQ for the purpose of obtaining stockholder approval of an amendment to the certificate of incorporation of the Company increasing the number of shares of Common Stock and Preferred Stock the Company is authorized to issue and, if and to the extent required by the corporate governance rules of NASDAQ, further approving the issuance of shares of Common Stock upon such approval pursuant to the conversion of the Common Stock Equivalents issued in the TARP Exchange and in the Other Preferred Exchanges.  To the extent permitted by the NASDAQ corporate governance rules, the Investor agrees to vote all shares of Common Stock that it owns or has the power to direct the voting of for this purpose in favor of such amendment and such issuances.

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3.8          Registration Rights.

(a)           Registration.

(i)            Subject to the terms and conditions of this Agreement, the Company covenants and agrees that upon the expiration of ninety (90) days after the Closing Date (the “Filing Deadline”), the Company shall have prepared and filed with the SEC one or more Shelf Registration Statements covering the resale of all of the Registrable Securities (or, if permitted by the rules of the SEC, otherwise designated an existing Shelf Registration Statement filed with the SEC to cover such Registrable Securities), and, to the extent the Shelf Registration Statement has not theretofore been declared effective or is not automatically effective upon such filing, the Company shall use reasonable best efforts to cause such Shelf Registration Statement to be declared or become effective as soon as practicable (and in any event no later than the Effectiveness Deadline) and to keep such Shelf Registration Statement continuously effective and in compliance with the Securities Act and usable for resale of such Registrable Securities until the date that is 12 months after the initial effective date thereof (the “Registration Termination Date”).

(ii)           Any registration pursuant to this Section 3.8(a) shall be effected by means of a shelf registration under the Securities Act (a “Shelf Registration Statement”) in accordance with the methods and distribution set forth in the Shelf Registration Statement and Rule 415.

(b)           Expenses of Registration.  All Registration Expenses incurred in connection with any registration, qualification or compliance hereunder shall be borne by the Company.  All Selling Expenses incurred in connection with any registrations hereunder shall be borne by the Holders selling in such registration pro rata on the basis of the aggregate number of securities or shares being sold.

(c)           Obligations of the Company.  The Company shall use its reasonable best efforts, for so long as there are Registrable Securities outstanding, to take such actions as are under its control to not become an ineligible issuer (as defined in Rule 405 under the Securities Act).  In addition, whenever required to effect the registration of any Registrable Securities or facilitate the distribution of Registrable Securities pursuant to an effective Shelf Registration Statement, the Company shall, as expeditiously as reasonably practicable:

(i)            Prepare and file with the SEC a prospectus supplement with respect to a proposed offering of Registrable Securities pursuant to an effective registration statement and, subject to this Section 3.8(c), keep such registration statement effective or such prospectus supplement current.

(ii)           Prepare and file with the SEC such amendments and supplements to the applicable registration statement and the prospectus or prospectus supplement used in connection with such registration statement as may be

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necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.

(iii)          Furnish to the Holders such number of correct and complete copies of the applicable registration statement and each such amendment and supplement thereto (including in each case all exhibits) and of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned or to be distributed by them.

(iv)          Use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky Laws of such jurisdictions as shall be reasonably requested by the Holders, to keep such registration or qualification in effect for so long as such registration statement remains in effect, and to take any other action which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such Holder; provided, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

(v)           Notify each Holder of Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the applicable prospectus, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing (which notice shall not contain any material non-public information).

(vi)          Give written notice to the Holders (which notice shall not contain any material, non-public information):

(A)          when any registration statement filed pursuant to Section 3.8(a) or any amendment thereto has been filed with the SEC (except for any amendment effected by the filing of a document with the SEC pursuant to the Exchange Act) and when such registration statement or any post-effective amendment thereto has become effective;

(B)          of any request by the SEC for amendments or supplements to any registration statement or the prospectus included therein or for additional information;

(C)          of the issuance by the SEC of any stop order suspending the effectiveness of any registration statement or the initiation of any proceedings for that purpose;

(D)          of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the

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Common Stock for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

(E)           of the happening of any event that requires the Company to make changes in any effective registration statement or the prospectus related to the registration statement in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made).

(vii)         Use its reasonable best efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of any registration statement referred to in Section 3.8(c)(vi)(C) at the earliest practicable time.

(viii)        Upon the occurrence of any event contemplated by Section 3.8(c)(v) or 3.8(c)(vi)(E) and subject to the Company’s rights under Section 3.8(d), promptly prepare a post-effective amendment to such registration statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to the Holders, the prospectus shall not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(ix)          Cause all such Registrable Securities to be listed on each securities exchange on which the same class of securities issued by the Company are then listed or, if the same class of securities is not then listed on any securities exchange, use its reasonable best efforts to cause all such Registrable Securities of such class to be listed on the NASDAQ Capital Market.

(x)           If requested by Holders of a majority of the Registrable Securities being registered and/or sold in connection therewith, promptly include in a prospectus supplement or amendment such information as the Holders of a majority of the Registrable Securities being registered and/or sold in connection therewith may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such prospectus supplement or such amendment as soon as practicable after the Company has received such request.

(xi)          Timely provide to its security holders earnings statements satisfying the provisions of Section 9(a) of the Securities Act and Rule 158 thereunder.

(d)           Suspension of Sales.  Upon receipt of written notice from the Company that a registration statement, prospectus or prospectus supplement contains or may contain an untrue statement of a material fact or omits or may omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that circumstances exist that make use of such registration statement, prospectus or prospectus supplement

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inadvisable, each Holder of Registrable Securities shall forthwith discontinue disposition of Registrable Securities pursuant to such registration statement until such Holder has received copies of a supplemented or amended prospectus or prospectus supplement, or until such Holder is advised in writing by the Company that the use of the prospectus and, if applicable, prospectus supplement may be resumed, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the prospectus and, if applicable, prospectus supplement covering such Registrable Securities current at the time of receipt of such notice (each such suspension, a “Suspension Period”).  No single Suspension Period shall exceed forty-five (45) consecutive days and the aggregate of all Suspension Periods shall not exceed one hundred twenty (120) days during any twelve (12) month period.

(e)           Termination of Registration Rights.  A Holder’s registration rights as to any securities held by such Holder (and its Affiliates, partners, members and former members) shall not be available unless such securities are Registrable Securities.

(f)            Furnishing Information.

(i)            Neither the Investor nor any Holder shall use any free writing prospectus (as defined in Rule 405) in connection with the sale of Registrable Securities without the prior written consent of the Company.

(ii)           It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 3.8(c) as to a selling Holder that such selling Holder shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the registered offering of their Registrable Securities.

(g)           Indemnification.

(i)            The Company agrees to indemnify each Holder and, if a Holder is a person other than an individual, such Holder’s officers, directors, employees, agents, representatives and Affiliates, and each Person, if any, that controls a Holder within the meaning of the Securities Act (each, an “Indemnitee”), against any and all Losses, joint or several, arising out of or based upon any untrue statement or alleged untrue statement of material fact contained in any registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto or any documents incorporated therein by reference or contained in any free writing prospectus (as such term is defined in Rule 405) prepared by the Company or authorized by it in writing for use by such Holder (or any amendment or supplement thereto), or any omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, that the Company shall not be liable to such Indemnitee in any such case to the extent that any such Loss is based solely upon (i) an untrue statement or omission made in such registration statement, including any such

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preliminary prospectus or final prospectus contained therein or any such amendments or supplements thereto or contained in any free writing prospectus (as such term is defined in Rule 405) prepared by the Company or authorized by it in writing for use by such Holder (or any amendment or supplement thereto), in reliance upon and in conformity with information regarding such Indemnitee or its plan of distribution or ownership interests which was furnished in writing to the Company by such Indemnitee expressly for use in connection with such registration statement, including any such preliminary prospectus or final prospectus contained therein or any such amendments or supplements thereto, or (ii) offers or sales effected by or on behalf such Indemnitee “by means of” (as defined in Rule 159A) a “free writing prospectus” (as defined in Rule 405) that was not authorized in writing by the Company.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an Indemnitee and shall survive the transfer of the Registrable Securities by the Holders.

(ii)           If any proceeding shall be brought or asserted against any Indemnitee, such Indemnitee shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnitee and the payment of all reasonable fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnitee to give such notice shall not relieve the Company of its obligations or liabilities pursuant to this Agreement, except to the extent that the Company is materially and adversely prejudiced in its ability to defend such action.  An Indemnitee shall have the right to employ separate counsel in any such proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnitee or Indemnitees unless: (1) the Company has agreed in writing to pay such fees and expenses; (2) the Company shall have failed promptly to assume the defense of such proceeding and to employ counsel reasonably satisfactory to such Indemnitee in any such proceeding; or (3) the named parties to any such proceeding (including any impleaded parties) include both such Indemnitee and the Company, and such Indemnitee shall have been advised by counsel that a conflict of interest exists if the same counsel were to represent such Indemnitee and the Company; provided, that the Company shall not be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnitees and all similarly situated Persons who are “Indemnitees” as defined in the other Agreements.  The Company shall not be liable for any settlement of any such proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed.  The Company shall not, without the prior written consent of the Indemnitee, effect any settlement of any pending proceeding in respect of which any Indemnitee is a party, unless such settlement includes an unconditional release of such Indemnitee from all liability on claims that are the subject matter of such proceeding.  Subject to the terms of this Agreement, all fees and expenses of the Indemnitee (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such proceeding in a manner not inconsistent with this Section

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3.8(g)(ii)) shall be paid to the Indemnitee, as incurred, within thirty (30) days of written notice thereof to the Company; provided, that the Indemnitee shall promptly reimburse the Company for that portion of such fees and expenses applicable to such actions for which such Indemnitee is finally judicially determined to not be entitled to indemnification hereunder).

(iii)          If the indemnification provided for in Section 3.8(g)(i) is unavailable to an Indemnitee with respect to any Losses, then the Company, in lieu of indemnifying such Indemnitee, shall contribute to the amount paid or payable by such Indemnitee as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnitee, on the one hand, and the Company, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations.  The relative fault of the Company, on the one hand, and of the Indemnitee, on the other hand, shall be determined by reference to, among other factors, whether the untrue statement of a material fact or omission to state a material fact relates to information supplied by the Company or by the Indemnitee and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; the Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 3.8(g)(iii) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in Section 3.8(g)(i).  No Indemnitee guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from the Company if the Company was not guilty of such fraudulent misrepresentation.

(iv)          The indemnity and contribution agreements contained in this Section 3.8(g) are in addition to any liability that the Company may have to the Indemnitees and are not in diminution or limitation of the indemnification provisions under Article 5 of this Agreement.

(h)           Assignment of Registration Rights.  The rights of the Investor to registration of Registrable Securities pursuant to Section 3.8(a) may be assigned by the Investor to a transferee or assignee of Registrable Securities to which (i) there is transferred to such transferee no less than $1 million in Registrable Securities or all of the Registrable Securities held by the Investor and (ii) such transfer is permitted under the terms hereof; provided, however, that the transferor shall, within ten (10) days after such transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the number and type of Registrable Securities that are being assigned.

(i)            Rule 144 Reporting.  With a view to making available to the Investor and Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its reasonable best efforts to:

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(i)make and keep adequate current public information with respect to the Company available, as those terms are understood and defined in Rule 144(c)(1) or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of this Agreement;

(ii)so long as the Investor or a Holder owns any Registrable Securities, furnish to the Investor or such Holder forthwith upon request: (A) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 under the Securities Act, and of the Exchange Act; (B) a copy of the most recent annual or quarterly report of the Company; and (C) such other reports and documents as the Investor or Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration; and

(iii)to take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act.

(j)As used in this Section 3.8, the following terms shall have the following respective meanings:

(i)“Effective Date” means the date that the Shelf Registration Statement filed pursuant to Section 3.8(a)(i) is first declared effective by the SEC.

(ii)“Effectiveness Deadline” means, with respect to the Shelf Registration Statement required to be filed pursuant to Section 3.8(a)(i), the earlier of (i) the 90th calendar day following the Filing Deadline and (ii) the 5th Business Day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Shelf Registration Statement will not be “reviewed” or will not be subject to further review; provided, that if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the SEC is closed for business, the Effectiveness Deadline shall be extended to the next Business Day on which the SEC is open for business.

(iii)“Holder” means the Investor and any other holder of Registrable Securities to whom the registration rights conferred by this Agreement have been transferred in compliance with Section 3.8(h) hereof.

(iv)“Register,” “registered” and “registration” shall refer to a registration effected by preparing and (A) filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of effectiveness of such registration statement or (B) filing a prospectus and/or prospectus supplement in respect of an appropriate effective registration statement.

(v)“Registrable Securities” means (A) all Common Stock purchased by the Investor pursuant to this Agreement and (B) any equity securities issued or issuable directly or indirectly with respect to the securities referred to in clause

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(A) by way of conversion, exercise or exchange thereof or stock dividend or stock split or in connection with a combination of shares, recapitalization, reclassification, merger, amalgamation, arrangement, consolidation or other reorganization, provided that, once issued, such securities shall not be Registrable Securities after (1) they are sold pursuant to an effective registration statement under the Securities Act, (2) they may be sold pursuant to Rule 144 without limitation thereunder on volume or manner of sale and without the requirement for the Company to be in compliance with the current public information required under Rule 144(e)(1) (or Rule 144(i)(2), if applicable), (3) they have ceased to be outstanding or (4) they have been sold in a private transaction in which the transferor’s rights under this Agreement are not permitted by this Agreement to be assigned to the transferee of the securities.  No Registrable Securities may be registered under more than one registration statement at one time.

(vi)“Registration Expenses” means all expenses incurred by the Company in effecting any registration pursuant to this Agreement (whether or not any registration or prospectus becomes effective or final) or otherwise complying with its obligations under this Section 3.8, including, without limitation, all registration, filing and listing fees, printing expenses, fees and disbursements of counsel for the Company and blue sky fees and expenses, but shall not include Selling Expenses and the compensation of regular employees of the Company, which shall be paid in any event by the Company.

(vii)“Rule 158,” “Rule 159A,” “Rule 405” and “Rule 415” mean, in each case, such rule promulgated under the Securities Act (or any successor provision), as the same shall be amended from time to time.

(viii)“Selling Expenses” means all discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder.

(k)On or prior to the Acceptance Date, the Investor shall furnish to the Company a fully completed Selling Shareholder Questionnaire in the form attached as Appendix I hereto for use in the preparation of the Registration Statement and all of the information contained therein will be true and correct as of the Closing Date.

ARTICLE 4

TERMINATION

4.1Termination.  This Agreement may be terminated prior to the Closing:

(a)by mutual written agreement of the Company and the Investor;

(b)by any party, upon written notice to the other party, in the event that the Closing does not occur on or before August 31, 2013; provided, however, that the right to terminate this Agreement pursuant to this Section 4.1(b) shall not be available to any party

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whose failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date;

(c)by the Investor, upon written notice to the Company, if (i) there has been a breach of any representation, warranty, covenant or agreement made by the Company in this Agreement, or any such representation and warranty shall have become untrue after the date of this Agreement, such that Section 1.2(c)(ii)(A) would not be satisfied and (ii) such breach or condition is not curable or, if curable, is not cured prior to the date that would otherwise be the Closing Date in absence of such breach or condition; provided that this Section 4.1(c) shall only apply if the Investor is not in material breach of any of the terms of this Agreement;

(d)by the Company, upon written notice to the Investor, if (i) there has been a breach of any representation, warranty, covenant or agreement made by the Investor in this Agreement, or any such representation and warranty shall have become untrue after the date of this Agreement, such that Section 1.2(c)(iii)(A) would not be satisfied and (ii) such breach or condition is not curable or, if curable, is not cured prior to the date that would otherwise be the Closing Date in absence of such breach or condition; provided that this Section 4.1(d) shall only apply if the Company is not in material breach of any of the terms of this Agreement; or

(e)by any party, upon written notice to the other parties, in the event that any Governmental Entity shall have issued any order, decree or injunction or taken any other action restraining, enjoining or prohibiting any of the transactions contemplated by this Agreement, and such order, decree, injunction or other action shall have become final and nonappealable.

4.2Effects of Termination.  In the event of any termination of this Agreement as provided in Section 4.1, this Agreement (other than Section 3.2, this Article 4 and Article 6 of this Agreement, which shall remain in full force and effect) shall forthwith become wholly void and of no further force and effect; provided that nothing herein shall relieve any party from liability for fraud or willful breach of this Agreement.

ARTICLE 5

INDEMNITY

5.1Indemnification by the Company.

(a)After the Closing, and subject to Sections 5.1(b), 5.3 and 5.4, the Company shall indemnify, defend and hold harmless to the fullest extent permitted by Law the Investor and its Affiliates, and their successors and assigns, officers, directors, partners, members and employees, as applicable, (the “Investor Indemnified Parties”) against, and reimburse any of the Investor Indemnified Parties for, all Losses that any of the Investor Indemnified Parties may at any time suffer or incur, or become subject to, as a result of or in connection with (1) the inaccuracy or breach of any representation or warranty made by the Company in this Agreement or any certificate delivered pursuant hereto or (2) any breach or failure by the Company to perform any of its covenants or agreements contained in this Agreement.  Notwithstanding anything herein to the contrary, the obligations of the Company under this Section 5.1(a) shall

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not be applicable to or inure to the benefit of any transferee of the Common Stock sold pursuant to this Agreement who is not an Affiliate of the Investor.

(b)Notwithstanding anything to the contrary contained herein, the Company shall not be required to indemnify, defend or hold harmless any of the Investor Indemnified Parties against, or reimburse any of the Investor Indemnified Parties for, any Losses pursuant to Section 5.1(a)(1) (other than Losses arising out of the inaccuracy or breach of any Company Specified Representations) until the aggregate amount of the Investor Indemnified Parties’ Losses for which the Investor Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5.1(a) exceeds $100,000 (the “Deductible”), after which the Company shall be obligated for all of the Investor Indemnified Parties’ Losses for which the Investor Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5.1(a)(1) that are in excess of the Deductible.  Notwithstanding anything to the contrary contained herein, the Company shall not be required to indemnify, defend or hold harmless the Investor Indemnified Parties against, or reimburse the Investor Indemnified Parties for, any Losses pursuant to Section 5.1(a)(1) in a cumulative aggregate amount exceeding the aggregate purchase price paid by the Investor to the Company pursuant to Section 1.1 (other than Losses arising out of the inaccuracy or breach of any Company Specified Representations).

(c)For purposes of Section 5.1(a), in determining whether there has been a breach of a representation or warranty, the parties hereto shall ignore any “materiality,” “Material Adverse Effect” or similar qualifications.

5.2Indemnification by the Investor.

(a)After the Closing, and subject to Sections 5.2(b), 5.3 and 5.4, the Investor shall indemnify, defend and hold harmless to the fullest extent permitted by Law the Company, the Placement Agent and their respective Affiliates and their respective successors and assigns, officers, directors, partners, members and employees (collectively, the “Company Indemnified Parties”) against, and reimburse any of the Company Indemnified Parties for, all Losses that the Company Indemnified Parties may at any time suffer or incur, or become subject to, as a result of or in connection with (1) the inaccuracy or breach of any representation or warranty made by the Investor in this Agreement or any certificate delivered pursuant hereto or (2) any breach or failure by such Investor to perform any of its covenants or agreements contained in this Agreement.

(b)Notwithstanding anything to the contrary contained herein, the Investor shall not be required to indemnify, defend or hold harmless any of the Company Indemnified Parties against, or reimburse any of the Company Indemnified Parties for any Losses pursuant to Section 5.2(a)(1) (other than Losses arising out of the inaccuracy or breach of any Investor Specified Representations) until the aggregate amount of the Company Indemnified Parties’ Losses for which the Company Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5.2(a) exceeds the Deductible, after which the Investor shall be obligated for all of the Company Indemnified Parties’ Losses for which the Company Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5.2(a)(1) that are in excess of such Deductible.  Notwithstanding anything to the contrary contained herein, the Investor shall not be required to indemnify, defend or hold harmless the

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Company Indemnified Parties against, or reimburse the Company Indemnified Parties for, any Losses pursuant to Section 5.2(a)(1) in a cumulative aggregate amount exceeding the aggregate purchase paid by the Investor to the Company pursuant to Section 1.1 hereof (other than Losses arising out of the inaccuracy or breach of any of the Investor Specified Representations).

(c)For purposes of Section 5.2(a), in determining whether there has been a breach of a representation or warranty, the parties hereto shall ignore any “materiality” or similar qualifications.

5.3Notification of Claims.

(a)Any Person that may be entitled to be indemnified under this Article 5 (the “Indemnified Party”) shall promptly notify the party or parties liable for such indemnification (the “Indemnifying Party”) in writing of any claim in respect of which indemnity may be sought hereunder, including any pending or threatened claim or demand by a third party that the Indemnified Party has determined has given or could reasonably give rise to a right of indemnification under this Agreement (including a pending or threatened claim or demand asserted by a third party against the Indemnified Party) (each, a “Third Party Claim”), describing in reasonable detail the facts and circumstances with respect to the subject matter of such claim or demand; provided, however, that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations under this Agreement except to the extent that the Indemnifying Party is materially prejudiced by such failure.  The parties agree that notices for claims in respect of a breach of a representation, warranty, covenant or agreement must be delivered prior to the expiration of any applicable survival period specified in Section 6.1 for such representation, warranty, covenant or agreement; provided, that if, prior to such applicable date, a party hereto shall have notified the other parties hereto in accordance with the requirements of this Section 5.3(a) of a claim for indemnification under this Agreement (whether or not formal legal action shall have been commenced based upon such claim), such claim shall continue to be subject to indemnification in accordance with this Agreement notwithstanding the passing of such applicable date.

(b)Upon receipt of a notice of a claim for indemnity from an Indemnified Party pursuant to Section 5.3(a) in respect of a Third Party Claim, the Indemnifying Party may, by notice to the Indemnified Party delivered within twenty (20) Business Days of the receipt of notice of such Third Party Claim, assume the defense and control of any Third Party Claim, with its own counsel reasonably acceptable to the Indemnified Party and at its own expense.  The Indemnified Party shall have the right to employ counsel on its own behalf for, and otherwise participate in the defense of, any such Third Party Claim, but the fees and expenses of its counsel will be at its own expense unless (A) the employment of counsel by the Indemnified Party at the Indemnifying Party’s expense has been authorized in writing by the Indemnifying Party, as applicable, (B) the Indemnified Party reasonably believes there may be a conflict of interest between the Indemnified Party and the Indemnifying Party in the conduct of the defense of such Third Party Claim, (C) the Indemnified Party reasonably believes there are legal defenses available to it that are different from, additional to or inconsistent with those available to the Indemnifying Party, or (D) the Indemnifying Party has not in fact employed counsel to assume the defense of such Third Party Claim within a reasonable time after receipt of notice of the commencement of such Third Party Claim, in each of which cases the fees and expenses of such

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Indemnified Party’s counsel shall be at the expense of the Indemnifying Party; provided, however, that in the event any Investor Indemnified Party is similarly situated with any other “Investor Indemnified Party” under any of the other Agreements with respect to any Third Party Claim, and does not have any conflict of interest with such Person in the conduct of the defense of such Third Party Claim or have legal defenses available to it that are different from, additional to or inconsistent with those available to such Person, such Investor Indemnified Party shall be required to employ the same counsel as such Person and the Company shall be responsible for the fees and expenses of only one such counsel for such Investor Indemnified Party and such other Person or Persons (assuming any of clauses (A) through (D) is satisfied).  The Indemnified Party may take any actions reasonably necessary to defend such Third Party Claim prior to the time that it receives a notice from the Indemnifying Party as contemplated by the immediately preceding sentence.  The Indemnified Party shall, and shall cause each of their Affiliates and representatives to, use reasonable best efforts to cooperate with the Indemnifying Party in the defense of any Third Party Claim.  The Indemnifying Party shall not, without the prior written consent of the Indemnified Party (which shall not be unreasonably withheld), consent to a settlement, compromise or discharge of, or the entry of any judgment arising from, any Third Party Claim, unless such settlement, compromise, discharge or entry of any judgment does not involve any statement, finding or admission of any fault, culpability, failure to act, violation of Law or admission of any wrongdoing by or on behalf of the Indemnified Party, and the Indemnifying Party shall (i) pay or cause to be paid all amounts arising out of such settlement or judgment concurrently with the effectiveness of such settlement or judgment (unless otherwise provided in such judgment), (ii) not encumber any of the assets of any Indemnified Party or agree to any restriction or condition that would apply to or materially adversely affect any Indemnified Party or the conduct of any Indemnified Party’s business and (iii) obtain, as a condition of any settlement, compromise, discharge, entry of judgment (if applicable), or other resolution, a complete and unconditional release of each Indemnified Party in form and substance reasonably satisfactory to such  Indemnified Party from any and all liabilities in respect of such Third Party Claim.  An Indemnified Party shall not settle, compromise or consent to the entry of any judgment with respect to any claim or demand for which it is seeking indemnification from the Indemnifying Party or admit to any liability with respect to such claim or demand without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed); provided that such consent shall not be required if the Indemnifying Party has not fulfilled any material obligations under this Section 5.3(b).

(c)In the event any Indemnifying Party receives a notice of a claim for indemnity from an Indemnified Party pursuant to Section 5.3(a) that does not involve a Third Party Claim, the Indemnifying Party shall notify the Indemnified Party within twenty (20) Business Days following its receipt of such notice whether the Indemnifying Party disputes its liability to the Indemnified Party under this Agreement.  The Indemnified Party shall reasonably cooperate with and assist the Indemnifying Party in determining the validity of any such claim for indemnity by the Indemnified Party.

5.4Indemnification Payment.  In the event a claim or any Action for indemnification hereunder has been finally determined, the amount of such final determination shall be paid by the Indemnifying Party to the Indemnified Party on demand in immediately available funds; provided, however, that any reasonable and documented out-of-pocket expenses incurred by the Indemnified Party as a result of such claim or Action shall be reimbursed

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promptly by the Indemnifying Party upon receipt of an invoice describing such costs incurred by the Indemnified Party.  A claim or an Action, and the liability for and amount of damages therefor, shall be deemed to be “finally determined” for purposes of this Agreement when the parties hereto have so determined by mutual agreement or, if disputed, when a final non-appealable judicial order has been entered into with respect to such claim or Action.

5.5Exclusive Remedies.  Each party hereto acknowledges and agrees that following the Closing, the indemnification provisions hereunder shall be the sole and exclusive remedies of the parties hereto for any breach of the representations, warranties or covenants contained in the this Agreement.  No investigation of the Company by the Investor, or of the Investor by the Company, whether prior to or after the date of this Agreement, shall limit any Indemnified Party’s exercise of any right hereunder or be deemed to be a waiver of any such right.  The parties agree that any indemnification payment made pursuant to this Agreement shall be treated as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

ARTICLE 6

MISCELLANEOUS

6.1Survival.  The representations and warranties of the parties hereto contained in this Agreement shall survive in full force and effect until the date that is fifteen (15) months after the Closing Date (or until final resolution of any claim or action arising from the breach of any such representation and warranty, if notice of such breach was provided prior to the end of such period), at which time they shall terminate and no claims shall be made for indemnification under Section 5.1 or Section 5.2, as applicable, for breaches of representations or warranties thereafter, except the Company Specified Representations (other than the representations and warranties made in Section 2.2(x), which shall survive until the expiration of the applicable statute of limitations) and the Investor Specified Representations shall survive the Closing indefinitely.  The covenants and agreements set forth in this Agreement shall survive until the earliest of the duration of any applicable statute of limitations or until performed or no longer operative in accordance with their respective terms.

6.2Other Definitions.  Wherever required by the context of this Agreement, the singular shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa, and references to any agreement, document or instrument shall be deemed to refer to such agreement, document or instrument as amended, supplemented or modified from time to time.  In addition, the following terms shall have the meanings assigned to them below:

(a)the term “Affiliate” means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with, such other Person provided that no security holder of the Company shall be deemed to be an Affiliate of any other security holder or of the Company or any of the Company Subsidiaries solely by reason of any investment in the Company and, for purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”) when used with respect to any Person, means the possession, directly or indirectly, of the

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power to cause the direction of management or policies of such Person, whether through the ownership of voting securities by contract or otherwise;

(b)the term “Agency” means the Federal Housing Administration, the Federal Home Loan Mortgage Corporation, the Farmers Home Administration (now known as Rural Housing and Community Development Services), the Federal National Mortgage Association, the United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture or any other federal or state agency with authority to (i) determine any investment, origination, lending or servicing requirements with regard to mortgage loans originated, purchased or serviced by the Company or (ii) originate, purchase, or service mortgage loans, or otherwise promote mortgage lending, including state and local housing finance authorities;

(c)the term “Board of Directors” means the Board of Directors of the Company;

(d)the term “Business Day” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York or in the State of California generally are authorized or required by Law or other governmental actions to close;

(e)the term “Capital Stock” means the capital stock or other applicable type of equity interest in a Person;

(f)the term “Change in Control” means, with respect to the Company, that any Person, other than the Investors and their Affiliates, becomes a beneficial owner (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act) directly or indirectly, of twenty percent (20%) of the aggregate voting power of the Voting Securities.

(g)the term “Code” means the Internal Revenue Code of 1986, as amended;

(h)the term “Company Specified Representations” means the representations and warranties made in Section 2.2(a), Section 2.2(c), Section 2.2(d)(i) and Section 2.2(z);

(i)the term “Disclosure Schedule” shall mean a schedule delivered, on or prior to the date of this Agreement, by (i) the Investor to the Company and (ii) the Company to the Investor setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in Section 2.2 with respect to the Company, or in Section 2.3 with respect to the Investor, or to one or more covenants contained in Article 3;

(j)the term “GAAP” means United States generally accepted accounting principles and practices as in effect from time to time;

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(k)the term “Governmental Consent” means any notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of, any Governmental Entity, or the expiration or termination of any statutory waiting periods;

(l)the term “Governmental Entity” means any court, administrative agency or commission or other governmental authority or instrumentality, whether federal, state, local or foreign, and any applicable industry self-regulatory organization or securities exchange;

(m)the term “Insurer” means a Person who insures or guarantees for the benefit of the mortgagee all or any portion of the risk of loss upon borrower default on any of the mortgage loans originated, purchased or serviced by the Bank, including the Federal Housing Administration, the United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture and any private mortgage insurer, and providers of hazard, title or other insurance with respect to such mortgage loans or the related collateral;

(n)the term “Investor Specified Representations” means the representations and warranties made in Section 2.3(b)(i), Section 2.3(d) and Section 2.3(e);

(o)the term “Knowledge” of the Company and words of similar import mean the knowledge of any directors or executive officers of the Company listed on the Disclosure Schedule hereto;

(p)the term “Loan Investor” means any Person (including an Agency) having a beneficial interest in any mortgage loan originated, purchased or serviced by the Bank or a security backed by or representing an interest in any such mortgage loan;

(q)the term “Losses” means any and all losses, damages, reasonable costs, reasonable expenses (including reasonable attorneys’ fees and disbursements), liabilities, settlement payments, awards, judgments, fines, obligations, claims, and deficiencies of any kind, excluding special, consequential, exemplary and punitive damages;

(r)the term “Person” means any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, Governmental Entity or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity;

(s)the term “Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture, limited liability company or other entity (x) of which such Person or a Subsidiary of such Person is a general partner or (y) of which a majority of the voting securities or other voting interests, or a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or persons performing similar functions with respect to such entity, is directly or indirectly owned by such Person and/or one or more Subsidiaries thereof;

(t)the term “Tax” or “Taxes” means all United States federal, state, local or foreign income, profits, estimated, gross receipts, windfall profits, severance, property, intangible property, occupation, production, sales, use, license, excise, emergency excise, franchise, capital gains, capital stock, employment, withholding, transfer, stamp, payroll, goods

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and services, value added, alternative or add-on minimum tax, or any other tax, custom, duty or governmental fee, or other like assessment or charge of any kind whatsoever, together with any interest, penalties, fines, related liabilities or additions to tax that may become payable in respect thereof imposed by any Governmental Entity, whether or not disputed;

(u)the term “Tax Return” means any return, declaration, report or similar statement required to be filed with respect to any Taxes (including any attached schedules), including, without limitation, any information return, claim or refund, amended return and declaration of estimated Tax;

(v)the term “Voting Securities” means at any time shares of any class of Capital Stock of the Company that are then entitled to vote generally in the election of directors;

(w)the word “or” is not exclusive;

(x)the words “including,” “includes,” “included” and “include” are deemed to be followed by the words “without limitation”;

(y)the terms “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision; and

(z)all article, section, paragraph or clause references not attributed to a particular document shall be references to such parts of this Agreement, and all exhibit and schedule references not attributed to a particular document shall be references to such exhibits and schedules to this Agreement.

6.3Amendment and Waivers.  The conditions to each party’s obligation to consummate the Closing are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by Law.  No amendment or waiver of any provision of this Agreement will be effective against any party hereto unless it is in a writing signed by a duly authorized officer of such party.

6.4Counterparts and Facsimile.  For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement.  Executed signature pages to this Agreement may be delivered by facsimile and such facsimiles shall be deemed as sufficient as if manually signed signature pages had been delivered.

6.5Governing Law.  This Agreement will be governed by and construed in accordance with the Laws of the State of New York applicable to contracts made and to be performed entirely within such State.

6.6Jurisdiction.  The parties hereby agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Southern District of New York sitting in the borough of Manhattan, New York,

40

New York, so long as such court shall have subject matter jurisdiction over such suit, action or proceeding or, if it does not have subject matter jurisdiction, in any New York State court sitting in the borough of Manhattan, New York, New York, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 6.8 shall be deemed effective service of process on such party.  The parties hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the state and federal courts referred to above for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby

6.7WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

6.8Notices.  Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (a) on the date of delivery if delivered personally or by telecopy or facsimile, upon confirmation of receipt, (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service, or (c) on the third Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid.  All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

41

(a)If to the Investor, at the address set forth on the signature page to this Agreement:

(b)If to the Company:

Broadway Financial Corporation
5055 Wilshire Boulevard, Suite 500
Los Angeles, California 90036
Attn:	Wayne-Kent A. Bradshaw, President and Chief
	Executive Officer
Fax:	(323) 556-3216

with a copy (which copy shall not constitute notice) to:

Arnold & Porter LLP
777 South Figueroa Street
44th Floor
Los Angeles, California 90017
Attn:	James R. Walther, Esq.
Fax:	(213) 243-4199

6.9Entire Agreement.  This Agreement (including the Annexes and Schedules hereto) and the Confidentiality Agreement constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties, inducements or conditions, both written and oral, among the parties, with respect to the subject matter hereof and thereof.

6.10Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Common Stock to be issued pursuant to this Agreement.  The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor.  The Investor may assign some or all of its rights hereunder or thereunder without the consent of the Company to any Affiliate of the Investor, and such assignee shall be deemed to be an Investor hereunder with respect to such assigned rights and shall be bound by the terms and conditions of this Agreement that apply to the Investor.

6.11Captions.  The article, section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.

6.12Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination, the parties

42

shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

6.13Third Party Beneficiaries.  Nothing contained in this Agreement, expressed or implied, is intended to confer upon any Person (including any of the Other Investors) other than the parties hereto, any benefit right or remedies, except that the provisions of Sections 5.1 and 5.2 shall inure to the benefit of the Persons referred to in such Sections.  Notwithstanding the foregoing, the Company and the Investor agree that the Placement Agent, as placement agent for the Common Stock sold pursuant to this Agreement, shall be a third party beneficiary of the representations, warranties and agreements made or given by the parties hereunder.

6.14Public Announcements.  The Investor will not make (and will use its reasonable best efforts to ensure that its Affiliates and representatives do not make) any news release or public disclosure with respect to this Agreement and any of the transactions contemplated hereby, without first consulting with the Company and, in each case, also receiving the Company’s consent (which shall not be unreasonably withheld or delayed).

6.15Specific Performance.  The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms.  It is accordingly agreed that the parties shall be entitled to seek specific performance of the terms hereof, this being in addition to any other remedies to which they are entitled at law or equity.

6.16No Recourse.  This Agreement may only be enforced against the named parties hereto.  All claims or causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may be made only against the entities that are expressly identified as parties hereto or that are subject to the terms hereof, and no past, present or future director, officer, employee, incorporator, member, manager, partner, shareholder, Affiliate, agent, attorney or representative of any party hereto (including any person negotiating or executing this Agreement on behalf of a party hereto) shall have any liability or obligation with respect to this Agreement or with respect to any claim or cause of action, whether in tort, contract or otherwise, that may arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement and the transactions contemplated hereby.

6.17Possible Common Stock Equivalent Transaction.  The Company does not currently have sufficient authorized but unissued shares of Common Stock available under its certificate of incorporation to enable it to complete the TARP Exchange, each of the Other Preferred Exchanges, and the Other Private Placements.  In addition, issuance of Common Stock for such purposes would ordinarily require approval by the Company’s stockholders pursuant to Rule 5635 of the corporate governance rules of the Nasdaq Stock Market.  Accordingly, the Company has agreed with the Treasury that the Company will, as a condition to completion of the TARP Exchange, either:  (i) obtain the required Company stockholder approval under the Nasdaq corporate governance rules and complete the other steps required to amend its certificate of incorporation to authorize the issuance of a sufficient number of shares of Common Stock for such purposes; or (ii) file a certificate of designations with the Secretary of State of the State of Delaware to designate a new series of preferred stock out of the Company’s authorized but

43

unissued preferred stock, to be designated Series F Common Stock Equivalent (the “Common Stock Equivalents”), the terms of which will include that, upon the affirmative vote of the stockholders of the Company specified in such certificate and relating to an increase in the shares of Common Stock it is authorized to issue, such preferred stock shall be mandatorily convertible into the number of shares of Common Stock that would be issued directly if the TARP Exchange were made for Common Stock and an escalating non-cumulative dividend requirement to provide an incentive to the stockholders of the Company to provide such vote.  The Company and the Treasury have further agreed in such event that the TARP Exchange and the Other Preferred Exchanges shall be exchanges for shares of the Common Stock Equivalents rather than shares of Common Stock.  The number of shares of Common Stock Equivalents to be issued in such alternative transaction (excluding shares to be issued in respect of accrued cumulative dividends under the terms of the TARP Preferred Stock) shall be the number of shares of Common Stock Equivalents that have an aggregate liquidation preference equal to 50% of the liquidation preference of all of the TARP Preferred Stock or other preferred stock, as applicable, to be exchanged.

44

Appendix I

SELLING STOCKHOLDER QUESTIONNAIRE

The undersigned beneficial owner of Common Stock (the “Common Stock”) of Broadway Financial Corporation (the “Company”) understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a Registration Statement for the registration and resale of Common Stock that qualifies as Registrable Securities, in accordance with the terms of a Subscription Agreement (the “Subscription Agreement”) between the Company and the Investor(s) named therein.  All capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Subscription Agreement.

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:

QUESTIONNAIRE

1.	Name.
	(a)	Full Legal Name of Selling Securityholder
	(b)	Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities Listed in Item 3 below are held:
	(c)	Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by the questionnaire):
2.		Address for Notices to Selling Securityholder:
		Telephone:
		Fax:
		Contact Person:

45

3.	Beneficial Ownership of Registrable Securities:
	Number of Shares of Registrable Securities beneficially owned(1) and purchased pursuant to the Subscription Agreement:
4.	Broker-Dealer Status:
	(a)	Are you a broker-dealer?
		Yes ¨ No ¨
		Note: If yes, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.
	(b)	Are you an affiliate of a broker-dealer?
		Yes ¨ No ¨
	(c)	If you are an affiliate of a broker-dealer, do you certify that you bought the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?
		Yes ¨ No ¨
		Note: If no, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.
5.	Beneficial Ownership of Securities of the Company Other than the Registrable Securities Owned by the Selling Securityholder.

(1)  Securities “beneficially owned” would include securities held by you for your own benefit, whether in bearer form or registered in your own name or otherwise (regardless of whether or how they are registered), such as, for example, securities held for you by custodians, brokers, relatives, executors, administrators or trustees, and securities held for your account by pledges, securities owned by a partnership in which you are a member, and securities owned by any corporation which is or should be regarded as a personal holding corporation of yours.  You are also considered to be the beneficial owner of a security if you, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise have or share: (1) voting power, which includes the power to vote, or to direct the voting of, such security or (2) investment power, which includes the power to dispose, or to direct the disposition, of such security.  You are also the beneficial owner of a security if you, directly or indirectly, create or use a trust, proxy, power of attorney, pooling arrangement or any other contract, arrangement or device with the purpose or effect of divesting yourself of beneficial ownership of a security or preventing the vesting of such beneficial ownership.  Finally, you are deemed to be the beneficial owner of a security if you have the right to acquire beneficial ownership of such security at any time within sixty days, including but not limited to any right to acquire (a) through the exercise of any option, warrant or right, (b) through the conversion of a security, (c) pursuant to the power to revoke a trust, discretionary account or similar arrangement or (d) pursuant to the automatic termination of a trust, discretionary account or similar arrangement.

46

Except as set forth below in this Item 5, the undersigned is not the beneficial or registered owner of any securities of the Company other than the Registrable Securities listed above in Item 3.

Type and Amount of Other Securities beneficially owned by the Selling Securityholder:

6.Relationships with the Company:

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

State any exceptions here:

7.Please fill in the table below as you would like it to appear in the Registration Statement.  Include footnotes where appropriate.

Name of Selling 
Shareholder Number of Shares of
Common Stock
Beneficially Owned Prior
to Offering Maximum Number of
Shares of Common Stock
to be Sold Pursuant to this
Prospectus Number of Shares of
Common Stock
Beneficially Owned After
Offering

The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof and prior to the Effective Date for the Registration Statement.

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 7 and the inclusion of such information in the Registration Statement and the related prospectus.  The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus.

47

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

Dated:	Beneficial Owner:
	By:
	Name:
	Title:

PLEASE (1) FAX OR EMAIL A COPY OF THE COMPLETED AND EXECUTED
NOTICE AND QUESTIONNAIRE, AND (2) RETURN THE ORIGINAL BY
OVERNIGHT MAIL, TO:

Broadway Financial Corporation
5055 Wilshire Boulevard
Suite 500
Los Angeles, CA  90036
Attn:  Chief Financial Officer
Facsimile: (213) 634-1723

48

EX-10.25.1

Exhibit 10.25.1

SUBSCRIPTION AGREEMENT

August 22, 2013

Broadway Financial Corporation
5055 Wilshire Boulevard, Suite 500
Los Angeles, California  90036

Ladies and Gentlemen:

The undersigned (the “Investor”) hereby confirms its agreement with you as follows:

1.             This Subscription Agreement (this “Agreement”) is entered into between Broadway Financial Corporation, a Delaware corporation (the “Company”), and the Investor whose name appears on the signature page hereto and is made as of the date of the Company’s acceptance hereof (the “Acceptance Date”).

2.             The Company is proposing to issue and sell shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”, to certain investors in a private offering at a purchase price of U.S.$1.00 per share (the “Per Share Purchase Price”).  The Common Stock is being offered only to persons who are accredited investors within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to a private placement exemption from the securities registration requirements of the Securities Act.  The Investor acknowledges and  agrees that the Company may, as provided in Section 6.17 of the attached Terms and Conditions, issue Common Stock Equivalents (as defined in the Terms and Conditions) in lieu of Common Stock in connection with certain of the exchanges for outstanding preferred stock of the Company that are to be completed concurrently with the Closing under this Agreement, all as described in the Terms and Conditions.

3.             The Company and the Investor agree that, upon the terms and subject to the conditions set forth herein, the Investor will purchase from the Company and the Company will issue and sell to the Investor, the number of shares of Common Stock equal to the dollar amount subscribed as indicated on the signature page hereto divided by the Per Share Purchase Price, pursuant to the Terms and Conditions for the Purchase of Common Stock attached hereto as Annex A and incorporated herein by reference as if fully set forth herein. The Common Stock purchased by the Investor will be delivered in certificated form, registered in the Investor’s name and address as set forth below, and will be released by Computershare Inc., the Company’s transfer agent (the “Transfer Agent”), to the Investor at the Closing (as defined in the Terms and Conditions for the Purchase of Common Stock) or, if uncertificated, the Transfer Agent for the Common Stock will register the shares of Common Stock purchased in the name of the Investor and deliver evidence of such registration to the Investor.

4.             In agreeing to purchase Common Stock pursuant hereto, the Investor is making the representations and warranties set forth in the attached Terms and Conditions for the Purchase of Common Stock (the “Terms and Conditions”), including representations and warranties that the Investor is an “accredited investor” (as that term is defined by Rule 501 under

the Securities Act) and that the Investor has not taken actions regarding a coordinated acquisition of Common Stock as set forth in Section 2.3(f) or Section 2.3(j).

Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose.

Subscription amount in shares and U.S. dollars:
$1,935,500
Shares: 1,935,500
Name of Investor:		CJA Private Equity Financial
Restructuring Master Fund I L.P.
CJA PRIVATE EQUITY FINANCIAL RESTRUCTURING MASTER FUND I L.P.
By: CJA Private Equity Financial Restructuring GPI Ltd., its General Partner
By:	/s/ Christopher J. Acito
Print Name: Christopher J. Acito
Title: Managing Member
Mailing Address:
CJA Private Equity Financial Restructuring Master Fund I L.P.
c/o Hedgserv, Ltd.
Attn: Mr. Donal Murphy
75 St. Stephens Green — 2nd Floor
Dublin 2 Ireland
with a copy to:
CJA Private Equity Financial Restructuring Master Fund I L.P.
c/o Gapstow Capital Partners LP
Attn: Virginia Hathorn
130 East 59th Street — 12 Floor
New York, NY 10022
Type of Entity: Limited Partnership
Jurisdiction of Organization: Cayman Islands
Tax ID No.: 33-1219583
Contact Name: Virginia Hathorn

2

Telephone: 646-735-3447

Email Address: virginia.hathorn@gapstow.com

Name under which Common Stock is to be issued (if different from above): same as above

Address to which share certificates or statement of ownership are to be sent (if different from mailing address above):

U.S. Bank Securities Services

1555 N. River Center Drive — Suite 302

Milwaukee, WI 53212

Attn: Dan Harding — Physical Processing Manager

Attn: Brand Hosford— Phone No. 704-335-4600

Ref: Acct#CJA Private Equity Financial Restructuring Master Fund I LP

3

Agreed and Accepted as of August 22, 2013:
BROADWAY FINANCIAL CORPORATION
By:	/s/ Wayne-Kent A. Bradshaw
Name:		Wayne-Kent A. Bradshaw
Title:		President and Chief Executive Officer

4

INSTRUCTION SHEET FOR INVESTOR

(to be read in conjunction with the entire Agreement)

Complete the following items in the Agreement:

1.             Provide the information regarding the Investor requested on the signature page to the Agreement. The Agreement must be executed by an individual authorized to bind the Investor.

2.             If the Investor is purchasing Common Stock for more than one investor account, it may either (i) complete a separate Agreement for each such account, in which case a separate wire transfer (or other acceptable form of payment) must be made by or on behalf of such account for the Common Stock it will purchase and a separate issuance of Common Stock will be made by the Transfer Agent to each account, or (ii) complete a single Agreement for all such accounts, in which case only one wire transfer (or other acceptable form of payment) need be made for the Common Stock to be purchased for all such accounts (but all such Common Stock will be issued to a single account specified by the Investor) and the information called for on the signature page hereof must be completed for each account.

3.             Return the signed Agreement to:

Broadway Financial Corporation
5055 Wilshire Boulevard, Suite 500
Los Angeles, California 90036
Attn:	Wayne-Kent A. Bradshaw, President and Chief
	Executive Officer
Fax:	(323) 556-3216
Email:	WBradshaw@broadwayfederalbank.com

4.             Please note that all payments must be made in U.S. dollars by wire transfer of immediately available funds to the following account, which has been established to hold funds received from investors, which funds shall be released to the Company only upon the Closing of the transactions referred to and described herein:

Bank Name:	Broadway Federal Bank, f.s.b.
Bank Account Name:	Broadway Federal Bank for the benefit of Broadway Financial Corporation
Bank ABA #:	322070145
Bank Account #:	80-000820-4

An executed Agreement or a facsimile transmission thereof must be received by such time on such date as you are advised. The Company reserves all rights to reject any subscription before it is accepted by the Company.

5

ANNEX A

TERMS AND CONDITIONS FOR THE PURCHASE OF COMMON STOCK

6

TABLE OF CONTENTS

						Page
ARTICLE 1					PURCHASE; CLOSING	2
1.1			Issuance, Sale and Purchase			2
1.2			Closing; Deliverables for the Closing; Conditions to the Closing			2
ARTICLE 2				REPRESENTATIONS AND WARRANTIES		5
2.1			Certain Terms			5
2.2			Representations and Warranties of the Company			6
2.3			Representations and Warranties of the Investor			19
ARTICLE 3					COVENANTS	22
3.1			Conduct of Business Prior to Closing			22
3.2			Confidentiality			22
3.3			Commercially Reasonable Efforts			22
3.4			Legend			23
3.5			Certain Other Transactions			23
3.6			Exchange Listing			24
3.7			Stockholders Meeting			24
3.8			Registration Rights			25
ARTICLE 4					TERMINATION	33
4.1		Termination				33
4.2		Effects of Termination				33
ARTICLE 5					INDEMNITY	34
5.1		Indemnification by the Company				34
5.2		Indemnification by the Investor				34
5.3		Notification of Claims				35
5.4		Indemnification Payment				37
5.5		Exclusive Remedies				37
ARTICLE 6					MISCELLANEOUS	37
6.1	Survival					37
6.2	Other Definitions					38
6.3	Amendment and Waivers					40
6.4	Counterparts and Facsimile					41
6.5	Governing Law					41

i

TABLE OF CONTENTS

(continued)

		Page
6.6	Jurisdiction	41
6.7	WAIVER OF JURY TRIAL	41
6.8	Notices	41
6.9	Entire Agreement	42
6.10	Successors and Assigns	42
6.11	Captions	42
6.12	Severability	42
6.13	Third Party Beneficiaries	43
6.14	Public Announcements	43
6.15	Specific Performance	43
6.16	No Recourse	43
6.17	Possible Common Stock Equivalent Transactions	43

INDEX OF DEFINED TERMS

Defined Term	Section
Acceptance Date	Subscription Agreement
Action	2.2(f)
Affiliate	6.2(a)
Agency	6.2(b)
Agreement	Subscription Agreement
Agreements	Recital B
Bank	2.2(a)
Benefit Plans	2.2(u)(i)
Board of Directors	6.2(c)
Business Day	6.2(d)
Capital Stock	6.2(e)
Capitalization Date	2.2(c)(ii)
Change in Control	6.2(f)
Closing	1.2(a)
Closing Date	1.2(a)
Code	6.2(g)
Common Stock	Subscription Agreement
Common Stock Equivalents	6.17(a)
Company	Subscription Agreement
Company Employees	2.2(u)(i)
Company Financial Statements	2.2(g)

ii

Defined Term	Section
Company Indemnified Parties	5.2(a)
Company Insurance Policies	2.2(s)
Company Preferred Stock	2.2(c)(i)
Company Reports	2.2(h)
Company Specified Representations	6.2(h)
Company Stock Plans	2.2(c)(iii)
Company Subsidiaries	2.2(b)
Company Subsidiary	2.2(b)
Confidentiality Agreement	3.2
control, controlling, controlled by and under common control with	6.2(a)
Deductible	5.1(b)
Disclosure Schedule	6.2(i)
EESA	2.2(u)(iii)
Effective Date	3.8(j)(i)
Effectiveness Deadline	3.8(j)(ii)
employee benefit plan	2.2(u)(i)
ERISA	2.2(u)(i)
Exchange Act	2.2(h)
FDI Act	2.2(b)
FDIC	2.2(b)
Filing Deadline	3.8(a)(i)
finally determined	5.4
GAAP	6.2(j)
Governmental Consent	6.2(k)
Governmental Entity	6.2(l)
Holder	3.8(j)(iii)
Indemnified Party	5.3(a)
Indemnifying Party	5.3(a)
Indemnitee	3.8(g)(i)
Insider	2.2(bb)
Insurer	6.2(m)
Investment	Recital A
Investment Manager	2.3(f)
Investor	Subscription Agreement
Investor Indemnified Parties	5.1(a)
Investor Specified Representations	6.2(n)
Investors	Recital B
Knowledge	6.2(o)
Law	2.2(p)
Liens	2.2(d)(ii)
Loan Investor	6.2(p)
Losses	6.2(q)
Material Adverse Effect	2.1(a)
Material Contract	2.2(r)
NASDAQ	2.2(d)

iii

Defined Term	Section
OFAC	2.2(m)
Other Investors	Recital B
Other Preferred Exchange Agreement	Recital C
Other Preferred Exchange Agreements	Recital C
Other Preferred Exchanges	Recital C
Other Private Placements	Recital B
Per Share Purchase Price	Subscription Agreement
Person	6.2(r)
Placement Agent	2.2(x)
Potential Investor	2.3(j)
Previously Disclosed	2.1(b)
Purchase Price	1.1
Register, registered and registration	3.8(j)(iv)
Registrable Securities	3.8(j)(v)
Registration Expenses	3.8(j)(vi)
Registration Termination Date	3.8(a)(i)
Regulatory Agreement	2.2(q)
Regulatory Order or Regulatory Orders	2.2(p)
Rights Offering	Recital D
Rights Plan	2.2(c)(iii)
Rule 158, Rule 159A, Rule 405 and Rule 415	3.8(j)(vii)
SEC	2.1(b)
Securities Act	Subscription Agreement
Selling Expenses	3.8(j)(viii)
Series A Junior Preferred Stock	2.2(c)(i)
Series A Preferred Stock	2.2(c)(i)
Series B Preferred Stock	2.2(c)(i)
Series C Preferred Stock	2.2(c)(i)
Series D Preferred Stock	2.2(c)(i)
Series E Preferred Stock	2.2(c)(i)
Shelf Registration Statement	3.8(a)(ii)
SLHCA Act	2.2(a)
Subsidiary	6.2(s)
Suspension Period	3.8(d)
TARP Exchange	Recital C
TARP Exchange Agreement	Recital C
TARP Preferred Stock	2.2(c)(ii)
Tax or Taxes	6.2(t)
Tax Return	6.2(u)
Third Party Claim	5.3(a)
Transfer Agent	Subscription Agreement
Treasury	Recital C
Voting Debt	2.2(c)(iv)
Voting Securities	6.2(v)

iv

RECITALS

A.            The Investment.  The Company intends to issue and sell to the Investor, and the Investor intends to purchase from the Company, on the terms and conditions described herein, the number of shares of Common Stock set forth on such Investor’s signature page hereto for the aggregate purchase price set forth on such signature page (the “Investment”).

B.            Other Private Placements.  The Company also intends to enter into agreements similar to this Agreement with certain other investors (the “Other Investors”) and expects to complete sales of Common Stock to them, with the closing of such sales to occur simultaneously with the Closing (the “Other Private Placements”).  The Investor and the Other Investors are hereinafter sometimes collectively referred to as the “Investors”, and this Agreement and the subscription agreements executed by the Other Investors are hereinafter sometimes collectively referred to as the “Agreements.”

C.            TARP Exchange; Other Preferred Stock Exchanges.  The United States Department of Treasury (the “Treasury”) holds 15,000 shares of TARP Preferred Stock (as defined herein).  On the terms and subject to the conditions set forth in an Exchange Agreement, dated as of February 10, 2012, entered into by the Company and the Treasury, as amended (the “TARP Exchange Agreement”), the Company intends to exchange the TARP Preferred Stock for a new series of mandatorily convertible preferred stock, which shares shall automatically convert into Common Stock having an aggregate value (valuing the Common Stock at the Per Share Purchase Price) equal to the sum of (x) 50% of the aggregate liquidation preference of the TARP Preferred Stock and (y) 100% of the amount of accrued and unpaid dividends on the TARP Preferred Stock as of the Closing Date (the “TARP Exchange”) upon receipt of any necessary shareholder approvals, as provided in Section 3.7 of this Agreement.  The Company has entered into, or will enter into simultaneously herewith, similar exchange agreements providing for exchanges of all of the outstanding shares of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock of the Company (each as defined herein) on substantially the same economic terms as provided in the TARP Exchange Agreement with the respective holders of such other series of preferred stock of the Company (such other exchange agreements being referred to herein individually as an “Other Preferred Exchange Agreement” and collectively as the “Other Preferred Exchange Agreements”).  The exchanges referred to in each of the Other Preferred Exchange Agreements (collectively the “Other Preferred Exchanges”) and the TARP Exchange are to occur prior to or simultaneously with the Closing.

D.            The Rights Offering.  Following the Closing, the Company may commence a rights offering (the “Rights Offering”) providing holders of record of the Common Stock as of the close of business on a record date prior to the Closing to be selected by the Company with the right to purchase Common Stock at the same price per share as that paid by the Investor.  The rights would not be transferable and would provide for the purchase of up to $2 million of Common Stock in the aggregate by such existing stockholders.

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ARTICLE 1

PURCHASE; CLOSING

1.1          Issuance, Sale and Purchase.  On the terms and subject to the conditions set forth herein, the Company agrees to issue and sell to the Investor, and the Investor agrees to purchase from the Company, free and clear of any Liens, a number of shares of Common Stock (including any associated preferred share purchase rights issuable with respect to such Common Stock pursuant to the Rights Plan) equal to the dollar amount subscribed as indicated on the signature page hereto divided by the Per Share Purchase Price payable by the Investor to the Company.  The aggregate purchase price payable pursuant to this Section 1.1 is referred to herein as the “Purchase Price”).

1.2          Closing; Deliverables for the Closing; Conditions to the Closing.

(a)           Closing.  Unless this Agreement has been terminated pursuant to Article 4, and subject to the satisfaction or, to the extent permitted by Law and this Agreement, the written waiver of the conditions set forth in Section 1.2(c), the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Arnold & Porter LLP, located at 777 South Figueroa Street, 44th Floor, Los Angeles, California 90017, or remotely via the electronic or other exchange of documents and signature pages, on a date to be specified by the Company on no less than two Business Days’ notice to the Investor (which date shall be the same date as the date of closing of the TARP Exchange, the Other Preferred Exchanges and the Other Private Placements), or at such other place or such other date as agreed to in writing by the parties hereto (the “Closing Date”).

(b)           Closing Deliverables.  Subject to the satisfaction or waiver on the Closing Date of the conditions to the Closing set forth in Section 1.2(c), at the Closing the parties shall make the following deliveries:

(i)            the Company shall deliver to the Investor one or more certificates evidencing the Common Stock to be purchased pursuant to Section 1.1 registered in the name of the Investor (or if the shares of the Common Stock being purchased are to be uncertificated, the Company shall cause the Transfer Agent to register such shares in the name of the Investor and deliver evidence of such registration to the Investor); and

(ii)           the Investor shall deliver the Purchase Price, by wire transfer of immediately available funds to the account set forth in the Instruction Sheet for Investor provided with this Agreement.

(c)           Closing Conditions.

(i)            The obligations of the Investor, on the one hand, and the Company, on the other hand, to consummate the purchase and sale of Common Stock provided for in this Agreement are each subject to the satisfaction or, to the extent permitted by Law and this Agreement, the written waiver by the Company or the Investor, as applicable, of the following conditions at the Closing:

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(A)          No provision of any Law and no judgment, injunction, order or decree shall prohibit the Closing or shall prohibit or restrict the Investor from owning or voting any Common Stock to be purchased pursuant to this Agreement; and

(B)          All Governmental Consents required to have been obtained at or prior to the Closing Date in connection with the execution, delivery or performance of this Agreement and the consummation of the transactions contemplated hereby shall have been obtained and shall be in full force and effect.

(ii)           The obligation of the Investor to consummate the purchase of Common Stock provided for in this Agreement is also subject to the satisfaction or written waiver by the Investor of the following conditions at the Closing:

(A)          The representations and warranties of the Company set forth in this Agreement shall be true and correct in all respects on and as of the date of this Agreement and on and as of the Closing Date as though made on and as of the Closing Date, except to the extent that the failure to be true and correct (without regard to any materiality or Material Adverse Effect qualifications contained therein), would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and except that representations and warranties made as of a specified date shall be true and correct as of such date;

(B)          The Company shall have performed and complied with, in all material respects, all agreements, covenants and conditions required by this Agreement to be performed by it on or prior to the Closing Date;

(C)          The Investor shall have received a certificate, dated as of the Closing Date, signed on behalf of the Company by a senior executive officer certifying to the effect that the conditions set forth in Section 1.2(c)(ii)(A) and Section 1.2(c)(ii)(B) have been satisfied on and as of the Closing Date;

(D)          Since the date of this Agreement, a Material Adverse Effect shall not have occurred and no change or other event shall have occurred that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(E)           The Common Stock to be purchased pursuant to this Agreement shall have been authorized for listing on the NASDAQ Capital Market or such other market on which the Common Stock is then listed or quoted, subject to official notice of issuance;

(F)           The Company shall have received (or shall receive concurrently with the Closing) gross proceeds from the Other Private

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Placements in an aggregate amount, together with the Purchase Price, of not less than $3,500,000;

(G)          The Company shall have completed the TARP Exchange in accordance in all material respects with the terms and conditions set forth in the TARP Exchange Agreement, except that the gross proceeds received from the Equity Offering referred to therein shall be not less than $3,500,000;

(H)          The Company shall have completed each of the Other Preferred Exchanges in accordance in all material respects with the respective Other Preferred Exchange Agreements; and

(I)            The Company and the Investor shall have entered into the Letter Agreement, substantially in the form attached hereto as Exhibit A (the “Side Letter”).

(iii)          The obligation of the Company to consummate the sale of Common Stock provided for in this Agreement is also subject to the satisfaction or written waiver by the Company of the following conditions at the Closing:

(A)          The representations and warranties of the Investor set forth in this Agreement shall be true and correct in all respects on and as of the date of this Agreement and on and as of the Closing Date as though made on and as of the Closing Date except where the failure to be true and correct (without regard to any materiality qualifications contained therein) would not materially adversely affect the ability of the Investor to perform its obligations hereunder (and except that (1) representations and warranties made as of a specified date shall be true and correct as of such date and (2) the representations and warranties of the Investor set forth in Sections 2.3(d) and 2.3(h) shall be true and correct in all respects);

(B)          The Investor shall have performed and complied with, in all material respects, all agreements, covenants and conditions required by this Agreement to be performed by it on or prior to the Closing Date; and

(C)          The Company shall have received a certificate, dated as of the Closing Date, signed on behalf of the Investor by a duly authorized person certifying to the effect that the conditions set forth in Section 1.2(c)(iii)(A) and Section 1.2(c)(iii)(B) have been satisfied on and as of the Closing Date.

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ARTICLE 2

REPRESENTATIONS AND WARRANTIES

2.1          Certain Terms.

(a)           As used in this Agreement, the term “Material Adverse Effect” means any circumstance, event, change, development or effect that, individually or in the aggregate, would reasonably be expected to (i) result in a material adverse effect on the assets, liabilities, business, financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole, or (ii) materially impair or delay the ability of the Company or any of the Company Subsidiaries to perform its or their obligations under this Agreement to consummate the Closing or any of the transactions contemplated hereby; provided, however, that in determining whether a Material Adverse Effect has occurred under clause (i), there shall be excluded any circumstance, event, change, development or effect to the extent resulting from (A) actions or omissions of the Company or any Company Subsidiary expressly required or contemplated by the terms of this Agreement, (B) changes after the date hereof in general economic conditions in the United States, including financial market volatility or downturns, or in the markets in which the Company and the Company Subsidiaries operate, (C) changes after the date hereof affecting the banking industry generally, (D) any changes after the date hereof in applicable Laws or accounting rules or principles, including changes in GAAP, (E) changes in the market price or trading volume of the Common Stock or the Company’s other outstanding securities (but not the underlying causes of such changes) or (F) any failure by the Company or any of the Company Subsidiaries to meet any internal projections or forecasts with regard to the assets, liabilities, business, financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole (but not the underlying causes of such failure), in each case to the extent that such circumstance, event, change, development or effect referred to in clauses (B), (C) and (D) do not have a disproportionate effect on the Company and the Company Subsidiaries compared to other participants in the industries or markets in which the Company and the Company Subsidiaries operate.

(b)           As used in this Agreement, the term “Previously Disclosed” (i) with regard to any party, means information set forth in its Disclosure Schedule under Section references corresponding with the provision of this Agreement to which such information relates (including, in the case of the Company, information identified in the Company’s Disclosure Schedule by reference to specific portions of the “virtual data room” website established by the Company for use by the Investor in its “due diligence” examination of the Company; provided, however, that if such information is disclosed in such a way as to make its relevance or applicability to another provision of this Agreement reasonably apparent on its face, such information shall be deemed to be responsive to such other provision of this Agreement and (ii) with regard to the Company, includes information publicly disclosed by the Company in (A) the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as filed by it with the Securities and Exchange Commission (the “SEC”) and subsequently amended by the filing of Forms 10-K/A on April 27, 2012 and September 14, 2012, or the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, as filed by it with the SEC on April 1, 2013, (B) the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2012, June 30, 2012, September 30, 2012 and March 31, 2013 as filed by it

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with the SEC, (C) the Company’s Definitive Proxy Statement on Schedule 14A, as filed by it with the SEC on November 19, 2012, or (D) any Current Report on Form 8-K filed or furnished by it with the SEC since January 1, 2011, in each case available prior to the date of this Agreement (excluding any risk factor disclosures contained in such documents under the heading “Risk Factors” and any disclosure of risks included in any “forward-looking statements” disclaimer or other statements that are similarly non-specific and are predictive or forward-looking in nature).  Notwithstanding anything in this Agreement to the contrary, the mere inclusion of an item in a Disclosure Schedule shall not be deemed an admission that such item represents a material exception or material fact, event or circumstance or that such item has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

2.2          Representations and Warranties of the Company.  Except as Previously Disclosed, the Company hereby represents and warrants to the Investor, as of the date of this Agreement and as of the Closing Date (except for the representations and warranties that are as of a specific date, which are made as of that date) that:

(a)           Organization and Authority.  Each of the Company and the Company Subsidiaries is a corporation or other entity duly organized and validly existing under the laws of the jurisdiction of its incorporation or organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified except where any failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and has the corporate or other organizational power and authority to own its properties and assets and to carry on its business as it is now being conducted.  The Company has Previously Disclosed correct and complete copies of the certificate of incorporation and bylaws (or similar governing documents) as amended through the date of this Agreement for the Company and Broadway Federal Bank, f.s.b. (the “Bank”).  The Company is duly registered with the Board of Governors of the Federal Reserve System (the “Federal Reserve”) as a savings and loan holding company under the Savings and Loan Holding Company Act, as amended, 12 U.S.C. 1467a (the “SLHCA Act”).

(b)           Company Subsidiaries.  The Company has Previously Disclosed a true, complete and correct list of all of its subsidiaries as of the date of this Agreement (each, a “Company Subsidiary” and, collectively, the “Company Subsidiaries”).  Except for the Company Subsidiaries, the Company does not own beneficially, directly or indirectly, more than 5% of any class of equity securities or similar interests of any corporation, business trust, association or similar organization, and is not, directly or indirectly, a partner in any partnership or party to any joint venture.  The Company owns, directly or indirectly, all of its interests in each Company Subsidiary free and clear of any and all Liens, except for the Lien of BBCN Bank on all assets of the Company, including the stock of the Bank owned by the Company.  The deposit accounts of the Bank are insured by the Federal Deposit Insurance Corporation (“FDIC”) to the fullest extent permitted by the Federal Deposit Insurance Act, as amended (the “FDI Act”), and the rules and regulations of the FDIC thereunder, and all premiums and assessments required to be paid in connection therewith have been paid when due (after giving effect to any applicable extensions).  The Company beneficially owns all of the outstanding capital securities of, and has sole control of, the Bank.

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(c)           Capitalization.

(i)            As of the date hereof, (A) the authorized Capital Stock of the Company consists of 8,000,000 shares of Common Stock, par value $0.01 per share and 1,000,000 shares of preferred stock, par value $0.01 per share (the “Company Preferred Stock”) and (B) of the Company Preferred Stock, 100,000 shares have been designated as Non-Cumulative Perpetual Preferred Stock, Series A, having a liquidation preference of $10 per share (the “Series A Preferred Stock”); 100,000 shares have been designated as Non-Cumulative Perpetual Preferred Stock, Series B, having a liquidation preference of $10 per share (the “Series B Preferred Stock”); 76,950 shares have been designated as Series C Non-Cumulative Perpetual Convertible Preferred Stock, having a liquidation preference of $13 per share (the “Series C Preferred Stock”); 9,000 shares have been designated as Fixed Rate Cumulative Perpetual Preferred Stock, Series D, having a liquidation preference of $1,000 per share (the “Series D Preferred Stock”); 6,000 shares have been designated as Fixed Rate Cumulative Perpetual Preferred Stock, Series E, having a liquidation preference of $1,000 per share (the “Series E Preferred Stock”); and 25,000 shares have been designated as Series A Junior Participating Preferred Stock, having a liquidation preference of $1.00 per share (the “Series A Junior Preferred Stock”).

(ii)           As of the close of business on May 31, 2013 (the “Capitalization Date”), the Company had outstanding: 1,917,422 shares of Common Stock; 55,199 shares of Series A Preferred Stock; 100,000 shares of Series B Preferred Stock; 76,950 shares of Series C Preferred Stock; 9,000 shares of Series D Preferred Stock; and 6,000 shares of Series E Preferred Stock (the Series D Preferred Stock and Series E Preferred Stock being referred to herein as the “TARP Preferred Stock”).

(iii)          As of the close of business on the Capitalization Date, other than in respect of awards outstanding under or issuable pursuant to the Company’s 1996 Long-Term Incentive Plan, 1996 Stock Option Plan and 2008 Long-Term Incentive Plan (the “Company Stock Plans”) in respect of which an aggregate of 437,390 shares of Common Stock have been reserved for issuance, 76,950 shares of Common Stock reserved for issuance upon conversion of the outstanding shares of the Series C Preferred Stock and 25,000 shares of Series A Junior Preferred Stock reserved for issuance pursuant to the Rights Agreement, dated January 31, 2003, entered into between the Company and US Stock Transfer Corporation (the “Rights Plan”), no shares of Common Stock or Company Preferred Stock were reserved for issuance.  Since the Capitalization Date and through the date of this Agreement, except in connection with this Agreement and the transactions contemplated hereby, including the Investment, the Other Private Placements, the TARP Exchange, the Other Preferred Exchanges, and the Rights Offering, the Company has not (A) issued or authorized the issuance of any shares of Common Stock or Company Preferred Stock, or any securities convertible into or exchangeable or exercisable for shares of Common Stock or Company Preferred Stock, except to Directors and certain executive officers of the

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Company and the Bank pursuant to the Stock Purchase Agreements copies of which are included in Section 2.2(c) of the Disclosure Schedule, (B) reserved for issuance any shares of Common Stock or Company Preferred Stock or (C) repurchased or redeemed, or authorized the repurchase or redemption of, any shares of Common Stock or Company Preferred Stock.

(iv)          All of the issued and outstanding shares of Common Stock and Company Preferred Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights.  None of the outstanding shares of Capital Stock or other securities of the Company or any of the Company Subsidiaries was issued, sold or offered by the Company or any Company Subsidiary in violation of the Securities Act or the securities or blue sky laws of any state or jurisdiction.  No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which the shareholders of the Company may vote (“Voting Debt”) are issued and outstanding.

(v)           As of the date of this Agreement, except for (x) the outstanding awards under the Company Stock Plans listed on Section 2.2(c) of the Disclosure Schedule, (y) as set forth elsewhere in this Section 2.2(c) and (z) the Agreements, the TARP Exchange Agreement, and the Other Preferred Exchange Agreements, the Company does not have and is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of, or securities or rights convertible into or exchangeable or exercisable for, any shares of Common Stock or Company Preferred Stock or any other equity securities of the Company or Voting Debt or any securities representing the right to purchase or otherwise receive any shares of Capital Stock of the Company.

(d)           Authorization; No Conflicts; Shareholder Approval.

(i)            The Company has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  Subject to the approval by the Nasdaq Stock Market (“NASDAQ”) of the Company’s application pursuant to Rule 5635(f) and other applicable provisions of the Nasdaq Listing Rules to issue Common Stock in connection with the Investment, the Other Private Placements, the TARP Exchange, the Other Preferred Exchanges and related transactions without prior shareholder approval, the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no further approval or authorization is required on the part of the Company or its shareholders.  The Board of Directors has unanimously approved the transactions contemplated by this Agreement, including the Investment, the Other Private Placements, the Other Preferred Exchanges, and the TARP Exchange and the Rights Offering.  This Agreement has been duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery by the Investor, is the valid and binding obligation of the Company

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enforceable against the Company in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles (whether applied in equity or at law).

(ii)           Neither the execution and delivery by the Company of this Agreement nor the consummation of the transactions contemplated hereby, nor compliance by the Company with any of the provisions hereof, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or result in the loss of any benefit or creation of any right on the part of any third party under, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any liens, charges, adverse rights or claims, pledges, covenants, title defects, security interests or other encumbrances of any kind (“Liens”) upon any of the properties or assets of the Company or any Company Subsidiary, under any of the terms, conditions or provisions of (1) the certificate of incorporation or bylaws (or similar governing documents) of the Company and each Company Subsidiary or (2) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Company or any of the Company Subsidiaries is a party or by which it may be bound, or to which the Company or any of the Company Subsidiaries, or any of the properties or assets of the Company or any of the Company Subsidiaries may be subject, or (B) violate any Law applicable to the Company or any of the Company Subsidiaries or any of their respective properties or assets except in the case of clauses (A)(2) and (B) for such violations, conflicts and breaches as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(e)           Governmental Consents.  Except as set forth in the Disclosure Schedule, no Governmental Consents are necessary for the execution and delivery of this Agreement or for the sale by the Company of Common Stock to the Investor pursuant to this Agreement.

(f)            Litigation and Other Proceedings.  Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there is no pending or, to the Knowledge of the Company, threatened claim, action, suit, arbitration, complaint, charge or investigation or proceeding (each an “Action”) against the Company or any Company Subsidiary or any of its assets, rights or properties, nor is the Company or any Company Subsidiary a party or named as subject to the provisions of any order, writ, injunction, settlement, judgment or decree of any court, arbitrator or government agency, or instrumentality.  There has not been, and to the Knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company or any current or former director or officer of the Company in his or her capacity as such.

(g)           Financial Statements.  The audited consolidated balance sheets of the Company and the Company Subsidiaries and the related consolidated statements of operations, changes in stockholders’ equity and cash flows, together with the notes thereto, included in the

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Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2012 (the “Company Financial Statements”) (i) have been prepared from, and are in accordance with, the books and records of the Company and the Company Subsidiaries, (ii) complied, as of their respective date of such filing, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, (iii) have been prepared in accordance with GAAP applied on a consistent basis and (iv) present fairly in all material respects the consolidated financial position of the Company and the Company Subsidiaries at the dates and the consolidated results of operations, changes in shareholders’ equity and cash flows of the Company and the Company Subsidiaries for the periods stated therein.

(h)           Reports.  Since December 31, 2008, the Company and each Company Subsidiary have filed all material reports, registrations, documents, filings, statements and submissions, together with any required amendments thereto, that they were required to file with any Governmental Entity (the foregoing, collectively, being referred to herein as the “Company Reports”) and have paid all material fees and assessments due and payable in connection therewith.  As of their respective filing dates, or as subsequently amended prior to the date hereof, the Company Reports complied in all material respects with all statutes and applicable rules and regulations of the applicable Governmental Entities.  As of the date of this Agreement, there are no outstanding comments from the SEC or any other Governmental Entity with respect to any Company Report that were the subject of written correspondence that have not been resolved.  The Company Reports, including the documents incorporated by reference in each of them, each contained all the information required to be included in it and, when it was filed and, as of the date of each such Company Report filed with the SEC, or if amended prior to the date of this Agreement, as of the date of such amendment, did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made in it, in light of the circumstances under which they were made, not misleading and complied as to form in all material respects with the applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  No executive officer of the Company has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002.

(i)            Internal Accounting and Disclosure Controls.  The records, systems, controls, data and information of the Company and the Company Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of the Company or the Company Subsidiaries or accountants (including all means of access thereto and therefrom) or reputable banking industry service providers, except for any non-exclusive ownership and non-direct control that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the system of internal accounting controls described below in this Section 2.2(i).  The Company (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) intended to ensure that material information relating to the Company, including its consolidated Subsidiaries, is made known to the chief executive officer or executive chairman and the chief financial officer of the Company by others within those entities, and (ii) has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s outside auditors and the audit committee of the Board of Directors (A) any significant deficiencies and material

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weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information, and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.  As of the date of this Agreement, the Company has no Knowledge of any reason that its outside auditors and its chief executive officer or executive chairman and chief financial officer shall not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, without qualification, when next due.  Since December 31, 2008, neither the Company nor any Company Subsidiary nor, to the Knowledge of the Company, any director, officer, employee, auditor, accountant or representative of the Company or any Company Subsidiary has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any Company Subsidiary or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or any Company Subsidiary has engaged in questionable accounting or auditing practices.

(j)            Risk Management Instruments.  All material derivative instruments, including swaps, caps, floors and option agreements entered into for the Company’s or any of the Company Subsidiaries’ own account were entered into (i) only in the ordinary course of business, (ii) in accordance with prudent practices and in all material respects with all applicable Laws and (iii) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of the Company or any Company Subsidiary, as applicable, enforceable in accordance with its terms.  Neither the Company nor, to the Knowledge of the Company, any other party thereto is in breach of any of its material obligations under any such agreement or arrangement.

(k)           No Undisclosed Liabilities.  There are no liabilities of the Company or any of the Company Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, except for (i) liabilities adequately reflected or reserved against in accordance with GAAP in the Company’s audited balance sheet as of December 31, 2011 and (ii) liabilities that have arisen in the ordinary and usual course of business and consistent with past practice since December 31, 2011 and that have not or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(l)            Mortgage Lending.  The Company and each of the Company Subsidiaries have complied in all material respects with, and all documentation in connection with the origination, processing, underwriting and credit approval of any mortgage loan originated, purchased or serviced by the Company or any Company Subsidiary has satisfied, in all material respects (i) all Laws with respect to the origination, insuring, purchase, sale, servicing, or filing of claims in connection with mortgage loans, including all Laws relating to real estate settlement procedures, consumer credit protection, truth in lending laws, usury limitations, fair housing, transfers of servicing, collection practices, equal credit opportunity and adjustable rate mortgages, (ii) the responsibilities and obligations relating to mortgage loans set forth in any agreement between the Company and any Agency, Loan Investor or Insurer, (iii) the applicable rules, regulations, guidelines, handbooks and other requirements of any Agency, Loan

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Investor or Insurer and (iv) the terms and provisions of any mortgage or other collateral documents and other loan documents with respect to each mortgage loan.

(m)          Bank Secrecy Act; Anti-Money Laundering; OFAC; and Customer Information.  The Company is not aware of, has not been advised of, and, to the Knowledge of the Company, has no reason to believe that any facts or circumstances exist that would cause it or any Company Subsidiary to be deemed to be not operating in compliance, in all material respects, with the Bank Secrecy Act of 1970, as amended, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (also known as the USA PATRIOT Act), any order or regulation issued by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), or any other applicable anti-money laundering or anti-terrorist-financing statute, rule or regulation.  The Company is not aware of any facts or circumstances that would cause it to believe that any nonpublic customer information has been disclosed to or accessed by an unauthorized third party in a manner that would cause it to undertake any material remedial action.  The Company and each of the Company Subsidiaries have adopted and implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that comply with the USA PATRIOT Act and such anti-money laundering program meets the requirements in all material respects of Section 352 of the USA PATRIOT Act and the regulations thereunder, and they have complied in all respects with any requirements to file reports and other necessary documents as required by the USA PATRIOT Act and the regulations thereunder.  The Company will not directly or indirectly use the proceeds of the sale of the Common Stock pursuant to transactions contemplated by this Agreement, or lend, contribute or otherwise make available such proceeds to any Company Subsidiary, joint venture partner or other Person, towards any sales or operations in any country appearing on the OFAC Specially Designated Nationals List (“SDN List”) or for the purpose of financing the activities of any Person currently appearing on the SDN List.

(n)           Certain Payments.  Neither the Company nor any of the Company Subsidiaries, nor any directors, officers, nor to the Knowledge of the Company, employees or any of their Affiliates or any other Person who to the Knowledge of the Company is associated with or acting on behalf of the Company or any of the Company Subsidiaries has directly or indirectly (i) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment in material violation of any Law to any Person, private or public, regardless of form, whether in money, property, or services (A) to obtain favorable treatment in securing business for the Company or any of the Company Subsidiaries, (B) to pay for favorable treatment for business secured by the Company or any of the Company Subsidiaries, or (C) to obtain special concessions or for special concessions already obtained, for or in respect of the Company or any of the Company Subsidiaries or (ii) established or maintained any fund or asset with respect to the Company or any of the Company Subsidiaries that was required by Law or GAAP to have been recorded and was not recorded in the books and records of the Company or any of the Company Subsidiaries.

(o)           Absence of Certain Changes.  Since December 31, 2012 and except as Previously Disclosed or as required or contemplated by the terms of this Agreement, (i) the Company and the Company Subsidiaries have conducted their respective businesses in all material respects in the ordinary and usual course of business consistent with past practices,

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(ii) none of the Company or any Company Subsidiary has issued any securities (other than Common Stock and Company Options and other equity-based awards issued prior to the date of this Agreement pursuant to Company Stock Plans and reflected in the numbers set forth in Section 2.2(c)), (iii) the Company has not made or declared any distribution in cash or in kind to its shareholders or issued or repurchased any shares of its Capital Stock, (iv) through (and including) the date of this Agreement, no fact, event, change, condition, development, circumstance or effect has occurred that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and (v) no material default (or event which, with notice or lapse of time, or both, would constitute a material default) exists on the part of the Company or any Company Subsidiary in the due performance and observance of any term, covenant or condition of any agreement to which the Company or any Company Subsidiary is a party and which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(p)           Compliance with Laws.  The Company and each Company Subsidiary have all material permits, licenses, franchises, authorizations, orders and approvals of, and have made all filings, applications and registrations with, Governmental Entities that are required in order to permit them to own or lease their properties and assets and to carry on their business as presently conducted and that are material to the business of the Company and each Company Subsidiary.  The Company and each Company Subsidiary have complied in all material respects and (i) are not in default or violation in any respect of, (ii) are not under investigation with respect to, and (iii) have not been threatened to be charged with or given notice of any material violation of, any applicable material domestic (federal, state or local) or foreign law, statute, ordinance, license, rule, regulation, policy or guideline, order, demand, writ, injunction, decree or judgment of any Governmental Entity (each, a “Law”), other than such noncompliance, defaults or violations as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  Except for statutory or regulatory restrictions of general application, restrictions applicable to recipients of funds under the Troubled Asset Relief Program of the Treasury, the respective Orders to Cease and Desist issued by the Office of Thrift Supervision to the Company and the Bank, with the consent of the Company and the Bank, effective September 9, 2010 (each, individually a “Regulatory Order” and, together, the “Regulatory Orders”), no Governmental Entity has placed any material restriction on the business or properties of the Company or any of the Company Subsidiaries.  As of the date hereof, the Bank has a Community Reinvestment Act rating of “outstanding.”

(q)           Agreements with Regulatory Agencies.  Except for the Regulatory Orders, (i) the Company and the Company Subsidiaries (A) are not subject to any cease-and-desist or other similar order or enforcement action issued by, (B) are not a party to any written agreement, consent agreement or memorandum of understanding with, (C) are not a party to any commitment letter or similar undertaking to, and (D) are not subject to any capital directive by, and (ii) since December 31, 2012, neither the Company nor any of the Company Subsidiaries has adopted any board resolutions at the request of, any Governmental Entity that currently restricts in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its liquidity and funding policies and practices, its ability to pay dividends, its credit, risk management or compliance policies, its internal controls, its management or its operations or business (each item in this sentence, including the Regulatory Orders, being referred to herein as a “Regulatory Agreement”), nor has the Company nor any of the Company

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Subsidiaries been advised since December 31, 2012 by any Governmental Entity that it is considering issuing, initiating, ordering, or requesting any such Regulatory Agreement, except that the Company and the Bank have been advised that they may receive revised Regulatory Orders from the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System (either acting directly or by or through the Federal Reserve Bank of San Francisco).  Except as set forth in the Disclosure Schedule, the Company and the Company Subsidiaries are in compliance in all material respects with each Regulatory Agreement to which they are party or subject, and the Company and the Company Subsidiaries have not received any notice from any Governmental Entity indicating that either the Company or any of the Company Subsidiaries is not in compliance in all material respects with any such Regulatory Agreement.

(r)            Contracts.  The Company has Previously Disclosed or provided (by hard copy, electronic data room or otherwise) to the Investor or its representatives true, correct and complete copies of each of the following to which the Company or any Company Subsidiary is a party, each of which is set forth on Section 2.2(r) of the Disclosure Schedule (each, a “Material Contract”):

(i)            any contract or agreement relating to indebtedness of the Company or any Company Subsidiary for borrowed money, letters of credit, capital lease obligations, obligations secured by a Lien or interest rate or currency hedging agreements (including guarantees in respect of any of the foregoing, but in any event excluding trade payables, securities transactions and brokerage agreements arising in the ordinary course of business, intercompany indebtedness and immaterial leases for telephones, copy machines, facsimile machines and other office equipment) in excess of $200,000, except for those issued in the ordinary course of business;

(ii)           any contract or agreement that is a “material contract” within the meaning of Item 601(b)(10) of Regulation S-K;

(iii)          any contract or agreement limiting, in any material respect, the ability of the Company or any of the Company Subsidiaries to engage in any line of business or to compete, whether by restricting territories, customers or otherwise, or in any other material respect, with any Person;

(iv)          any contract or agreement that concerns the sale or acquisition of any material portion of the Company’s business;

(v)           any alliance, cooperation, joint venture, shareholders, partnership or similar agreement involving a sharing of profits or losses relating to the Company or any Company Subsidiary;

(vi)          any contract or agreement involving annual payments in excess of $200,000 that cannot be cancelled by the Company or a Company Subsidiary without penalty on not more than 90 days’ notice;

(vii)         any material hedge, collar, option, forward purchasing, swap, derivative or similar agreement, understanding or undertaking;

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(viii)        any contract or agreement with respect to the employment or service of any current or former directors, officers, employees or consultants of the Company or any of the Company Subsidiaries other than, with respect to non-executive employees and consultants, in the ordinary course of business; and

(ix)          any contract or agreement containing any (x) non-competition or exclusive dealing obligations or other obligation which purports to limit or restrict in any respect the ability of the Company or any Company Subsidiary to solicit customers or the manner in which, or the localities in which, all or any portion of the business of the Company or the Company Subsidiaries is or can be conducted, or (y) right of first refusal or right of first offer or similar right or that limits or purports to limit the ability of the Company or any of the Company Subsidiaries to own, operate, sell, transfer, pledge or otherwise dispose of any material assets or business.

Each Material Contract (A) is legal, valid and binding on the Company and the Company Subsidiaries which are a party to such contract, (B) is in full force and effect and enforceable in accordance with its terms and (C) will continue to be legal, valid, binding, enforceable, and in full force and effect in all material respects following the consummation of the transactions contemplated by this Agreement.  Neither the Company nor any of the Company Subsidiaries, nor to the Knowledge of the Company, any other party thereto is in material violation or default under any Material Contract.  No benefits under any Material Contract will be increased, and no vesting of any benefits under any Material Contract will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement, nor will the value of any of the benefits under any Material Contract be calculated on the basis of any of the transactions contemplated by this Agreement.  The Company and the Company Subsidiaries, and to the Knowledge of the Company, each of the other parties thereto, have performed in all material respects all material obligations required to be performed by them under each Material Contract, and to the Knowledge of the Company, no event has occurred that with notice or lapse of time would constitute a material breach or default or permit termination, modification, or acceleration, under the Material Contracts.

(s)            Insurance.  The Company and each of the Company Subsidiaries are presently insured, and have been insured for at least the past two years, for reasonable amounts with financially sound and reputable insurance companies against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured.  All of the policies, bonds and other arrangements providing for the foregoing (the “Company Insurance Policies”) are in full force and effect, the premiums due and payable thereon have been or will be timely paid through the Closing Date, and there is no material breach or default (and no condition exists or event has occurred that, with the giving of notice or lapse of time or both, would constitute such a material breach or default) by the Company or any of the Company Subsidiaries under any of the Company Insurance Policies or, to the Knowledge of the Company, by any other party to the Company Insurance Policies.  Neither the Company nor any of the Company Subsidiaries has received any written notice of cancellation or non-renewal of any Company Insurance Policy nor, to the Knowledge of the Company, is the termination of any such policies threatened in writing by the insurer, and there is no material claim for coverage by the Company, or any of the Company Subsidiaries, pending under any of

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such Company Insurance Policies as to which coverage has been denied or disputed by the underwriters of such Company Insurance Policies or in respect of which such underwriters have reserved their rights.

(t)            Title.  The Company and the Company Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and valid title to all material personal property owned by them, in each case free and clear of all Liens, except for Liens which do not materially affect the value of such property or do not interfere with the use made and proposed to be made of such property by the Company or any Company Subsidiary.  Any real property and facilities held under lease by the Company or the Company Subsidiaries are valid, subsisting and enforceable leases with such exceptions that are not material and do not interfere with the use made and proposed to be made of such property and facilities by the Company or the Company Subsidiaries.

(u)           Employee Benefits.

(i)            Section 2.2(v) of the Disclosure Schedule sets forth a correct and complete list of each “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), including, without limitation, multiemployer plans within the meaning of Section 3(37) of ERISA), and all stock purchase, stock option, severance, employment, change-in-control, fringe benefit, bonus, incentive, deferred compensation and all other employee benefit plans, agreements, programs, policies or other arrangements, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise), whether formal or informal, oral or written, under which (A) any current or former employee or director of the Company or any of the Company Subsidiaries (the “Company Employees”) has any present or future right to benefits and which are contributed to, sponsored by or maintained by the Company or any of the Company Subsidiaries or (B) the Company or any Company Subsidiary has had or has any present or future liability.  All such plans, agreements, programs, policies and arrangements shall be collectively referred to as the “Benefit Plans.”

(ii)           (A) Each Benefit Plan has been established and administered in all material respects in accordance with its terms, and in compliance with the applicable provisions of ERISA, the Code and other Laws; (B) no “reportable event” (as such term is defined in Section 4043 of ERISA) that could reasonably be expected to result in material liability has occurred with respect to any Benefit Plan, and (C) no non-exempt “prohibited transaction” (as such term is defined in Section 406 of ERISA and Section 4975 of the Code) has been engaged in by the Company or any Company Subsidiary with respect to any Benefit Plan that has or is expected to result in any material liability or “accumulated funding deficiency” (as such term is defined in Section 302 of ERISA and Section 412 of the Code (whether or not waived)).

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(iii)          The Company and the Company Subsidiaries will be in compliance, as of the Closing Date, with Sections 111 and 302 of the Emergency Economic Stabilization Act of 2008, as amended by the U.S. American Recovery and Reinvestment Act of 2009, including all guidance issued thereunder by a Governmental Entity (collectively “EESA”).

(v)           Taxes.  All material Tax Returns required to be filed by, or on behalf of, Company or the Company Subsidiaries have been timely filed, or will be timely filed, in accordance with all Laws, and all such Tax Returns are, or shall be at the time of filing, complete and correct in all material respects.  The Company and the Company Subsidiaries have timely paid all material Taxes due and payable (whether or not shown on such Tax Returns), or, where payment is not yet due, have made adequate provisions in accordance with GAAP.  There are no Liens with respect to Taxes upon any of the assets or properties of either the Company or the Company Subsidiaries other than with respect to Taxes not yet due and payable.

(w)          Labor.

(i)            Employees of the Company and the Company Subsidiaries are not represented by any labor union nor are any collective bargaining agreements otherwise in effect with respect to such employees.  No labor organization or group of employees of the Company or any Company Subsidiary has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions presently pending or threatened to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority, nor have there been in the last three years.  There are no strikes, work stoppages, slowdowns, labor picketing lockouts, material arbitrations or material grievances, or other material labor disputes pending or, to the Knowledge of the Company, threatened against or involving the Company or any Company Subsidiary, nor have there been any in the past year.

(ii)           Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company and the Company Subsidiaries are in compliance with all federal and state Laws and requirements respecting employment and employment practices, terms and conditions of employment, collective bargaining, disability, immigration, health and safety, wages, hours and benefits, non-discrimination in employment, workers’ compensation and the collection and payment of withholding and/or payroll taxes and similar taxes.

(iii)          Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there is no charge or complaint pending or threatened before any Governmental Entity alleging unlawful discrimination in employment practices, unfair labor practices or other unlawful employment practices by the Company or any Company Subsidiary.

(x)           Brokers and Finders.  Except for PGP Capital Advisors, LLC (the “Placement Agent”) and the fees payable thereto or to its assigns (which fees are to be paid by

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the Company), neither the Company nor any of its officers, directors, employees or agents has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Company in connection with this Agreement or the transactions contemplated hereby.

(y)           Loan Portfolio.  As of the date of this Agreement, the characteristics of the loan portfolio of the Company have not materially and adversely changed from the characteristics of the loan portfolio as of December 31, 2012.

(z)           Offering of Securities.  Neither the Company nor any Person acting on its behalf has taken any action (including any offering of any securities of the Company under circumstances which would require the integration of such offering with the offering of any of the Common Stock to be issued pursuant to this Agreement under the Securities Act and the rules and regulations of the SEC promulgated thereunder) which would subject the offering, issuance or sale of any of the Common Stock to be issued pursuant to this Agreement to be subject to the registration requirements of the Securities Act.  Neither the Company nor any Person acting on its behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with any offer or sale of the Common Stock pursuant to the transactions contemplated by this Agreement.  Assuming the accuracy of the Investor’s representations and warranties set forth in this Agreement, no registration under the Securities Act is required for the offer and sale of the Common Stock by the Company to the Investor.

(aa)         Investment Company Status.  The Company is not, and upon consummation of the transactions contemplated by this Agreement will not be, an “investment company,” a company controlled by an “investment company” or an “affiliated Person” of, or “promoter” or “principal underwriter” of, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.

(bb)         Affiliate Transactions.  No officer, director, five percent (5%) shareholder or other Affiliate of the Company (or any Company Subsidiary), or any individual who, to the Knowledge of the Company, is related by marriage or adoption to or shares the same home as any such Person, or any entity which, to the Knowledge of the Company, is controlled by any such Person (collectively, an “Insider”), is a party to any contract or transaction with the Company (or any Company Subsidiary) which pertains to the business of the Company (or any Company Subsidiary) or has any interest in any property, real or personal or mixed, tangible or intangible, used in or pertaining to the business of the Company (or any Company Subsidiary).  The foregoing representation and warranty does not include deposits at the Company (or any Company Subsidiary) or loans of $250,000 or less made in the ordinary course of business in compliance with Regulation O and other applicable Law.

(cc)         Anti-takeover Provisions Not Applicable.  The Board of Directors has taken all necessary action to ensure that the transactions contemplated by this Agreement and the consummation of the transactions contemplated hereby will be exempt from any anti-takeover or similar provisions of the Company’s certificate of incorporation and bylaws, the Rights Plan and any provisions of any applicable “moratorium”, “control share”, “fair price”, “interested shareholder” or other anti-takeover Laws and regulations of any jurisdiction.

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(dd)         Issuance of the Common Stock.  The issuance of the Common Stock in connection with the transactions contemplated by this Agreement has been duly authorized and such Common Stock, when issued and paid for in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable and free and clear of all Liens, other than restrictions on transfer imposed by applicable securities Laws, and shall not be subject to preemptive or similar rights.

2.3          Representations and Warranties of the Investor.  Except as Previously Disclosed, the Investor hereby represents and warrants to the Company, as of the date hereof and as of the Closing Date (except for the representations and warranties that are as of a specific date which are made as of that date) that:

(a)           Organization and Authority.  The Investor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified and where failure to be so qualified would be reasonably expected to materially and adversely impair or delay its ability to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.

(b)           Authorization; No Conflicts.

(i)            The Investor has the necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by its board of directors, general partner or managing members, investment committee, investment adviser or other authorized person, as the case may be, and no further approval or authorization by any of its shareholders, partners or other equity owners, as the case may be, is required.  This Agreement has been duly and validly executed and delivered by the Investor and, assuming due authorization, execution and delivery by the Company is the valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles).

(ii)           Neither the execution, delivery and performance by the Investor of this Agreement nor the consummation of the transactions contemplated hereby, nor compliance by the Investor with any of the provisions hereof, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any Liens upon any of the properties or assets of the Investor under any of the terms, conditions or provisions of (1) its certificate of incorporation or bylaws, its certificate of limited partnership or partnership agreement or its similar governing

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documents or (2) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Investor is a party or by which the Investor may be bound, or to which the Investor or any of the properties or assets of the Investor may be subject, or (B) violate any Law applicable to the Investor or any of its properties or assets except in the case of clauses (A)(2) and (B) for such violations, conflicts and breaches as would not reasonably be expected to materially adversely affect the Investor’s ability to perform its obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis.

(c)           Governmental Consents.  Except as set forth in the Disclosure Schedule, no Governmental Consents are necessary for the execution and delivery of this Agreement or for the purchase by the Investor of the Common Stock pursuant to this Agreement.

(d)           Purchase for Investment; Accredited Investor Status.  The Investor acknowledges that the Common Stock to be purchased by the Investor pursuant to this Agreement has not been registered under the Securities Act or under any state securities laws and may not be resold or transferred by the Investor without such registration or appropriate reliance on any available exemption from such requirements.  The Investor (i) is acquiring the Common Stock pursuant to an exemption from the registration requirements of the Securities Act and other applicable securities laws solely for investment with no present intention to distribute any of the Common Stock to any Person, (ii) will not sell or otherwise dispose of any of the Common Stock, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable securities laws, (iii) has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of its investment in the Common Stock and of making an informed investment decision and (iv) is an “accredited investor” (as that term is defined by Rule 501 of the Securities Act).

(e)           Brokers and Finders.  Neither the Investor, nor its respective Affiliates nor any of their respective officers or directors, has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Investor in connection with this Agreement or the transactions contemplated hereby.  The Investor acknowledges that it is purchasing the Common Stock directly from the Company and not from the Placement Agent.

(f)            Investment Decision.  The Investor, or the duly appointed investment manager to the Investor (the “Investment Manager”), if applicable, has independently evaluated the merits of its decision to purchase the Common Stock pursuant to this Agreement, and the Investor confirms that neither it, nor its Investment Manager, if applicable, has relied on the advice of any other person’s business and/or legal counsel in making such decision.  The Investor understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Investor in connection with the purchase of the Common Stock constitutes legal, tax or investment advice.  The Investor has consulted such accounting, legal, tax and investment advisors as it has deemed necessary or appropriate in connection with its purchase of the Common Stock.  The Investor understands that the Placement Agent has acted solely as the agent of the Company in this placement of the Common Stock and the Investor has

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not relied on the business or legal advice of the Placement Agent or any of its agents, counsel or Affiliates in making its investment decision hereunder, and confirms that none of such persons has made any representations or warranties to the Investor in connection with the transactions contemplated by this Agreement.  Except as Previously Disclosed and except for this Agreement, there are no agreements or understandings with respect to the transactions contemplated by this Agreement and the Side Letter between the Investor or any of its Affiliates, on the one hand, and (i) any of the Other Investors or any of their respective Affiliates, in each case, the identity of which is known to the Investor, (ii) the Company or (iii) the Company Subsidiaries, on the other hand.

(g)Financial Capability.  At the Closing, the Investor shall have available all funds necessary to consummate the purchase of Common Stock on the terms and conditions contemplated by this Agreement.

(h)Access to Information.  The Investor acknowledges that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Common Stock and the merits and risks of investing in the Common Stock; (ii) access to information about the Company and the Company Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the Investment; and (iv) the opportunity to ask questions of management.

(i)No Reliance.  The Investor has not relied on any representation or warranty in connection with the Investment other than those contained in this Agreement.

(j)No Coordinated Acquisition.  Except as Previously Disclosed, the Investor (i) reached its decision to invest in the Common Stock independently from any other Person known by the Investor to be a potential investor in the Company, other than any Affiliates of the Investor that are also investing in the Other Private Placements, (any such person, a “Potential Investor”), (ii) is not affiliated with any other Potential Investor, (iii) is not advised or managed by an advisor or manager that advises or manages any other Potential Investor, other than any Affiliates of the Investor that are also investing in the Other Private Placements, (iv) has not entered into any agreement or understanding, whether written or not reduced to writing, with any other Potential Investor to act in concert for the purpose of exercising a controlling influence over the Company or any Company Subsidiaries, including, but not limited to, any agreements or understandings regarding the voting or transfer of shares of the Company, (v) has not shared due diligence materials prepared by such Investor or any of its advisors or representatives with respect to the Company or any Company Subsidiaries with any other Potential Investor, (vi) has not been induced, nor has induced any other Potential Investor, to enter into the transactions contemplated by this Agreement by any other Potential Investor, (vii) was not notified of or provided the opportunity to enter into the transactions contemplated by this Agreement pursuant to the terms of any agreement or informal understanding with, or otherwise acting in concert with, any other Potential Investor and was not required by the terms of any agreement or informal understanding to so notify any other Potential Investor, (viii) is not a party to any

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formal or informal understanding with any other Potential Investor to make a coordinated acquisition of stock of the Company, and the investment decision of the Investor is not based on the investment decision of any other Potential Investor, (ix) is not a party to any formal or informal agreement or understanding concerning the appointment of any individual to the Board of Directors, (x) will not, by reason of the Investment, file, be required to file, or be required to be included in a Schedule 13D or Schedule 13G pursuant to the United States federal securities laws, (xi) has not engaged as part of a group consisting of substantially the same entities as the Potential Investors, in substantially the same combination of interests, in any additional banking or nonbanking activities or business ventures in the United States and (xii) will not pay any other Potential Investor any fee in connection with the transactions contemplated hereby.  Except as Previously Disclosed, the Investor does not presently hold any capital stock of the Company.

ARTICLE 3

COVENANTS

3.1Conduct of Business Prior to Closing.  Except as otherwise expressly required or contemplated by this Agreement or applicable Law or in the performance of any Material Contract that was Previously Disclosed, or with the prior written consent of the Investor, between the date of this Agreement and the Closing, the Company shall, and the Company shall cause each Company Subsidiary to:

(a)use commercially reasonable efforts to conduct its business only in the ordinary course of business; and

(b)use commercially reasonable efforts to (i) preserve the present business operations, organization (including officers and employees) and goodwill of the Company and any Company Subsidiary and (ii) preserve business relationships with customers, suppliers, consultants and others having business dealings with the Company; provided, however, that nothing in this clause (b) shall place any limit on the ability of the Board of Directors to act, or require any actions that the Board of Directors may, in good faith, determine to be inconsistent with their duties or the Company’s obligations under applicable Law or imposed by any Governmental Entity.

3.2Confidentiality.  The Investor acknowledges that the information being provided to it in connection with the transactions contemplated hereby is subject to the terms of the Confidentiality Agreement heretofore entered into between the Investor and the Company (the “Confidentiality Agreement”), the terms of which are incorporated herein by reference.

3.3Commercially Reasonable Efforts.  Upon the terms and subject to the conditions herein provided, except as otherwise provided in this Agreement, each of the parties hereto agrees to use its commercially reasonable efforts to take or cause to be taken all action, to do or cause to be done and to assist and cooperate with the other parties hereto in doing all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated hereby, including but not limited to: (a) the satisfaction of the conditions precedent to the obligations of the parties hereto; (b) the obtaining of applicable Governmental Consents, and consents, waivers and approvals of any other third parties; (c)

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defending of any claim, action, suit, investigation or proceeding, whether judicial or administrative, challenging this Agreement or the performance of the obligations hereunder; and (d) the execution and delivery of such instruments, and the taking of such other actions as the other parties hereto may reasonably request in order to carry out the intent of this Agreement.  Notwithstanding the foregoing, under no circumstances will the Investor be required to disclose to the Company, the Company Subsidiaries or any third party any information the disclosure of which is prohibited by Law, nor shall it be required to agree to any restrictions, conditions or commitments imposed or otherwise required by any Government Entity that are determined by the Investor in its sole discretion to be unduly burdensome, other than customary passivity commitments, in order to consummate and make effective the transactions contemplated hereby.

3.4Legend.

(a)The Investor agrees that all certificates or other instruments representing the Common Stock subject to this Agreement shall bear a legend substantially to the following effect, until such time as they are not required under Section 3.4(b):

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.”

(b)Upon request of the Investor, the Company shall promptly cause such legend to be removed from any certificate for any Common Stock to be so transferred if (i) such Common Stock is being transferred pursuant to a registration statement in effect with respect to such transfer or (ii) such Common Stock is being transferred pursuant to an exemption from registration under the Securities Act and applicable state laws subject to receipt by the Company of an opinion of counsel for the Investor reasonably satisfactory to the Company to the effect that such legend is no longer required under the Securities Act and applicable state laws.  The Investor acknowledges that the Common Stock has not been registered under the Securities Act or under any state securities laws and agrees that it shall not sell or otherwise dispose of any of the Common Stock, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable securities laws.

3.5Certain Other Transactions.

(a)Prior to the Closing, notwithstanding anything in this Agreement to the contrary, the Company shall not directly or indirectly effect or cause to be effected any transaction with a third party that would reasonably be expected to result in a Change in Control unless such third party shall have provided prior assurance in writing to the Investor (in a form that is reasonably satisfactory to the Investor) that the terms of this Agreement shall be fully performed (i) by the Company or (ii) by such third party if it is the successor of the Company or if the Company is its direct or indirect Subsidiary.  For the avoidance of doubt, it is understood

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and agreed that, in the event that a Change in Control occurs on or prior to the Closing, the Investor shall maintain the right under this Agreement to acquire, pursuant to the terms and conditions of this Agreement, the Common Stock that is to be purchased by the Investor pursuant to this Agreement (or such other securities or property (including cash) into which the Common Stock that is to be purchased by Investor pursuant to this Agreement may have become exchangeable as a result of such Change in Control), as if the Closing had occurred immediately prior to such Change in Control.

(b)In the event that, at or prior to the Closing, (i) the number of shares of Common Stock, or securities convertible or exchangeable into or exercisable for shares of Common Stock, issued and outstanding is changed as a result of any reclassification, stock split (including reverse split), stock dividend or distribution (including any dividend or distribution of securities convertible or exchangeable into or exercisable for shares of Common Stock), merger, tender or exchange offer or other similar transaction, or (ii) the Company fixes a record date that is at or prior to the Closing Date for the payment of any non-stock dividend or distribution on the Common Stock (excluding the rights to be issued in the Rights Offering), then the number of shares of Common Stock to be issued to the Investor at the Closing under this Agreement, together with the applicable implied per share price (and the number of shares and per share price pursuant to the Rights Offering), shall be equitably adjusted and/or the shares of Common Stock to be issued to the Investor at the applicable Closing under this Agreement shall be equitably replaced with shares of other stock or securities or property (including cash), in each case, to provide the Investor with substantially the same economic benefit from this Agreement as the Investor had prior to the applicable transaction.  Notwithstanding anything in this Agreement to the contrary, in no event shall the Purchase Price or any component thereof, or the aggregate percentage of shares to be purchased by the Investor, be changed by the foregoing.

(c)Notwithstanding anything in the foregoing to the contrary, the provisions of this Section 3.5 shall not be implicated by (i) the transactions contemplated by this Agreement, the Other Private Placements, the TARP Exchange and the Other Preferred Exchanges, and the Rights Offering, or (ii) any issuances of options, restricted stock units or other equity-based awards granted to newly-appointed directors, employees or consultants of the Company at or around the same time as the transactions contemplated by this Agreement to such Persons, including upon exercise of any such options.

3.6Exchange Listing.  The Company shall use its reasonable best efforts to cause the Common Stock to be issued pursuant to this Agreement to be approved for listing on NASDAQ or such other market on which the Common Stock is then listed or quoted, subject to official notice of issuance, as promptly as possible and in any event prior to the Closing.

3.7Stockholders Meeting.  Promptly after the Closing Date, the Company shall give notice of and hold a meeting of its stockholders in accordance with applicable law and the corporate governance rules of NASDAQ for the purpose of obtaining stockholder approval of an amendment to the certificate of incorporation of the Company increasing the number of shares of Common Stock and Preferred Stock the Company is authorized to issue and, if and to the extent required by the corporate governance rules of NASDAQ, further approving the issuance of shares of Common Stock upon such approval pursuant to the conversion of the Common Stock Equivalents issued in the TARP Exchange and in the Other Preferred Exchanges.  To the extent

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permitted by the NASDAQ corporate governance rules, the Investor agrees to vote all shares of Common Stock that it owns or has the power to direct the voting of for this purpose in favor of such amendment and such issuances.

3.8Registration Rights.

(a)Registration.

(i)Subject to the terms and conditions of this Agreement, the Company covenants and agrees that upon the expiration of ninety (90) days after the Closing Date (the “Filing Deadline”), the Company shall have prepared and filed with the SEC one or more Shelf Registration Statements covering the resale of all of the Registrable Securities (or, if permitted by the rules of the SEC, otherwise designated an existing Shelf Registration Statement filed with the SEC to cover such Registrable Securities), and, to the extent the Shelf Registration Statement has not theretofore been declared effective or is not automatically effective upon such filing, the Company shall use reasonable best efforts to cause such Shelf Registration Statement to be declared or become effective as soon as practicable (and in any event no later than the Effectiveness Deadline) and to keep such Shelf Registration Statement continuously effective and in compliance with the Securities Act and usable for resale of such Registrable Securities until the date that is 12 months after the initial effective date thereof (the “Registration Termination Date”).

(ii)Any registration pursuant to this Section 3.8(a) shall be effected by means of a shelf registration under the Securities Act (a “Shelf Registration Statement”) in accordance with the methods and distribution set forth in the Shelf Registration Statement and Rule 415.

(b)Expenses of Registration.  All Registration Expenses incurred in connection with any registration, qualification or compliance hereunder shall be borne by the Company.  All Selling Expenses incurred in connection with any registrations hereunder shall be borne by the Holders selling in such registration pro rata on the basis of the aggregate number of securities or shares being sold.

(c)Obligations of the Company.  The Company shall use its reasonable best efforts, for so long as there are Registrable Securities outstanding, to take such actions as are under its control to not become an ineligible issuer (as defined in Rule 405 under the Securities Act).  In addition, whenever required to effect the registration of any Registrable Securities or facilitate the distribution of Registrable Securities pursuant to an effective Shelf Registration Statement, the Company shall, as expeditiously as reasonably practicable:

(i)Prepare and file with the SEC a prospectus supplement with respect to a proposed offering of Registrable Securities pursuant to an effective registration statement and, subject to this Section 3.8(c), keep such registration statement effective or such prospectus supplement current.

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(ii)Prepare and file with the SEC such amendments and supplements to the applicable registration statement and the prospectus or prospectus supplement used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.

(iii)Furnish to the Holders such number of correct and complete copies of the applicable registration statement and each such amendment and supplement thereto (including in each case all exhibits) and of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned or to be distributed by them.

(iv)Use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky Laws of such jurisdictions as shall be reasonably requested by the Holders, to keep such registration or qualification in effect for so long as such registration statement remains in effect, and to take any other action which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such Holder; provided, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

(v)Notify each Holder of Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the applicable prospectus, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing (which notice shall not contain any material non-public information).

(vi)Give written notice to the Holders (which notice shall not contain any material, non-public information):

(A)when any registration statement filed pursuant to Section 3.8(a) or any amendment thereto has been filed with the SEC (except for any amendment effected by the filing of a document with the SEC pursuant to the Exchange Act) and when such registration statement or any post-effective amendment thereto has become effective;

(B)of any request by the SEC for amendments or supplements to any registration statement or the prospectus included therein or for additional information;

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(C)of the issuance by the SEC of any stop order suspending the effectiveness of any registration statement or the initiation of any proceedings for that purpose;

(D)of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Common Stock for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

(E)of the happening of any event that requires the Company to make changes in any effective registration statement or the prospectus related to the registration statement in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made).

(vii)Use its reasonable best efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of any registration statement referred to in Section 3.8(c)(vi)(C) at the earliest practicable time.

(viii)Upon the occurrence of any event contemplated by Section 3.8(c)(v) or 3.8(c)(vi)(E) and subject to the Company’s rights under Section 3.8(d), promptly prepare a post-effective amendment to such registration statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to the Holders, the prospectus shall not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(ix)Cause all such Registrable Securities to be listed on each securities exchange on which the same class of securities issued by the Company are then listed or, if the same class of securities is not then listed on any securities exchange, use its reasonable best efforts to cause all such Registrable Securities of such class to be listed on the NASDAQ Capital Market.

(x)If requested by Holders of a majority of the Registrable Securities being registered and/or sold in connection therewith, promptly include in a prospectus supplement or amendment such information as the Holders of a majority of the Registrable Securities being registered and/or sold in connection therewith may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such prospectus supplement or such amendment as soon as practicable after the Company has received such request.

(xi)Timely provide to its security holders earnings statements satisfying the provisions of Section 9(a) of the Securities Act and Rule 158 thereunder.

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(d)Suspension of Sales.  Upon receipt of written notice from the Company that a registration statement, prospectus or prospectus supplement contains or may contain an untrue statement of a material fact or omits or may omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that circumstances exist that make use of such registration statement, prospectus or prospectus supplement inadvisable, each Holder of Registrable Securities shall forthwith discontinue disposition of Registrable Securities pursuant to such registration statement until such Holder has received copies of a supplemented or amended prospectus or prospectus supplement, or until such Holder is advised in writing by the Company that the use of the prospectus and, if applicable, prospectus supplement may be resumed, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the prospectus and, if applicable, prospectus supplement covering such Registrable Securities current at the time of receipt of such notice (each such suspension, a “Suspension Period”).  No single Suspension Period shall exceed forty-five (45) consecutive days and the aggregate of all Suspension Periods shall not exceed one hundred twenty (120) days during any twelve (12) month period.

(e)Termination of Registration Rights.  A Holder’s registration rights as to any securities held by such Holder (and its Affiliates, partners, members and former members) shall not be available unless such securities are Registrable Securities.

(f)Furnishing Information.

(i)Neither the Investor nor any Holder shall use any free writing prospectus (as defined in Rule 405) in connection with the sale of Registrable Securities without the prior written consent of the Company.

(ii)It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 3.8(c) as to a selling Holder that such selling Holder shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the registered offering of their Registrable Securities.

(g)Indemnification.

(i)The Company agrees to indemnify each Holder and, if a Holder is a person other than an individual, such Holder’s officers, directors, employees, agents, representatives and Affiliates, and each Person, if any, that controls a Holder within the meaning of the Securities Act (each, an “Indemnitee”), against any and all Losses, joint or several, arising out of or based upon any untrue statement or alleged untrue statement of material fact contained in any registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto or any documents incorporated therein by reference or contained in any free writing prospectus (as such term is defined in Rule 405) prepared by the Company or authorized by it in writing for use by such Holder (or any amendment or supplement thereto), or any omission to

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state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, that the Company shall not be liable to such Indemnitee in any such case to the extent that any such Loss is based solely upon (i) an untrue statement or omission made in such registration statement, including any such preliminary prospectus or final prospectus contained therein or any such amendments or supplements thereto or contained in any free writing prospectus (as such term is defined in Rule 405) prepared by the Company or authorized by it in writing for use by such Holder (or any amendment or supplement thereto), in reliance upon and in conformity with information regarding such Indemnitee or its plan of distribution or ownership interests which was furnished in writing to the Company by such Indemnitee expressly for use in connection with such registration statement, including any such preliminary prospectus or final prospectus contained therein or any such amendments or supplements thereto, or (ii) offers or sales effected by or on behalf such Indemnitee “by means of” (as defined in Rule 159A) a “free writing prospectus” (as defined in Rule 405) that was not authorized in writing by the Company.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an Indemnitee and shall survive the transfer of the Registrable Securities by the Holders.

(ii)If any proceeding shall be brought or asserted against any Indemnitee, such Indemnitee shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnitee and the payment of all reasonable fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnitee to give such notice shall not relieve the Company of its obligations or liabilities pursuant to this Agreement, except to the extent that the Company is materially and adversely prejudiced in its ability to defend such action.  An Indemnitee shall have the right to employ separate counsel in any such proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnitee or Indemnitees unless: (1) the Company has agreed in writing to pay such fees and expenses; (2) the Company shall have failed promptly to assume the defense of such proceeding and to employ counsel reasonably satisfactory to such Indemnitee in any such proceeding; or (3) the named parties to any such proceeding (including any impleaded parties) include both such Indemnitee and the Company, and such Indemnitee shall have been advised by counsel that a conflict of interest exists if the same counsel were to represent such Indemnitee and the Company; provided, that the Company shall not be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnitees and all similarly situated Persons who are “Indemnitees” as defined in the other Agreements.  The Company shall not be liable for any settlement of any such proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed.  The Company shall not, without the prior written consent of the Indemnitee, effect any settlement of any pending proceeding in respect of which any Indemnitee is a party, unless such settlement

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includes an unconditional release of such Indemnitee from all liability on claims that are the subject matter of such proceeding.  Subject to the terms of this Agreement, all fees and expenses of the Indemnitee (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such proceeding in a manner not inconsistent with this Section 3.8(g)(ii)) shall be paid to the Indemnitee, as incurred, within thirty (30) days of written notice thereof to the Company; provided, that the Indemnitee shall promptly reimburse the Company for that portion of such fees and expenses applicable to such actions for which such Indemnitee is finally judicially determined to not be entitled to indemnification hereunder).

(iii)If the indemnification provided for in Section 3.8(g)(i) is unavailable to an Indemnitee with respect to any Losses, then the Company, in lieu of indemnifying such Indemnitee, shall contribute to the amount paid or payable by such Indemnitee as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnitee, on the one hand, and the Company, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations.  The relative fault of the Company, on the one hand, and of the Indemnitee, on the other hand, shall be determined by reference to, among other factors, whether the untrue statement of a material fact or omission to state a material fact relates to information supplied by the Company or by the Indemnitee and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; the Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 3.8(g)(iii) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in Section 3.8(g)(i).  No Indemnitee guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from the Company if the Company was not guilty of such fraudulent misrepresentation.

(iv)The indemnity and contribution agreements contained in this Section 3.8(g) are in addition to any liability that the Company may have to the Indemnitees and are not in diminution or limitation of the indemnification provisions under Article 5 of this Agreement.

(h)Assignment of Registration Rights.  The rights of the Investor to registration of Registrable Securities pursuant to Section 3.8(a) may be assigned by the Investor to a transferee or assignee of Registrable Securities to which (i) there is transferred to such transferee no less than $1 million in Registrable Securities or all of the Registrable Securities held by the Investor and (ii) such transfer is permitted under the terms hereof; provided, however, that the transferor shall, within ten (10) days after such transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the number and type of Registrable Securities that are being assigned.

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(i)Rule 144 Reporting.  With a view to making available to the Investor and Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its reasonable best efforts to:

(i)make and keep adequate current public information with respect to the Company available, as those terms are understood and defined in Rule 144(c)(1) or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of this Agreement;

(ii)so long as the Investor or a Holder owns any Registrable Securities, furnish to the Investor or such Holder forthwith upon request: (A) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 under the Securities Act, and of the Exchange Act; (B) a copy of the most recent annual or quarterly report of the Company; and (C) such other reports and documents as the Investor or Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration; and

(iii)to take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act.

(j)As used in this Section 3.8, the following terms shall have the following respective meanings:

(i)“Effective Date” means the date that the Shelf Registration Statement filed pursuant to Section 3.8(a)(i) is first declared effective by the SEC.

(ii)“Effectiveness Deadline” means, with respect to the Shelf Registration Statement required to be filed pursuant to Section 3.8(a)(i), the earlier of (i) the 90th calendar day following the Filing Deadline and (ii) the 5th Business Day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Shelf Registration Statement will not be “reviewed” or will not be subject to further review; provided, that if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the SEC is closed for business, the Effectiveness Deadline shall be extended to the next Business Day on which the SEC is open for business.

(iii)“Holder” means the Investor and any other holder of Registrable Securities to whom the registration rights conferred by this Agreement have been transferred in compliance with Section 3.8(h) hereof.

(iv)“Register,” “registered” and “registration” shall refer to a registration effected by preparing and (A) filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of effectiveness of such registration

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statement or (B) filing a prospectus and/or prospectus supplement in respect of an appropriate effective registration statement.

(v)“Registrable Securities” means (A) all Common Stock purchased by the Investor pursuant to this Agreement and (B) any equity securities issued or issuable directly or indirectly with respect to the securities referred to in clause (A) by way of conversion, exercise or exchange thereof or stock dividend or stock split or in connection with a combination of shares, recapitalization, reclassification, merger, amalgamation, arrangement, consolidation or other reorganization, provided that, once issued, such securities shall not be Registrable Securities after (1) they are sold pursuant to an effective registration statement under the Securities Act, (2) they may be sold pursuant to Rule 144 without limitation thereunder on volume or manner of sale and without the requirement for the Company to be in compliance with the current public information required under Rule 144(e)(1) (or Rule 144(i)(2), if applicable), (3) they have ceased to be outstanding or (4) they have been sold in a private transaction in which the transferor’s rights under this Agreement are not permitted by this Agreement to be assigned to the transferee of the securities.  No Registrable Securities may be registered under more than one registration statement at one time.

(vi)“Registration Expenses” means all expenses incurred by the Company in effecting any registration pursuant to this Agreement (whether or not any registration or prospectus becomes effective or final) or otherwise complying with its obligations under this Section 3.8, including, without limitation, all registration, filing and listing fees, printing expenses, fees and disbursements of counsel for the Company and blue sky fees and expenses, but shall not include Selling Expenses and the compensation of regular employees of the Company, which shall be paid in any event by the Company.

(vii)“Rule 158,” “Rule 159A,” “Rule 405” and “Rule 415” mean, in each case, such rule promulgated under the Securities Act (or any successor provision), as the same shall be amended from time to time.

(viii)“Selling Expenses” means all discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder.

(k)On or prior to the Acceptance Date, the Investor shall furnish to the Company a fully completed Selling Shareholder Questionnaire in the form attached as Appendix I hereto for use in the preparation of the Registration Statement and all of the information contained therein will be true and correct as of the Closing Date.

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ARTICLE 4

TERMINATION

4.1Termination.  This Agreement may be terminated prior to the Closing:

(a)by mutual written agreement of the Company and the Investor;

(b)by any party, upon written notice to the other party, in the event that the Closing does not occur on or before August 31, 2013; provided, however, that the right to terminate this Agreement pursuant to this Section 4.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date;

(c)by the Investor, upon written notice to the Company, if (i) there has been a breach of any representation, warranty, covenant or agreement made by the Company in this Agreement, or any such representation and warranty shall have become untrue after the date of this Agreement, such that Section 1.2(c)(ii)(A) would not be satisfied and (ii) such breach or condition is not curable or, if curable, is not cured prior to the date that would otherwise be the Closing Date in absence of such breach or condition; provided that this Section 4.1(c) shall only apply if the Investor is not in material breach of any of the terms of this Agreement;

(d)by the Company, upon written notice to the Investor, if (i) there has been a breach of any representation, warranty, covenant or agreement made by the Investor in this Agreement, or any such representation and warranty shall have become untrue after the date of this Agreement, such that Section 1.2(c)(iii)(A) would not be satisfied and (ii) such breach or condition is not curable or, if curable, is not cured prior to the date that would otherwise be the Closing Date in absence of such breach or condition; provided that this Section 4.1(d) shall only apply if the Company is not in material breach of any of the terms of this Agreement; or

(e)by any party, upon written notice to the other parties, in the event that any Governmental Entity shall have issued any order, decree or injunction or taken any other action restraining, enjoining or prohibiting any of the transactions contemplated by this Agreement, and such order, decree, injunction or other action shall have become final and nonappealable.

4.2Effects of Termination.  In the event of any termination of this Agreement as provided in Section 4.1, this Agreement (other than Section 3.2, this Article 4 and Article 6 of this Agreement, which shall remain in full force and effect) shall forthwith become wholly void and of no further force and effect; provided that nothing herein shall relieve any party from liability for fraud or willful breach of this Agreement.

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ARTICLE 5

INDEMNITY

5.1Indemnification by the Company.

(a)After the Closing, and subject to Sections 5.1(b), 5.3 and 5.4, the Company shall indemnify, defend and hold harmless to the fullest extent permitted by Law the Investor and its Affiliates, and their successors and assigns, officers, directors, partners, members and employees, as applicable, (the “Investor Indemnified Parties”) against, and reimburse any of the Investor Indemnified Parties for, all Losses that any of the Investor Indemnified Parties may at any time suffer or incur, or become subject to, as a result of or in connection with (1) the inaccuracy or breach of any representation or warranty made by the Company in this Agreement or any certificate delivered pursuant hereto or (2) any breach or failure by the Company to perform any of its covenants or agreements contained in this Agreement.  Notwithstanding anything herein to the contrary, the obligations of the Company under this Section 5.1(a) shall not be applicable to or inure to the benefit of any transferee of the Common Stock sold pursuant to this Agreement who is not an Affiliate of the Investor.

(b)Notwithstanding anything to the contrary contained herein, the Company shall not be required to indemnify, defend or hold harmless any of the Investor Indemnified Parties against, or reimburse any of the Investor Indemnified Parties for, any Losses pursuant to Section 5.1(a)(1) (other than Losses arising out of the inaccuracy or breach of any Company Specified Representations) until the aggregate amount of the Investor Indemnified Parties’ Losses for which the Investor Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5.1(a) exceeds $100,000 (the “Deductible”), after which the Company shall be obligated for all of the Investor Indemnified Parties’ Losses for which the Investor Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5.1(a)(1) that are in excess of the Deductible.  Notwithstanding anything to the contrary contained herein, the Company shall not be required to indemnify, defend or hold harmless the Investor Indemnified Parties against, or reimburse the Investor Indemnified Parties for, any Losses pursuant to Section 5.1(a)(1) in a cumulative aggregate amount exceeding the aggregate purchase price paid by the Investor to the Company pursuant to Section 1.1 (other than Losses arising out of the inaccuracy or breach of any Company Specified Representations).

(c)For purposes of Section 5.1(a), in determining whether there has been a breach of a representation or warranty, the parties hereto shall ignore any “materiality,” “Material Adverse Effect” or similar qualifications.

5.2Indemnification by the Investor.

(a)After the Closing, and subject to Sections 5.2(b), 5.3 and 5.4, the Investor shall indemnify, defend and hold harmless to the fullest extent permitted by Law the Company, the Placement Agent and their respective Affiliates and their respective successors and assigns, officers, directors, partners, members and employees (collectively, the “Company Indemnified Parties”) against, and reimburse any of the Company Indemnified Parties for, all Losses that the Company Indemnified Parties may at any time suffer or incur, or become subject to, as a result

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of or in connection with (1) the inaccuracy or breach of any representation or warranty made by the Investor in this Agreement or any certificate delivered pursuant hereto or (2) any breach or failure by such Investor to perform any of its covenants or agreements contained in this Agreement.

(b)Notwithstanding anything to the contrary contained herein, the Investor shall not be required to indemnify, defend or hold harmless any of the Company Indemnified Parties against, or reimburse any of the Company Indemnified Parties for any Losses pursuant to Section 5.2(a)(1) (other than Losses arising out of the inaccuracy or breach of any Investor Specified Representations) until the aggregate amount of the Company Indemnified Parties’ Losses for which the Company Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5.2(a) exceeds the Deductible, after which the Investor shall be obligated for all of the Company Indemnified Parties’ Losses for which the Company Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5.2(a)(1) that are in excess of such Deductible.  Notwithstanding anything to the contrary contained herein, the Investor shall not be required to indemnify, defend or hold harmless the Company Indemnified Parties against, or reimburse the Company Indemnified Parties for, any Losses pursuant to Section 5.2(a)(1) in a cumulative aggregate amount exceeding the aggregate purchase paid by the Investor to the Company pursuant to Section 1.1 hereof (other than Losses arising out of the inaccuracy or breach of any of the Investor Specified Representations).

(c)For purposes of Section 5.2(a), in determining whether there has been a breach of a representation or warranty, the parties hereto shall ignore any “materiality” or similar qualifications.

5.3Notification of Claims.

(a)Any Person that may be entitled to be indemnified under this Article 5 (the “Indemnified Party”) shall promptly notify the party or parties liable for such indemnification (the “Indemnifying Party”) in writing of any claim in respect of which indemnity may be sought hereunder, including any pending or threatened claim or demand by a third party that the Indemnified Party has determined has given or could reasonably give rise to a right of indemnification under this Agreement (including a pending or threatened claim or demand asserted by a third party against the Indemnified Party) (each, a “Third Party Claim”), describing in reasonable detail the facts and circumstances with respect to the subject matter of such claim or demand; provided, however, that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations under this Agreement except to the extent that the Indemnifying Party is materially prejudiced by such failure.  The parties agree that notices for claims in respect of a breach of a representation, warranty, covenant or agreement must be delivered prior to the expiration of any applicable survival period specified in Section 6.1 for such representation, warranty, covenant or agreement; provided, that if, prior to such applicable date, a party hereto shall have notified the other parties hereto in accordance with the requirements of this Section 5.3(a) of a claim for indemnification under this Agreement (whether or not formal legal action shall have been commenced based upon such claim), such claim shall continue to be subject to indemnification in accordance with this Agreement notwithstanding the passing of such applicable date.

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(b)Upon receipt of a notice of a claim for indemnity from an Indemnified Party pursuant to Section 5.3(a) in respect of a Third Party Claim, the Indemnifying Party may, by notice to the Indemnified Party delivered within twenty (20) Business Days of the receipt of notice of such Third Party Claim, assume the defense and control of any Third Party Claim, with its own counsel reasonably acceptable to the Indemnified Party and at its own expense.  The Indemnified Party shall have the right to employ counsel on its own behalf for, and otherwise participate in the defense of, any such Third Party Claim, but the fees and expenses of its counsel will be at its own expense unless (A) the employment of counsel by the Indemnified Party at the Indemnifying Party’s expense has been authorized in writing by the Indemnifying Party, as applicable, (B) the Indemnified Party reasonably believes there may be a conflict of interest between the Indemnified Party and the Indemnifying Party in the conduct of the defense of such Third Party Claim, (C) the Indemnified Party reasonably believes there are legal defenses available to it that are different from, additional to or inconsistent with those available to the Indemnifying Party, or (D) the Indemnifying Party has not in fact employed counsel to assume the defense of such Third Party Claim within a reasonable time after receipt of notice of the commencement of such Third Party Claim, in each of which cases the fees and expenses of such Indemnified Party’s counsel shall be at the expense of the Indemnifying Party; provided, however, that in the event any Investor Indemnified Party is similarly situated with any other “Investor Indemnified Party” under any of the other Agreements with respect to any Third Party Claim, and does not have any conflict of interest with such Person in the conduct of the defense of such Third Party Claim or have legal defenses available to it that are different from, additional to or inconsistent with those available to such Person, such Investor Indemnified Party shall be required to employ the same counsel as such Person and the Company shall be responsible for the fees and expenses of only one such counsel for such Investor Indemnified Party and such other Person or Persons (assuming any of clauses (A) through (D) is satisfied).  The Indemnified Party may take any actions reasonably necessary to defend such Third Party Claim prior to the time that it receives a notice from the Indemnifying Party as contemplated by the immediately preceding sentence.  The Indemnified Party shall, and shall cause each of their Affiliates and representatives to, use reasonable best efforts to cooperate with the Indemnifying Party in the defense of any Third Party Claim.  The Indemnifying Party shall not, without the prior written consent of the Indemnified Party (which shall not be unreasonably withheld), consent to a settlement, compromise or discharge of, or the entry of any judgment arising from, any Third Party Claim, unless such settlement, compromise, discharge or entry of any judgment does not involve any statement, finding or admission of any fault, culpability, failure to act, violation of Law or admission of any wrongdoing by or on behalf of the Indemnified Party, and the Indemnifying Party shall (i) pay or cause to be paid all amounts arising out of such settlement or judgment concurrently with the effectiveness of such settlement or judgment (unless otherwise provided in such judgment), (ii) not encumber any of the assets of any Indemnified Party or agree to any restriction or condition that would apply to or materially adversely affect any Indemnified Party or the conduct of any Indemnified Party’s business and (iii) obtain, as a condition of any settlement, compromise, discharge, entry of judgment (if applicable), or other resolution, a complete and unconditional release of each Indemnified Party in form and substance reasonably satisfactory to such  Indemnified Party from any and all liabilities in respect of such Third Party Claim.  An Indemnified Party shall not settle, compromise or consent to the entry of any judgment with respect to any claim or demand for which it is seeking indemnification from the Indemnifying Party or admit to any liability with respect to such claim

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or demand without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed); provided that such consent shall not be required if the Indemnifying Party has not fulfilled any material obligations under this Section 5.3(b).

(c)In the event any Indemnifying Party receives a notice of a claim for indemnity from an Indemnified Party pursuant to Section 5.3(a) that does not involve a Third Party Claim, the Indemnifying Party shall notify the Indemnified Party within twenty (20) Business Days following its receipt of such notice whether the Indemnifying Party disputes its liability to the Indemnified Party under this Agreement.  The Indemnified Party shall reasonably cooperate with and assist the Indemnifying Party in determining the validity of any such claim for indemnity by the Indemnified Party.

5.4Indemnification Payment.  In the event a claim or any Action for indemnification hereunder has been finally determined, the amount of such final determination shall be paid by the Indemnifying Party to the Indemnified Party on demand in immediately available funds; provided, however, that any reasonable and documented out-of-pocket expenses incurred by the Indemnified Party as a result of such claim or Action shall be reimbursed promptly by the Indemnifying Party upon receipt of an invoice describing such costs incurred by the Indemnified Party.  A claim or an Action, and the liability for and amount of damages therefor, shall be deemed to be “finally determined” for purposes of this Agreement when the parties hereto have so determined by mutual agreement or, if disputed, when a final non-appealable judicial order has been entered into with respect to such claim or Action.

5.5Exclusive Remedies.  Each party hereto acknowledges and agrees that following the Closing, the indemnification provisions hereunder shall be the sole and exclusive remedies of the parties hereto for any breach of the representations, warranties or covenants contained in the this Agreement.  No investigation of the Company by the Investor, or of the Investor by the Company, whether prior to or after the date of this Agreement, shall limit any Indemnified Party’s exercise of any right hereunder or be deemed to be a waiver of any such right.  The parties agree that any indemnification payment made pursuant to this Agreement shall be treated as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

ARTICLE 6

MISCELLANEOUS

6.1Survival.  The representations and warranties of the parties hereto contained in this Agreement shall survive in full force and effect until the date that is fifteen (15) months after the Closing Date (or until final resolution of any claim or action arising from the breach of any such representation and warranty, if notice of such breach was provided prior to the end of such period), at which time they shall terminate and no claims shall be made for indemnification under Section 5.1 or Section 5.2, as applicable, for breaches of representations or warranties thereafter, except the Company Specified Representations (other than the representations and warranties made in Section 2.2(x), which shall survive until the expiration of the applicable statute of limitations) and the Investor Specified Representations shall survive the Closing indefinitely.  The covenants and agreements set forth in this Agreement shall survive until the

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earliest of the duration of any applicable statute of limitations or until performed or no longer operative in accordance with their respective terms.

6.2Other Definitions.  Wherever required by the context of this Agreement, the singular shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa, and references to any agreement, document or instrument shall be deemed to refer to such agreement, document or instrument as amended, supplemented or modified from time to time.  In addition, the following terms shall have the meanings assigned to them below:

(a)the term “Affiliate” means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with, such other Person provided that no security holder of the Company shall be deemed to be an Affiliate of any other security holder or of the Company or any of the Company Subsidiaries solely by reason of any investment in the Company and, for purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”) when used with respect to any Person, means the possession, directly or indirectly, of the power to cause the direction of management or policies of such Person, whether through the ownership of voting securities by contract or otherwise;

(b)the term “Agency” means the Federal Housing Administration, the Federal Home Loan Mortgage Corporation, the Farmers Home Administration (now known as Rural Housing and Community Development Services), the Federal National Mortgage Association, the United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture or any other federal or state agency with authority to (i) determine any investment, origination, lending or servicing requirements with regard to mortgage loans originated, purchased or serviced by the Company or (ii) originate, purchase, or service mortgage loans, or otherwise promote mortgage lending, including state and local housing finance authorities;

(c)the term “Board of Directors” means the Board of Directors of the Company;

(d)the term “Business Day” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York or in the State of California generally are authorized or required by Law or other governmental actions to close;

(e)the term “Capital Stock” means the capital stock or other applicable type of equity interest in a Person;

(f)the term “Change in Control” means, with respect to the Company, that any Person, other than the Investors and their Affiliates, becomes a beneficial owner (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act) directly or indirectly, of twenty percent (20%) of the aggregate voting power of the Voting Securities.

(g)the term “Code” means the Internal Revenue Code of 1986, as amended;

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(h)the term “Company Specified Representations” means the representations and warranties made in Section 2.2(a), Section 2.2(c), Section 2.2(d)(i) and Section 2.2(z);

(i)the term “Disclosure Schedule” shall mean a schedule delivered, on or prior to the date of this Agreement, by (i) the Investor to the Company and (ii) the Company to the Investor setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in Section 2.2 with respect to the Company, or in Section 2.3 with respect to the Investor, or to one or more covenants contained in Article 3;

(j)the term “GAAP” means United States generally accepted accounting principles and practices as in effect from time to time;

(k)the term “Governmental Consent” means any notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of, any Governmental Entity, or the expiration or termination of any statutory waiting periods;

(l)the term “Governmental Entity” means any court, administrative agency or commission or other governmental authority or instrumentality, whether federal, state, local or foreign, and any applicable industry self-regulatory organization or securities exchange;

(m)the term “Insurer” means a Person who insures or guarantees for the benefit of the mortgagee all or any portion of the risk of loss upon borrower default on any of the mortgage loans originated, purchased or serviced by the Bank, including the Federal Housing Administration, the United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture and any private mortgage insurer, and providers of hazard, title or other insurance with respect to such mortgage loans or the related collateral;

(n)the term “Investor Specified Representations” means the representations and warranties made in Section 2.3(b)(i), Section 2.3(d) and Section 2.3(e);

(o)the term “Knowledge” of the Company and words of similar import mean the knowledge of any directors or executive officers of the Company listed on the Disclosure Schedule hereto;

(p)the term “Loan Investor” means any Person (including an Agency) having a beneficial interest in any mortgage loan originated, purchased or serviced by the Bank or a security backed by or representing an interest in any such mortgage loan;

(q)the term “Losses” means any and all losses, damages, reasonable costs, reasonable expenses (including reasonable attorneys’ fees and disbursements), liabilities, settlement payments, awards, judgments, fines, obligations, claims, and deficiencies of any kind, excluding special, consequential, exemplary and punitive damages;

(r)the term “Person” means any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited

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liability company, Governmental Entity or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity;

(s)the term “Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture, limited liability company or other entity (x) of which such Person or a Subsidiary of such Person is a general partner or (y) of which a majority of the voting securities or other voting interests, or a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or persons performing similar functions with respect to such entity, is directly or indirectly owned by such Person and/or one or more Subsidiaries thereof;

(t)the term “Tax” or “Taxes” means all United States federal, state, local or foreign income, profits, estimated, gross receipts, windfall profits, severance, property, intangible property, occupation, production, sales, use, license, excise, emergency excise, franchise, capital gains, capital stock, employment, withholding, transfer, stamp, payroll, goods and services, value added, alternative or add-on minimum tax, or any other tax, custom, duty or governmental fee, or other like assessment or charge of any kind whatsoever, together with any interest, penalties, fines, related liabilities or additions to tax that may become payable in respect thereof imposed by any Governmental Entity, whether or not disputed;

(u)the term “Tax Return” means any return, declaration, report or similar statement required to be filed with respect to any Taxes (including any attached schedules), including, without limitation, any information return, claim or refund, amended return and declaration of estimated Tax;

(v)the term “Voting Securities” means at any time shares of any class of Capital Stock of the Company that are then entitled to vote generally in the election of directors;

(w)the word “or” is not exclusive;

(x)the words “including,” “includes,” “included” and “include” are deemed to be followed by the words “without limitation”;

(y)the terms “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision; and

(z)all article, section, paragraph or clause references not attributed to a particular document shall be references to such parts of this Agreement, and all exhibit and schedule references not attributed to a particular document shall be references to such exhibits and schedules to this Agreement.

6.3Amendment and Waivers.  The conditions to each party’s obligation to consummate the Closing are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by Law.  No amendment or waiver of any provision of this Agreement will be effective against any party hereto unless it is in a writing signed by a duly authorized officer of such party.

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6.4Counterparts and Facsimile.  For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement.  Executed signature pages to this Agreement may be delivered by facsimile and such facsimiles shall be deemed as sufficient as if manually signed signature pages had been delivered.

6.5Governing Law.  This Agreement will be governed by and construed in accordance with the Laws of the State of New York applicable to contracts made and to be performed entirely within such State.

6.6Jurisdiction.  The parties hereby agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Southern District of New York sitting in the borough of Manhattan, New York, New York, so long as such court shall have subject matter jurisdiction over such suit, action or proceeding or, if it does not have subject matter jurisdiction, in any New York State court sitting in the borough of Manhattan, New York, New York, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 6.8 shall be deemed effective service of process on such party.  The parties hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the state and federal courts referred to above for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby

6.7WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

6.8Notices.  Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (a) on the date of delivery if delivered personally or by telecopy or facsimile, upon confirmation of receipt, (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service, or (c) on the third Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid.  All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

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(a)If to the Investor, at the address set forth on the signature page to this Agreement:

(b)If to the Company:

Broadway Financial Corporation
5055 Wilshire Boulevard, Suite 500
Los Angeles, California  90036
Attn:Wayne-Kent A. Bradshaw, President and Chief

Executive Officer

Fax:(323) 556-3216

with a copy (which copy shall not constitute notice) to:

Arnold & Porter LLP
777 South Figueroa Street,
44th Floor
Los Angeles, California  90017
Attn:James R. Walther, Esq.
Fax:(213) 243-4199

6.9Entire Agreement.  This Agreement (including the Annexes, the Side Letter and Schedules hereto) and the Confidentiality Agreement constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties, inducements or conditions, both written and oral, among the parties, with respect to the subject matter hereof and thereof.

6.10Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Common Stock to be issued pursuant to this Agreement.  The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor.  The Investor may assign some or all of its rights hereunder or thereunder without the consent of the Company to any Affiliate of the Investor, and such assignee shall be deemed to be an Investor hereunder with respect to such assigned rights and shall be bound by the terms and conditions of this Agreement that apply to the Investor.

6.11Captions.  The article, section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.

6.12Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination, the parties

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shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

6.13Third Party Beneficiaries.  Nothing contained in this Agreement, expressed or implied, is intended to confer upon any Person (including any of the Other Investors) other than the parties hereto, any benefit right or remedies, except that the provisions of Sections 5.1 and 5.2 shall inure to the benefit of the Persons referred to in such Sections.  Notwithstanding the foregoing, the Company and the Investor agree that the Placement Agent, as placement agent for the Common Stock sold pursuant to this Agreement, shall be a third party beneficiary of the representations, warranties and agreements made or given by the parties hereunder.

6.14Public Announcements.  The Investor will not make (and will use its reasonable best efforts to ensure that its Affiliates and representatives do not make) any news release or public disclosure with respect to this Agreement and any of the transactions contemplated hereby, without first consulting with the Company and, in each case, also receiving the Company’s consent (which shall not be unreasonably withheld or delayed).

6.15Specific Performance.  The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms.  It is accordingly agreed that the parties shall be entitled to seek specific performance of the terms hereof, this being in addition to any other remedies to which they are entitled at law or equity.

6.16No Recourse.  This Agreement may only be enforced against the named parties hereto.  All claims or causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may be made only against the entities that are expressly identified as parties hereto or that are subject to the terms hereof, and no past, present or future director, officer, employee, incorporator, member, manager, partner, shareholder, Affiliate, agent, attorney or representative of any party hereto (including any person negotiating or executing this Agreement on behalf of a party hereto) shall have any liability or obligation with respect to this Agreement or with respect to any claim or cause of action, whether in tort, contract or otherwise, that may arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement and the transactions contemplated hereby.

6.17Possible Common Stock Equivalent Transaction.  The Company does not currently have sufficient authorized but unissued shares of Common Stock available under its certificate of incorporation to enable it to complete the TARP Exchange, each of the Other Preferred Exchanges, and the Other Private Placements.  In addition, issuance of Common Stock for such purposes would ordinarily require approval by the Company’s stockholders pursuant to Rule 5635 of the corporate governance rules of the Nasdaq Stock Market.  Accordingly, the Company has agreed with the Treasury that the Company will, as a condition to completion of the TARP Exchange, either:  (i) obtain the required Company stockholder approval under the Nasdaq corporate governance rules and complete the other steps required to amend its certificate of incorporation to authorize the issuance of a sufficient number of shares of Common Stock for such purposes; or (ii) file a certificate of designations with the Secretary of State of the State of Delaware to designate a new series of preferred stock out of the Company’s authorized but

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unissued preferred stock, to be designated Series F Common Stock Equivalent (the “Common Stock Equivalents”), the terms of which will include that, upon the affirmative vote of the stockholders of the Company specified in such certificate and relating to an increase in the shares of Common Stock it is authorized to issue, such preferred stock shall be mandatorily convertible into the number of shares of Common Stock that would be issued directly if the TARP Exchange were made for Common Stock and an escalating non-cumulative dividend requirement to provide an incentive to the stockholders of the Company to provide such vote.  The Company and the Treasury have further agreed in such event that the TARP Exchange and the Other Preferred Exchanges shall be exchanges for shares of the Common Stock Equivalents rather than shares of Common Stock.  The number of shares of Common Stock Equivalents to be issued in such alternative transaction (excluding shares to be issued in respect of accrued cumulative dividends under the terms of the TARP Preferred Stock) shall be the number of shares of Common Stock Equivalents that have an aggregate liquidation preference equal to 50% of the liquidation preference of all of the TARP Preferred Stock or other preferred stock, as applicable, to be exchanged.

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Appendix I

SELLING STOCKHOLDER QUESTIONNAIRE

The undersigned beneficial owner of Common Stock (the “Common Stock”) of Broadway Financial Corporation (the “Company”) understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a Registration Statement for the registration and resale of Common Stock that qualifies as Registrable Securities, in accordance with the terms of a Subscription Agreement (the “Subscription Agreement”) between the Company and the Investor(s) named therein.  All capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Subscription Agreement.

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:

QUESTIONNAIRE

1.Name.

(a)Full Legal Name of Selling Securityholder

(b)Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities Listed in Item 3 below are held:

(c)Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by the questionnaire):

2.Address for Notices to Selling Securityholder:

Telephone:

Fax:

Contact Person:

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3.Beneficial Ownership of Registrable Securities:

Number of Shares of Registrable Securities beneficially owned(1) and purchased pursuant to the Subscription Agreement:

4.Broker-Dealer Status:

(a)Are you a broker-dealer?

Yes  oNo  o

Note: If yes, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

(b)Are you an affiliate of a broker-dealer?

Yes  oNo  o

(c)If you are an affiliate of a broker-dealer, do you certify that you bought the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?

Yes  oNo  o

Note: If no, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

5.Beneficial Ownership of Securities of the Company Other than the Registrable Securities Owned by the Selling Securityholder.

(1)  Securities “beneficially owned” would include securities held by you for your own benefit, whether in bearer form or registered in your own name or otherwise (regardless of whether or how they are registered), such as, for example, securities held for you by custodians, brokers, relatives, executors, administrators or trustees, and securities held for your account by pledgees, securities owned by a partnership in which you are a member, and securities owned by any corporation which is or should be regarded as a personal holding corporation of yours.  You are also considered to be the beneficial owner of a security if you, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise have or share: (1) voting power, which includes the power to vote, or to direct the voting of, such security or (2) investment power, which includes the power to dispose, or to direct the disposition, of such security.  You are also the beneficial owner of a security if you, directly or indirectly, create or use a trust, proxy, power of attorney, pooling arrangement or any other contract, arrangement or device with the purpose or effect of divesting yourself of beneficial ownership of a security or preventing the vesting of such beneficial ownership.  Finally, you are deemed to be the beneficial owner of a security if you have the right to acquire beneficial ownership of such security at any time within sixty days, including but not limited to any right to acquire (a) through the exercise of any option, warrant or right, (b) through the conversion of a security, (c) pursuant to the power to revoke a trust, discretionary account or similar arrangement or (d) pursuant to the automatic termination of a trust, discretionary account or similar arrangement.

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Except as set forth below in this Item 5, the undersigned is not the beneficial or registered owner of any securities of the Company other than the Registrable Securities listed above in Item 3.

Type and Amount of Other Securities beneficially owned by the Selling Securityholder:

6.Relationships with the Company:

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

State any exceptions here:

7.Please fill in the table below as you would like it to appear in the Registration Statement.  Include footnotes where appropriate.

Name of Selling
Shareholder Number of Shares of
Common Stock
Beneficially Owned Prior
to Offering Maximum Number of
Shares of Common Stock
to be Sold Pursuant to this
Prospectus Number of Shares of
Common Stock
Beneficially Owned After
Offering

The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof and prior to the Effective Date for the Registration Statement.

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 7 and the inclusion of such information in the Registration Statement and the related prospectus.  The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus.

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

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Dated:	Beneficial Owner:
	By:
	Name:
	Title:

PLEASE (1) FAX OR EMAIL A COPY OF THE COMPLETED AND EXECUTED
NOTICE AND QUESTIONNAIRE, AND (2) RETURN THE ORIGINAL BY
OVERNIGHT MAIL, TO:

Broadway Financial Corporation
5055 Wilshire Boulevard
Suite 500
Los Angeles, CA  90036
Attn:  Chief Financial Officer
Facsimile: (213) 634-1723

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EX-10.25.2

Exhibit 10.25.2

BROADWAY FINANCIAL CORPORATION
5055 Wilshire Boulevard, Suite 500
Los Angeles, CA 90036

August 22, 2013

CJA Private Equity Financial Restructuring Master Fund I, L.P.
c/o Gapstow Capital Partners
130 East 59th Street, 12th Floor
New York, NY 10022

Re:Investor Rights

Ladies and Gentlemen:

This letter will confirm our agreement that pursuant to and effective as of your purchase of capital stock of Broadway Financial Corporation, a Delaware corporation (the “Company”), the parent company of Broadway Federal Bank, F.S.B. (the “Bank”), CJA Private Equity Financial Restructuring Master Fund I, L.P., a Cayman Islands limited partnership (the “Investor”), shall be entitled to the following contractual rights, in addition to any other rights specifically provided to the Investor pursuant to that certain Subscription Agreement, dated as of the date hereof, by and between the Company and the Investor, including any amendments or supplements thereto, and such other agreements, instruments and certificates delivered in connection therewith (collectively, the “Subscription Documents”):

1.Right to Designate Board Member.  As long as the Investor (together with its affiliates) beneficially owns at least 4% of the total capital stock (including common shares and non-voting shares) of the Company or any of its affiliates, and subject to any required approvals or non-objections of the Board of Governors of the Federal Reserve System (whether acting directly or through the Federal Reserve Bank of San Francisco in such reserve bank’s regulatory capacity), the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and/or any other regulatory body having jurisdiction over the Company or the Bank (collectively, the “Regulators”), the Company shall use its reasonable best efforts to cause one person nominated by the Investor to be elected to serve on the Board of Directors of the Company, and any direct or indirect subsidiary thereof, including the Bank (collectively, the “Board”), which efforts shall include, without limitation, soliciting proxies for the Investor’s nominee in the same manner as it does for the Company’s other nominees.  Any director nominated by the Investor pursuant to this paragraph 1 shall be entitled to indemnification rights in his or her capacity as a member of the Board pursuant to an indemnification agreement in such form as shall be agreed to between the Company and the Investor.  The Investor’s Board representative shall receive compensation from the Company equal in form and value to compensation paid to other Board members (such compensation to be paid as directed by the Investor).  To facilitate the in-person attendance of the Investor’s Board representative (as a

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member of the Board pursuant to this paragraph 1 or as an observer pursuant to paragraph 2 below), the Company shall reimburse the Investor for all reasonable travel expenses of such representative promptly upon receiving documentation thereof reasonably acceptable to the Company; provided, however, that the Company shall not be obligated to reimburse expenses in excess of $20,000 in any calendar year.

2.Board Observer Rights.  If the Investor is not represented on the Board (including during such time as regulatory approval is pending), as long as the Investor (together with its affiliates) beneficially owns at least 4.0% of the total capital stock (including any common shares and non-voting shares) of the Company or any of its affiliates, the Company shall allow a representative of the Investor to attend all meetings of the Board in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents and other materials that it provides to its directors at the same time and in the same manner as provided to such directors; provided, however, that (i) such representative shall agree to hold in confidence and trust all information so provided; (ii) the representative may be excluded from access to any material or meeting or portion thereof if the Board determines in good faith, upon advice of counsel, that access to such material or attendance at such meeting would adversely affect the attorney-client privilege between the Company or the Bank and its counsel or would conflict with applicable banking laws or regulations or if such material or meeting relates to relations or negotiations with the Investor or require the consent or non-objection of any Regulator; and (iii) such observer shall be excluded from all “executive sessions” of the board of directors if any other persons who are not members of the board of directors, other than counsel to the Company, are also excluded.  Upon reasonable notice and at a scheduled meeting of the Board or such other time, if any, as the Board may determine in its sole discretion, such representative may address the Board with respect to the Investor’s concerns regarding significant business issues facing the Company.  For the avoidance of doubt, such representative shall not have access to any “confidential supervisory information” (as such term or relevant similar term is defined under the regulations of any Regulator).

3.Terms of Agreements with Other Investors.  The Company represents and warrants that it has not entered into, and does not currently intend to enter into, any agreement with any other investor that provides rights to such investor related to its investment in capital stock of the Company, other than any such agreement as to which it has provided a copy to the Investor.   If the Company enters into any such agreement with a party that agrees to purchase capital stock issued by the Company after the date hereof, then the Company shall promptly provide a copy of any such agreement to the Investor.  As to any such agreement entered into with any other investor agreeing to purchase capital stock issued by the Company, any terms of such agreement that are more favorable to such investor than the terms of the Subscription Documents shall be added and incorporated into this letter agreement, unless the Investor provides written notice to the Company that it elects to waive its rights to any such additional or modified terms.

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4.Capital Structure.

(a)Exchange Rights.  The Investor shall have the right, but not the obligation, from time to time, in its sole discretion, to exchange any voting common stock held by the Investor for the non-voting common stock of the Company (“Non-Voting Common Stock”) if the Company’s certificate of incorporation then authorizes the Company to issue Non-Voting Common Stock, or the non-voting preferred stock of the Company referred to herein if the Company’s certificate of incorporation does not then authorize the issuance of Non-Voting Common Stock, in order to reduce its ownership of any class of voting securities of the Company to 4.9% of the voting securities of the Company on a fully-diluted basis.  The Non-Voting Common Stock shall have all of the rights and other attributes of the Company’s currently outstanding common stock, except as provided in this paragraph 4(a) and except that such stock shall not be entitled to vote on any matter, except as required by the Delaware General Corporation Law.  The non-voting preferred stock referred to herein shall be authorized by the Company prior to the closing of the transactions contemplated by the Subscription Documents and shall have the rights, powers and preferences set forth in a Certificate of Designation of Series G Non-Voting Preferred Stock substantially in the form attached as Exhibit A hereto and is referred to herein collectively with the Non-Voting Common Stock as the “Non-Voting Stock.”  Any such exchange of voting common stock for Non-Voting Stock shall be effected by way of an Exchange Agreement in form and substance substantially as set forth on Exhibit B hereto.  Any Non-Voting Stock of the Company held by the Investor shall, upon its transfer to any person other than the Investor, or one of its affiliates, immediately and without any further action on the part of any person, automatically convert into voting common stock of the Company, as provided for in the Company’s certificate of incorporation provisions relating to the Non-Voting Common Stock or the Certificate of Designation of the Series G Non-Voting Preferred Stock, as applicable, subject to compliance with the applicable requirements of the Regulators.  Any shares of Non-Voting Stock received by the Investor or any affiliate of the Investor pursuant to this paragraph shall not be convertible by the Investor into shares of voting common stock or any other voting security of the Company, and any such shares shall be subject to the restrictions set forth in the Company’s certificate of incorporation provisions relating to the Non-Voting Common Stock or the Certificate of Designation of the Series G Non-Voting Preferred Stock, including restrictions on transfer contained therein that are intended to cause such shares to qualify as non-voting shares under the applicable requirements and policies of the Regulators.  For the avoidance of doubt, it is the intention of the parties hereto that any shares of Series G Non-Voting Preferred Stock that are outstanding at the time the Company’s certificate of incorporation is amended to authorize the Company to issue Non-Voting Common Stock shall be converted into shares of Non-Voting Common Stock and that no shares of Series G Non-Voting Preferred Stock shall be issued to any person or entity after that time.

(b)Preemptive Rights.  If, following the consummation of the transactions contemplated by the Subscription Documents, the Company authorizes the issuance or sale of any securities comparable or identical to the securities issued in this offering pursuant to the Subscription Documents, the Investor shall be entitled,  in its sole discretion, to (i) purchase shares of common stock, Non-Voting Stock or any combination thereof, such that the Investor would maintain its percentage ownership interest in the Company’s capital stock on a fully-

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diluted basis; or (ii) exchange any Non-Voting Stock held by the Investor for voting common stock, such that the Investor would maintain its percentage ownership interest in the Company’s common stock on a fully-diluted basis, in each case, subject to compliance with the applicable requirements of the Regulators.  With respect to each of (i) and (ii) above (the “Preemptive Rights”), the Company shall give written notice of such proposed issuance or sale (including the terms and conditions thereof) to the Investor at least thirty (30) days prior to the anticipated issuance or sale date and the Investor shall have twenty (20) days from the receipt thereof to provide the Company with notice of the exercise of its Preemptive Rights with respect to such issuance or sale.  The Preemptive Rights described herein shall not apply to the issuance of securities of the Company (A) to employees or directors of, or consultants or advisors to, the Company or the Bank pursuant to a plan, agreement or arrangement approved by the Board, (B) in connection with the acquisition of another company by the Company by way of merger or other reorganization or the acquisition of all or substantially all of the assets or capital stock of such company, provided that such issuances are approved by the Board, or (C) in a transaction approved by the Board that results in a “Change of Control,” which for purposes of this letter agreement a “Change of Control” means the acquisition by any person (including a group of related persons within the meaning of Rule 13d-2 of the Securities Exchange Act of 1934, as amended) of (x) more than fifty percent (50%) of the outstanding capital stock of the Company; (y) all or substantially all of the assets of the Company (including without limitation the sale of more than two-thirds (2/3) of the capital stock held by the Company in the Bank); or (z) a merger of the Company with or into any person, or of any person with or into the Company, immediately after which the shareholders of the Company (as measured immediately prior to completion of the transaction) own less than a majority of the combined capital stock or membership interests of the surviving entity.   In the case of a Change of Control, the Investor’s non-voting securities shall be exchanged or purchased in the same manner as the voting common stock of the Company; provided, however, that in all cases, the aggregate ownership percentage of the Investor and its affiliates in the issued and outstanding voting securities of the Company shall be less than 10%.  For the purpose of any such calculations of the percentage of voting securities owned by the Investor and its affiliates, the Investor shall include (i) any voting securities previously sold or transferred by the Investor and its affiliates, and (ii) any voting securities that were converted to Non-Voting Stock pursuant to paragraph 4(a) above as if such Non-Voting Stock were still voting securities.  In addition, the total equity ownership of the Company by the Investor and its affiliates shall not exceed 24.9% of the Company’s issued and outstanding stock.

5.Expense Reimbursement.  The Company shall pay the fees and expenses incurred by the Investor in connection with its evaluation of the Company and negotiation of the Subscription Documents (including, without limitation, legal and travel expenses), regardless of whether the transactions contemplated by the Subscription Documents are consummated promptly upon receiving documentation thereof reasonably acceptable to the Company; provided, however, that the Company shall not be obligated to reimburse expenses in excess of $40,000.

6.Registration Rights.  The Company shall provide a “shelf registration” for use by the Investor in the offer and sale of shares acquired by the Investor pursuant to the Transaction Documents, the registration statement for which shall be filed with the SEC by not later than the Filing Deadline (as defined in Section 1(a) of the Registration Rights Agreement referred to

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below).  In addition, the Investor shall be entitled to exercise “piggyback” registration rights to participate in the registration of shares pursuant to all registration statements proposed to be filed by the Company (except for the registration of securities (a) to be offered pursuant to an employee benefit plan on Form S-8 or pursuant to a registration made on Form S-4 or any successor forms then in effect or (b) in a transaction relating solely to the sale of debt or convertible debt instruments).  The rights and obligations of the Investor and the Company in respect of such registration rights shall be set forth in a Registration Rights Agreement in form and substance substantially as set forth on Exhibit C hereto.

7.Regulatory Approval.  The Company and the Investor shall cooperate to obtain the appropriate approvals from the Regulators in accordance with this letter agreement and the Subscription Documents. If necessary, the Investor shall agree to certain passivity commitments imposed by the Regulators, provided, that the terms and conditions of such commitments are customary and are not deemed by the Investor (in its sole discretion) to be unreasonable and provided, further, that the Investor shall not be required to agree to any restrictions, conditions or commitments imposed or otherwise required by any Regulator that are determined by the Investor (in its sole discretion) to be unduly burdensome.

8.Miscellaneous.  The validity, construction and interpretation of this letter agreement and the rights and duties of the parties hereunder shall be governed by and construed in accordance with laws of the State of New York without regard to its conflicts of laws

[Signature page to follow]

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provisions.  This letter agreement (together with the Subscription Documents) constitutes the entire agreement among the parties hereto, and supersedes any and all prior representations, agreements and understandings, whether written or oral, with respect to the subject matter hereof.  This letter agreement shall not be modified, amended or waived, in whole or in part, except by written agreement of both parties.  The provisions hereof shall be binding upon, and shall inure to the benefit of, the parties hereto and their successors and assigns.  Each of the parties hereto shall, at the request of the other party, execute, deliver and acknowledge without any consideration, such additional documents, instruments or certificates or do or cause to be done such other things as are reasonably necessary or desirable to make effective the agreements and transactions contemplated by this letter agreement.  This letter agreement may be executed and delivered (including by facsimile or electronic transmission) in multiple counterparts, each of which shall constitute an original and all of which together shall be deemed to be one and the sane instrument.

Very truly yours,
Broadway Financial Corporation
By:	/s/ Wayne-Kent A. Bradshaw
Name:	Wayne-Kent A. Bradshaw
Title:	President and Chief Executive Officer

********************************************************

ACKNOWLEDGED AND AGREED:

CJA PRIVATE EQUITY FINANCIAL

RESTRUCTURING MASTER FUND I, L.P.

By:CJA Private Equity Financial Restructuring

GP I Ltd., its General Partner

By:	/s/ Christopher J. Acito
Name:	Christopher J. Acito
Title:	Managing Member

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Exhibit A

Form of Series G Certificate of Designations

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Exhibit B

Form of Series G Exchange Agreement

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Exhibit C

Registration Rights Agreement

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EX-10.26.1

Exhibit 10.26.1

SUBSCRIPTION AGREEMENT

August 21, 2013

Broadway Financial Corporation
5055 Wilshire Boulevard, Suite 500
Los Angeles, California  90036

Ladies and Gentlemen:

The undersigned (the “Investor”) hereby confirms its agreement with you as follows:

1.             This Subscription Agreement (this “Agreement”) is entered into between Broadway Financial Corporation, a Delaware corporation (the “Company”), and the Investor whose name appears on the signature page hereto and is made as of the date of the Company’s acceptance hereof (the “Acceptance Date”).

2.             The Company is proposing to issue and sell shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”, to certain investors in a private offering at a purchase price of U.S. $·1.00 per share (the “Per Share Purchase Price”).  The Common Stock is being offered only to persons who are accredited investors within the meaning of Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”), pursuant to a private placement exemption from the securities registration requirements of the Securities Act.  The Investor acknowledges and agrees that the Company may, as provided in Section 6.17 of the attached Terms and Conditions, issue Common Stock Equivalents (as defined in the Terms and Conditions) in lieu of Common Stock in connection with certain of the exchanges for outstanding preferred stock of the Company that are to be completed concurrently with the Closing under this Agreement, all as described in the Terms and Conditions.

3.             The Company and the Investor agree that, upon the terms and subject to the conditions set forth herein, the Investor will purchase from the Company and the Company will issue and sell to the Investor, the number of shares of Common Stock equal to the dollar amount subscribed as indicated on the signature page hereto divided by the Per Share Purchase Price, pursuant to the Terms and Conditions for the Purchase of Common Stock attached hereto as Annex A and incorporated herein by reference as if fully set forth herein. The Common Stock purchased by the Investor will be delivered in certificated form, registered in the Investor’s name and address as set forth below, and will be released by Computershare Inc., the Company’s transfer agent (the “Transfer Agent”), to the Investor at the Closing (as defined in the Terms and Conditions for the Purchase of Common Stock) or, if uncertificated, the Transfer Agent for the Common Stock will register the shares of Common Stock purchased in the name of the Investor and deliver evidence of such registration to the Investor.

4.             In agreeing to purchase Common Stock pursuant hereto, the Investor is making the representations and warranties set forth in the attached Terms and Conditions for the Purchase of Common Stock (the “Terms and Conditions”), including representations and warranties that the Investor is an “accredited investor” (as that term is defined by Rule 501 under

the Securities Act) and that the Investor has not taken actions regarding a coordinated acquisition of Common Stock as set forth in Section 2.3(f) or Section 2.3(j).

Please confirm that the foregoing correctly sets forth the agreement between us by signing in the space provided below for that purpose.

Subscription amount in shares and U.S. dollars:
		$	500,000
		Shares:				500,000
Name of Investor: Valley Economic Development Center, Inc.
By:	/s/ Roberto Barragan
Print Name:					Roberto Barragan
Title:		President
Mailing Address:										5121 Van Nuys Blvd., 3rd Floor
Van Nuys, CA 91403
Type of Entity:									Non-profit
Jurisdiction of Organization:											California
Tax ID No.:					95-3139419
Contact Name:							Roberto Barragan
Telephone:				818-907-9977
Email Address:								rbarragan@vedc.org
Name under which Common Stock is to be issued (if different from above):   same as above
Address to which share certificates or statement of ownership are to be sent (if different from mailing address above):

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Agreed and Accepted as of August 22, 2013:
BROADWAY FINANCIAL CORPORATION
By:	/s/ Wayne-Kent A. Bradshaw
Name:		Wayne-Kent A. Bradshaw
Title:		President and Chief Executive Officer

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INSTRUCTION SHEET FOR INVESTOR

(to be read in conjunction with the entire Agreement)

Complete the following items in the Agreement:

1.             Provide the information regarding the Investor requested on the signature page to the Agreement. The Agreement must be executed by an individual authorized to bind the Investor.

2.             If the Investor is purchasing Common Stock for more than one investor account, it may either (i) complete a separate Agreement for each such account, in which case a separate wire transfer (or other acceptable form of payment) must be made by or on behalf of such account for the Common Stock it will purchase and a separate issuance of Common Stock will be made by the Transfer Agent to each account, or (ii) complete a single Agreement for all such accounts, in which case only one wire transfer (or other acceptable form of payment) need be made for the Common Stock to be purchased for all such accounts (but all such Common Stock will be issued to a single account specified by the Investor) and the information called for on the signature page hereof must be completed for each account.

3.             Return the signed Agreement to:

Broadway Financial Corporation

5055 Wilshire Boulevard, Suite 500

Los Angeles, California  90036

Attn:    Wayne-Kent A. Bradshaw, President and Chief
Executive Officer

Fax:     (323) 556-3216

Email:  WBradshaw@broadwayfederalbank.com

4.             Please note that all payments must be made in U.S. dollars by wire transfer of immediately available funds to the following account, which has been established to hold funds received from investors, which funds shall be released to the Company only upon the Closing of the transactions referred to and described herein:

Bank Name:	Broadway Federal Bank, f.s.b.
Bank Account Name:	Broadway Federal Bank for the benefit of Broadway Financial Corporation
Bank ABA #:	322070145
Bank Account #:	80-000820-4

An executed Agreement or a facsimile transmission thereof must be received by such time on such date as you are advised. The Company reserves all rights to reject any subscription before it is accepted by the Company.

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ANNEX A

TERMS AND CONDITIONS FOR THE PURCHASE OF COMMON STOCK

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TABLE OF CONTENTS

			Page
ARTICLE	1	PURCHASE; CLOSING	2
1.1		Issuance, Sale and Purchase	2
1.2		Closing; Deliverables for the Closing; Conditions to the Closing	2
ARTICLE	2	REPRESENTATIONS AND WARRANTIES	5
2.1		Certain Terms	5
2.2		Representations and Warranties of the Company	6
2.3		Representations and Warranties of the Investor	19
ARTICLE	3	COVENANTS	22
3.1		Conduct of Business Prior to Closing	22
3.2		Confidentiality	22
3.3		Commercially Reasonable Efforts	22
3.4		Legend	23
3.5		Certain Other Transactions	23
3.6		Exchange Listing	24
3.7		Stockholders Meeting	24
3.8		Registration Rights	25
ARTICLE	4	TERMINATION	33
4.1		Termination	33
4.2		Effects of Termination	33
ARTICLE	5	INDEMNITY	34
5.1		Indemnification by the Company	34
5.2		Indemnification by the Investor	34
5.3		Notification of Claims	35
5.4		Indemnification Payment	37
5.5		Exclusive Remedies	37
ARTICLE	6	MISCELLANEOUS	37
6.1		Survival	37
6.2		Other Definitions	38
6.3		Amendment and Waivers	40
6.4		Counterparts and Facsimile	41
6.5		Governing Law	41

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TABLE OF CONTENTS

(continued)

		Page
6.6	Jurisdiction	41
6.7	WAIVER OF JURY TRIAL	41
6.8	Notices	41
6.9	Entire Agreement	42
6.10	Successors and Assigns	42
6.11	Captions	42
6.12	Severability	42
6.13	Third Party Beneficiaries	43
6.14	Public Announcements	43
6.15	Specific Performance	43
6.16	No Recourse	43
6.17	Possible Common Stock Equivalent Transactions	43

INDEX OF DEFINED TERMS

Defined Term	Section
Acceptance Date	Subscription Agreement
Action	2.2(f)
Affiliate	6.2(a)
Agency	6.2(b)
Agreement	Subscription Agreement
Agreements	Recital B
Bank	2.2(a)
Benefit Plans	2.2(u)(i)
Board of Directors	6.2(c)
Business Day	6.2(d)
Capital Stock	6.2(e)
Capitalization Date	2.2(c)(ii)
Change in Control	6.2(f)
Closing	1.2(a)
Closing Date	1.2(a)
Code	6.2(g)
Common Stock	Subscription Agreement
Common Stock Equivalents	6.17(a)
Company	Subscription Agreement
Company Employees	2.2(u)(i)
Company Financial Statements	2.2(g)

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Defined Term	Section
Company Indemnified Parties	5.2(a)
Company Insurance Policies	2.2(s)
Company Preferred Stock	2.2(c)(i)
Company Reports	2.2(h)
Company Specified Representations	6.2(h)
Company Stock Plans	2.2(c)(iii)
Company Subsidiaries	2.2(b)
Company Subsidiary	2.2(b)
Confidentiality Agreement	3.2
control, controlling, controlled by and under common control with	6.2(a)
Deductible	5.1(b)
Disclosure Schedule	6.2(i)
EESA	2.2(u)(iii)
Effective Date	3.8(j)(i)
Effectiveness Deadline	3.8(j)(ii)
employee benefit plan	2.2(u)(i)
ERISA	2.2(u)(i)
Exchange Act	2.2(h)
FDI Act	2.2(b)
FDIC	2.2(b)
Filing Deadline	3.8(a)(i)
finally determined	5.4
GAAP	6.2(j)
Governmental Consent	6.2(k)
Governmental Entity	6.2(l)
Holder	3.8(j)(iii)
Indemnified Party	5.3(a)
Indemnifying Party	5.3(a)
Indemnitee	3.8(g)(i)
Insider	2.2(bb)
Insurer	6.2(m)
Investment	Recital A
Investment Manager	2.3(f)
Investor	Subscription Agreement
Investor Indemnified Parties	5.1(a)
Investor Specified Representations	6.2(n)
Investors	Recital B
Knowledge	6.2(o)
Law	2.2(p)
Liens	2.2(d)(ii)
Loan Investor	6.2(p)
Losses	6.2(q)
Material Adverse Effect	2.1(a)
Material Contract	2.2(r)
NASDAQ	2.2(d)
OFAC	2.2(m)

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Defined Term	Section
Other Investors	Recital B
Other Preferred Exchange Agreement	Recital C
Other Preferred Exchange Agreements	Recital C
Other Preferred Exchanges	Recital C
Other Private Placements	Recital B
Per Share Purchase Price	Subscription Agreement
Person	6.2(r)
Placement Agent	2.2(x)
Potential Investor	2.3(j)
Previously Disclosed	2.1(b)
Purchase Price	1.1
Register, registered and registration	3.8(j)(iv)
Registrable Securities	3.8(j)(v)
Registration Expenses	3.8(j)(vi)
Registration Termination Date	3.8(a)(i)
Regulatory Agreement	2.2(q)
Regulatory Order or Regulatory Orders	2.2(p)
Rights Offering	Recital D
Rights Plan	2.2(c)(iii)
Rule 158, Rule 159A, Rule 405 and Rule 415	3.8(j)(vii)
SEC	2.1(b)
Securities Act	Subscription Agreement
Selling Expenses	3.8(j)(viii)
Series A Junior Preferred Stock	2.2(c)(i)
Series A Preferred Stock	2.2(c)(i)
Series B Preferred Stock	2.2(c)(i)
Series C Preferred Stock	2.2(c)(i)
Series D Preferred Stock	2.2(c)(i)
Series E Preferred Stock	2.2(c)(i)
Shelf Registration Statement	3.8(a)(ii)
SLHCA Act	2.2(a)
Subsidiary	6.2(s)
Suspension Period	3.8(d)
TARP Exchange	Recital C
TARP Exchange Agreement	Recital C
TARP Preferred Stock	2.2(c)(ii)
Tax or Taxes	6.2(t)
Tax Return	6.2(u)
Third Party Claim	5.3(a)
Transfer Agent	Subscription Agreement
Treasury	Recital C
Voting Debt	2.2(c)(iv)
Voting Securities	6.2(v)

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RECITALS

A.            The Investment.  The Company intends to issue and sell to the Investor, and the Investor intends to purchase from the Company, on the terms and conditions described herein, the number of shares of Common Stock set forth on such Investor’s signature page hereto for the aggregate purchase price set forth on such signature page (the “Investment”).

B.            Other Private Placements.  The Company also intends to enter into agreements similar to this Agreement with certain other investors (the “Other Investors”) and expects to complete sales of Common Stock to them, with the closing of such sales to occur simultaneously with the Closing (the “Other Private Placements”).  The Investor and the Other Investors are hereinafter sometimes collectively referred to as the “Investors”, and this Agreement and the subscription agreements executed by the Other Investors are hereinafter sometimes collectively referred to as the “Agreements.”

C.            TARP Exchange; Other Preferred Stock Exchanges.  The United States Department of Treasury (the “Treasury”) holds 15,000 shares of TARP Preferred Stock (as defined herein).  On the terms and subject to the conditions set forth in an Exchange Agreement, dated as of February 10, 2012, entered into by the Company and the Treasury, as amended (the “TARP Exchange Agreement”), the Company intends to exchange the TARP Preferred Stock for a new series of mandatorily convertible preferred stock), which shares shall automatically convert into Common Stock having an aggregate value (valuing the Common Stock at the Per Share Purchase Price) equal to the sum of (x) 50% of the aggregate liquidation preference of the TARP Preferred Stock and (y) 100% of the amount of accrued and unpaid dividends on the TARP Preferred Stock as of the Closing Date (the “TARP Exchange”) upon receipt of any necessary shareholder approvals, as provided in Section 3.7 of this Agreement.  The Company has entered into, or will enter into simultaneously herewith, similar exchange agreements providing for exchanges of all of the outstanding shares of the Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock of the Company (each as defined herein) on substantially the same economic terms as provided in the TARP Exchange Agreement with the respective holders of such other series of preferred stock of the Company (such other exchange agreements being referred to herein individually as an “Other Preferred Exchange Agreement” and collectively as the “Other Preferred Exchange Agreements”).  The exchanges referred to in each of the Other Preferred Exchange Agreements (collectively the “Other Preferred Exchanges”) and the TARP Exchange are to occur prior to or simultaneously with the Closing.

D.            The Rights Offering.  Following the Closing, the Company may commence a rights offering (the “Rights Offering”) providing holders of record of the Common Stock as of the close of business on a record date prior to the Closing to be selected by the Company with the right to purchase Common Stock at the same price per share as that paid by the Investor.  The rights would not be transferable and would provide for the purchase of up to $2 million of Common Stock in the aggregate by such existing stockholders.

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ARTICLE 1

PURCHASE; CLOSING

1.1          Issuance, Sale and Purchase.  On the terms and subject to the conditions set forth herein, the Company agrees to issue and sell to the Investor, and the Investor agrees to purchase from the Company, free and clear of any Liens, a number of shares of Common Stock (including any associated preferred share purchase rights issuable with respect to such Common Stock pursuant to the Rights Plan) equal to the dollar amount subscribed as indicated on the signature page hereto divided by the Per Share Purchase Price payable by the Investor to the Company.  The aggregate purchase price payable pursuant to this Section 1.1 is referred to herein as the “Purchase Price”).

1.2          Closing; Deliverables for the Closing; Conditions to the Closing.

(a)           Closing.  Unless this Agreement has been terminated pursuant to Article 4, and subject to the satisfaction or, to the extent permitted by Law and this Agreement, the written waiver of the conditions set forth in Section 1.2(c), the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Arnold & Porter LLP, located at 777 South Figueroa Street, 44th Floor, Los Angeles, California 90017, or remotely via the electronic or other exchange of documents and signature pages, on a date to be specified by the Company on no less than two Business Days’ notice to the Investor (which date shall be the same date as the date of closing of the TARP Exchange, the Other Preferred Exchanges and the Other Private Placements), or at such other place or such other date as agreed to in writing by the parties hereto (the “Closing Date”).

(b)           Closing Deliverables.  Subject to the satisfaction or waiver on the Closing Date of the conditions to the Closing set forth in Section 1.2(c), at the Closing the parties shall make the following deliveries:

(i)            the Company shall deliver to the Investor one or more certificates evidencing the Common Stock to be purchased pursuant to Section 1.1 registered in the name of the Investor (or if the shares of the Common Stock being purchased are to be uncertificated, the Company shall cause the Transfer Agent to register such shares in the name of the Investor and deliver evidence of such registration to the Investor); and

(ii)           the Investor shall deliver the Purchase Price, by wire transfer of immediately available funds to the account set forth in the Instruction Sheet for Investor provided with this Agreement.

(c)           Closing Conditions.

(i)            The obligations of the Investor, on the one hand, and the Company, on the other hand, to consummate the purchase and sale of Common Stock provided for in this Agreement are each subject to the satisfaction or, to the extent permitted by Law and this Agreement, the written waiver by the Company or the Investor, as applicable, of the following conditions at the Closing:

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(A)          No provision of any Law and no judgment, injunction, order or decree shall prohibit the Closing or shall prohibit or restrict the Investor from owning or voting any Common Stock to be purchased pursuant to this Agreement; and

(B)          All Governmental Consents required to have been obtained at or prior to the Closing Date in connection with the execution, delivery or performance of this Agreement and the consummation of the transactions contemplated hereby shall have been obtained and shall be in full force and effect.

(ii)           The obligation of the Investor to consummate the purchase of Common Stock provided for in this Agreement is also subject to the satisfaction or written waiver by the Investor of the following conditions at the Closing:

(A)          The representations and warranties of the Company set forth in this Agreement shall be true and correct in all respects on and as of the date of this Agreement and on and as of the Closing Date as though made on and as of the Closing Date, except to the extent that the failure to be true and correct (without regard to any materiality or Material Adverse Effect qualifications contained therein), would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and except that representations and warranties made as of a specified date shall be true and correct as of such date;

(B)          The Company shall have performed and complied with, in all material respects, all agreements, covenants and conditions required by this Agreement to be performed by it on or prior to the Closing Date;

(C)          The Investor shall have received a certificate, dated as of the Closing Date, signed on behalf of the Company by a senior executive officer certifying to the effect that the conditions set forth in Section 1.2(c)(ii)(A) and Section 1.2(c)(ii)(B) have been satisfied on and as of the Closing Date;

(D)          Since the date of this Agreement, a Material Adverse Effect shall not have occurred and no change or other event shall have occurred that would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect;

(E)           The Common Stock to be purchased pursuant to this Agreement shall have been authorized for listing on the NASDAQ Capital Market or such other market on which the Common Stock is then listed or quoted, subject to official notice of issuance;

(F)           The Company shall have received (or shall receive concurrently with the Closing) gross proceeds from the Other Private

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Placements in an aggregate amount, together with the Purchase Price, of not less than $3,500,000;

(G)          The Company shall have completed the TARP Exchange in accordance in all material respects with the terms and conditions set forth in the TARP Exchange Agreement, except that the gross proceeds received from the Equity Offering referred to therein shall be not less than $3,500,000;

(H)          The Company shall have completed each of the Other Preferred Exchanges in accordance in all material respects with the respective Other Preferred Exchange Agreements; and

(I)            The Company and the Investor shall have entered into the Letter Agreement, substantially in the form attached hereto as Exhibit A (the “Side Letter”).

(iii)          The obligation of the Company to consummate the sale of Common Stock provided for in this Agreement is also subject to the satisfaction or written waiver by the Company of the following conditions at the Closing:

(A)          The representations and warranties of the Investor set forth in this Agreement shall be true and correct in all respects on and as of the date of this Agreement and on and as of the Closing Date as though made on and as of the Closing Date except where the failure to be true and correct (without regard to any materiality qualifications contained therein) would not materially adversely affect the ability of the Investor to perform its obligations hereunder (and except that (1) representations and warranties made as of a specified date shall be true and correct as of such date and (2) the representations and warranties of the Investor set forth in Sections 2.3(d) and 2.3(h) shall be true and correct in all respects);

(B)          The Investor shall have performed and complied with, in all material respects, all agreements, covenants and conditions required by this Agreement to be performed by it on or prior to the Closing Date; and

(C)          The Company shall have received a certificate, dated as of the Closing Date, signed on behalf of the Investor by a duly authorized person certifying to the effect that the conditions set forth in Section 1.2(c)(iii)(A) and Section 1.2(c)(iii)(B) have been satisfied on and as of the Closing Date.

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ARTICLE 2

REPRESENTATIONS AND WARRANTIES

2.1          Certain Terms.

(a)           As used in this Agreement, the term “Material Adverse Effect” means any circumstance, event, change, development or effect that, individually or in the aggregate, would reasonably be expected to (i) result in a material adverse effect on the assets, liabilities, business, financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole, or (ii) materially impair or delay the ability of the Company or any of the Company Subsidiaries to perform its or their obligations under this Agreement to consummate the Closing or any of the transactions contemplated hereby; provided, however, that in determining whether a Material Adverse Effect has occurred under clause (i), there shall be excluded any circumstance, event, change, development or effect to the extent resulting from (A) actions or omissions of the Company or any Company Subsidiary expressly required or contemplated by the terms of this Agreement, (B) changes after the date hereof in general economic conditions in the United States, including financial market volatility or downturns, or in the markets in which the Company and the Company Subsidiaries operate, (C) changes after the date hereof affecting the banking industry generally, (D) any changes after the date hereof in applicable Laws or accounting rules or principles, including changes in GAAP, (E) changes in the market price or trading volume of the Common Stock or the Company’s other outstanding securities (but not the underlying causes of such changes) or (F) any failure by the Company or any of the Company Subsidiaries to meet any internal projections or forecasts with regard to the assets, liabilities, business, financial condition or results of operations of the Company and the Company Subsidiaries, taken as a whole (but not the underlying causes of such failure), in each case to the extent that such circumstance, event, change, development or effect referred to in clauses (B), (C) and (D) do not have a disproportionate effect on the Company and the Company Subsidiaries compared to other participants in the industries or markets in which the Company and the Company Subsidiaries operate.

(b)           As used in this Agreement, the term “Previously Disclosed” (i) with regard to any party, means information set forth in its Disclosure Schedule under Section references corresponding with the provision of this Agreement to which such information relates (including, in the case of the Company, information identified in the Company’s Disclosure Schedule by reference to specific portions of the “virtual data room” website established by the Company for use by the Investor in its “due diligence” examination of the Company; provided, however, that if such information is disclosed in such a way as to make its relevance or applicability to another provision of this Agreement reasonably apparent on its face, such information shall be deemed to be responsive to such other provision of this Agreement and (ii) with regard to the Company, includes information publicly disclosed by the Company in (A) the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, as filed by it with the Securities and Exchange Commission (the “SEC”) and subsequently amended by the filing of Forms 10-K/A on April 27, 2012 and September 14, 2012, or the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, as filed by it with the SEC on April 1, 2013, (B) the Company’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2012, June 30, 2012, September 30, 2012 and March 31, 2013 as filed by it

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with the SEC, (C) the Company’s Definitive Proxy Statement on Schedule 14A, as filed by it with the SEC on November 19, 2012, or (D) any Current Report on Form 8-K filed or furnished by it with the SEC since January 1, 2011, in each case available prior to the date of this Agreement (excluding any risk factor disclosures contained in such documents under the heading “Risk Factors” and any disclosure of risks included in any “forward-looking statements” disclaimer or other statements that are similarly non-specific and are predictive or forward-looking in nature).  Notwithstanding anything in this Agreement to the contrary, the mere inclusion of an item in a Disclosure Schedule shall not be deemed an admission that such item represents a material exception or material fact, event or circumstance or that such item has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

2.2          Representations and Warranties of the Company.  Except as Previously Disclosed, the Company hereby represents and warrants to the Investor, as of the date of this Agreement and as of the Closing Date (except for the representations and warranties that are as of a specific date, which are made as of that date) that:

(a)           Organization and Authority.  Each of the Company and the Company Subsidiaries is a corporation or other entity duly organized and validly existing under the laws of the jurisdiction of its incorporation or organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified except where any failure to be so qualified would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, and has the corporate or other organizational power and authority to own its properties and assets and to carry on its business as it is now being conducted.  The Company has Previously Disclosed correct and complete copies of the certificate of incorporation and bylaws (or similar governing documents) as amended through the date of this Agreement for the Company and Broadway Federal Bank, f.s.b. (the “Bank”).  The Company is duly registered with the Board of Governors of the Federal Reserve System (the “Federal Reserve”) as a savings and loan holding company under the Savings and Loan Holding Company Act, as amended, 12 U.S.C. 1467a (the “SLHCA Act”).

(b)           Company Subsidiaries.  The Company has Previously Disclosed a true, complete and correct list of all of its subsidiaries as of the date of this Agreement (each, a “Company Subsidiary” and, collectively, the “Company Subsidiaries”).  Except for the Company Subsidiaries, the Company does not own beneficially, directly or indirectly, more than 5% of any class of equity securities or similar interests of any corporation, business trust, association or similar organization, and is not, directly or indirectly, a partner in any partnership or party to any joint venture.  The Company owns, directly or indirectly, all of its interests in each Company Subsidiary free and clear of any and all Liens, except for the Lien of BBCN Bank on all assets of the Company, including the stock of the Bank owned by the Company.  The deposit accounts of the Bank are insured by the Federal Deposit Insurance Corporation (“FDIC”) to the fullest extent permitted by the Federal Deposit Insurance Act, as amended (the “FDI Act”), and the rules and regulations of the FDIC thereunder, and all premiums and assessments required to be paid in connection therewith have been paid when due (after giving effect to any applicable extensions).  The Company beneficially owns all of the outstanding capital securities of, and has sole control of, the Bank.

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(c)           Capitalization.

(i)            As of the date hereof, (A) the authorized Capital Stock of the Company consists of 8,000,000 shares of Common Stock, par value $0.01 per share and 1,000,000 shares of preferred stock, par value $0.01 per share (the “Company Preferred Stock”) and (B) of the Company Preferred Stock, 100,000 shares have been designated as Non-Cumulative Perpetual Preferred Stock, Series A, having a liquidation preference of $10 per share (the “Series A Preferred Stock”); 100,000 shares have been designated as Non-Cumulative Perpetual Preferred Stock, Series B, having a liquidation preference of $10 per share (the “Series B Preferred Stock”); 76,950 shares have been designated as Series C Non-Cumulative Perpetual Convertible Preferred Stock, having a liquidation preference of $13 per share (the “Series C Preferred Stock”); 9,000 shares have been designated as Fixed Rate Cumulative Perpetual Preferred Stock, Series D, having a liquidation preference of $1,000 per share (the “Series D Preferred Stock”); 6,000 shares have been designated as Fixed Rate Cumulative Perpetual Preferred Stock, Series E, having a liquidation preference of $1,000 per share (the “Series E Preferred Stock”); and 25,000 shares have been designated as Series A Junior Participating Preferred Stock, having a liquidation preference of $1.00 per share (the “Series A Junior Preferred Stock”).

(ii)           As of the close of business on May 31, 2013 (the “Capitalization Date”), the Company had outstanding: 1,917,422 shares of Common Stock; 55,199 shares of Series A Preferred Stock; 100,000 shares of Series B Preferred Stock; 76,950 shares of Series C Preferred Stock; 9,000 shares of Series D Preferred Stock; and 6,000 shares of Series E Preferred Stock (the Series D Preferred Stock and Series E Preferred Stock being referred to herein as the “TARP Preferred Stock”).

(iii)          As of the close of business on the Capitalization Date, other than in respect of awards outstanding under or issuable pursuant to the Company’s 1996 Long-Term Incentive Plan, 1996 Stock Option Plan and 2008 Long-Term Incentive Plan (the “Company Stock Plans”) in respect of which an aggregate of 437,390 shares of Common Stock have been reserved for issuance, 76,950 shares of Common Stock reserved for issuance upon conversion of the outstanding shares of the Series C Preferred Stock and 25,000 shares of Series A Junior Preferred Stock reserved for issuance pursuant to the Rights Agreement, dated January 31, 2003, entered into between the Company and US Stock Transfer Corporation (the “Rights Plan”), no shares of Common Stock or Company Preferred Stock were reserved for issuance.  Since the Capitalization Date and through the date of this Agreement, except in connection with this Agreement and the transactions contemplated hereby, including the Investment, the Other Private Placements, the TARP Exchange, the Other Preferred Exchanges, and the Rights Offering, the Company has not (A) issued or authorized the issuance of any shares of Common Stock or Company Preferred Stock, or any securities convertible into or exchangeable or exercisable for shares of Common Stock or Company Preferred Stock, except to Directors and certain executive officers of the

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Company and the Bank pursuant to the Stock Purchase Agreements copies of which are included in Section 2.2(c) of the Disclosure Schedule, (B) reserved for issuance any shares of Common Stock or Company Preferred Stock or (C) repurchased or redeemed, or authorized the repurchase or redemption of, any shares of Common Stock or Company Preferred Stock.

(iv)          All of the issued and outstanding shares of Common Stock and Company Preferred Stock have been duly authorized and validly issued and are fully paid, nonassessable and free of preemptive rights.  None of the outstanding shares of Capital Stock or other securities of the Company or any of the Company Subsidiaries was issued, sold or offered by the Company or any Company Subsidiary in violation of the Securities Act or the securities or blue sky laws of any state or jurisdiction.  No bonds, debentures, notes or other indebtedness having the right to vote on any matters on which the shareholders of the Company may vote (“Voting Debt”) are issued and outstanding.

(v)           As of the date of this Agreement, except for (x) the outstanding awards under the Company Stock Plans listed on Section 2.2(c) of the Disclosure Schedule, (y) as set forth elsewhere in this Section 2.2(c) and (z) the Agreements, the TARP Exchange Agreement, and the Other Preferred Exchange Agreements, the Company does not have and is not bound by any outstanding subscriptions, options, warrants, calls, commitments or agreements of any character calling for the purchase or issuance of, or securities or rights convertible into or exchangeable or exercisable for, any shares of Common Stock or Company Preferred Stock or any other equity securities of the Company or Voting Debt or any securities representing the right to purchase or otherwise receive any shares of Capital Stock of the Company.

(d)           Authorization; No Conflicts; Shareholder Approval.

(i)            The Company has the corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  Subject to the approval by the Nasdaq Stock Market (“NASDAQ”) of the Company’s application pursuant to Rule 5635(f) and other applicable provisions of the Nasdaq Listing Rules to issue Common Stock in connection with the Investment, the Other Private Placements, the TARP Exchange, the Other Preferred Exchanges and related transactions without prior shareholder approval, the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no further approval or authorization is required on the part of the Company or its shareholders.  The Board of Directors has unanimously approved the transactions contemplated by this Agreement, including the Investment, the Other Private Placements, the Other Preferred Exchanges, and the TARP Exchange and the Rights Offering.  This Agreement has been duly and validly executed and delivered by the Company and, assuming due authorization, execution and delivery by the Investor, is the valid and binding obligation of the Company

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enforceable against the Company in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles (whether applied in equity or at law).

(ii)           Neither the execution and delivery by the Company of this Agreement nor the consummation of the transactions contemplated hereby, nor compliance by the Company with any of the provisions hereof, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or result in the loss of any benefit or creation of any right on the part of any third party under, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any liens, charges, adverse rights or claims, pledges, covenants, title defects, security interests or other encumbrances of any kind (“Liens”) upon any of the properties or assets of the Company or any Company Subsidiary, under any of the terms, conditions or provisions of (1) the certificate of incorporation or bylaws (or similar governing documents) of the Company and each Company Subsidiary or (2) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Company or any of the Company Subsidiaries is a party or by which it may be bound, or to which the Company or any of the Company Subsidiaries, or any of the properties or assets of the Company or any of the Company Subsidiaries may be subject, or (B) violate any Law applicable to the Company or any of the Company Subsidiaries or any of their respective properties or assets except in the case of clauses (A)(2) and (B) for such violations, conflicts and breaches as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(e)           Governmental Consents.  Except as set forth in the Disclosure Schedule, no Governmental Consents are necessary for the execution and delivery of this Agreement or for the sale by the Company of Common Stock to the Investor pursuant to this Agreement.

(f)            Litigation and Other Proceedings.  Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there is no pending or, to the Knowledge of the Company, threatened claim, action, suit, arbitration, complaint, charge or investigation or proceeding (each an “Action”) against the Company or any Company Subsidiary or any of its assets, rights or properties, nor is the Company or any Company Subsidiary a party or named as subject to the provisions of any order, writ, injunction, settlement, judgment or decree of any court, arbitrator or government agency, or instrumentality.  There has not been, and to the Knowledge of the Company, there is not pending or contemplated, any investigation by the SEC involving the Company or any current or former director or officer of the Company in his or her capacity as such.

(g)           Financial Statements.  The audited consolidated balance sheets of the Company and the Company Subsidiaries and the related consolidated statements of operations, changes in stockholders’ equity and cash flows, together with the notes thereto, included in the

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Company’s Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2012 (the “Company Financial Statements,”), (i) have been prepared from, and are in accordance with, the books and records of the Company and the Company Subsidiaries, (ii) complied, as of their respective date of such filing, in all material respects with applicable accounting requirements and with the published rules and regulations of the SEC with respect thereto, (iii) have been prepared in accordance with GAAP applied on a consistent basis and (iv) present fairly in all material respects the consolidated financial position of the Company and the Company Subsidiaries at the dates and the consolidated results of operations, changes in shareholders’ equity and cash flows of the Company and the Company Subsidiaries for the periods stated therein.

(h)           Reports.  Since December 31, 2008, the Company and each Company Subsidiary have filed all material reports, registrations, documents, filings, statements and submissions, together with any required amendments thereto, that they were required to file with any Governmental Entity (the foregoing, collectively, being referred to herein as the “Company Reports”) and have paid all material fees and assessments due and payable in connection therewith.  As of their respective filing dates, or as subsequently amended prior to the date hereof, the Company Reports complied in all material respects with all statutes and applicable rules and regulations of the applicable Governmental Entities.  As of the date of this Agreement, there are no outstanding comments from the SEC or any other Governmental Entity with respect to any Company Report that were the subject of written correspondence that have not been resolved.  The Company Reports, including the documents incorporated by reference in each of them, each contained all the information required to be included in it and, when it was filed and, as of the date of each such Company Report filed with the SEC, or if amended prior to the date of this Agreement, as of the date of such amendment, did not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made in it, in light of the circumstances under which they were made, not misleading and complied as to form in all material respects with the applicable requirements of the Securities Act and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  No executive officer of the Company has failed in any respect to make the certifications required of him or her under Section 302 or 906 of the Sarbanes-Oxley Act of 2002.

(i)            Internal Accounting and Disclosure Controls.  The records, systems, controls, data and information of the Company and the Company Subsidiaries are recorded, stored, maintained and operated under means (including any electronic, mechanical or photographic process, whether computerized or not) that are under the exclusive ownership and direct control of the Company or the Company Subsidiaries or accountants (including all means of access thereto and therefrom) or reputable banking industry service providers, except for any non-exclusive ownership and non-direct control that would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the system of internal accounting controls described below in this Section 2.2(i).  The Company (i) has implemented and maintains disclosure controls and procedures (as defined in Rule 13a-15(e) of the Exchange Act) intended to ensure that material information relating to the Company, including its consolidated Subsidiaries, is made known to the chief executive officer or executive chairman and the chief financial officer of the Company by others within those entities, and (ii) has disclosed, based on its most recent evaluation prior to the date of this Agreement, to the Company’s outside auditors and the audit committee of the Board of Directors (A) any significant deficiencies and material

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weaknesses in the design or operation of internal control over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) that are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information, and (B) any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal controls over financial reporting.  As of the date of this Agreement, the Company has no Knowledge of any reason that its outside auditors and its chief executive officer or executive chairman and chief financial officer shall not be able to give the certifications and attestations required pursuant to the rules and regulations adopted pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, without qualification, when next due.  Since December 31, 2008, neither the Company nor any Company Subsidiary nor, to the Knowledge of the Company, any director, officer, employee, auditor, accountant or representative of the Company or any Company Subsidiary has received or otherwise had or obtained knowledge of any material complaint, allegation, assertion or claim, whether written or oral, regarding the accounting or auditing practices, procedures, methodologies or methods of the Company or any Company Subsidiary or their respective internal accounting controls, including any material complaint, allegation, assertion or claim that the Company or any Company Subsidiary has engaged in questionable accounting or auditing practices.

(j)            Risk Management Instruments.  All material derivative instruments, including swaps, caps, floors and option agreements entered into for the Company’s or any of the Company Subsidiaries’ own account were entered into (i) only in the ordinary course of business, (ii) in accordance with prudent practices and in all material respects with all applicable Laws and (iii) with counterparties believed to be financially responsible at the time; and each of them constitutes the valid and legally binding obligation of the Company or any Company Subsidiary, as applicable, enforceable in accordance with its terms.  Neither the Company nor, to the Knowledge of the Company, any other party thereto is in breach of any of its material obligations under any such agreement or arrangement.

(k)           No Undisclosed Liabilities.  There are no liabilities of the Company or any of the Company Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, except for (i) liabilities adequately reflected or reserved against in accordance with GAAP in the Company’s audited balance sheet as of December 31, 2011 and (ii) liabilities that have arisen in the ordinary and usual course of business and consistent with past practice since December 31, 2011 and that have not or would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(l)            Mortgage Lending.  The Company and each of the Company Subsidiaries have complied in all material respects with, and all documentation in connection with the origination, processing, underwriting and credit approval of any mortgage loan originated, purchased or serviced by the Company or any Company Subsidiary has satisfied, in all material respects (i) all Laws with respect to the origination, insuring, purchase, sale, servicing, or filing of claims in connection with mortgage loans, including all Laws relating to real estate settlement procedures, consumer credit protection, truth in lending laws, usury limitations, fair housing, transfers of servicing, collection practices, equal credit opportunity and adjustable rate mortgages, (ii) the responsibilities and obligations relating to mortgage loans set forth in any agreement between the Company and any Agency, Loan Investor or Insurer, (iii) the applicable rules, regulations, guidelines, handbooks and other requirements of any Agency, Loan

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Investor or Insurer and (iv) the terms and provisions of any mortgage or other collateral documents and other loan documents with respect to each mortgage loan.

(m)          Bank Secrecy Act; Anti-Money Laundering; OFAC; and Customer Information.  The Company is not aware of, has not been advised of, and, to the Knowledge of the Company, has no reason to believe that any facts or circumstances exist that would cause it or any Company Subsidiary to be deemed to be not operating in compliance, in all material respects, with the Bank Secrecy Act of 1970, as amended, the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (also known as the USA PATRIOT Act), any order or regulation issued by the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”), or any other applicable anti-money laundering or anti-terrorist-financing statute, rule or regulation.  The Company is not aware of any facts or circumstances that would cause it to believe that any nonpublic customer information has been disclosed to or accessed by an unauthorized third party in a manner that would cause it to undertake any material remedial action.  The Company and each of the Company Subsidiaries have adopted and implemented an anti-money laundering program that contains adequate and appropriate customer identification verification procedures that comply with the USA PATRIOT Act and such anti-money laundering program meets the requirements in all material respects of Section 352 of the USA PATRIOT Act and the regulations thereunder, and they have complied in all respects with any requirements to file reports and other necessary documents as required by the USA PATRIOT Act and the regulations thereunder.  The Company will not directly or indirectly use the proceeds of the sale of the Common Stock pursuant to transactions contemplated by this Agreement, or lend, contribute or otherwise make available such proceeds to any Company Subsidiary, joint venture partner or other Person, towards any sales or operations in any country appearing on the OFAC Specially Designated Nationals List (“SDN List”) or for the purpose of financing the activities of any Person currently appearing on the SDN List.

(n)           Certain Payments.  Neither the Company nor any of the Company Subsidiaries, nor any directors, officers, nor to the Knowledge of the Company, employees or any of their Affiliates or any other Person who to the Knowledge of the Company is associated with or acting on behalf of the Company or any of the Company Subsidiaries has directly or indirectly (i) made any contribution, gift, bribe, rebate, payoff, influence payment, kickback, or other payment in material violation of any Law to any Person, private or public, regardless of form, whether in money, property, or services (A) to obtain favorable treatment in securing business for the Company or any of the Company Subsidiaries, (B) to pay for favorable treatment for business secured by the Company or any of the Company Subsidiaries, or (C) to obtain special concessions or for special concessions already obtained, for or in respect of the Company or any of the Company Subsidiaries or (ii) established or maintained any fund or asset with respect to the Company or any of the Company Subsidiaries that was required by Law or GAAP to have been recorded and was not recorded in the books and records of the Company or any of the Company Subsidiaries.

(o)           Absence of Certain Changes.  Since December 31, 2012 and except as Previously Disclosed or as required or contemplated by the terms of this Agreement, (i) the Company and the Company Subsidiaries have conducted their respective businesses in all material respects in the ordinary and usual course of business consistent with past practices, (ii)

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none of the Company or any Company Subsidiary has issued any securities (other than Common Stock and Company Options and other equity-based awards issued prior to the date of this Agreement pursuant to Company Stock Plans and reflected in the numbers set forth in Section 2.2(c)), (iii) the Company has not made or declared any distribution in cash or in kind to its shareholders or issued or repurchased any shares of its Capital Stock, (iv) through (and including) the date of this Agreement, no fact, event, change, condition, development, circumstance or effect has occurred that has had or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect and (v) no material default (or event which, with notice or lapse of time, or both, would constitute a material default) exists on the part of the Company or any Company Subsidiary in the due performance and observance of any term, covenant or condition of any agreement to which the Company or any Company Subsidiary is a party and which would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

(p)           Compliance with Laws.  The Company and each Company Subsidiary have all material permits, licenses, franchises, authorizations, orders and approvals of, and have made all filings, applications and registrations with, Governmental Entities that are required in order to permit them to own or lease their properties and assets and to carry on their business as presently conducted and that are material to the business of the Company and each Company Subsidiary.  The Company and each Company Subsidiary have complied in all material respects and (i) are not in default or violation in any respect of, (ii) are not under investigation with respect to, and (iii) have not been threatened to be charged with or given notice of any material violation of, any applicable material domestic (federal, state or local) or foreign law, statute, ordinance, license, rule, regulation, policy or guideline, order, demand, writ, injunction, decree or judgment of any Governmental Entity (each, a “Law”), other than such noncompliance, defaults or violations as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.  Except for statutory or regulatory restrictions of general application, restrictions applicable to recipients of funds under the Troubled Asset Relief Program of the Treasury, the respective Orders to Cease and Desist issued by the Office of Thrift Supervision to the Company and the Bank, with the consent of the Company and the Bank, effective September 9, 2010 (each, individually a “Regulatory Order” and, together, the “Regulatory Orders”), no Governmental Entity has placed any material restriction on the business or properties of the Company or any of the Company Subsidiaries.  As of the date hereof, the Bank has a Community Reinvestment Act rating of “outstanding.”

(q)           Agreements with Regulatory Agencies.  Except for the Regulatory Orders, (i) the Company and the Company Subsidiaries (A) are not subject to any cease-and-desist or other similar order or enforcement action issued by, (B) are not a party to any written agreement, consent agreement or memorandum of understanding with, (C) are not a party to any commitment letter or similar undertaking to, and (D) are not subject to any capital directive by, and (ii) since December 31, 2012, neither the Company nor any of the Company Subsidiaries has adopted any board resolutions at the request of, any Governmental Entity that currently restricts in any material respect the conduct of its business or that in any material manner relates to its capital adequacy, its liquidity and funding policies and practices, its ability to pay dividends, its credit, risk management or compliance policies, its internal controls, its management or its operations or business (each item in this sentence, including the Regulatory Orders, being referred to herein as a “Regulatory Agreement”), nor has the Company nor any of the Company

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Subsidiaries been advised since December 31, 2012 by any Governmental Entity that it is considering issuing, initiating, ordering, or requesting any such Regulatory Agreement, except that the Company and the Bank have been advised that they may receive revised Regulatory Orders from the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System (either acting directly or by or through the Federal Reserve Bank of San Francisco).  Except as set forth in the Disclosure Schedule, the Company and the Company Subsidiaries are in compliance in all material respects with each Regulatory Agreement to which they are party or subject, and the Company and the Company Subsidiaries have not received any notice from any Governmental Entity indicating that either the Company or any of the Company Subsidiaries is not in compliance in all material respects with any such Regulatory Agreement.

(r)            Contracts.  The Company has Previously Disclosed or provided (by hard copy, electronic data room or otherwise) to the Investor or its representatives true, correct and complete copies of each of the following to which the Company or any Company Subsidiary is a party, each of which is set forth on Section 2.2(r) of the Disclosure Schedule (each, a “Material Contract”):

(i)            any contract or agreement relating to indebtedness of the Company or any Company Subsidiary for borrowed money, letters of credit, capital lease obligations, obligations secured by a Lien or interest rate or currency hedging agreements (including guarantees in respect of any of the foregoing, but in any event excluding trade payables, securities transactions and brokerage agreements arising in the ordinary course of business, intercompany indebtedness and immaterial leases for telephones, copy machines, facsimile machines and other office equipment) in excess of $200,000, except for those issued in the ordinary course of business;

(ii)           any contract or agreement that is a “material contract” within the meaning of Item 601(b)(10) of Regulation S-K;

(iii)          any contract or agreement limiting, in any material respect, the ability of the Company or any of the Company Subsidiaries to engage in any line of business or to compete, whether by restricting territories, customers or otherwise, or in any other material respect, with any Person;

(iv)          any contract or agreement that concerns the sale or acquisition of any material portion of the Company’s business;

(v)           any alliance, cooperation, joint venture, shareholders, partnership or similar agreement involving a sharing of profits or losses relating to the Company or any Company Subsidiary;

(vi)          any contract or agreement involving annual payments in excess of $200,000 that cannot be cancelled by the Company or a Company Subsidiary without penalty on not more than 90 days’ notice;

(vii)         any material hedge, collar, option, forward purchasing, swap, derivative or similar agreement, understanding or undertaking;

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(viii)        any contract or agreement with respect to the employment or service of any current or former directors, officers, employees or consultants of the Company or any of the Company Subsidiaries other than, with respect to non-executive employees and consultants, in the ordinary course of business; and

(ix)          any contract or agreement containing any (x) non-competition or exclusive dealing obligations or other obligation which purports to limit or restrict in any respect the ability of the Company or any Company Subsidiary to solicit customers or the manner in which, or the localities in which, all or any portion of the business of the Company or the Company Subsidiaries is or can be conducted, or (y) right of first refusal or right of first offer or similar right or that limits or purports to limit the ability of the Company or any of the Company Subsidiaries to own, operate, sell, transfer, pledge or otherwise dispose of any material assets or business.

Each Material Contract (A) is legal, valid and binding on the Company and the Company Subsidiaries which are a party to such contract, (B) is in full force and effect and enforceable in accordance with its terms and (C) will continue to be legal, valid, binding, enforceable, and in full force and effect in all material respects following the consummation of the transactions contemplated by this Agreement.  Neither the Company nor any of the Company Subsidiaries, nor to the Knowledge of the Company, any other party thereto is in material violation or default under any Material Contract.  No benefits under any Material Contract will be increased, and no vesting of any benefits under any Material Contract will be accelerated, by the occurrence of any of the transactions contemplated by this Agreement, nor will the value of any of the benefits under any Material Contract be calculated on the basis of any of the transactions contemplated by this Agreement.  The Company and the Company Subsidiaries, and to the Knowledge of the Company, each of the other parties thereto, have performed in all material respects all material obligations required to be performed by them under each Material Contract, and to the Knowledge of the Company, no event has occurred that with notice or lapse of time would constitute a material breach or default or permit termination, modification, or acceleration, under the Material Contracts.

(s)            Insurance.  The Company and each of the Company Subsidiaries are presently insured, and have been insured for at least the past two years, for reasonable amounts with financially sound and reputable insurance companies against such risks as companies engaged in a similar business would, in accordance with good business practice, customarily be insured.  All of the policies, bonds and other arrangements providing for the foregoing (the “Company Insurance Policies”) are in full force and effect, the premiums due and payable thereon have been or will be timely paid through the Closing Date, and there is no material breach or default (and no condition exists or event has occurred that, with the giving of notice or lapse of time or both, would constitute such a material breach or default) by the Company or any of the Company Subsidiaries under any of the Company Insurance Policies or, to the Knowledge of the Company, by any other party to the Company Insurance Policies.  Neither the Company nor any of the Company Subsidiaries has received any written notice of cancellation or non-renewal of any Company Insurance Policy nor, to the Knowledge of the Company, is the termination of any such policies threatened in writing by the insurer, and there is no material claim for coverage by the Company, or any of the Company Subsidiaries, pending under any of

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such Company Insurance Policies as to which coverage has been denied or disputed by the underwriters of such Company Insurance Policies or in respect of which such underwriters have reserved their rights.

(t)            Title.  The Company and the Company Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and valid title to all material personal property owned by them, in each case free and clear of all Liens, except for Liens which do not materially affect the value of such property or do not interfere with the use made and proposed to be made of such property by the Company or any Company Subsidiary.  Any real property and facilities held under lease by the Company or the Company Subsidiaries are valid, subsisting and enforceable leases with such exceptions that are not material and do not interfere with the use made and proposed to be made of such property and facilities by the Company or the Company Subsidiaries.

(u)           Employee Benefits.

(i)            Section 2.2(v) of the Disclosure Schedule sets forth a correct and complete list of each “employee benefit plan” (within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), including, without limitation, multiemployer plans within the meaning of Section 3(37) of ERISA), and all stock purchase, stock option, severance, employment, change-in-control, fringe benefit, bonus, incentive, deferred compensation and all other employee benefit plans, agreements, programs, policies or other arrangements, whether or not subject to ERISA (including any funding mechanism therefor now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise), whether formal or informal, oral or written, under which (A) any current or former employee or director of the Company or any of the Company Subsidiaries (the “Company Employees”) has any present or future right to benefits and which are contributed to, sponsored by or maintained by the Company or any of the Company Subsidiaries or (B) the Company or any Company Subsidiary has had or has any present or future liability.  All such plans, agreements, programs, policies and arrangements shall be collectively referred to as the “Benefit Plans.”

(ii)           (A) Each Benefit Plan has been established and administered in all material respects in accordance with its terms, and in compliance with the applicable provisions of ERISA, the Code and other Laws; (B) no “reportable event” (as such term is defined in Section 4043 of ERISA) that could reasonably be expected to result in material liability has occurred with respect to any Benefit Plan, and (C) no non-exempt “prohibited transaction” (as such term is defined in Section 406 of ERISA and Section 4975 of the Code) has been engaged in by the Company or any Company Subsidiary with respect to any Benefit Plan that has or is expected to result in any material liability or “accumulated funding deficiency” (as such term is defined in Section 302 of ERISA and Section 412 of the Code (whether or not waived)).

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(iii)          The Company and the Company Subsidiaries will be in compliance, as of the Closing Date, with Sections 111 and 302 of the Emergency Economic Stabilization Act of 2008, as amended by the U.S. American Recovery and Reinvestment Act of 2009, including all guidance issued thereunder by a Governmental Entity (collectively “EESA”).

(v)           Taxes.  All material Tax Returns required to be filed by, or on behalf of, Company or the Company Subsidiaries have been timely filed, or will be timely filed, in accordance with all Laws, and all such Tax Returns are, or shall be at the time of filing, complete and correct in all material respects.  The Company and the Company Subsidiaries have timely paid all material Taxes due and payable (whether or not shown on such Tax Returns), or, where payment is not yet due, have made adequate provisions in accordance with GAAP.  There are no Liens with respect to Taxes upon any of the assets or properties of either the Company or the Company Subsidiaries other than with respect to Taxes not yet due and payable.

(w)          Labor.

(i)            Employees of the Company and the Company Subsidiaries are not represented by any labor union nor are any collective bargaining agreements otherwise in effect with respect to such employees.  No labor organization or group of employees of the Company or any Company Subsidiary has made a pending demand for recognition or certification, and there are no representation or certification proceedings or petitions presently pending or threatened to be brought or filed with the National Labor Relations Board or any other labor relations tribunal or authority, nor have there been in the last three years.  There are no strikes, work stoppages, slowdowns, labor picketing lockouts, material arbitrations or material grievances, or other material labor disputes pending or, to the Knowledge of the Company, threatened against or involving the Company or any Company Subsidiary, nor have there been any in the past year.

(ii)           Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, the Company and the Company Subsidiaries are in compliance with all federal and state Laws and requirements respecting employment and employment practices, terms and conditions of employment, collective bargaining, disability, immigration, health and safety, wages, hours and benefits, non-discrimination in employment, workers’ compensation and the collection and payment of withholding and/or payroll taxes and similar taxes.

(iii)          Except as would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, there is no charge or complaint pending or threatened before any Governmental Entity alleging unlawful discrimination in employment practices, unfair labor practices or other unlawful employment practices by the Company or any Company Subsidiary.

(x)           Brokers and Finders.  Except for PGP Capital Advisors, LLC (the “Placement Agent”) and the fees payable thereto or to its assigns (which fees are to be paid by

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the Company), neither the Company nor any of its officers, directors, employees or agents has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Company in connection with this Agreement or the transactions contemplated hereby.

(y)           Loan Portfolio.  As of the date of this Agreement, the characteristics of the loan portfolio of the Company have not materially and adversely changed from the characteristics of the loan portfolio as of December 31, 2012.

(z)           Offering of Securities.  Neither the Company nor any Person acting on its behalf has taken any action (including any offering of any securities of the Company under circumstances which would require the integration of such offering with the offering of any of the Common Stock to be issued pursuant to this Agreement under the Securities Act and the rules and regulations of the SEC promulgated thereunder) which would subject the offering, issuance or sale of any of the Common Stock to be issued pursuant to this Agreement to be subject to the registration requirements of the Securities Act.  Neither the Company nor any Person acting on its behalf has engaged or will engage in any form of general solicitation or general advertising (within the meaning of Regulation D under the Securities Act) in connection with any offer or sale of the Common Stock pursuant to the transactions contemplated by this Agreement.  Assuming the accuracy of the Investor’s representations and warranties set forth in this Agreement, no registration under the Securities Act is required for the offer and sale of the Common Stock by the Company to the Investor.

(aa)         Investment Company Status.  The Company is not, and upon consummation of the transactions contemplated by this Agreement will not be, an “investment company,” a company controlled by an “investment company” or an “affiliated Person” of, or “promoter” or “principal underwriter” of, an “investment company,” as such terms are defined in the Investment Company Act of 1940, as amended.

(bb)         Affiliate Transactions.  No officer, director, five percent (5%) shareholder or other Affiliate of the Company (or any Company Subsidiary), or any individual who, to the Knowledge of the Company, is related by marriage or adoption to or shares the same home as any such Person, or any entity which, to the Knowledge of the Company, is controlled by any such Person (collectively, an “Insider”), is a party to any contract or transaction with the Company (or any Company Subsidiary) which pertains to the business of the Company (or any Company Subsidiary) or has any interest in any property, real or personal or mixed, tangible or intangible, used in or pertaining to the business of the Company (or any Company Subsidiary).  The foregoing representation and warranty does not include deposits at the Company (or any Company Subsidiary) or loans of $250,000 or less made in the ordinary course of business in compliance with Regulation O and other applicable Law.

(cc)         Anti-takeover Provisions Not Applicable.  The Board of Directors has taken all necessary action to ensure that the transactions contemplated by this Agreement and the consummation of the transactions contemplated hereby will be exempt from any anti-takeover or similar provisions of the Company’s certificate of incorporation and bylaws, the Rights Plan and any provisions of any applicable “moratorium”, “control share”, “fair price”, “interested shareholder” or other anti-takeover Laws and regulations of any jurisdiction.

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(dd)         Issuance of the Common Stock.  The issuance of the Common Stock in connection with the transactions contemplated by this Agreement has been duly authorized and such Common Stock, when issued and paid for in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and nonassessable and free and clear of all Liens, other than restrictions on transfer imposed by applicable securities Laws, and shall not be subject to preemptive or similar rights.

2.3          Representations and Warranties of the Investor.  Except as Previously Disclosed, the Investor hereby represents and warrants to the Company, as of the date hereof and as of the Closing Date (except for the representations and warranties that are as of a specific date which are made as of that date) that:

(a)           Organization and Authority.  The Investor is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, is duly qualified to do business and is in good standing in all jurisdictions where its ownership or leasing of property or the conduct of its business requires it to be so qualified and where failure to be so qualified would be reasonably expected to materially and adversely impair or delay its ability to perform its obligations under this Agreement or to consummate the transactions contemplated hereby.

(b)           Authorization; No Conflicts.

(i)            The Investor has the necessary power and authority to execute and deliver this Agreement and to perform its obligations hereunder.  The execution, delivery and performance of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by its board of directors, general partner or managing members, investment committee, investment adviser or other authorized person, as the case may be, and no further approval or authorization by any of its shareholders, partners or other equity owners, as the case may be, is required.  This Agreement has been duly and validly executed and delivered by the Investor and, assuming due authorization, execution and delivery by the Company is the valid and binding obligation of the Investor enforceable against the Investor in accordance with its terms (except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors’ rights or by general equity principles).

(ii)           Neither the execution, delivery and performance by the Investor of this Agreement nor the consummation of the transactions contemplated hereby, nor compliance by the Investor with any of the provisions hereof, will (A) violate, conflict with, or result in a breach of any provision of, or constitute a default (or an event which, with notice or lapse of time or both, would constitute a default) under, or result in the termination of, or accelerate the performance required by, or result in a right of termination or acceleration of, or result in the creation of any Liens upon any of the properties or assets of the Investor under any of the terms, conditions or provisions of (1) its certificate of incorporation or bylaws, its certificate of limited partnership or partnership agreement or its similar governing

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documents or (2) any note, bond, mortgage, indenture, deed of trust, license, lease, agreement or other instrument or obligation to which the Investor is a party or by which the Investor may be bound, or to which the Investor or any of the properties or assets of the Investor may be subject, or (B) violate any Law applicable to the Investor or any of its properties or assets except in the case of clauses (A)(2) and (B) for such violations, conflicts and breaches as would not reasonably be expected to materially adversely affect the Investor’s ability to perform its obligations under this Agreement or consummate the transactions contemplated hereby on a timely basis.

(c)           Governmental Consents.  Except as set forth in the Disclosure Schedule, no Governmental Consents are necessary for the execution and delivery of this Agreement or for the purchase by the Investor of the Common Stock pursuant to this Agreement.

(d)           Purchase for Investment; Accredited Investor Status.  The Investor acknowledges that the Common Stock to be purchased by the Investor pursuant to this Agreement has not been registered under the Securities Act or under any state securities laws and may not be resold or transferred by the Investor without such registration or appropriate reliance on any available exemption from such requirements.  The Investor (i) is acquiring the Common Stock pursuant to an exemption from the registration requirements of the Securities Act and other applicable securities laws solely for investment with no present intention to distribute any of the Common Stock to any Person, (ii) will not sell or otherwise dispose of any of the Common Stock, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable securities laws, (iii) has such knowledge and experience in financial and business matters and in investments of this type that it is capable of evaluating the merits and risks of its investment in the Common Stock and of making an informed investment decision and (iv) is an “accredited investor” (as that term is defined by Rule 501 of the Securities Act).

(e)           Brokers and Finders.  Neither the Investor, nor its respective Affiliates nor any of their respective officers or directors, has employed any broker or finder or incurred any liability for any financial advisory fees, brokerage fees, commissions or finder’s fees, and no broker or finder has acted directly or indirectly for the Investor in connection with this Agreement or the transactions contemplated hereby.  The Investor acknowledges that it is purchasing the Common Stock directly from the Company and not from the Placement Agent.

(f)            Investment Decision.  The Investor, or the duly appointed investment manager to the Investor (the “Investment Manager”), if applicable, has independently evaluated the merits of its decision to purchase the Common Stock pursuant to this Agreement, and the Investor confirms that neither it, nor its Investment Manager, if applicable, has relied on the advice of any other person’s business and/or legal counsel in making such decision.  The Investor understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Investor in connection with the purchase of the Common Stock constitutes legal, tax or investment advice.  The Investor has consulted such accounting, legal, tax and investment advisors as it has deemed necessary or appropriate in connection with its purchase of the Common Stock.  The Investor understands that the Placement Agent has acted solely as the agent of the Company in this placement of the Common Stock and the Investor has

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not relied on the business or legal advice of the Placement Agent or any of its agents, counsel or Affiliates in making its investment decision hereunder, and confirms that none of such persons has made any representations or warranties to the Investor in connection with the transactions contemplated by this Agreement.  Except as Previously Disclosed and except for this Agreement, there are no agreements or understandings with respect to the transactions contemplated by this Agreement and the Side Letter between the Investor or any of its Affiliates, on the one hand, and (i) any of the Other Investors or any of their respective Affiliates, in each case, the identity of which is known to the Investor, (ii) the Company or (iii) the Company Subsidiaries, on the other hand.

(g)           Financial Capability.  At the Closing, the Investor shall have available all funds necessary to consummate the purchase of Common Stock on the terms and conditions contemplated by this Agreement.

(h)           Access to Information.  The Investor acknowledges that it has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Common Stock and the merits and risks of investing in the Common Stock; (ii) access to information about the Company and the Company Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the Investment; and (iv) the opportunity to ask questions of management.

(i)            No Reliance.  The Investor has not relied on any representation or warranty in connection with the Investment other than those contained in this Agreement.

(j)            No Coordinated Acquisition.  Except as Previously Disclosed, the Investor (i) reached its decision to invest in the Common Stock independently from any other Person known by the Investor to be a potential investor in the Company, other than any Affiliates of the Investor that are also investing in the Other Private Placements, (any such person, a “Potential Investor”), (ii) is not affiliated with any other Potential Investor, (iii) is not advised or managed by an advisor or manager that advises or manages any other Potential Investor, other than any Affiliates of the Investor that are also investing in the Other Private Placements, (iv) has not entered into any agreement or understanding, whether written or not reduced to writing, with any other Potential Investor to act in concert for the purpose of exercising a controlling influence over the Company or any Company Subsidiaries, including, but not limited to, any agreements or understandings regarding the voting or transfer of shares of the Company, (v) has not shared due diligence materials prepared by such Investor or any of its advisors or representatives with respect to the Company or any Company Subsidiaries with any other Potential Investor, (vi) has not been induced, nor has induced any other Potential Investor, to enter into the transactions contemplated by this Agreement by any other Potential Investor, (vii) was not notified of or provided the opportunity to enter into the transactions contemplated by this Agreement pursuant to the terms of any agreement or informal understanding with, or otherwise acting in concert with, any other Potential Investor and was not required by the terms of any agreement or informal understanding to so notify any other Potential Investor, (viii) is not a party to any

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formal or informal understanding with any other Potential Investor to make a coordinated acquisition of stock of the Company, and the investment decision of the Investor is not based on the investment decision of any other Potential Investor, (ix) is not a party to any formal or informal agreement or understanding concerning the appointment of any individual to the Board of Directors, (x) will not, by reason of the Investment, file, be required to file, or be required to be included in a Schedule 13D or Schedule 13G pursuant to the United States federal securities laws, (xi) has not engaged as part of a group consisting of substantially the same entities as the Potential Investors, in substantially the same combination of interests, in any additional banking or nonbanking activities or business ventures in the United States and (xii) will not pay any other Potential Investor any fee in connection with the transactions contemplated hereby.  Except as Previously Disclosed, the Investor does not presently hold any capital stock of the Company.

ARTICLE 3

COVENANTS

3.1          Conduct of Business Prior to Closing.  Except as otherwise expressly required or contemplated by this Agreement or applicable Law or in the performance of any Material Contract that was Previously Disclosed, or with the prior written consent of the Investor, between the date of this Agreement and the Closing, the Company shall, and the Company shall cause each Company Subsidiary to:

(a)           use commercially reasonable efforts to conduct its business only in the ordinary course of business; and

(b)           use commercially reasonable efforts to (i) preserve the present business operations, organization (including officers and employees) and goodwill of the Company and any Company Subsidiary and (ii) preserve business relationships with customers, suppliers, consultants and others having business dealings with the Company; provided, however, that nothing in this clause (b) shall place any limit on the ability of the Board of Directors to act, or require any actions that the Board of Directors may, in good faith, determine to be inconsistent with their duties or the Company’s obligations under applicable Law or imposed by any Governmental Entity.

3.2          Confidentiality.  The Investor acknowledges that the information being provided to it in connection with the transactions contemplated hereby is subject to the terms of the Confidentiality Agreement heretofore entered into between the Investor and the Company (the “Confidentiality Agreement”), the terms of which are incorporated herein by reference.

3.3          Commercially Reasonable Efforts.  Upon the terms and subject to the conditions herein provided, except as otherwise provided in this Agreement, each of the parties hereto agrees to use its commercially reasonable efforts to take or cause to be taken all action, to do or cause to be done and to assist and cooperate with the other parties hereto in doing all things necessary, proper or advisable under applicable Laws to consummate and make effective the transactions contemplated hereby, including but not limited to: (a) the satisfaction of the conditions precedent to the obligations of the parties hereto; (b) the obtaining of applicable Governmental Consents, and consents, waivers and approvals of any other third parties; (c)

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defending of any claim, action, suit, investigation or proceeding, whether judicial or administrative, challenging this Agreement or the performance of the obligations hereunder; and (d) the execution and delivery of such instruments, and the taking of such other actions as the other parties hereto may reasonably request in order to carry out the intent of this Agreement.  Notwithstanding the foregoing, under no circumstances will the Investor be required to disclose to the Company, the Company Subsidiaries or any third party any information the disclosure of which is prohibited by Law, nor shall it be required to agree to any restrictions, conditions or commitments imposed or otherwise required by any Government Entity that are determined by the Investor in its sole discretion to be unduly burdensome, other than customary passivity commitments, in order to consummate and make effective the transactions contemplated hereby.

3.4          Legend.

(a)           The Investor agrees that all certificates or other instruments representing the Common Stock subject to this Agreement shall bear a legend substantially to the following effect, until such time as they are not required under Section 3.4(b):

“THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR SECURITIES LAWS OF ANY STATE AND MAY NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR SUCH LAWS.”

(b)           Upon request of the Investor, the Company shall promptly cause such legend to be removed from any certificate for any Common Stock to be so transferred if (i) such Common Stock is being transferred pursuant to a registration statement in effect with respect to such transfer or (ii) such Common Stock is being transferred pursuant to an exemption from registration under the Securities Act and applicable state laws subject to receipt by the Company of an opinion of counsel for the Investor reasonably satisfactory to the Company to the effect that such legend is no longer required under the Securities Act and applicable state laws.  The Investor acknowledges that the Common Stock has not been registered under the Securities Act or under any state securities laws and agrees that it shall not sell or otherwise dispose of any of the Common Stock, except in compliance with the registration requirements or exemption provisions of the Securities Act and any other applicable securities laws.

3.5          Certain Other Transactions.

(a)           Prior to the Closing, notwithstanding anything in this Agreement to the contrary, the Company shall not directly or indirectly effect or cause to be effected any transaction with a third party that would reasonably be expected to result in a Change in Control unless such third party shall have provided prior assurance in writing to the Investor (in a form that is reasonably satisfactory to the Investor) that the terms of this Agreement shall be fully performed (i) by the Company or (ii) by such third party if it is the successor of the Company or if the Company is its direct or indirect Subsidiary.  For the avoidance of doubt, it is understood

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and agreed that, in the event that a Change in Control occurs on or prior to the Closing, the Investor shall maintain the right under this Agreement to acquire, pursuant to the terms and conditions of this Agreement, the Common Stock that is to be purchased by the Investor pursuant to this Agreement (or such other securities or property (including cash) into which the Common Stock that is to be purchased by Investor pursuant to this Agreement may have become exchangeable as a result of such Change in Control), as if the Closing had occurred immediately prior to such Change in Control.

(b)           In the event that, at or prior to the Closing, (i) the number of shares of Common Stock, or securities convertible or exchangeable into or exercisable for shares of Common Stock, issued and outstanding is changed as a result of any reclassification, stock split (including reverse split), stock dividend or distribution (including any dividend or distribution of securities convertible or exchangeable into or exercisable for shares of Common Stock), merger, tender or exchange offer or other similar transaction, or (ii) the Company fixes a record date that is at or prior to the Closing Date for the payment of any non-stock dividend or distribution on the Common Stock (excluding the rights to be issued in the Rights Offering), then the number of shares of Common Stock to be issued to the Investor at the Closing under this Agreement, together with the applicable implied per share price (and the number of shares and per share price pursuant to the Rights Offering), shall be equitably adjusted and/or the shares of Common Stock to be issued to the Investor at the applicable Closing under this Agreement shall be equitably replaced with shares of other stock or securities or property (including cash), in each case, to provide the Investor with substantially the same economic benefit from this Agreement as the Investor had prior to the applicable transaction.  Notwithstanding anything in this Agreement to the contrary, in no event shall the Purchase Price or any component thereof, or the aggregate percentage of shares to be purchased by the Investor, be changed by the foregoing.

(c)           Notwithstanding anything in the foregoing to the contrary, the provisions of this Section 3.5 shall not be implicated by (i) the transactions contemplated by this Agreement, the Other Private Placements, the TARP Exchange and the Other Preferred Exchanges, and the Rights Offering, or (ii) any issuances of options, restricted stock units or other equity-based awards granted to newly-appointed directors, employees or consultants of the Company at or around the same time as the transactions contemplated by this Agreement to such Persons, including upon exercise of any such options.

3.6          Exchange Listing.  The Company shall use its reasonable best efforts to cause the Common Stock to be issued pursuant to this Agreement to be approved for listing on NASDAQ or such other market on which the Common Stock is then listed or quoted, subject to official notice of issuance, as promptly as possible and in any event prior to the Closing.

3.7          Stockholders Meeting.  Promptly after the Closing Date, the Company shall give notice of and hold a meeting of its stockholders in accordance with applicable law and the corporate governance rules of NASDAQ for the purpose of obtaining stockholder approval of an amendment to the certificate of incorporation of the Company increasing the number of shares of Common Stock and Preferred Stock the Company is authorized to issue and, if and to the extent required by the corporate governance rules of NASDAQ, further approving the issuance of shares of Common Stock upon such approval pursuant to the conversion of the Common Stock Equivalents issued in the TARP Exchange and in the Other Preferred Exchanges.  To the extent

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permitted by the NASDAQ corporate governance rules, the Investor agrees to vote all shares of Common Stock that it owns or has the power to direct the voting of for this purpose in favor of such amendment and such issuances.

3.8          Registration Rights.

(a)           Registration.

(i)            Subject to the terms and conditions of this Agreement, the Company covenants and agrees that upon the expiration of ninety (90) days after the Closing Date (the “Filing Deadline”), the Company shall have prepared and filed with the SEC one or more Shelf Registration Statements covering the resale of all of the Registrable Securities (or, if permitted by the rules of the SEC, otherwise designated an existing Shelf Registration Statement filed with the SEC to cover such Registrable Securities), and, to the extent the Shelf Registration Statement has not theretofore been declared effective or is not automatically effective upon such filing, the Company shall use reasonable best efforts to cause such Shelf Registration Statement to be declared or become effective as soon as practicable (and in any event no later than the Effectiveness Deadline) and to keep such Shelf Registration Statement continuously effective and in compliance with the Securities Act and usable for resale of such Registrable Securities until the date that is 12 months after the initial effective date thereof (the “Registration Termination Date”).

(ii)           Any registration pursuant to this Section 3.8(a) shall be effected by means of a shelf registration under the Securities Act (a “Shelf Registration Statement”) in accordance with the methods and distribution set forth in the Shelf Registration Statement and Rule 415.

(b)           Expenses of Registration.  All Registration Expenses incurred in connection with any registration, qualification or compliance hereunder shall be borne by the Company.  All Selling Expenses incurred in connection with any registrations hereunder shall be borne by the Holders selling in such registration pro rata on the basis of the aggregate number of securities or shares being sold.

(c)           Obligations of the Company.  The Company shall use its reasonable best efforts, for so long as there are Registrable Securities outstanding, to take such actions as are under its control to not become an ineligible issuer (as defined in Rule 405 under the Securities Act).  In addition, whenever required to effect the registration of any Registrable Securities or facilitate the distribution of Registrable Securities pursuant to an effective Shelf Registration Statement, the Company shall, as expeditiously as reasonably practicable:

(i)            Prepare and file with the SEC a prospectus supplement with respect to a proposed offering of Registrable Securities pursuant to an effective registration statement and, subject to this Section 3.8(c), keep such registration statement effective or such prospectus supplement current.

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(ii)           Prepare and file with the SEC such amendments and supplements to the applicable registration statement and the prospectus or prospectus supplement used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.

(iii)          Furnish to the Holders such number of correct and complete copies of the applicable registration statement and each such amendment and supplement thereto (including in each case all exhibits) and of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned or to be distributed by them.

(iv)          Use its reasonable best efforts to register and qualify the securities covered by such registration statement under such other securities or blue sky Laws of such jurisdictions as shall be reasonably requested by the Holders, to keep such registration or qualification in effect for so long as such registration statement remains in effect, and to take any other action which may be reasonably necessary to enable such seller to consummate the disposition in such jurisdictions of the securities owned by such Holder; provided, that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.

(v)           Notify each Holder of Registrable Securities at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the applicable prospectus, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing (which notice shall not contain any material non-public information).

(vi)          Give written notice to the Holders (which notice shall not contain any material, non-public information):

(A)          when any registration statement filed pursuant to Section 3.8(a) or any amendment thereto has been filed with the SEC (except for any amendment effected by the filing of a document with the SEC pursuant to the Exchange Act) and when such registration statement or any post-effective amendment thereto has become effective;

(B)          of any request by the SEC for amendments or supplements to any registration statement or the prospectus included therein or for additional information;

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(C)          of the issuance by the SEC of any stop order suspending the effectiveness of any registration statement or the initiation of any proceedings for that purpose;

(D)          of the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Common Stock for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and

(E)           of the happening of any event that requires the Company to make changes in any effective registration statement or the prospectus related to the registration statement in order to make the statements therein not misleading (which notice shall be accompanied by an instruction to suspend the use of the prospectus until the requisite changes have been made).

(vii)         Use its reasonable best efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of any registration statement referred to in Section 3.8(c)(vi)(C) at the earliest practicable time.

(viii)        Upon the occurrence of any event contemplated by Section 3.8(c)(v) or 3.8(c)(vi)(E) and subject to the Company’s rights under Section 3.8(d), promptly prepare a post-effective amendment to such registration statement or a supplement to the related prospectus or file any other required document so that, as thereafter delivered to the Holders, the prospectus shall not contain an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

(ix)          Cause all such Registrable Securities to be listed on each securities exchange on which the same class of securities issued by the Company are then listed or, if the same class of securities is not then listed on any securities exchange, use its reasonable best efforts to cause all such Registrable Securities of such class to be listed on the NASDAQ Capital Market.

(x)           If requested by Holders of a majority of the Registrable Securities being registered and/or sold in connection therewith, promptly include in a prospectus supplement or amendment such information as the Holders of a majority of the Registrable Securities being registered and/or sold in connection therewith may reasonably request in order to permit the intended method of distribution of such securities and make all required filings of such prospectus supplement or such amendment as soon as practicable after the Company has received such request.

(xi)          Timely provide to its security holders earnings statements satisfying the provisions of Section 9(a) of the Securities Act and Rule 158 thereunder.

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(d)           Suspension of Sales.  Upon receipt of written notice from the Company that a registration statement, prospectus or prospectus supplement contains or may contain an untrue statement of a material fact or omits or may omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading or that circumstances exist that make use of such registration statement, prospectus or prospectus supplement inadvisable, each Holder of Registrable Securities shall forthwith discontinue disposition of Registrable Securities pursuant to such registration statement until such Holder has received copies of a supplemented or amended prospectus or prospectus supplement, or until such Holder is advised in writing by the Company that the use of the prospectus and, if applicable, prospectus supplement may be resumed, and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the prospectus and, if applicable, prospectus supplement covering such Registrable Securities current at the time of receipt of such notice (each such suspension, a “Suspension Period”).  No single Suspension Period shall exceed forty-five (45) consecutive days and the aggregate of all Suspension Periods shall not exceed one hundred twenty (120) days during any twelve (12) month period.

(e)           Termination of Registration Rights.  A Holder’s registration rights as to any securities held by such Holder (and its Affiliates, partners, members and former members) shall not be available unless such securities are Registrable Securities.

(f)            Furnishing Information.

(i)            Neither the Investor nor any Holder shall use any free writing prospectus (as defined in Rule 405) in connection with the sale of Registrable Securities without the prior written consent of the Company.

(ii)           It shall be a condition precedent to the obligations of the Company to take any action pursuant to Section 3.8(c) as to a selling Holder that such selling Holder shall furnish to the Company such information regarding themselves, the Registrable Securities held by them and the intended method of disposition of such securities as shall be required to effect the registered offering of their Registrable Securities.

(g)           Indemnification.

(i)            The Company agrees to indemnify each Holder and, if a Holder is a person other than an individual, such Holder’s officers, directors, employees, agents, representatives and Affiliates, and each Person, if any, that controls a Holder within the meaning of the Securities Act (each, an “Indemnitee”), against any and all Losses, joint or several, arising out of or based upon any untrue statement or alleged untrue statement of material fact contained in any registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto or any documents incorporated therein by reference or contained in any free writing prospectus (as such term is defined in Rule 405) prepared by the Company or authorized by it in writing for use by such Holder (or any amendment or supplement thereto), or any omission to

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state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided, that the Company shall not be liable to such Indemnitee in any such case to the extent that any such Loss is based solely upon (i) an untrue statement or omission made in such registration statement, including any such preliminary prospectus or final prospectus contained therein or any such amendments or supplements thereto or contained in any free writing prospectus (as such term is defined in Rule 405) prepared by the Company or authorized by it in writing for use by such Holder (or any amendment or supplement thereto), in reliance upon and in conformity with information regarding such Indemnitee or its plan of distribution or ownership interests which was furnished in writing to the Company by such Indemnitee expressly for use in connection with such registration statement, including any such preliminary prospectus or final prospectus contained therein or any such amendments or supplements thereto, or (ii) offers or sales effected by or on behalf such Indemnitee “by means of” (as defined in Rule 159A) a “free writing prospectus” (as defined in Rule 405) that was not authorized in writing by the Company.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an Indemnitee and shall survive the transfer of the Registrable Securities by the Holders.

(ii)           If any proceeding shall be brought or asserted against any Indemnitee, such Indemnitee shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnitee and the payment of all reasonable fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnitee to give such notice shall not relieve the Company of its obligations or liabilities pursuant to this Agreement, except to the extent that the Company is materially and adversely prejudiced in its ability to defend such action.  An Indemnitee shall have the right to employ separate counsel in any such proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnitee or Indemnitees unless: (1) the Company has agreed in writing to pay such fees and expenses; (2) the Company shall have failed promptly to assume the defense of such proceeding and to employ counsel reasonably satisfactory to such Indemnitee in any such proceeding; or (3) the named parties to any such proceeding (including any impleaded parties) include both such Indemnitee and the Company, and such Indemnitee shall have been advised by counsel that a conflict of interest exists if the same counsel were to represent such Indemnitee and the Company; provided, that the Company shall not be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnitees and all similarly situated Persons who are “Indemnitees” as defined in the other Agreements.  The Company shall not be liable for any settlement of any such proceeding effected without its written consent, which consent shall not be unreasonably withheld or delayed.  The Company shall not, without the prior written consent of the Indemnitee, effect any settlement of any pending proceeding in respect of which any Indemnitee is a party, unless such settlement

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includes an unconditional release of such Indemnitee from all liability on claims that are the subject matter of such proceeding.  Subject to the terms of this Agreement, all fees and expenses of the Indemnitee (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such proceeding in a manner not inconsistent with this Section 3.8(g)(ii)) shall be paid to the Indemnitee, as incurred, within thirty (30) days of written notice thereof to the Company; provided, that the Indemnitee shall promptly reimburse the Company for that portion of such fees and expenses applicable to such actions for which such Indemnitee is finally judicially determined to not be entitled to indemnification hereunder).

(iii)          If the indemnification provided for in Section 3.8(g)(i) is unavailable to an Indemnitee with respect to any Losses, then the Company, in lieu of indemnifying such Indemnitee, shall contribute to the amount paid or payable by such Indemnitee as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnitee, on the one hand, and the Company, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations.  The relative fault of the Company, on the one hand, and of the Indemnitee, on the other hand, shall be determined by reference to, among other factors, whether the untrue statement of a material fact or omission to state a material fact relates to information supplied by the Company or by the Indemnitee and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission; the Company and each Holder agree that it would not be just and equitable if contribution pursuant to this Section 3.8(g)(iii) were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in Section 3.8(g)(i).  No Indemnitee guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from the Company if the Company was not guilty of such fraudulent misrepresentation.

(iv)          The indemnity and contribution agreements contained in this Section 3.8(g) are in addition to any liability that the Company may have to the Indemnitees and are not in diminution or limitation of the indemnification provisions under Article 5 of this Agreement.

(h)           Assignment of Registration Rights.  The rights of the Investor to registration of Registrable Securities pursuant to Section 3.8(a) may be assigned by the Investor to a transferee or assignee of Registrable Securities to which (i) there is transferred to such transferee no less than $1 million in Registrable Securities or all of the Registrable Securities held by the Investor and (ii) such transfer is permitted under the terms hereof; provided, however, that the transferor shall, within ten (10) days after such transfer, furnish to the Company written notice of the name and address of such transferee or assignee and the number and type of Registrable Securities that are being assigned.

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(i)            Rule 144 Reporting.  With a view to making available to the Investor and Holders the benefits of certain rules and regulations of the SEC which may permit the sale of the Registrable Securities to the public without registration, the Company agrees to use its reasonable best efforts to:

(i)            make and keep adequate current public information with respect to the Company available, as those terms are understood and defined in Rule 144(c)(1) or any similar or analogous rule promulgated under the Securities Act, at all times after the effective date of this Agreement;

(ii)           so long as the Investor or a Holder owns any Registrable Securities, furnish to the Investor or such Holder forthwith upon request: (A) a written statement by the Company as to its compliance with the reporting requirements of Rule 144 under the Securities Act, and of the Exchange Act; (B) a copy of the most recent annual or quarterly report of the Company; and (C) such other reports and documents as the Investor or Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing it to sell any such securities without registration; and

(iii)          to take such further action as any Holder may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act.

(j)            As used in this Section 3.8, the following terms shall have the following respective meanings:

(i)            “Effective Date” means the date that the Shelf Registration Statement filed pursuant to Section 3.8(a)(i) is first declared effective by the SEC.

(ii)           “Effectiveness Deadline” means, with respect to the Shelf Registration Statement required to be filed pursuant to Section 3.8(a)(i), the earlier of (i) the 90th calendar day following the Filing Deadline and (ii) the 5th Business Day after the date the Company is notified (orally or in writing, whichever is earlier) by the SEC that such Shelf Registration Statement will not be “reviewed” or will not be subject to further review; provided, that if the Effectiveness Deadline falls on a Saturday, Sunday or other day that the SEC is closed for business, the Effectiveness Deadline shall be extended to the next Business Day on which the SEC is open for business.

(iii)          “Holder” means the Investor and any other holder of Registrable Securities to whom the registration rights conferred by this Agreement have been transferred in compliance with Section 3.8(h) hereof.

(iv)          “Register,” “registered” and “registration” shall refer to a registration effected by preparing and (A) filing a registration statement in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering of effectiveness of such registration

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statement or (B) filing a prospectus and/or prospectus supplement in respect of an appropriate effective registration statement.

(v)           “Registrable Securities” means (A) all Common Stock purchased by the Investor pursuant to this Agreement and (B) any equity securities issued or issuable directly or indirectly with respect to the securities referred to in clause (A) by way of conversion, exercise or exchange thereof or stock dividend or stock split or in connection with a combination of shares, recapitalization, reclassification, merger, amalgamation, arrangement, consolidation or other reorganization, provided that, once issued, such securities shall not be Registrable Securities after (1) they are sold pursuant to an effective registration statement under the Securities Act, (2) they may be sold pursuant to Rule 144 without limitation thereunder on volume or manner of sale and without the requirement for the Company to be in compliance with the current public information required under Rule 144(e)(1) (or Rule 144(i)(2), if applicable), (3) they have ceased to be outstanding or (4) they have been sold in a private transaction in which the transferor’s rights under this Agreement are not permitted by this Agreement to be assigned to the transferee of the securities.  No Registrable Securities may be registered under more than one registration statement at one time.

(vi)          “Registration Expenses” means all expenses incurred by the Company in effecting any registration pursuant to this Agreement (whether or not any registration or prospectus becomes effective or final) or otherwise complying with its obligations under this Section 3.8, including, without limitation, all registration, filing and listing fees, printing expenses, fees and disbursements of counsel for the Company and blue sky fees and expenses, but shall not include Selling Expenses and the compensation of regular employees of the Company, which shall be paid in any event by the Company.

(vii)         “Rule 158,” “Rule 159A,” “Rule 405” and “Rule 415” mean, in each case, such rule promulgated under the Securities Act (or any successor provision), as the same shall be amended from time to time.

(viii)        “Selling Expenses” means all discounts, selling commissions and stock transfer taxes applicable to the sale of Registrable Securities and fees and disbursements of counsel for any Holder.

(k)           On or prior to the Acceptance Date, the Investor shall furnish to the Company a fully completed Selling Shareholder Questionnaire in the form attached as Appendix I hereto for use in the preparation of the Registration Statement and all of the information contained therein will be true and correct as of the Closing Date.

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ARTICLE 4

TERMINATION

4.1          Termination.  This Agreement may be terminated prior to the Closing:

(a)           by mutual written agreement of the Company and the Investor;

(b)           by any party, upon written notice to the other party, in the event that the Closing does not occur on or before August 31, 2013; provided, however, that the right to terminate this Agreement pursuant to this Section 4.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement shall have been the cause of, or shall have resulted in, the failure of the Closing to occur on or prior to such date;

(c)           by the Investor, upon written notice to the Company, if (i) there has been a breach of any representation, warranty, covenant or agreement made by the Company in this Agreement, or any such representation and warranty shall have become untrue after the date of this Agreement, such that Section 1.2(c)(ii)(A) would not be satisfied and (ii) such breach or condition is not curable or, if curable, is not cured prior to the date that would otherwise be the Closing Date in absence of such breach or condition; provided that this Section 4.1(c) shall only apply if the Investor is not in material breach of any of the terms of this Agreement;

(d)           by the Company, upon written notice to the Investor, if (i) there has been a breach of any representation, warranty, covenant or agreement made by the Investor in this Agreement, or any such representation and warranty shall have become untrue after the date of this Agreement, such that Section 1.2(c)(iii)(A) would not be satisfied and (ii) such breach or condition is not curable or, if curable, is not cured prior to the date that would otherwise be the Closing Date in absence of such breach or condition; provided that this Section 4.1(d) shall only apply if the Company is not in material breach of any of the terms of this Agreement; or

(e)           by any party, upon written notice to the other parties, in the event that any Governmental Entity shall have issued any order, decree or injunction or taken any other action restraining, enjoining or prohibiting any of the transactions contemplated by this Agreement, and such order, decree, injunction or other action shall have become final and nonappealable.

4.2          Effects of Termination.  In the event of any termination of this Agreement as provided in Section 4.1, this Agreement (other than Section 3.2, this Article 4 and Article 6 of this Agreement, which shall remain in full force and effect) shall forthwith become wholly void and of no further force and effect; provided that nothing herein shall relieve any party from liability for fraud or willful breach of this Agreement.

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ARTICLE 5

INDEMNITY

5.1          Indemnification by the Company.

(a)           After the Closing, and subject to Sections 5.1(b), 5.3 and 5.4, the Company shall indemnify, defend and hold harmless to the fullest extent permitted by Law the Investor and its Affiliates, and their successors and assigns, officers, directors, partners, members and employees, as applicable, (the “Investor Indemnified Parties”) against, and reimburse any of the Investor Indemnified Parties for, all Losses that any of the Investor Indemnified Parties may at any time suffer or incur, or become subject to, as a result of or in connection with (1) the inaccuracy or breach of any representation or warranty made by the Company in this Agreement or any certificate delivered pursuant hereto or (2) any breach or failure by the Company to perform any of its covenants or agreements contained in this Agreement.  Notwithstanding anything herein to the contrary, the obligations of the Company under this Section 5.1(a) shall not be applicable to or inure to the benefit of any transferee of the Common Stock sold pursuant to this Agreement who is not an Affiliate of the Investor.

(b)           Notwithstanding anything to the contrary contained herein, the Company shall not be required to indemnify, defend or hold harmless any of the Investor Indemnified Parties against, or reimburse any of the Investor Indemnified Parties for, any Losses pursuant to Section 5.1(a)(1) (other than Losses arising out of the inaccuracy or breach of any Company Specified Representations) until the aggregate amount of the Investor Indemnified Parties’ Losses for which the Investor Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5.1(a) exceeds $100,000 (the “Deductible”), after which the Company shall be obligated for all of the Investor Indemnified Parties’ Losses for which the Investor Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5.1(a)(1) that are in excess of the Deductible. Notwithstanding anything to the contrary contained herein, the Company shall not be required to indemnify, defend or hold harmless the Investor Indemnified Parties against, or reimburse the Investor Indemnified Parties for, any Losses pursuant to Section 5.1(a)(1) in a cumulative aggregate amount exceeding the aggregate purchase price paid by the Investor to the Company pursuant to Section 1.1 (other than Losses arising out of the inaccuracy or breach of any Company Specified Representations).

(c)           For purposes of Section 5.1(a), in determining whether there has been a breach of a representation or warranty, the parties hereto shall ignore any “materiality,” “Material Adverse Effect” or similar qualifications.

5.2          Indemnification by the Investor.

(a)           After the Closing, and subject to Sections 5.2(b), 5.3 and 5.4, the Investor shall indemnify, defend and hold harmless to the fullest extent permitted by Law the Company, the Placement Agent and their respective Affiliates and their respective successors and assigns, officers, directors, partners, members and employees (collectively, the “Company Indemnified Parties”) against, and reimburse any of the Company Indemnified Parties for, all Losses that the Company Indemnified Parties may at any time suffer or incur, or become subject to, as a result

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of or in connection with (1) the inaccuracy or breach of any representation or warranty made by the Investor in this Agreement or any certificate delivered pursuant hereto or (2) any breach or failure by such Investor to perform any of its covenants or agreements contained in this Agreement.

(b)           Notwithstanding anything to the contrary contained herein, the Investor shall not be required to indemnify, defend or hold harmless any of the Company Indemnified Parties against, or reimburse any of the Company Indemnified Parties for any Losses pursuant to Section 5.2(a)(1) (other than Losses arising out of the inaccuracy or breach of any Investor Specified Representations) until the aggregate amount of the Company Indemnified Parties’ Losses for which the Company Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5.2(a) exceeds the Deductible, after which the Investor shall be obligated for all of the Company Indemnified Parties’ Losses for which the Company Indemnified Parties are finally determined to be otherwise entitled to indemnification under Section 5.2(a)(1) that are in excess of such Deductible.  Notwithstanding anything to the contrary contained herein, the Investor shall not be required to indemnify, defend or hold harmless the Company Indemnified Parties against, or reimburse the Company Indemnified Parties for, any Losses pursuant to Section 5.2(a)(1) in a cumulative aggregate amount exceeding the aggregate purchase paid by the Investor to the Company pursuant to Section 1.1 hereof (other than Losses arising out of the inaccuracy or breach of any of the Investor Specified Representations).

(c)           For purposes of Section 5.2(a), in determining whether there has been a breach of a representation or warranty, the parties hereto shall ignore any “materiality” or similar qualifications.

5.3          Notification of Claims.

(a)           Any Person that may be entitled to be indemnified under this Article 5 (the “Indemnified Party”) shall promptly notify the party or parties liable for such indemnification (the “Indemnifying Party”) in writing of any claim in respect of which indemnity may be sought hereunder, including any pending or threatened claim or demand by a third party that the Indemnified Party has determined has given or could reasonably give rise to a right of indemnification under this Agreement (including a pending or threatened claim or demand asserted by a third party against the Indemnified Party) (each, a “Third Party Claim”), describing in reasonable detail the facts and circumstances with respect to the subject matter of such claim or demand; provided, however, that the failure to provide such notice shall not release the Indemnifying Party from any of its obligations under this Agreement except to the extent that the Indemnifying Party is materially prejudiced by such failure.  The parties agree that notices for claims in respect of a breach of a representation, warranty, covenant or agreement must be delivered prior to the expiration of any applicable survival period specified in Section 6.1 for such representation, warranty, covenant or agreement; provided, that if, prior to such applicable date, a party hereto shall have notified the other parties hereto in accordance with the requirements of this Section 5.3(a) of a claim for indemnification under this Agreement (whether or not formal legal action shall have been commenced based upon such claim), such claim shall continue to be subject to indemnification in accordance with this Agreement notwithstanding the passing of such applicable date.

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(b)           Upon receipt of a notice of a claim for indemnity from an Indemnified Party pursuant to Section 5.3(a) in respect of a Third Party Claim, the Indemnifying Party may, by notice to the Indemnified Party delivered within twenty (20) Business Days of the receipt of notice of such Third Party Claim, assume the defense and control of any Third Party Claim, with its own counsel reasonably acceptable to the Indemnified Party and at its own expense.  The Indemnified Party shall have the right to employ counsel on its own behalf for, and otherwise participate in the defense of, any such Third Party Claim, but the fees and expenses of its counsel will be at its own expense unless (A) the employment of counsel by the Indemnified Party at the Indemnifying Party’s expense has been authorized in writing by the Indemnifying Party, as applicable, (B) the Indemnified Party reasonably believes there may be a conflict of interest between the Indemnified Party and the Indemnifying Party in the conduct of the defense of such Third Party Claim, (C) the Indemnified Party reasonably believes there are legal defenses available to it that are different from, additional to or inconsistent with those available to the Indemnifying Party, or (D) the Indemnifying Party has not in fact employed counsel to assume the defense of such Third Party Claim within a reasonable time after receipt of notice of the commencement of such Third Party Claim, in each of which cases the fees and expenses of such Indemnified Party’s counsel shall be at the expense of the Indemnifying Party; provided, however, that in the event any Investor Indemnified Party is similarly situated with any other “Investor Indemnified Party” under any of the other Agreements with respect to any Third Party Claim, and does not have any conflict of interest with such Person in the conduct of the defense of such Third Party Claim or have legal defenses available to it that are different from, additional to or inconsistent with those available to such Person, such Investor Indemnified Party shall be required to employ the same counsel as such Person and the Company shall be responsible for the fees and expenses of only one such counsel for such Investor Indemnified Party and such other Person or Persons (assuming any of clauses (A) through (D) is satisfied).  The Indemnified Party may take any actions reasonably necessary to defend such Third Party Claim prior to the time that it receives a notice from the Indemnifying Party as contemplated by the immediately preceding sentence.  The Indemnified Party shall, and shall cause each of their Affiliates and representatives to, use reasonable best efforts to cooperate with the Indemnifying Party in the defense of any Third Party Claim.  The Indemnifying Party shall not, without the prior written consent of the Indemnified Party (which shall not be unreasonably withheld), consent to a settlement, compromise or discharge of, or the entry of any judgment arising from, any Third Party Claim, unless such settlement, compromise, discharge or entry of any judgment does not involve any statement, finding or admission of any fault, culpability, failure to act, violation of Law or admission of any wrongdoing by or on behalf of the Indemnified Party, and the Indemnifying Party shall (i) pay or cause to be paid all amounts arising out of such settlement or judgment concurrently with the effectiveness of such settlement or judgment (unless otherwise provided in such judgment), (ii) not encumber any of the assets of any Indemnified Party or agree to any restriction or condition that would apply to or materially adversely affect any Indemnified Party or the conduct of any Indemnified Party’s business and (iii) obtain, as a condition of any settlement, compromise, discharge, entry of judgment (if applicable), or other resolution, a complete and unconditional release of each Indemnified Party in form and substance reasonably satisfactory to such  Indemnified Party from any and all liabilities in respect of such Third Party Claim.  An Indemnified Party shall not settle, compromise or consent to the entry of any judgment with respect to any claim or demand for which it is seeking indemnification from the Indemnifying Party or admit to any liability with respect to such claim

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or demand without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed); provided that such consent shall not be required if the Indemnifying Party has not fulfilled any material obligations under this Section 5.3(b).

(c)           In the event any Indemnifying Party receives a notice of a claim for indemnity from an Indemnified Party pursuant to Section 5.3(a) that does not involve a Third Party Claim, the Indemnifying Party shall notify the Indemnified Party within twenty (20) Business Days following its receipt of such notice whether the Indemnifying Party disputes its liability to the Indemnified Party under this Agreement.  The Indemnified Party shall reasonably cooperate with and assist the Indemnifying Party in determining the validity of any such claim for indemnity by the Indemnified Party.

5.4          Indemnification Payment.  In the event a claim or any Action for indemnification hereunder has been finally determined, the amount of such final determination shall be paid by the Indemnifying Party to the Indemnified Party on demand in immediately available funds; provided, however, that any reasonable and documented out-of-pocket expenses incurred by the Indemnified Party as a result of such claim or Action shall be reimbursed promptly by the Indemnifying Party upon receipt of an invoice describing such costs incurred by the Indemnified Party.  A claim or an Action, and the liability for and amount of damages therefor, shall be deemed to be “finally determined” for purposes of this Agreement when the parties hereto have so determined by mutual agreement or, if disputed, when a final non-appealable judicial order has been entered into with respect to such claim or Action.

5.5          Exclusive Remedies.  Each party hereto acknowledges and agrees that following the Closing, the indemnification provisions hereunder shall be the sole and exclusive remedies of the parties hereto for any breach of the representations, warranties or covenants contained in the this Agreement.  No investigation of the Company by the Investor, or of the Investor by the Company, whether prior to or after the date of this Agreement, shall limit any Indemnified Party’s exercise of any right hereunder or be deemed to be a waiver of any such right.  The parties agree that any indemnification payment made pursuant to this Agreement shall be treated as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

ARTICLE 6

MISCELLANEOUS

6.1          Survival.  The representations and warranties of the parties hereto contained in this Agreement shall survive in full force and effect until the date that is fifteen (15) months after the Closing Date (or until final resolution of any claim or action arising from the breach of any such representation and warranty, if notice of such breach was provided prior to the end of such period), at which time they shall terminate and no claims shall be made for indemnification under Section 5.1 or Section 5.2, as applicable, for breaches of representations or warranties thereafter, except the Company Specified Representations (other than the representations and warranties made in Section 2.2(x), which shall survive until the expiration of the applicable statute of limitations) and the Investor Specified Representations shall survive the Closing indefinitely.  The covenants and agreements set forth in this Agreement shall survive until the

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earliest of the duration of any applicable statute of limitations or until performed or no longer operative in accordance with their respective terms.

6.2          Other Definitions.  Wherever required by the context of this Agreement, the singular shall include the plural and vice versa, and the masculine gender shall include the feminine and neuter genders and vice versa, and references to any agreement, document or instrument shall be deemed to refer to such agreement, document or instrument as amended, supplemented or modified from time to time.  In addition, the following terms shall have the meanings assigned to them below:

(a)           the term “Affiliate” means, with respect to any Person, any Person directly or indirectly controlling, controlled by or under common control with, such other Person provided that no security holder of the Company shall be deemed to be an Affiliate of any other security holder or of the Company or any of the Company Subsidiaries solely by reason of any investment in the Company and, for purposes of this definition, “control” (including, with correlative meanings, the terms “controlling”, “controlled by” and “under common control with”) when used with respect to any Person, means the possession, directly or indirectly, of the power to cause the direction of management or policies of such Person, whether through the ownership of voting securities by contract or otherwise;

(b)           the term “Agency” means the Federal Housing Administration, the Federal Home Loan Mortgage Corporation, the Farmers Home Administration (now known as Rural Housing and Community Development Services), the Federal National Mortgage Association, the United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture or any other federal or state agency with authority to (i) determine any investment, origination, lending or servicing requirements with regard to mortgage loans originated, purchased or serviced by the Company or (ii) originate, purchase, or service mortgage loans, or otherwise promote mortgage lending, including state and local housing finance authorities;

(c)           the term “Board of Directors” means the Board of Directors of the Company;

(d)           the term “Business Day” means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York or in the State of California generally are authorized or required by Law or other governmental actions to close;

(e)           the term “Capital Stock” means the capital stock or other applicable type of equity interest in a Person;

(f)            the term “Change in Control” means, with respect to the Company, that any Person, other than the Investors and their Affiliates, becomes a beneficial owner (as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act) directly or indirectly, of twenty percent (20%) of the aggregate voting power of the Voting Securities.

(g)           the term “Code” means the Internal Revenue Code of 1986, as amended;

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(h)           the term “Company Specified Representations” means the representations and warranties made in Section 2.2(a), Section 2.2(c), Section 2.2(d)(i) and Section 2.2(z);

(i)            the term “Disclosure Schedule” shall mean a schedule delivered, on or prior to the date of this Agreement, by (i) the Investor to the Company and (ii) the Company to the Investor setting forth, among other things, items the disclosure of which is necessary or appropriate either in response to an express disclosure requirement contained in a provision hereof or as an exception to one or more representations or warranties contained in Section 2.2 with respect to the Company, or in Section 2.3 with respect to the Investor, or to one or more covenants contained in Article 3;

(j)            the term “GAAP” means United States generally accepted accounting principles and practices as in effect from time to time;

(k)           the term “Governmental Consent” means any notice to, registration, declaration or filing with, exemption or review by, or authorization, order, consent or approval of, any Governmental Entity, or the expiration or termination of any statutory waiting periods;

(l)            the term “Governmental Entity” means any court, administrative agency or commission or other governmental authority or instrumentality, whether federal, state, local or foreign, and any applicable industry self-regulatory organization or securities exchange;

(m)          the term “Insurer” means a Person who insures or guarantees for the benefit of the mortgagee all or any portion of the risk of loss upon borrower default on any of the mortgage loans originated, purchased or serviced by the Bank, including the Federal Housing Administration, the United States Department of Veterans’ Affairs, the Rural Housing Service of the U.S. Department of Agriculture and any private mortgage insurer, and providers of hazard, title or other insurance with respect to such mortgage loans or the related collateral;

(n)           the term “Investor Specified Representations” means the representations and warranties made in Section 2.3(b)(i), Section 2.3(d) and Section 2.3(e);

(o)           the term “Knowledge” of the Company and words of similar import mean the knowledge of any directors or executive officers of the Company listed on the Disclosure Schedule hereto;

(p)           the term “Loan Investor” means any Person (including an Agency) having a beneficial interest in any mortgage loan originated, purchased or serviced by the Bank or a security backed by or representing an interest in any such mortgage loan;

(q)           the term “Losses” means any and all losses, damages, reasonable costs, reasonable expenses (including reasonable attorneys’ fees and disbursements), liabilities, settlement payments, awards, judgments, fines, obligations, claims, and deficiencies of any kind, excluding special, consequential, exemplary and punitive damages;

(r)            the term “Person” means any individual, firm, corporation, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited

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liability company, Governmental Entity or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity;

(s)            the term “Subsidiary” means, with respect to any Person, any corporation, partnership, joint venture, limited liability company or other entity (x) of which such Person or a Subsidiary of such Person is a general partner or (y) of which a majority of the voting securities or other voting interests, or a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority of the board of directors or persons performing similar functions with respect to such entity, is directly or indirectly owned by such Person and/or one or more Subsidiaries thereof;

(t)            the term “Tax” or “Taxes” means all United States federal, state, local or foreign income, profits, estimated, gross receipts, windfall profits, severance, property, intangible property, occupation, production, sales, use, license, excise, emergency excise, franchise, capital gains, capital stock, employment, withholding, transfer, stamp, payroll, goods and services, value added, alternative or add-on minimum tax, or any other tax, custom, duty or governmental fee, or other like assessment or charge of any kind whatsoever, together with any interest, penalties, fines, related liabilities or additions to tax that may become payable in respect thereof imposed by any Governmental Entity, whether or not disputed;

(u)           the term “Tax Return” means any return, declaration, report or similar statement required to be filed with respect to any Taxes (including any attached schedules), including, without limitation, any information return, claim or refund, amended return and declaration of estimated Tax;

(v)           the term “Voting Securities” means at any time shares of any class of Capital Stock of the Company that are then entitled to vote generally in the election of directors;

(w)          the word “or” is not exclusive;

(x)           the words “including,” “includes,” “included” and “include” are deemed to be followed by the words “without limitation”;

(y)           the terms “herein,” “hereof” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular section, paragraph or subdivision; and

(z)           all article, section, paragraph or clause references not attributed to a particular document shall be references to such parts of this Agreement, and all exhibit and schedule references not attributed to a particular document shall be references to such exhibits and schedules to this Agreement.

6.3          Amendment and Waivers.  The conditions to each party’s obligation to consummate the Closing are for the sole benefit of such party and may be waived by such party in whole or in part to the extent permitted by Law.  No amendment or waiver of any provision of this Agreement will be effective against any party hereto unless it is in a writing signed by a duly authorized officer of such party.

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6.4Counterparts and Facsimile.  For the convenience of the parties hereto, this Agreement may be executed in any number of separate counterparts, each such counterpart being deemed to be an original instrument, and all such counterparts will together constitute the same agreement.  Executed signature pages to this Agreement may be delivered by facsimile and such facsimiles shall be deemed as sufficient as if manually signed signature pages had been delivered.

6.5Governing Law.  This Agreement will be governed by and construed in accordance with the Laws of the State of New York applicable to contracts made and to be performed entirely within such State.

6.6Jurisdiction.  The parties hereby agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby shall be brought in the United States District Court for the Southern District of New York sitting in the borough of Manhattan, New York, New York, so long as such court shall have subject matter jurisdiction over such suit, action or proceeding or, if it does not have subject matter jurisdiction, in any New York State court sitting in the borough of Manhattan, New York, New York, and each of the parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by Law, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum.  Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court.  Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 6.8 shall be deemed effective service of process on such party.  The parties hereby irrevocably and unconditionally consent to submit to the exclusive jurisdiction of the state and federal courts referred to above for any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby

6.7WAIVER OF JURY TRIAL.  EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

6.8Notices.  Any notice, request, instruction or other document to be given hereunder by any party to the other will be in writing and will be deemed to have been duly given (a) on the date of delivery if delivered personally or by telecopy or facsimile, upon confirmation of receipt, (b) on the first Business Day following the date of dispatch if delivered by a recognized next-day courier service, or (c) on the third Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid.  All notices hereunder shall be delivered as set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice.

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(a)If to the Investor, at the address set forth on the signature page to this Agreement:

(b)If to the Company:

Broadway Financial Corporation
5055 Wilshire Boulevard, Suite 500
Los Angeles, California  90036
Attn:Wayne-Kent A. Bradshaw, President and Chief
Executive Officer
Fax:(323) 556-3216

with a copy (which copy shall not constitute notice) to:

Arnold & Porter LLP
777 South Figueroa Street
44th Floor
Los Angeles, California  90017
Attn: James R. Walther, Esq.
Fax: (213) 243-4199

6.9Entire Agreement.  This Agreement (including the Annexes, the Side Letter and Schedules hereto) and the Confidentiality Agreement constitute the entire agreement, and supersede all other prior agreements, understandings, representations and warranties, inducements or conditions, both written and oral, among the parties, with respect to the subject matter hereof and thereof.

6.10Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns, including any purchasers of the Common Stock to be issued pursuant to this Agreement.  The Company shall not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor.  The Investor may assign some or all of its rights hereunder or thereunder without the consent of the Company to any Affiliate of the Investor, and such assignee shall be deemed to be an Investor hereunder with respect to such assigned rights and shall be bound by the terms and conditions of this Agreement that apply to the Investor.

6.11Captions.  The article, section, paragraph and clause captions herein are for convenience of reference only, do not constitute part of this Agreement and will not be deemed to limit or otherwise affect any of the provisions hereof.

6.12Severability.  If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances other than those as to which it has been held invalid or unenforceable, will remain in full force and effect and shall in no way be affected, impaired or invalidated thereby,

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so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party.  Upon such determination, the parties shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original intent of the parties.

6.13Third Party Beneficiaries.  Nothing contained in this Agreement, expressed or implied, is intended to confer upon any Person (including any of the Other Investors) other than the parties hereto, any benefit right or remedies, except that the provisions of Sections 5.1 and 5.2 shall inure to the benefit of the Persons referred to in such Sections.  Notwithstanding the foregoing, the Company and the Investor agree that the Placement Agent, as placement agent for the Common Stock sold pursuant to this Agreement, shall be a third party beneficiary of the representations, warranties and agreements made or given by the parties hereunder.

6.14Public Announcements.  The Investor will not make (and will use its reasonable best efforts to ensure that its Affiliates and representatives do not make) any news release or public disclosure with respect to this Agreement and any of the transactions contemplated hereby, without first consulting with the Company and, in each case, also receiving the Company’s consent (which shall not be unreasonably withheld or delayed).

6.15Specific Performance.  The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms.  It is accordingly agreed that the parties shall be entitled to seek specific performance of the terms hereof, this being in addition to any other remedies to which they are entitled at law or equity.

6.16No Recourse.  This Agreement may only be enforced against the named parties hereto.  All claims or causes of action that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement may be made only against the entities that are expressly identified as parties hereto or that are subject to the terms hereof, and no past, present or future director, officer, employee, incorporator, member, manager, partner, shareholder, Affiliate, agent, attorney or representative of any party hereto (including any person negotiating or executing this Agreement on behalf of a party hereto) shall have any liability or obligation with respect to this Agreement or with respect to any claim or cause of action, whether in tort, contract or otherwise, that may arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement and the transactions contemplated hereby.

6.17Possible Common Stock Equivalent Transaction.  The Company does not currently have sufficient authorized but unissued shares of Common Stock available under its certificate of incorporation to enable it to complete the TARP Exchange, each of the Other Preferred Exchanges, and the Other Private Placements.  In addition, issuance of Common Stock for such purposes would ordinarily require approval by the Company’s stockholders pursuant to Rule 5635 of the corporate governance rules of the Nasdaq Stock Market.  Accordingly, the Company has agreed with the Treasury that the Company will, as a condition to completion of the TARP Exchange, either:  (i) obtain the required Company stockholder approval under the Nasdaq corporate governance rules and complete the other steps required to amend its certificate of incorporation to authorize the issuance of a sufficient number of shares of Common Stock for

43

such purposes; or (ii) file a certificate of designations with the Secretary of State of the State of Delaware to designate a new series of preferred stock out of the Company’s authorized but unissued preferred stock, to be designated Series F Common Stock Equivalent (the “Common Stock Equivalents”), the terms of which will include that, upon the affirmative vote of the stockholders of the Company specified in such certificate and relating to an increase in the shares of Common Stock it is authorized to issue, such preferred stock shall be mandatorily convertible into the number of shares of Common Stock that would be issued directly if the TARP Exchange were made for Common Stock and an escalating non-cumulative dividend requirement to provide an incentive to the stockholders of the Company to provide such vote.  The Company and the Treasury have further agreed in such event that the TARP Exchange and the Other Preferred Exchanges shall be exchanges for shares of the Common Stock Equivalents rather than shares of Common Stock.  The number of shares of Common Stock Equivalents to be issued in such alternative transaction (excluding shares to be issued in respect of accrued cumulative dividends under the terms of the TARP Preferred Stock) shall be the number of shares of Common Stock Equivalents that have an aggregate liquidation preference equal to 50% of the liquidation preference of all of the TARP Preferred Stock or other preferred stock, as applicable, to be exchanged.

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Appendix I

SELLING STOCKHOLDER QUESTIONNAIRE

The undersigned beneficial owner of Common Stock (the “Common Stock”) of Broadway Financial Corporation (the “Company”) understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a Registration Statement for the registration and resale of Common Stock that qualifies as Registrable Securities, in accordance with the terms of a Subscription Agreement (the “Subscription Agreement”) between the Company and the Investor(s) named therein.  All capitalized terms used and not otherwise defined herein shall have the meanings ascribed thereto in the Subscription Agreement.

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:

QUESTIONNAIRE

1.Name.

(a)Full Legal Name of Selling Securityholder

(b)Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities Listed in Item 3 below are held:

(c)Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by the questionnaire):

2.Address for Notices to Selling Securityholder:

Telephone:

Fax:

Contact Person:

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3.Beneficial Ownership of Registrable Securities:

Number of Shares of Registrable Securities beneficially owned(1) and purchased pursuant to the Subscription Agreement:

4.Broker-Dealer Status:

(a)Are you a broker-dealer?

Yes  oNo  o

Note: If yes, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

(b)Are you an affiliate of a broker-dealer?

Yes  ¨No  ¨

(c)If you are an affiliate of a broker-dealer, do you certify that you bought the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?

Yes  oNo  o

Note: If no, the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

5.Beneficial Ownership of Securities of the Company Other than the Registrable Securities Owned by the Selling Securityholder.

(1)  Securities “beneficially owned” would include securities held by you for your own benefit, whether in bearer form or registered in your own name or otherwise (regardless of whether or how they are registered), such as, for example, securities held for you by custodians, brokers, relatives, executors, administrators or trustees, and securities held for your account by pledges, securities owned by a partnership in which you are a member, and securities owned by any corporation which is or should be regarded as a personal holding corporation of yours.  You are also considered to be the beneficial owner of a security if you, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise have or share: (1) voting power, which includes the power to vote, or to direct the voting of, such security or (2) investment power, which includes the power to dispose, or to direct the disposition, of such security.  You are also the beneficial owner of a security if you, directly or indirectly, create or use a trust, proxy, power of attorney, pooling arrangement or any other contract, arrangement or device with the purpose or effect of divesting yourself of beneficial ownership of a security or preventing the vesting of such beneficial ownership.  Finally, you are deemed to be the beneficial owner of a security if you have the right to acquire beneficial ownership of such security at any time within sixty days, including but not limited to any right to acquire (a) through the exercise of any option, warrant or right, (b) through the conversion of a security, (c) pursuant to the power to revoke a trust, discretionary account or similar arrangement or (d) pursuant to the automatic termination of a trust, discretionary account or similar arrangement.

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Except as set forth below in this Item 5, the undersigned is not the beneficial or registered owner of any securities of the Company other than the Registrable Securities listed above in Item 3.

Type and Amount of Other Securities beneficially owned by the Selling Securityholder:

6.Relationships with the Company:

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

State any exceptions here:

7.Please fill in the table below as you would like it to appear in the Registration Statement.  Include footnotes where appropriate.

Name of Selling
Shareholder Number of Shares of
Common Stock
Beneficially Owned Prior
to Offering Maximum Number of
Shares of Common Stock
to be Sold Pursuant to this
Prospectus Number of Shares of
Common Stock
Beneficially Owned After
Offering

The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof and prior to the Effective Date for the Registration Statement.

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 7 and the inclusion of such information in the Registration Statement and the related prospectus.  The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus.

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IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

Dated:	Beneficial Owner:
	By:
	Name:
	Title:

PLEASE (1) FAX OR EMAIL A COPY OF THE COMPLETED AND EXECUTED
NOTICE AND QUESTIONNAIRE, AND (2) RETURN THE ORIGINAL BY
OVERNIGHT MAIL, TO:

Broadway Financial Corporation
5055 Wilshire Boulevard
Suite 500
Los Angeles, CA  90036
Attn:  Chief Financial Officer
Facsimile: (213) 634-1723

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EX-10.26.2

Exhibit 10.26.2

BROADWAY FINANCIAL CORPORATION
5055 Wilshire Boulevard, Suite 500
Los Angeles, CA 90036

August 22, 2013

Valley Economic Development Center, Inc.
5121 Van Nuys Boulevard, 3rd Floor
Van Nuys, CA  91403

Re:Investor Rights

Ladies and Gentlemen:

This letter will confirm our agreement that pursuant to and effective as of your purchase of capital stock of Broadway Financial Corporation, a Delaware corporation (the “Company”), the parent company of Broadway Federal Bank, F.S.B. (the “Bank”), Valley Economic Development Center, Inc., a California corporation (the “Investor”), shall be entitled to the following contractual rights, in addition to any other rights specifically provided to the Investor pursuant to that certain Subscription Agreement, dated as of the date hereof by and between the Company and the Investor, including any amendments or supplements thereto, and such other agreements, instruments and certificates as may be delivered in connection therewith (collectively, the “Transaction Documents”):

1.Board Observer Rights.  As long as Investor retains ownership of more than 50% of the number of shares of capital stock of the Company originally acquired by Investor pursuant to the Subscription Agreement (including any shares into which such stock may be converted), the Company shall allow a representative of the Investor to attend all meetings of the Board in a nonvoting observer capacity and, in this respect, shall give such representative copies of all notices, minutes, consents and other materials that it provides to its directors at the same time and in the same manner as provided to such directors; provided, however, that (i) such representative shall agree to hold in confidence and trust all information so provided; (ii) the representative may be excluded from access to any material or meeting or portion thereof if the Board determines in good faith, upon advice of counsel, that access to such material or attendance at such meeting would adversely affect the attorney-client privilege between the Company or the Bank and its counsel or would conflict with applicable banking laws or regulations or if such material or meeting relates to relations or negotiations with the Investor or require the consent or non-objection of any Regulator; and (iii) such observer shall be excluded from all “executive sessions” of the board of directors if any other persons who are not members of the board of directors, other than counsel to the Company, are also excluded.  Upon reasonable notice and at a scheduled meeting of the Board or such other time, if any, as the Board may determine in its sole discretion, such representative may address the Board with respect to the Investor’s concerns regarding significant business issues facing the Company.

2.Miscellaneous.  The validity, construction and interpretation of this letter agreement and the rights and duties of the parties hereunder shall be governed by and construed

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in accordance with laws of the State of California without regard to its conflicts of laws provisions.  This letter agreement (together with the Transaction Documents) constitutes the entire agreement among the parties hereto, and supersedes any and all prior representations, agreements and understandings, whether written or oral, with respect to the subject matter hereof.  This letter agreement shall not be modified, amended or waived, in whole or in part, except by written agreement of both parties.  The provisions hereof shall be binding upon, and shall inure to the benefit of, the parties hereto and their successors and assigns.  Each of the parties hereto shall, at the request of the other party, execute, deliver and acknowledge without any consideration, such additional documents, instruments or certificates or do or cause to be done such other things as are reasonably necessary or desirable to make effective the agreements and transactions contemplated by this letter agreement.  This letter agreement may be executed and delivered (including by facsimile or electronic transmission) in multiple counterparts, each of which shall constitute an original and all of which together shall be deemed to be one and the same instrument.

Very truly yours,
Broadway Financial Corporation
By:	/s/ Wayne-Kent A. Bradshaw
Name: Wayne-Kent A. Bradshaw
Title: President and Chief Executive Officer

******************************************************

ACKNOWLEDGED AND AGREED:

VALLEY ECONOMIC DEVELOPMENT CENTER, INC.

By:	/s/ Roberto Barragan
Name:		Robert Barragan
Title:		President

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EX-10.27

Exhibit 10.27

AGREEMENT FOR PARTIAL SATISFACTION
OF
DEBT PREVIOUSLY CONTRACTED

THIS AGREEMENT FOR PARTIAL SATISFACTION OF DEBT PREVIOUSLY CONTRACTED (this “Agreement”) is made and entered into as of August 22, 2013 by and among BBCN Bank, a California state chartered bank (the “Bank”), and Broadway Financial Corporation, a Delaware corporation and registered savings and loan holding company (“Broadway” and, together with the Bank hereinafter collectively referred to as, the “Parties”).

RECITALS

WHEREAS, the Parties have previously entered into a Business Loan Agreement (the “Loan Agreement”), dated July 31, 2009, made and entered into by and among the Bank and Broadway, a Commercial Security Agreement (the “Security Agreement”), dated July 31, 2009, made and entered into by and among the Bank and Broadway, and a Promissory Note (the “Note” and, together with the Loan Agreement and Security Agreement hereinafter collectively referred to as, the “Loan Documents”), dated July 31, 2009, made and entered into by and among the Bank and Broadway, pursuant to which the Bank has made a loan (the “Loan”) to Broadway in the principal amount of Five Million Dollars ($5,000,000.00);

WHEREAS, Broadway failed to repay the Loan in accordance with the terms of the Loan Documents on the maturity date, July 31, 2010, thereby resulting in an Event of Default, under, and as that term is defined in the Loan Documents, which is continuing as of the date of this Agreement;

WHEREAS, in connection with Broadway’s efforts to complete a recapitalization transaction, which, among other things, would involve (i) the exchange (the “Exchange”) of all of Broadway’s outstanding shares of preferred stock for shares of common stock at a Fifty Percent (50%) discount to full liquidation value, including the shares of preferred stock beneficially owned and held of record by BBCN Bancorp, a Delaware corporation and registered bank holding company (“Bancorp”), pursuant to a series of Exchange Agreements, and (ii) the issuance of up to Three Million Five Hundred Thousand Dollars ($3,500,000.00) of Broadway common stock in a private placement (the “Private Placement”), Broadway has requested that the Bank agree to accept a certain number of shares of Broadway common stock calculated in accordance with Section 1(b) of this Agreement (the “Shares”) in partial satisfaction of Broadway’s obligation to repay the Loan;

WHEREAS, the Bank is willing to accept the Shares in partial satisfaction of Broadway’s obligation to repay the Loan on the terms, and subject to the conditions, set forth in this Agreement; and

WHEREAS, on or prior to the date of the Closing, Broadway will reissue the Loan Documents in two new sets of loan documents, with one set of loan documents (the “New Bank Loan Documents”) representing Three Million Eight Hundred Fifty Thousand Dollars ($3,850,000.00) of the principal amount of the Loan, which shall bear interest, and the other set of loan documents representing the remaining One Million One Hundred Fifty Thousand Dollars ($1,150,000.00) of the principal amount of the Loan, which shall not bear interest, to facilitate the sale by the Bank of One Million One Hundred Fifty Thousand Dollars ($1,150,000.00) of the principal amount of the Loan to National Community Investment Fund pursuant to the terms and conditions of a Loan Purchase and Sale Agreement (the “Loan Sale Agreement”) in the form attached hereto as Exhibit A.

NOW, THEREFORE, in consideration of the premises, the covenants contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto hereby agree as follows:

AGREEMENT

Section 1.Issuance of the Shares in Partial Satisfaction of the Loan.

(a)           At the Closing, and subject to the satisfaction or waiver (by the party for whose benefit such term or condition exists) of the terms and conditions set forth in this Agreement, Broadway shall issue the Shares to the Bank in consideration of the Bank recognizing partial satisfaction of Broadway’s obligation under the New Bank Loan Documents to repay the Loan.

(b)           The number of Shares to be issued to the Bank at the Closing pursuant to Section 1(a) shall be the quotient of (i) the principal amount of the Loan that Broadway requests in writing, at least five (5) business days in advance of the Closing, be satisfied and extinguished in consideration of the issuance of the Shares to the Bank, divided by (ii) the purchase price per share in the Private Placement.

(c)           The principal amount of the Loan that Broadway requests be satisfied and extinguished pursuant to Section 1(b) shall in no event, when taken together with all other shares of Broadway common stock to be acquired by Bancorp in the Exchange or otherwise, result in the Bank and Bancorp in the aggregate owning more than Nine and Nine Tenths Percent (9.90%) of Broadway.

(d)           At the Closing, and subject to the satisfaction or waiver (by the party for whose benefit such term or condition exists) of the terms and conditions set forth in this Agreement, the Bank shall forgive and relinquish any and all rights to all interest (including interest accrued pursuant to the Default Rate Margin, as that term is defined in the New Bank Loan Documents) and late charges that have accrued and remain unpaid through the date of the Closing.

Section 2.Treatment of Remainder of the Loan Post-Closing.

(a)           Immediately following the Closing, the New Bank Loan Documents shall be modified in accordance with and subject to the terms of that certain Change of Terms (the “Change of Terms”) in the form attached hereto as Exhibit B, which, among other things, sets new payment terms, including a payment schedule and interest rate.

(b)           With the exception of this Agreement and the Change of Terms, each of which the Parties hereby acknowledge and agree shall be deemed to be amendments to the Loan Documents effectuated in conformity with the provisions of the Loan Documents governing amendments of the same, the Parties hereby acknowledge and agree that the Loan Documents are in all respects ratified and confirmed and all of the terms, conditions, representations, warranties, covenants and provisions thereof shall remain in full force and effect in accordance with their respective terms, including the Bank’s rights to the Collateral (as that term is defined in the Loan Documents) and its Security Interest (as that term is defined in the Loan Documents) therein (including the priority thereof). This Agreement and the Change of Terms shall not be deemed to be an amendment to any other term or condition of the Loan Documents or any of the documents referred to therein, or otherwise affect or operate as a waiver or relinquishment of any of the rights of any party under any of them. Except as expressly amended hereby or by the Change of Terms, this Agreement does not constitute a waiver of any condition or other provision of the Loan Documents.

(c)           From time to time, at the request of the Bank, whether on or after the Closing, without further consideration, Broadway, at its expense, shall promptly execute and deliver such further

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instruments and take such other actions as may be reasonably required to give effect to the terms of this Agreement, and the Bank may, upon advanced written notice to Broadway, take such actions and execute, file or otherwise deliver such further instruments as may be reasonably required in connection with the transactions contemplated by this Agreement.

Section 3.Conditions to the Closing; and Closing.

(a)           The obligation of the Bank to consummate the transactions contemplated by this Agreement is subject to the fulfillment (or waiver by the Bank) at or prior to the Closing of each of the following conditions: (i) Broadway shall consummate the Exchange on or prior to August 31, 2013, (ii) Broadway shall consummate the Private Placement on or prior to August 31, 2013, (iii) Broadway shall consummate the transactions contemplated by this Agreement on or prior to August 31, 2013, (iv) the representations and warranties of Broadway set forth in this Agreement shall be true and correct as though made on and as of the date of the Closing, and (v) Broadway shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing.

(b)           The consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place concurrently with the completion of the Exchange and the Private Placement as follows: Broadway shall deliver or cause to be delivered, through the transfer agent for Broadway common stock, or such other means as shall be acceptable to the Bank, the number of Shares provided for in Section 1, registered in such names as the Bank shall specify to Broadway at least five (5) business days prior to the Closing.

Section 4.Representations and Warranties.

(a)           Broadway hereby makes the following representations and warranties to the Bank, and the Bank hereby makes the following representations and warranties to Broadway:

(i)            Broadway is a corporation duly incorporated, validly existing and in good standing under the laws of Delaware and the Bank is a state chartered bank, validly existing and in good standing under the laws of California,

(ii)           each has full power and authority to enter into this Agreement and to consummate the transactions contemplated hereby,

(iii)          the person or entity who has executed this Agreement is duly authorized to do so and thereby bind the party on whose behalf he, she or it is purporting to act, and

(iv)          this Agreement is a valid and binding agreement, enforceable against each of the Parties in accordance with its terms.

(b)           Broadway hereby makes the following representations and warranties to the Bank:

(i)            Upon issuance, the Shares to be issued by Broadway pursuant hereto (x) will be duly and validly authorized and issued, fully paid and non-assessable, and the Bank will acquire such Shares free and clear of any liens, encumbrances, pledges, security interests or other restrictions or claims of third parties, and (y) will, when combined with shares that may be issued to Bancorp in connection with the Exchange, comprise no more than Nine and Nine Tenths Percent (9.90%) of Broadway’s issued and outstanding shares of common stock,

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(ii)           Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will violate, result in a breach of any of the terms or provisions of, constitute a default (or in any event that, with the giving of notice or the passage of time or both would constitute a default) under, accelerate any obligations under, or conflict with, (x) Broadway’s certificate of incorporation or bylaws, or other organizational documents, or any agreement, indenture or other instrument to which Broadway is a party or by which Broadway or Broadway’s properties are bound, (y) any judgment, decree, order or award of any court, governmental body or arbitrator to which Broadway is subject, or (x) any law, rule or regulation applicable to Broadway,

(iii)          Neither Broadway nor any person acting on its behalf has taken any action (including any offering of any securities of Broadway under circumstances which would require the integration of such offering with the offering of the Shares hereunder under the Securities Act of 1933, as amended, (the “Securities Act”) and the rules and regulations of the Securities and Exchange Commission promulgated thereunder), which might subject the offering and issuance of the Shares to the Bank pursuant to this Agreement to the registration requirements of the Securities Act,

(iv)          Broadway has no reason to believe that following the Closing it will not be able to service the Loan in accordance with the Change of Terms, and

(v)           No broker, finder or investment banker is entitled to any financial advisory, brokerage, finder’s or other fee or commission in connection with this Agreement or the transactions contemplated hereby based upon arrangements made by or on behalf of Broadway or any subsidiary of Broadway for which the Bank could have any liability.

(c)           All representations, warranties and agreements of the Parties hereto shall survive the Closing.

Section 5.Provisions Applicable to the Shares.

(a)           Should Broadway at any time and for any reason desire to retire or repurchase shares of its outstanding common stock, Broadway shall give the Bank and Bancorp thirty (30) days’ prior written notice of such intent.  Such notice shall specify the number of outstanding shares of common stock prior to such retirement or repurchase, and the number of outstanding shares of common stock after giving effect to such retirement or repurchase.  Upon receipt of such notice, the Bank and/or Bancorp shall have the right to sell to Broadway, at the same price per share as that at which Broadway proposes to retire or repurchase its other shares of outstanding common stock, the minimum number of shares of common stock that would result in the Bank and Bancorp in the aggregate owning Nine and Nine Tenths Percent (9.90%) or less of the outstanding shares of common stock of Broadway after giving effect to such retirement or repurchase and such sale by the Bank and/or Bancorp to Broadway; provided, that (i) Broadway shall not be required hereby to purchase more shares of Common Stock than were indicated in its notice of desired purchase sent to Bank and Bancorp, (ii) Broadway may decide not to purchase shares of Common Stock from any third party (but shall not be permitted to purchase shares from anyone unless it also purchases shares from the Bank and/or Bancorp pursuant to their rights hereunder), and (iii) Bank’s and Bancorp’s right to sell Common Stock pursuant hereto shall be subject to pro rata reduction to the extent that CJA Private Equity Financial Restructuring Master Fund I LP and/or National Community Investment Fund exercise the similar sale rights granted to them by Broadway, based on the respective numbers of shares of Common Stock requested to be sold by each; provided, further, however that in no event shall Broadway’s rights pursuant to (i) — (iii) above allow Broadway to repurchase from the Bank and/or Bancorp less than the minimum number of shares of common stock that would result in the Bank and Bancorp in the aggregate owning Nine and Nine Tenths Percent (9.90%) or less of the outstanding shares of common stock of Broadway after giving effect to such retirement or repurchase and such sale by

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the Bank and/or Bancorp to Broadway.  Within ten (10) days after the receipt of such notice by the Bank and Bancorp, the Bank and/or Bancorp shall notify Broadway in writing of its intent to exercise its rights to sell shares of common stock to Broadway pursuant to this Section 5, which shall include the number of shares of common stock to be sold by the Bank and/or Bancorp, respectively, to Broadway in accordance with this Section 5.  The closing of such repurchase by Broadway from the Bank and/or Bancorp shall occur concurrently with the date of the proposed retirement or repurchase that triggered the Bank’s and Bancorp’s rights pursuant to this Section 5. Such rights shall be in effect as long as the Bank maintains a beneficial ownership in Broadway common stock.  The provisions of this Section 5 shall apply to any Common Stock Equivalents or non-voting preferred stock of Broadway theretofore issued in exchange for Common Stock at the request of the Bank and/or Bancorp.

(b)           Subject to compliance with applicable securities laws, the Bank shall be permitted to transfer, sell, assign or otherwise dispose of (“Transfer”) all or a portion of the Shares at any time, and Broadway shall take all steps as may be reasonably requested by the Bank to facilitate the Transfer of all or any portion of the Shares.

(c)           The Shares shall be covered by the same Securities Act registration rights that are granted to the investors in the Private Placement to the same extent and subject to the same terms and conditions as such investors.

Section 6.Common Stock Equivalents.  Broadway does not currently have sufficient authorized but unissued shares of Common Stock available under its certificate of incorporation to enable it to complete the delivery of Common Stock provided for herein.  Accordingly, the Bank and Bancorp hereby agree that references to “Common Stock” herein shall include Common Stock Equivalents, as that term is defined in the Exchange Agreement entered into by Bancorp with Broadway concurrently herewith in connection with Bancorp’s exchange of shares of Broadway’s Non-Cumulative Perpetual Preferred Stock, Series B.

Section 7.Miscellaneous.

(a)           The “Recitals” are expressly deemed to be a part of this Agreement.

(b)           After giving effect to this Agreement, each reference in the New Bank Loan Documents to “hereof”, “hereunder” or words of like import referring to the one or all of the New Bank Loan Documents shall refer to the New Bank Loan Documents as amended by this Agreement.

(c)           All references in the New Bank Loan Documents to “the date hereof” or words of like import shall remain as references to July 31, 2009.

(d)           The “Miscellaneous Provisions” of the Loan Agreement shall apply mutatis mutandis to this Agreement, and to the other New Bank Loan Documents as modified by this Agreement, taken together as a single agreement, reflecting the terms therein as modified hereby.

[REMAINDER OF THE PAGE INTENTIONALLY LEFT BLANK — SIGNATURE PAGE TO FOLLOW]

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The parties have executed this Agreement as of the date first written above.

THE BANK:
BBCN BANK
By:	/s/ Mark Lee
(Signature)
Name: Mark Lee
Title:   Executive Vice President and Chief            Credit Officer
BROADWAY:
BROADWAY FINANCIAL CORPORATION
By:		/s/ Wayne-Kent A. Bradshaw
(Signature)
Name:			Wayne-Kent A. Bradshaw
Title:			President and Chief Executive Officer

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EXHIBIT A

LOAN PURCHASE AND SALE AGREEMENT

LOAN PURCHASE AND SALE AGREEMENT

THIS LOAN PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of August 22, 2013, by and between BBCN Bank, a California corporation (“Transferor”), and National Community Investment Fund, an Illinois trust (“Transferee”).

RECITALS

Broadway Financial Corporation (“Borrower”), a Delaware corporation and the savings and loan holding company of Broadway Federal Bank, f.s.b., requested that Transferor make a line of credit in an amount up to Five Million Dollars Even ($5,000,000.00) available to Borrower (the “Loan”).

On or about July 31, 2009, Transferor and Borrower entered into a Business Loan Agreement, dated July 31, 2009 (the “Loan Agreement”), whereby Transferor agreed to make the Loan to Borrower, with the Loan secured by the Collateral, as that term is defined in the Commercial Security Agreement, by and between Transferor and Borrower, dated July 31, 2009.  In connection with the Loan Agreement, on or about July 31, 2009, Borrower made, executed and delivered to Transferor the original promissory note (the “Original Promissory Note”), for the sum of Five Million Dollars Even ($5,000,000.00).

Borrower has defaulted on its obligations under the Original Promissory Note (the “Loan Obligations”) by, among other things, failing to make the monthly payments during the stated term of the Original Promissory Note and the lump sum payment of all outstanding principal plus all accrued and unpaid interest on July 31, 2010, the maturity date (collectively the “Defaults”).

As of the date hereof the outstanding principal balance under the Original Promissory Note is Five Million Dollars Even ($5,000,000.00) (collectively, the “Indebtedness”).

On or about August 22, 2013, in order to facilitate the sale by Transferor of One Million One Hundred Fifty Thousand Dollars Even ($1,150,000.00) of the principal amount represented by the Original Promissory Note to Transferee in consideration of the receipt by Transferor of Five Hundred Seventy-Five Thousand Dollars Even ($575,000.00) from the Transferee, and for other good and valuable consideration as set forth in this Agreement, the Original Promissory Note was broken up into two resulting promissory notes, an interest bearing note for Three Million Eight Hundred Fifty Thousand Dollars ($3,850,000.00), which is being retained by the Transferor, and a non-interest bearing note (the “Promissory Note”) a copy of which is attached hereto as Exhibit A in the principal amount of One Million One Hundred Fifty Thousand Dollars Even ($1,150,000.00), which is being

acquired by Transferee pursuant to this Agreement.

Subject to the terms, conditions and provisions of this Agreement, Transferee desires to purchase, and Transferor desires to sell, all of Transferor’s right, title and interest in and to the Promissory Note.

AGREEMENT

NOW, THEREFORE, in consideration of the mutual promises set forth herein, and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

Section 1.  Purchase and Sale, No Recourse.

1.1Purchase and Sale. Subject to all of the provisions, terms and conditions of this Agreement, on the Closing Date (as hereinafter defined) Transferee shall purchase and accept from Transferor and Transferor shall sell, transfer and assign to Transferee all of Transferor’s right, title and interest in and to the Promissory Note.

1.2No Recourse.  The sale and purchase of the Promissory Note hereunder is made on an “AS IS” and “WITH ALL FAULTS” basis, without any recourse of any kind to, or indemnification obligation on the part of, Transferor, and without representation or warranty, whether express or implied, by Transferor except with regard to Transferor’s representations and warranties set forth in Section 7.1 hereof.

Section 2.  Purchase Price.  Concurrently with the closing of a series of related transactions, including the exchange (the “Exchange Transactions”) by the Transferor and the Transferee with the Borrower of all of the shares of preferred stock of the Borrower held by the Transferor and the Transferee for shares of common stock of the Borrower (the “Closing Date”), Transferee shall pay to Transferor the sum of Five Hundred Seventy-Five Thousand Dollars Even ($575,000.00) (“Purchase Price”), which shall be in certified funds, to purchase the Promissory Note.

Section 3.  Costs and Expenses.Transferee shall bear its own costs and expenses in connection with the negotiation and performance of this Agreement.  Without limiting the generality of the foregoing, Transferor shall have no responsibility for the payment of any documentary, filing, recording, conveyance, transfer and intangible taxes payable in connection with the delivery of the documents provided or contemplated by this Agreement, or broker fees or commissions payable in connection with the negotiation or performance of this Agreement.

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Section 4.  Conditions to Closing.

4.1Transferor’s Conditions.  All obligations of the Transferor to sell and transfer the Promissory Note to Transferee (the “Closing”) are subject to the satisfaction or Transferor’s written waiver of the following conditions:

(a)Transferor shall have received a counterpart original of this Agreement, duly executed by Transferee.

(b)On the Closing Date:

(1)Transferor shall have received the entire Purchase Price in accordance with Section 2;

(2)All representations and warranties of Transferee set forth in Section 7.2 shall be true; and

(3)Transferee shall not have dissolved or become the subject of any bankruptcy or insolvency proceeding, whether voluntarily or involuntarily.

4.2Transferee’s Conditions. All obligations of the Transferee to buy and accept the Promissory Note are subject to the satisfaction or Transferee’s written waiver of the following conditions:

(a)Transferee shall have received a counterpart original of this Agreement, duly executed by Transferor.

(b)On the Closing Date:

(1)All representations and warranties of Transferor set forth in Section 7.1 shall be true;

(2)Transferee shall have received true and complete copies of the Loan Agreement and all other loan documents entered into in connection therewith, together with all amendments and supplements thereto.

Section 5.  Delivery of Promissory Note.  Subject to the timely satisfaction of all the conditions precedent set forth in Section 4.1, Transferor shall deliver upon Closing:

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(a)The Promissory Note; and

(b)An Assignment of Promissory Note duly executed by Transferor together with any other instruments required pursuant to the Loan Agreement to effectuate the sale and assignment of the Promissory Note from Transferor to Transferee hereunder.

Section 6.  Non-Satisfaction of Conditions.  If the sale and purchase contemplated herein does not close on the Closing Date due to the failure of the satisfaction of any of the conditions contained in Section 4, and if either party does not waive in writing the non-satisfaction of each such condition, this Agreement shall thereupon be cancelled and terminated.

Section 7.  Representations and Warranties.

7.1Transferor’s Representations and Warranties. Transferor hereby makes the following representations and warranties for the benefit of Transferee as of the date of this Agreement and as of the Closing Date:

(a)Transferor is a corporation duly incorporated, validly existing and in good standing under the laws of the State of California.

(b)Transferor has all right, power and authority required to execute and deliver this Agreement and to perform the terms of this Agreement.

(c)Transferor is the legal and beneficial owner and holder of the Promissory Note.

(d)Transferor has not assigned or pledged the Promissory Note or any participation in the Promissory Note, to any other party.

(e)Neither the execution and delivery by Transferor of this Agreement, nor the consummation by Transferor of the transactions contemplated hereby, will (i) conflict with or violate any provision of the certificate of incorporation or bylaws of Transferor, each as presently in effect, (ii) require on the part of Transferor any notice to or filing with, or any permit, authorization, consent or approval of, any governmental entity, other than those obtained on or prior to the date hereof, (iii) conflict with, result in a breach of, constitute a default under, result in the acceleration of obligations under, create in any party the right to terminate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument to which Transferor is a party or by which Transferor is bound or to which any of Transferor’s assets is subject, (iv) result in the imposition of or

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acceleration of any lien upon any assets of Transferor, or (v) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Transferor.

7.2Transferee’s Representations and Warranties. Transferee hereby makes the following representations and warranties for the benefit of Transferor as of the date of this Agreement and as of the Closing Date:

(a)Transferee is a trust duly formed, validly existing and in good standing under the laws of the State of Illinois.

(b)Transferee has all right, power and authority required to execute and deliver this Agreement and to perform the terms of this Agreement.

(c)Neither the execution and delivery by Transferee of this Agreement, nor the consummation by Transferee of the transactions contemplated hereby, will (i) conflict with or violate any provision of the certificate of incorporation or bylaws of Transferee, each as presently in effect, (ii) require on the part of Transferee any notice to or filing with, or any permit, authorization, consent or approval of, any governmental entity, other than those obtained on or prior to the date hereof, (iii) conflict with, result in a breach of, constitute a default under, result in the acceleration of obligations under, create in any party the right to terminate, modify or cancel, or require any notice, consent or waiver under, any contract or instrument to which Transferee is a party or by which Transferee is bound or to which any of Transferee’s assets is subject, (iv) result in the imposition of or acceleration of any lien upon any assets of Transferee, or (v) violate any order, writ, injunction, decree, statute, rule or regulation applicable to Transferee.

(d)Transferee has made such independent legal and factual investigations of the Borrower, Transferor, the Promissory Note, the Original Promissory Note, the Loan Agreement and any and all related loan documents, Defaults, and existence of any other defaults, as it deems necessary and appropriate.

(e)Based upon such legal and factual investigations as Transferee deemed necessary or appropriate, Transferee accepts the Promissory Note on the Closing Date on an “AS IS” and “WITH ALL FAULTS” basis, without recourse, indemnification right or warranty of any kind, express or implied, except for those representations and warranties made by Transferor in Section 7.1.

7.3  Transferee Acknowledgement. Transferee acknowledges and agrees that except for those representations and warranties made by Transferor in Section 7.1, Transferor has not made any representations or warranties of any kind to Transferee, whether express or implied or written or oral.

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Without limiting the generality of the foregoing, Transferee acknowledges and agrees that Transferor makes no representations or warranties of any kind to Transferee regarding (a) the enforceability of the Promissory Note, (b) the status of the Promissory Note, (c) the existence, status, good standing, financial condition or creditworthiness of Borrower or the collectability on the Promissory Note, including any claims, defenses to payment or setoffs in connection therewith, or (d) compliance in the past by Borrower, or any other applicable party, with conditions to advances under the Promissory Note or the implicit or explicit waiver of any such conditions by Transferor, the establishment of any course of dealing or course of conduct by Transferor or Borrower regarding advances or any commitment on the part of Transferor to make advances under the Promissory Note.  Transferee further acknowledges and agrees that Transferor has advised Transferee to make its own decisions and conduct its own investigation of these matters and all other matters pertaining to the Borrower, Defaults, existence of any other defaults, the Promissory Note and the Original Promissory Note.

Section 8.  Brokers.  Each of the parties hereto represents and warrants to the other party hereto that it has not had any dealings with any agent or broker in connection with the negotiation or performance of this Agreement, and agrees to indemnify, defend and hold the other party hereto harmless for any commission, charges or compensation paid to or otherwise claimed by any agent or broker with respect to this Agreement or the transactions contemplated hereunder.  Each of the parties hereto shall be solely and entirely responsible for payment of any and all fees claimed or due by any agent or broker that has been engaged by or otherwise has performed services for such party hereto in connection with the herein contemplated transactions.

Section 9.  Further Assurances.  Transferee and Transferor shall execute any and all documents and perform any and all acts reasonably necessary or appropriate to consummate the purchase and sale of the Promissory Note pursuant to the terms and conditions set forth in this Agreement.

Section 10.  Additional Covenants.

10.1Conversion of the Principal Amount Represented by the Promissory Note into Borrower Common Stock.  On the Closing Date, Transferee shall convert the entire principal amount of the Promissory Note into shares of common stock of the Borrower, in full satisfaction of any obligation of Borrower to Transferee pursuant to the Promissory Note, with the number of shares to be received by Transferee calculated by dividing the entire principal amount of the Promissory Note by the price per share paid by investors in the private placement conducted by the Borrower and closing concurrently with the Exchange Transactions.

10.2Notices.Prior to the Closing, each of the parties hereto shall give immediate notice to the other party hereto of the occurrence of any event or the receipt of any notice or

6

knowledge the effect of which would be to make a representation or warranty herein untrue or misleading if made on or immediately following the occurrence of such event or the receipt of such notice or knowledge.

Section 11.  Survival of Representations.  All representations, warranties, covenants, agreements, terms and conditions made herein will survive the execution, delivery and Closing and all transactions contemplated hereunder.

Section 12.  No Third Party Beneficiaries.  Nothing in this Agreement, express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any person other than the parties to it and their respective successors and permitted assigns, nor is anything in this Agreement intended to relieve or discharge any obligation of any third person to any party hereto or give any third person any right or subrogation or action against any party to this Agreement.

Section 13.  Descriptive Headings.  The descriptive headings of the several sections of this Agreement are inserted for convenience and will not be deemed to affect the meaning or construction of any of the provisions hereof.

Section 14.  Construction.  The parties hereto agree that the rule of construction to the effect that any ambiguities are to be resolved against the drafting party will not be employed in the interpretation of this Agreement.

Section 15.  Terms Generally.  The defined terms in this Agreement will apply equally to both the singular and the plural forms of the terms defined. Whenever the context may require, any pronoun will include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” when used in this Agreement will be deemed to be followed by the phrase “without limitation.”  The words “approval” and “notice” when used in this Agreement will be deemed to be preceded by the word “written.” All references to “Exhibit” or “Exhibits” in this Agreement mean the exhibits attached hereto, the terms and conditions of which are made a part hereof.  All references to “Section” or “Sections” in this Agreement mean the applicable section of this Agreement unless otherwise specified.

Section 16.  Entire Agreement.  This Agreement constitutes the entire agreement between the parties hereto with respect to the purchase and sale of the Promissory Note, and supersedes any other agreements, negotiations, communications, understandings and commitments whether written or oral, relating thereto. This Agreement may be modified only by a writing signed by both parties to this Agreement.

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Section 17.  Severability.  If any one or more of the provisions contained in this Agreement shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision, and this Agreement shall be construed as if such invalid, illegal or unenforceable provision had never been contained in this Agreement.

Section 18.  Time of the Essence.  Time is of the essence in the execution and performance of this Agreement and each of its provisions.

Section 19.  Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall constitute one and the same agreement, and either party hereto may execute this Agreement by signing such counterpart.

Section 20.  Choice of Law and Venue; Jury Trial Waiver.  The validity of this Agreement, the construction, interpretation, and enforcement hereof, and the rights of the parties hereto with respect to all matters arising hereunder or related hereto shall be determined under, governed by, and construed in accordance with the laws of the State of California.  The parties agree that all actions or proceedings arising in connection with this Agreement shall be tried and litigated only in the State and Federal courts located in the county of Los Angeles, State of California or, at the sole option of Transferor, in any other court in which Transferor shall initiate legal or equitable proceedings and which has subject matter jurisdiction over the matter in controversy.  The parties waive, to the extent permitted under applicable law, any right each may have to assert the doctrine of forum non conveniens or to object to venue to the extent any proceeding is brought in accordance with this Section 20.  The parties hereby waive their respective rights to a jury trial of any claim or cause of action based upon or arising out of any of this Agreement or any of the transactions contemplated herein, including contract claims, tort claims, breach of duty claims, and all other common law or statutory claims.  Each of the parties represent that it has reviewed this waiver and each knowingly and voluntarily waives its jury trial rights following consultation with legal counsel.  In the event of litigation, a copy of this Agreement may be filed as a written consent to a trial by the court.

Section 21.  Attorney Fees.  In the event of any litigation or other action to construe, interpret or enforce this Agreement, the prevailing party shall be entitled to recover reasonable attorney and expert witness fees and costs.

Section 22.  Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties hereto, and their respective heirs, executors, administrators, trustees (including bankruptcy trustees), receivers, successors and assigns, jointly and severally.  As used herein, the singular number includes the plural and the masculine gender includes the feminine and neuter.

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Section 23.  Advice of Counsel.  Each party hereto represent that they have been advised of the effect of this Agreement by their own attorneys, that they have investigated the facts and are not relying upon any representation or acknowledgment, whether oral or in writing, of any other party hereto except as contained herein.

Section 24.  Notices.All notices, demands, requests or replies (collectively, “Notices”) provided for or permitted by this Agreement shall be in writing and may be delivered by any one of the following methods: (1) by personal delivery; (2) by deposit with the United States Postal Service as certified or registered mail, return receipt requested, postage prepaid to the addresses stated below; or (3) by prepaid deposit with an overnight express delivery service.  Notice deposited with the United States Postal Service in the manner described above shall be deemed effective three (3) business days after deposit with the Postal Service.  Notice by overnight express delivery service shall be deemed effective one (1) business day after deposit with the express delivery service for overnight delivery. Notice by personal delivery shall be deemed effective at the time of personal delivery.  Notice also may be given by means of electronic facsimile transmission or pdf file ; provided, however, that in order for a fax or pdf file Notice to be deemed effective, the party giving notice shall provide a “hard copy” of the Notice thereafter to the other party pursuant to one of the three methods of “hard copy” delivery specified in this Section.

For purpose of Notices, the address of Transferor shall be:

BBCN Bank

3731 Wilshire Blvd, Suite 1000

Los Angeles, CA  90010

Telephone No.: 213 639 1700

Fax No.: 213 235 3257

E-Mail Address: Juliet.Stone@BBCNBank.com

Attention:  Legal Department

and the address of Transferee shall be:

National Community Investment Fund

135 South LaSalle

Suite 2040

Chicago, IL 60603

Telephone No.: (312) 881-5826

Fax No.: (312) 662-6100

E-Mail Address: snarain@ncif.org

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Attention:  Saurabh Narain

Chief Executive Officer

Section 25.  Common Stock Equivalents.  Borrower does not currently have sufficient authorized but unissued shares of Common Stock available under its certificate of incorporation to enable it to complete the delivery of Common Stock contemplated herein.  Accordingly, Transferor and Transferee hereby agree that references to Common Stock herein shall include Common Stock Equivalents, as that term is defined in the respective Exchange Agreements entered into by Transferor and Transferee, respectively, with Borrower concurrently herewith in connection with, respectively, Transferor’s exchange of shares of Borrower’s Non-Cumulative Perpetual Preferred Stock, Series B, and Transferee’s exchange of Borrower’s Non-Cumulative Perpetual Preferred Stock, Series C.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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IN WITNESS WHEREOF, the undersigned have executed this Agreement the date first above set forth.

“TRANSFEROR”			“TRANSFEREE”
BBCN Bank, a California corporation			National Community Investment Fund, an Illinois trust
By:	/s/Mark Lee		By:	/s/Saurabh Narain
Name: Mark Lee			Name:	Saurabh Narain
Title: Executive Vice President and Chief			Title:	Chief Executive
Credit Officer
Acknowledged and agreed to by:
“BORROWER”
Broadway Financial Corporation, a Delaware corporation
By:		/s/Wayne-Kent A. Bradshaw
Name:		Wayne-Kent A. Bradshaw
Title:		President and Chief Executive Officer

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EXHIBIT B

CHANGE IN TERMS AGREEMENT

CHANGE IN TERMS AGREEMENT

Principal		Loan Date	Maturity	Loan No	Call / Coll	Account	Officer	Initials
$	3,850,000.00	07-31-2009	02-22-2019	30806518			CCHO

References in the boxes above are for Lender’s use only and do not limit the applicability of this document to any particular loan or item. Any item above containing “***” has been omitted due to text length limitations.

Borrower:	BROADWAY FINANCIAL CORPORATION, A	Lender:	BBCN Bank
	DELAWARE CORPORATION		Corporate Banking Center
	5055 WILSHIRE BOULEVARD, SUITE 500		3731 Wilshire Blvd., #400
	LOS ANGELES, CA 90036		Los Angeles, CA 90010

Principal Amount: $3,850,000.00 Date of Agreement: August 22, 2013

DESCRIPTION OF EXISTING INDEBTEDNESS. A Line of Credit evidenced by a Promissory Note dated July 31, 2009, in the original principal amount of $5,000,000.00 (“Note”).

DESCRIPTION OF COLLATERAL. A security interest in the collateral further described in the Commercial Security Agreement dated July 31, 2009, entered into between BROADWAY FINANCIAL CORPORATION (Grantor) and Lender, and the Commercial Pledge Agreement, dated even date herewith, entered into between Grantor and Lender.

DESCRIPTION OF CHANGE IN TERMS.

1. Original principal amount of $5,000,000.00 is hereby being split into two promissory notes as follows:

A)    A promissory note for $1,150,000.00 which it is presently contemplated will be sold to a third-party and then immediately converted into Borrower common stock, and

B)    A promissory note with a change in terms agreement for $3,850,000.00.

· Interest Rate is being changed to “Wall Street Journal Prime Rate (Daily Adjustable) + 2.00% with Floor Rate of 6.00%” from “Wall Street Journal Prime Rate (Daily Adjustable) + 1.00% with Floor Rate of 6.00%” effective as of the date of the closing of the transactions contemplated by the Agreement for Partial Satisfaction (defined below).

· The original Note which evidenced a revolving line of credit is being converted to Business Term Loan.

· Borrower will pay six (6) interest payments beginning three (3) months following the closing of the recapitalization of Broadway Financial Corporation and every quarter thereafter; and 48 monthly consecutive principal and Interest payments in the initial amount of $57,037.64 beginning nineteen (19) months following the closing of the recapitalization of Broadway Financial Corporation and every month thereafter.

2. Partial satisfaction of an amount of the principal represented by the $3,850,000.00 Promissory Note in consideration of the receipt by Lender of a certain number of shares of Borrower common stock is occurring, as more fully provided for in that certain Agreement for Partial Satisfaction of Debt Previously Contracted (the “Agreement for Partial Satisfaction”) in the form attached hereto as Exhibit A.

3. As of, and conditioned upon the closing of the transactions contemplated by the Agreement for Partial Satisfaction, Lender shall forgive any and all interest (including interest accrued pursuant to the Default Rate Margin) and late charges that have accrued and remain unpaid through the date of the closing of the transactions contemplated by the Agreement for Partial Satisfaction.

4. PREPAYMENT; MINIMUM INTEREST CHARGE: Early payment will not, unless agreed to by Lender in writing, relieve Borrower of Borrower’s obligation to continue to make regularly scheduled payments of principal and accrued and unpaid interest.

5. COVENANTS & CONDITIONS:

· if, but only to the extent that, Borrower receives FRB approval to do so, Borrower shall use 25% of net proceeds of any subsequent capital raises to repay Lender. Borrower shall use it best commercially resonable efforts to obtain such FRB approval.

· Borrower shall promptly seek any and all approvals from FRB, with sufficient time to allow a response, prior to each payment date.

· Borrower shall immediately upon the request of Lender, and, in advance of submission of the same, provide Lender with any and all documents forming part of a request for approval from the FRB to make a scheduled payment.

6. “Payment Default” under “Event of Default” is modified as follows:

Borrower fails to make any payment when due under this Note. However, it is not an event of default, if Borrower fails to make a scheduled payment as a result of not receiving the required approval from the FRB.

7. All references in the loan documents to Nara Bank are replaced with references to BBCN Bank.

CONTINUING VALIDITY. Except as expressly changed by this Agreement, the terms of the original obligation or obligations, including all agreements evidenced or securing the obligation(s), remain unchanged and in full force and effect. Consent by Lender to this Agreement does not waive Lender’s right to strict performance of the obligation(s) as changed, nor obligate Lender to make any future change in terms. Nothing in this Agreement will constitute a satisfaction of the obligation(s). It is the intention of Lender to retain as liable parties all makers and endorsers of the original obligation(s), including accommodation parties, unless a party is expressly released by Lender in writing. Any maker or endorser, including accommodation makers, will not be released by virtue of this Agreement. If any person who signed the original obligation does not sign this Agreement below, then all persons signing below acknowledge that this Agreement is given conditionally, based on the representation to Lender that the non-signing party consents to the changes and provisions of this Agreement or otherwise will not be released by it. This waiver applies not only to any initial extension, modification or release, but also to all such subsequent actions.

ACKNOWLEDGEMENT OF DEFAULTS AND WAIVERS. Borrower hereby acknowledges and agrees that it is currently In default under the Loan Documents, among other reasons, by failing to make the monthly loan payment due on July 31, 2010 and all loan payments that became due thereafter (“Default”). Borrower hereby knowingly and voluntarily waives any and all rights it may have, if any, to contest or dispute the validity of, or to cure, the Default or the exercise of any rights of Lender. Borrower hereby further acknowledges and agrees that in entering into this Agreement, Lender is relying upon the acknowledgment by Borrower of the existence of the Default and its waiver of any right to dispute the existence thereof or to contest any enforcement of Lender’s rights based thereon.

PRIOR TO SIGNING THIS AGREEMENT, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS AGREEMENT. BORROWER AGREES TO THE TERMS OF THE AGREEMENT.

BORROWER:

BROADWAY FINANCIAL CORPORATION, A DELAWARE CORPORATION

By:	/s/ Wayne-Kent A. Bradshaw	By:	/s/ Brenda Battey
	WAYNE-KENT A. BRADSHAW, President of BROADWAY FINANCIAL CORPORATION, A DELAWARE CORPORATION		BRENDA BATTEY, Chief Financial Officer of BROADWAY FINANCIAL CORPORATION, A DELAWARE CORPORATION

LASER PRO Lending, Ver. 12.2.0.003 Copr. Harland Financial Solutions, Inc. 1997, 2013. All Rights Reserved. - CA C:\CFIWCA\CFNLPL\D20C.FC TR-10840

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EX-31.1

Exhibit 31.1

SECTION 302 CERTIFICATION

I, Wayne-Kent A. Bradshaw, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Broadway Financial Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 14, 2013	By:	/s/ Wayne-Kent A. Bradshaw
		Wayne-Kent A. Bradshaw
		Chief Executive Officer

EX-31.2

Exhibit 31.2

SECTION 302 CERTIFICATION

I, Brenda J. Battey, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Broadway Financial Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
	a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
	b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:  November 14, 2013	By:	/s/ Brenda J. Battey
		Brenda J. Battey
		Chief Financial Officer

EX-32.1

Exhibit 32.1

SECTION 906 CERTIFICATION

The following statement is provided by the undersigned to accompany the foregoing Report on Form 10-Q pursuant to Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed filed pursuant to any provision of the Securities Exchange Act of 1934 or any other securities law.

The undersigned certifies that the foregoing Report on Form 10-Q fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Broadway Financial Corporation at the dates and for the periods indicated.

Date:  November 14, 2013	By:	/s/ Wayne-Kent A. Bradshaw
		Wayne-Kent A. Bradshaw
		Chief Executive Officer

EX-32.2

Exhibit 32.2

SECTION 906 CERTIFICATION

The following statement is provided by the undersigned to accompany the foregoing Report on Form 10-Q pursuant to Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002, and shall not be deemed filed pursuant to any provision of the Securities Exchange Act of 1934 or any other securities law.

The undersigned certifies that the foregoing Report on Form 10-Q fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of Broadway Financial Corporation at the dates and for the periods indicated.

Date:  November 14, 2013	By:	/s/ Brenda J. Battey
		Brenda J. Battey
		Chief Financial Officer

XML

Basis of Financial Statement Presentation (Policies)

9 Months Ended

Sep. 30, 2013

Basis of Financial Statement Presentation

Recent Accounting Pronouncements

Recent Accounting Pronouncements

FASB ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” The provisions of ASU No. 2013-11 require an entity to present an unrecognized tax benefit, or portion thereof, in the statement of financial position as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have a material impact on the Company’s consolidated financial statements.

XML

Consolidated Statements of Operations and Comprehensive Income (Loss) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Interest income:
Interest and fees on loans receivable	$ 3,637	$ 4,595	$ 11,420	$ 14,955
Interest on mortgage backed and other securities	71	109	240	392
Other interest income	103	19	237	55
Total interest income	3,811	4,723	11,897	15,402
Interest expense:
Interest on deposits	522	707	1,728	2,562
Interest on borrowings	651	789	2,075	2,437
Total interest expense	1,173	1,496	3,803	4,999
Net interest income before provision for loan losses	2,638	3,227	8,094	10,403
Provision for loan losses	414	129	414	1,190
Net interest income after provision for loan losses	2,224	3,098	7,680	9,213
Non-interest income:
Service charges	132	149	403	440
Loan servicing fees, net	8	(6)	18	(168)
Net gains (losses) on sales of loans		(280)	97	(280)
Net gains (losses) on sales of REO	(8)	(107)	(10)	288
Gain on sale of office properties and equipment				2,523
Gain on sale of securities				50
Gain on restructuring of debt	1,221		1,221
Other	14	27	113	77
Total non-interest income	1,367	(217)	1,842	2,930
Non-interest expense:
Compensation and benefits	1,479	1,534	4,428	4,661
Occupancy expense, net	269	358	932	942
Information services	213	212	636	664
Professional services	225	246	558	530
Provision for (recapture of) losses on loans held for sale	(315)	(267)	153	(81)
Provision for losses on REO	321	427	544	739
FDIC insurance	181	229	573	662
Office services and supplies	91	113	312	330
Other	543	640	1,640	1,609
Total non-interest expense	3,007	3,492	9,776	10,056
Income (loss) before income taxes	584	(611)	(254)	2,087
Income tax expense		2	6	849
Net income (loss)	584	(613)	(260)	1,238
Other comprehensive income (loss), net of tax:
Unrealized gain (loss) on securities available for sale	(76)	7	(222)	(72)
Reclassification of net gains included in net income				(50)
Other comprehensive income (loss), net of tax	(76)	7	(222)	(122)
Comprehensive income (loss)	508	(606)	(482)	1,116
Net income (loss)	584	(613)	(260)	1,238
Dividends and discount accretion on preferred stock	(127)	(287)	(779)	(858)
Income (loss) available to common stockholders	$ 457	$ (900)	$ (1,039)	$ 380
Earnings (loss) per common share-basic (in dollars per share)	$ 0.05	$ (0.48)	$ (0.23)	$ 0.21
Earnings (loss) per common share-diluted (in dollars per share)	$ 0.05	$ (0.48)	$ (0.23)	$ 0.21
Dividends declared per share-common stock (in dollars per share)	$ 0.00	$ 0.00	$ 0.00	$ 0.00

XML

Loans Receivable Held For Sale (Loans receivable held for sale)

9 Months Ended

Sep. 30, 2013

Loans receivable held for sale

Loans receivable held for sale

Loans Receivable

NOTE (5) – Loans Receivable Held For Sale

Loans receivable held for sale totaled $1.1 million at June 30, 2013 and $19.1 million at December 31, 2012.

During the nine months ended September 30, 2013, certain loans held for investment were reclassified to loans receivable held for sale at the lower of cost or fair value, less estimated selling costs.  At the time of transfers, the carrying amount of these loans totaled $8.8 million, and required additional charge-offs of $1.5 million, which were reserved for at year-end 2012.

During the third quarter of 2013, management determined that certain loans held for sale were no longer to be marketed for sale and therefore, transferred such loans to held for investment at the lower of cost or fair value.  Loans transferred to held for investment totaled $7.4 million and consisted of $2.5 million in multi-family loans, $1.4 million in commercial real estate loans and $3.5 million in church loans.

Loans sold during the first nine months of 2013 totaled $15.5 million with a net gain of $97 thousand.  Additionally, a loan receivable held for sale secured by a church building was transferred to REO during the nine months ended September 30, 2013.

Loans sold during the first the nine months of 2012 totaled $1.8 million with a net loss of $280 thousand.  During the nine months ended September 30, 2012, two loans receivable held for sale were transferred to REO.  The loans were secured by commercial real estate properties, which had a total carrying amount of $333 thousand, net of charge-offs of $327 thousand.

XML

Earnings (Loss) Per Share of Common Stock (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Basic
Net income (loss)	$ 584	$ (613)	$ (260)	$ 1,238
Less: Preferred stock dividends and accretion	(127)	(287)	(779)	(858)
Less: Net income (loss) attributable to participating securities	(283)		465
Income (loss) available to common stockholders	174	(900)	(574)	380
Weighted average common shares outstanding	3,755,695	1,858,697	2,536,913	1,782,887
Earnings (loss) per common share - basic (in dollars per share)	$ 0.05	$ (0.48)	$ (0.23)	$ 0.21
Diluted
Net income (loss)	584	(613)	(260)	1,238
Less: Preferred stock dividends and accretion	(127)	(287)	(779)	(858)
Less: Net income (loss) attributable to participating securities	(283)		465
Income (loss) available to common stockholders	$ 174	$ (900)	$ (574)	$ 380
Weighted average common shares outstanding	3,755,695	1,858,697	2,536,913	1,782,887
Weighted average common shares - fully diluted	3,755,695	1,858,697	2,536,913	1,782,887
Earnings (loss) per common share - diluted (in dollars per share)	$ 0.05	$ (0.48)	$ (0.23)	$ 0.21
Anti-dilutive stock options not considered in computing diluting earnings (loss) per common share	148,750	227,075	148,750	227,075

XML

Earnings (Loss) Per Share of Common Stock (Tables)

9 Months Ended

Sep. 30, 2013

Earnings (Loss) Per Share of Common Stock

Schedule of basic and diluted earnings (loss) per share of common stock

	For the three months ended September 30,						For the nine months ended September 30,
	2013			2012			2013			2012
	(Dollars in thousands, except per share)
Basic
Net income (loss)	$	584		$	(613	)	$	(260	)	$	1,238
Less: Preferred stock dividends and accretion	(127		)	(287		)	(779		)	(858		)
Less: Net income (loss) attributable to participating securities	(283		)	-			465			-
Income (loss) available to common stockholders	$	174		$	(900	)	$	(574	)	$	380
Weighted average common shares outstanding	3,755,695			1,858,697			2,536,913			1,782,887
Earnings (loss) per common share - basic	$	0.05		$	(0.48	)	$	(0.23	)	$	0.21
Diluted
Net income (loss)	$	584		$	(613	)	$	(260	)	$	1,238
Less: Preferred stock dividends and accretion	(127		)	(287		)	(779		)	(858		)
Less: Net income (loss) attributable to participating securities	(283		)	-			465			-
Income (loss) available to common stockholders	$	174		$	(900	)	$	(574	)	$	380
Weighted average common shares outstanding	3,755,695			1,858,697			2,536,913			1,782,887
Add: dilutive effects of assumed exercises of stock options	-			-			-			-
Weighted average common shares - fully diluted	3,755,695			1,858,697			2,536,913			1,782,887
Earnings (loss) per common share - diluted	$	0.05		$	(0.48	)	$	(0.23	)	$	0.21

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Fair Value (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Fair Value
Securities available-for-sale, at fair value	$ 10,148		$ 10,148		$ 13,378
Transfers between levels	0	0	0	0
Residential mortgage-backed
Fair Value
Securities available-for-sale, at fair value	10,148		10,148		13,378
Significant Other Observable Inputs (Level 2)
Fair Value
Securities available-for-sale, at fair value	10,148		10,148		13,378
Total
Fair Value
Securities available-for-sale, at fair value	10,148		10,148		13,378
Recurring basis | Significant Other Observable Inputs (Level 2) | Residential mortgage-backed
Fair Value
Securities available-for-sale, at fair value	10,148		10,148		13,378
Recurring basis | Total | Residential mortgage-backed
Fair Value
Securities available-for-sale, at fair value	$ 10,148		$ 10,148		$ 13,378

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Loans Receivable Held For Sale (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Loans receivable held for sale
Loans receivable held for sale, net	$ 1,085,000		$ 1,085,000		$ 19,051,000
Additional charge-offs required for transfers of loans to held-for-sale			1,500,000
Loans transferred to held for investment	7,400,000		7,394,000
Sale of loans			15,500,000	1,800,000
Net gains (losses) on sales of loans		(280,000)	97,000	(280,000)
Transfer of loans receivable held for sale to REO			753,000	333,000
Non-performing
Loans receivable held for sale
Transfers of loans held in portfolio to held-for-sale, before additional charge-offs			8,800,000
Multi-family
Loans receivable held for sale
Loans transferred to held for investment	2,500,000
Church
Loans receivable held for sale
Loans transferred to held for investment	3,500,000
Commercial real estate
Loans receivable held for sale
Loans transferred to held for investment	1,400,000
Transfer of loans receivable held for sale to REO				333,000
Number of loans transferred to REO				2
Charge-offs, loans transferred to REO				$ 327,000

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Securities (Details 2) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Dec. 31, 2012
Securities
Securities pledged	$ 10,100,000		$ 1,500,000
Sales of securities	0
Gain on sale of securities		50,000
Residential mortgage-backed
Securities
Estimated remaining term	5 years 4 months 24 days
U.S. Government and federal agency bonds
Securities
Sales of securities		1,000,000
Gain on sale of securities		$ 50,000

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Loans Receivable Held for Investment (Details 7) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Past due receivable
30-59 Days Past Due, Loans receivable	$ 1,295	$ 3,281
60-89 Days Past Due, Loans receivable	20	1,425
Greater than 90 Days Past Due, Loans receivable	20,135	37,090
Total Past Due, Loans receivable	21,450	41,796
Total Loans Not Past Due, Loans receivable	240,459	240,699
Loans receivable held for sale | One-to-four units
Past due receivable
60-89 Days Past Due, Loans receivable		871
Greater than 90 Days Past Due, Loans receivable		6,656
Total Past Due, Loans receivable		7,527
Total Loans Not Past Due, Loans receivable		389
Loans receivable held for sale | Five or more units
Past due receivable
Greater than 90 Days Past Due, Loans receivable		1,956
Total Past Due, Loans receivable		1,956
Total Loans Not Past Due, Loans receivable		3,839
Loans receivable held for sale | Commercial real estate
Past due receivable
Total Loans Not Past Due, Loans receivable		1,358
Loans receivable held for sale | Church
Past due receivable
Greater than 90 Days Past Due, Loans receivable	785	1,556
Total Past Due, Loans receivable	785	1,556
Total Loans Not Past Due, Loans receivable	300	2,744
Loans receivable held for investment | One-to-four units
Past due receivable
30-59 Days Past Due, Loans receivable	876	1,077
Greater than 90 Days Past Due, Loans receivable	1,694	1,489
Total Past Due, Loans receivable	2,570	2,566
Total Loans Not Past Due, Loans receivable	47,726	55,167
Loans receivable held for investment | Five or more units
Past due receivable
30-59 Days Past Due, Loans receivable		587
60-89 Days Past Due, Loans receivable		554
Greater than 90 Days Past Due, Loans receivable	3,041	2,312
Total Past Due, Loans receivable	3,041	3,453
Total Loans Not Past Due, Loans receivable	101,260	79,897
Loans receivable held for investment | Commercial real estate
Past due receivable
Greater than 90 Days Past Due, Loans receivable	1,451	7,090
Total Past Due, Loans receivable	1,451	7,090
Total Loans Not Past Due, Loans receivable	31,493	34,034
Loans receivable held for investment | Church
Past due receivable
30-59 Days Past Due, Loans receivable	419	1,617
Greater than 90 Days Past Due, Loans receivable	13,002	15,689
Total Past Due, Loans receivable	13,421	17,306
Total Loans Not Past Due, Loans receivable	57,299	58,948
Loans receivable held for investment | Construction
Past due receivable
Greater than 90 Days Past Due, Loans receivable		273
Total Past Due, Loans receivable		273
Total Loans Not Past Due, Loans receivable	434	462
Loans receivable held for investment | Commercial Sports
Past due receivable
Total Loans Not Past Due, Loans receivable	1,423	1,711
Loans receivable held for investment | Commercial Other
Past due receivable
60-89 Days Past Due, Loans receivable	20
Greater than 90 Days Past Due, Loans receivable	162	69
Total Past Due, Loans receivable	182	69
Total Loans Not Past Due, Loans receivable	488	2,115
Loans receivable held for investment | Consumer Other
Past due receivable
Total Loans Not Past Due, Loans receivable	$ 36	$ 35

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Fair Value (Details 3) (Significant Unobservable Inputs (Level 3), USD $) In Thousands, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Fair value quantitative information
Fair Value	$ 258,332	$ 252,043
Fair Value, Measurements, Nonrecurring | Non-performing loans receivable held-for-sale | One-to-four units
Fair value quantitative information
Fair Value		6,656
Fair Value, Measurements, Nonrecurring | Non-performing loans receivable held-for-sale | Five or more units
Fair value quantitative information
Fair Value		1,956
Fair Value, Measurements, Nonrecurring | Non-performing loans receivable held-for-sale | Church
Fair value quantitative information
Fair Value	785	1,556
Fair Value, Measurements, Nonrecurring | Non-performing loans receivable held-for-sale | Income approach | Five or more units | Minimum
Fair value quantitative information
Capitalization rate (as a percent)		6.00%
Fair Value, Measurements, Nonrecurring | Non-performing loans receivable held-for-sale | Income approach | Five or more units | Maximum
Fair value quantitative information
Capitalization rate (as a percent)		8.50%
Fair Value, Measurements, Nonrecurring | Non-performing loans receivable held-for-sale | Sales comparison approach | One-to-four units | Minimum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)		(30.00%)
Fair Value, Measurements, Nonrecurring | Non-performing loans receivable held-for-sale | Sales comparison approach | One-to-four units | Maximum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)		23.00%
Fair Value, Measurements, Nonrecurring | Non-performing loans receivable held-for-sale | Sales comparison approach | Five or more units | Minimum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)		(13.00%)
Fair Value, Measurements, Nonrecurring | Non-performing loans receivable held-for-sale | Sales comparison approach | Five or more units | Maximum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)		17.00%
Fair Value, Measurements, Nonrecurring | Non-performing loans receivable held-for-sale | Sales comparison approach | Church
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	1.00%
Fair Value, Measurements, Nonrecurring | Non-performing loans receivable held-for-sale | Sales comparison approach | Church | Minimum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)		(27.00%)
Fair Value, Measurements, Nonrecurring | Non-performing loans receivable held-for-sale | Sales comparison approach | Church | Maximum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)		29.00%
Fair Value, Measurements, Nonrecurring | Impaired loans | One-to-four units
Fair value quantitative information
Fair Value	1,494	1,284
Fair Value, Measurements, Nonrecurring | Impaired loans | Five or more units
Fair value quantitative information
Fair Value	908	1,679
Fair Value, Measurements, Nonrecurring | Impaired loans | Commercial real estate
Fair value quantitative information
Fair Value	1,451	3,385
Fair Value, Measurements, Nonrecurring | Impaired loans | Church
Fair value quantitative information
Fair Value	8,793	6,649
Fair Value, Measurements, Nonrecurring | Impaired loans | Income approach | Five or more units | Minimum
Fair value quantitative information
Capitalization rate (as a percent)	7.25%	6.50%
Fair Value, Measurements, Nonrecurring | Impaired loans | Income approach | Five or more units | Maximum
Fair value quantitative information
Capitalization rate (as a percent)	9.00%	9.00%
Fair Value, Measurements, Nonrecurring | Impaired loans | Income approach | Commercial real estate | Minimum
Fair value quantitative information
Capitalization rate (as a percent)	4.50%	7.00%
Fair Value, Measurements, Nonrecurring | Impaired loans | Income approach | Commercial real estate | Maximum
Fair value quantitative information
Capitalization rate (as a percent)	8.25%	9.00%
Fair Value, Measurements, Nonrecurring | Impaired loans | Income approach | Church
Fair value quantitative information
Capitalization rate (as a percent)	6.75%
Fair Value, Measurements, Nonrecurring | Impaired loans | Income approach | Church | Minimum
Fair value quantitative information
Capitalization rate (as a percent)		6.75%
Fair Value, Measurements, Nonrecurring | Impaired loans | Income approach | Church | Maximum
Fair value quantitative information
Capitalization rate (as a percent)		8.00%
Fair Value, Measurements, Nonrecurring | Impaired loans | Sales comparison approach | One-to-four units | Minimum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	(2.00%)	(5.00%)
Fair Value, Measurements, Nonrecurring | Impaired loans | Sales comparison approach | One-to-four units | Maximum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	8.00%	18.00%
Fair Value, Measurements, Nonrecurring | Impaired loans | Sales comparison approach | Five or more units | Minimum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	(10.00%)	(26.00%)
Fair Value, Measurements, Nonrecurring | Impaired loans | Sales comparison approach | Five or more units | Maximum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	0.00%	16.00%
Fair Value, Measurements, Nonrecurring | Impaired loans | Sales comparison approach | Commercial real estate | Minimum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	(2.00%)	(17.00%)
Fair Value, Measurements, Nonrecurring | Impaired loans | Sales comparison approach | Commercial real estate | Maximum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	0.00%	(1.00%)
Fair Value, Measurements, Nonrecurring | Impaired loans | Sales comparison approach | Church | Minimum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	(32.00%)	(45.00%)
Fair Value, Measurements, Nonrecurring | Impaired loans | Sales comparison approach | Church | Maximum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	50.00%	8.00%
Fair Value, Measurements, Nonrecurring | Real estate owned | Commercial real estate
Fair value quantitative information
Fair Value	1,294	2,752
Fair Value, Measurements, Nonrecurring | Real estate owned | Church
Fair value quantitative information
Fair Value	$ 5,317	$ 5,411
Fair Value, Measurements, Nonrecurring | Real estate owned | Income approach | Commercial real estate
Fair value quantitative information
Capitalization rate (as a percent)	10.00%
Fair Value, Measurements, Nonrecurring | Real estate owned | Income approach | Commercial real estate | Minimum
Fair value quantitative information
Capitalization rate (as a percent)		8.00%
Fair Value, Measurements, Nonrecurring | Real estate owned | Income approach | Commercial real estate | Maximum
Fair value quantitative information
Capitalization rate (as a percent)		11.00%
Fair Value, Measurements, Nonrecurring | Real estate owned | Income approach | Church
Fair value quantitative information
Capitalization rate (as a percent)		11.50%
Fair Value, Measurements, Nonrecurring | Real estate owned | Income approach | Church | Minimum
Fair value quantitative information
Capitalization rate (as a percent)	6.50%
Fair Value, Measurements, Nonrecurring | Real estate owned | Income approach | Church | Maximum
Fair value quantitative information
Capitalization rate (as a percent)	11.50%
Fair Value, Measurements, Nonrecurring | Real estate owned | Sales comparison approach | Commercial real estate | Minimum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	(9.00%)	(67.00%)
Fair Value, Measurements, Nonrecurring | Real estate owned | Sales comparison approach | Commercial real estate | Maximum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	3.00%	1.00%
Fair Value, Measurements, Nonrecurring | Real estate owned | Sales comparison approach | Church | Minimum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	(24.00%)	(12.00%)
Fair Value, Measurements, Nonrecurring | Real estate owned | Sales comparison approach | Church | Maximum
Fair value quantitative information
Adjustment for differences between the comparable sales (as a percent)	11.00%	7.00%

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Loans Receivable Held for Investment (Details 4) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Impaired loans
Unpaid principal balance	$ 49,838	$ 55,765
Recorded investment	38,550	44,376
Allowance for loan losses allocated, with an allowance recorded	2,450	2,732
One-to-four units
Impaired loans
Unpaid principal balance, with no related allowance recorded	2,348	1,986
Unpaid principal balance, with an allowance recorded	1,980	3,092
Recorded investment, with no related allowance recorded	1,694	1,484
Recorded investment, with an allowance recorded	1,980	3,092
Allowance for loan losses allocated, with an allowance recorded	508	719
Five or more units
Impaired loans
Unpaid principal balance, with no related allowance recorded	2,703	2,038
Unpaid principal balance, with an allowance recorded	1,586	1,947
Recorded investment, with no related allowance recorded	2,647	1,819
Recorded investment, with an allowance recorded	1,579	1,947
Allowance for loan losses allocated, with an allowance recorded	147	125
Commercial real estate
Impaired loans
Unpaid principal balance, with no related allowance recorded	4,869	10,184
Unpaid principal balance, with an allowance recorded	6,491	3,941
Recorded investment, with no related allowance recorded	1,451	6,423
Recorded investment, with an allowance recorded	6,485	3,941
Allowance for loan losses allocated, with an allowance recorded	293	543
Church
Impaired loans
Unpaid principal balance, with no related allowance recorded	12,938	18,664
Unpaid principal balance, with an allowance recorded	12,911	9,677
Recorded investment, with no related allowance recorded	9,695	15,689
Recorded investment, with an allowance recorded	12,857	9,639
Allowance for loan losses allocated, with an allowance recorded	1,486	1,276
Construction
Impaired loans
Unpaid principal balance, with no related allowance recorded		279
Recorded investment, with no related allowance recorded		273
Commercial Sports
Impaired loans
Unpaid principal balance, with no related allowance recorded	3,850	3,888
Commercial Other
Impaired loans
Unpaid principal balance, with an allowance recorded	162	69
Recorded investment, with an allowance recorded	162	69
Allowance for loan losses allocated, with an allowance recorded	$ 16	$ 69

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Regulatory Capital (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2012	Oct. 30, 2013 Subsequent event
Regulatory Capital
Tangible capital to adjusted total assets	$ 33,670		$ 32,936
Tier 1(Core) capital to adjusted total assets	33,670		32,936
Tier 1(Core) capital to risk weighted assets	33,670		32,936
Total capital to risk weighted assets	36,608		36,183
Tangible capital to adjusted total assets, ratio (as a percent)	9.75%		8.82%
Tier 1(Core) capital to adjusted total assets, ratio (as a percent)	9.75%	9.48%	8.82%
Tier 1(Core) capital to risk weighted assets, ratio (as a percent)	14.79%	14.98%	13.12%
Total capital to risk weighted assets, ratio (as a percent)	16.08%	16.27%	14.41%
Tangible capital required for capital adequacy purposes	5,182		5,603
Tier 1(Core) capital to adjusted total assets required for capital adequacy purposes	13,819		14,940
Total capital to risk weighted assets required for capital adequacy purposes	18,208		20,090
Tangible capital required for capital adequacy purposes, ratio (as a percent)	1.50%		1.50%
Tier 1(Core) capital to adjusted total assets required for capital adequacy purposes, ratio (as a percent)	4.00%		4.00%
Total capital to risk weighted assets required for capital adequacy purposes, ratio (as a percent)	8.00%		8.00%
Tier 1(Core) capital to adjusted total assets required under cease and desist order	27,637		29,881
Total capital to risk weighted assets required under cease and desist order	$ 27,312		$ 30,135
Tier 1(Core) capital to adjusted total assets required under cease and desist order, ratio (as a percent)	8.00%		8.00%
Total Risk-Based Capital to Risk-Weighted Assets, ratio per cease and desist orders (as a percent)	12.00%		12.00%
Regulatory Capital
Tier 1 (Core) capital to adjusted total assets required under consent order, ratio (as a percent)				9.00%
Total Risk-Based Capital to Risk-Weighted Assets, ratio per consent order (as a percent)				13.00%

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Securities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Securities
Amortized Cost	$ 9,652	$ 12,660
Gross Unrealized Gains	496	718
Fair Value	10,148	13,378
Residential mortgage-backed
Securities
Amortized Cost	9,652	12,660
Gross Unrealized Gains	496	718
Fair Value	$ 10,148	$ 13,378

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Basis of Financial Statement Presentation

9 Months Ended

Sep. 30, 2013

Basis of Financial Statement Presentation

Basis of Financial Statement Presentation

NOTE (1) – Basis of Financial Statement Presentation

The accompanying unaudited consolidated financial statements include Broadway Financial Corporation (the “Company”) and its wholly owned subsidiary, Broadway Federal Bank, f.s.b. (the “Bank”).  Also included in the unaudited consolidated financial statements is Broadway Service Corporation, a wholly owned subsidiary of the Bank.  All significant intercompany balances and transactions have been eliminated in consolidation.

The unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions for quarterly reports on Form 10-Q.  These unaudited consolidated financial statements do not include all disclosures associated with the Company’s consolidated annual financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2012 and, accordingly, should be read in conjunction with such audited consolidated financial statements.  In the opinion of management, all adjustments (all of which are normal and recurring in nature) considered necessary for a fair presentation have been included.  Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

Some items in the consolidated financial statements for the prior period were reclassified to conform to the current presentation.  Reclassifications had no effect on prior period consolidated net earnings or stockholders’ equity.

Recent Accounting Pronouncements

FASB ASU No. 2013-11, “Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists.” The provisions of ASU No. 2013-11 require an entity to present an unrecognized tax benefit, or portion thereof, in the statement of financial position as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have a material impact on the Company’s consolidated financial statements.

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Earnings (Loss) Per Share of Common Stock

9 Months Ended

Sep. 30, 2013

Earnings (Loss) Per Share of Common Stock

Earnings (Loss) Per Share of Common Stock

NOTE (3) – Earnings (Loss) Per Share of Common Stock

Basic earnings (loss) per share of common stock is computed by dividing income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding for the period.  Diluted earnings (loss) per share of common stock is computed by dividing income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding for the period, increased for the dilutive effect of common stock equivalents, except for the Common Stock Equivalents (defined in Note 2) and Series G Non-Voting Preferred Stock, which are both described as participating securities in the table below.  The participating securities are entitled to share in common stock dividends on an as-converted basis.

The following table shows how the Company computed basic and diluted earnings (loss) per share of common stock for the three and nine months ended September 30, 2013 and 2012:

	For the three months ended September 30,						For the nine months ended September 30,
	2013			2012			2013			2012
	(Dollars in thousands, except per share)
Basic
Net income (loss)	$	584		$	(613	)	$	(260	)	$	1,238
Less: Preferred stock dividends and accretion	(127		)	(287		)	(779		)	(858		)
Less: Net income (loss) attributable to participating securities	(283		)	-			465			-
Income (loss) available to common stockholders	$	174		$	(900	)	$	(574	)	$	380
Weighted average common shares outstanding	3,755,695			1,858,697			2,536,913			1,782,887
Earnings (loss) per common share - basic	$	0.05		$	(0.48	)	$	(0.23	)	$	0.21
Diluted
Net income (loss)	$	584		$	(613	)	$	(260	)	$	1,238
Less: Preferred stock dividends and accretion	(127		)	(287		)	(779		)	(858		)
Less: Net income (loss) attributable to participating securities	(283		)	-			465			-
Income (loss) available to common stockholders	$	174		$	(900	)	$	(574	)	$	380
Weighted average common shares outstanding	3,755,695			1,858,697			2,536,913			1,782,887
Add: dilutive effects of assumed exercises of stock options	-			-			-			-
Weighted average common shares - fully diluted	3,755,695			1,858,697			2,536,913			1,782,887
Earnings (loss) per common share - diluted	$	0.05		$	(0.48	)	$	(0.23	)	$	0.21

Stock options for 148,750 shares of common stock for the three and nine months ended September 30, 2013 and 227,075 shares of common stock for the three and nine months ended September 30, 2012 were not considered in computing diluted loss per common share because they were anti-dilutive.

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Loans Receivable Held for Investment (Loans receivable held for investment)

9 Months Ended

Sep. 30, 2013

Loans receivable held for investment

Loans receivable held for investment

Loans Receivable

NOTE (6) – Loans Receivable Held for Investment

Loans at September 30, 2013 and December 31, 2012 were as follows:

	September 30, 2013			December 31, 2012
	(In thousands)
Real estate:
One-to-four units	$	50,296		$	57,733
Five or more units	104,301			83,350
Commercial real estate	32,944			41,124
Church	70,720			76,254
Construction	434			735
Commercial:
Sports	1,423			1,711
Other	670			2,184
Consumer:
Other	36			35
Total gross loans receivable	260,824			263,126
Loans in process	(25		)	(74		)
Net deferred loan costs	784			557
Unamortized premium (discounts)	260			(17		)
Allowance for loan losses	(10,339		)	(11,869		)
Loans receivable, net	$	251,504		$	251,723

The following tables present the activity in the allowance for loan losses by portfolio segment for the three and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30, 2013
	One-to- four units			Five or more units			Commercial real estate			Church			Construction			Commercial			Consumer			Total
	(In thousands)
Beginning balance	$	2,445		$	1,169		$	1,674		$	5,060		$	8		$	213		$	10		$	10,579
Provision for loan losses	(315		)	351			72			523			(1		)	(213		)	(3		)	414
Recoveries	-			-			16			5			-			59			-			80
Loans charged off	(51		)	(3		)	(190		)	(490		)	-			-			-			(734		)
Ending balance	$	2,079		$	1,517		$	1,572		$	5,098		$	7		$	59		$	7		$	10,339
	Nine Months Ended September 30, 2013
	One-to- four units			Five or more units			Commercial real estate			Church			Construction			Commercial			Consumer			Total
	(In thousands)
Beginning balance	$	2,060		$	2,122		$	2,685		$	4,818		$	8		$	167		$	9		$	11,869
Provision for loan losses	(150		)	56			(96		)	929			(1		)	(322		)	(2		)	414
Recoveries	259			-			117			18			-			214			-			608
Loans charged off	(90		)	(661		)	(1,134		)	(667		)	-			-			-			(2,552		)
Ending balance	$	2,079		$	1,517		$	1,572		$	5,098		$	7		$	59		$	7		$	10,339

	Three Months Ended September 30, 2012
	One-to- four units			Five or more units			Commercial real estate			Church			Construction			Commercial			Consumer			Total
	(In thousands)
Beginning balance	$	4,701		$	2,897		$	2,640		$	7,223		$	106		$	270		$	19		$	17,856
Provision for loan losses	453			(326		)	135			3			(1		)	(126		)	(9		)	129
Recoveries	-			1			15			3			-			97			3			119
Loans charged off	(539		)	(14		)	(346		)	(221		)	-			-			-			(1,120		)
Ending balance	$	4,615		$	2,558		$	2,444		$	7,008		$	105		$	241		$	13		$	16,984
	Nine Months Ended September 30, 2012
	One-to- four units			Five or more units			Commercial real estate			Church			Construction			Commercial			Consumer			Total
	(In thousands)
Beginning balance	$	4,855		$	2,972		$	3,108		$	5,742		$	249		$	316		$	57		$	17,299
Provision for loan losses	654			(401		)	(305		)	1,864			(144		)	(427		)	(51		)	1,190
Recoveries	-			1			45			10			-			352			7			415
Loans charged off	(894		)	(14		)	(404		)	(608		)	-			-			-			(1,920		)
Ending balance	$	4,615		$	2,558		$	2,444		$	7,008		$	105		$	241		$	13		$	16,984

The following tables present the balance in the allowance for loan losses and the recorded investment in loans by portfolio segment and based on impairment method as of September 30, 2013 and December 31, 2012:

	September 30, 2013
	One-to-four units		Five or more units		Commercial real estate		Church		Construction		Commercial		Consumer		Total
	(In thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	508	$	147	$	293	$	1,486	$	-	$	16	$	-	$	2,450
Collectively evaluated for impairment	1,571		1,370		1,279		3,612		7		43		7		7,889
Total ending allowance balance	$	2,079	$	1,517	$	1,572	$	5,098	$	7	$	59	$	7	$	10,339
Loans:
Loans individually evaluated for impairment	$	3,674	$	4,226	$	7,936	$	22,552	$	-	$	162	$	-	$	38,550
Loans collectively evaluated for impairment	46,622		100,075		25,008		48,168		434		1,931		36		222,274
Total ending loans balance	$	50,296	$	104,301	$	32,944	$	70,720	$	434	$	2,093	$	36	$	260,824

	December 31, 2012
	One-to-four units		Five or more units		Commercial real estate		Church		Construction		Commercial		Consumer		Total
	(In thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	719	$	125	$	543	$	1,276	$	-	$	69	$	-	$	2,732
Collectively evaluated for impairment	1,341		1,997		2,142		3,542		8		98		9		9,137
Total ending allowance balance	$	2,060	$	2,122	$	2,685	$	4,818	$	8	$	167	$	9	$	11,869
Loans:
Loans individually evaluated for impairment	$	4,576	$	3,766	$	10,364	$	25,328	$	273	$	69	$	-	$	44,376
Loans collectively evaluated for impairment	53,157		79,584		30,760		50,926		462		3,826		35		218,750
Total ending loans balance	$	57,733	$	83,350	$	41,124	$	76,254	$	735	$	3,895	$	35	$	263,126

The following table presents information related to loans individually evaluated for impairment by type of loans as of September 30, 2013 and December 31, 2012:

	September 30, 2013						December 31, 2012
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(In thousands)
With no related allowance recorded:
One-to-four units	$	2,348	$	1,694	$	-	$	1,986	$	1,484	$	-
Five or more units	2,703		2,647		-		2,038		1,819		-
Commercial real estate	4,869		1,451		-		10,184		6,423		-
Church	12,938		9,695		-		18,664		15,689		-
Construction	-		-		-		279		273		-
Commercial:
Sports	3,850		-		-		3,888		-		-
With an allowance recorded:
One-to-four units	1,980		1,980		508		3,092		3,092		719
Five or more units	1,586		1,579		147		1,947		1,947		125
Commercial real estate	6,491		6,485		293		3,941		3,941		543
Church	12,911		12,857		1,486		9,677		9,639		1,276
Commercial:
Other	162		162		16		69		69		69
Total	$	49,838	$	38,550	$	2,450	$	55,765	$	44,376	$	2,732

The recorded investment in loans excludes accrued interest receivable and loan origination fees, net due to immateriality.  For purposes of this disclosure, the unpaid principal balance is not reduced for net charge-offs.

The following tables present the monthly average of loans individually evaluated for impairment by type of loans and the related interest income for the three and nine months ended September 30, 2013 and 2012.

	Three Months Ended September 30, 2013				Nine Months Ended September 30, 2013
	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
	(In thousands)
One-to-four units	$	3,699	$	30	$	3,822	$	91
Five or more units	3,347		15		3,215		55
Commercial real estate	6,986		182		7,778		405
Church	22,472		131		23,027		407
Construction	-		-		81		5
Commercial:
Other	165		2		156		8
Total	$	36,669	$	360	$	38,079	$	971

	Three Months Ended September 30, 2012				Nine Months Ended September 30, 2012
	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
	(In thousands)
One-to-four units	$	14,143	$	120	$	13,844	$	354
Five or more units	2,266		10		3,047		50
Commercial real estate	8,251		115		7,847		260
Church	31,094		237		31,709		834
Construction	288		3		294		12
Commercial:
Other	70		2		70		4
Total	$	56,112	$	487	$	56,811	$	1,514

Cash-basis interest income recognized represents cash received for interest payments on accruing impaired loans.  Interest income that would have been recognized for the nine months ended September 30, 2013 and 2012 had loans performed in accordance with their original terms were $2.5 million and $3.4 million.

The following table presents the recorded investment in non-accrual loans by type of loans as of September 30, 2013 and December 31, 2012:

	September 30, 2013		December 31, 2012
	(In thousands)
Loans receivable held for sale:
One-to-four units	$	-	$	6,656
Five or more units	-		1,956
Church	785		1,556
Loans receivable held for investment:
One-to-four units	1,694		1,489
Five or more units	3,041		2,312
Commercial real estate	1,451		7,090
Church	13,002		15,689
Construction	-		273
Commercial:
Other	162		69
Total non-accrual loans	$	20,135	$	37,090

There were no loans 90 days or more delinquent that were accruing interest as of September 30, 2013 or December 31, 2012.

The following tables present the aging of the recorded investment in past due loans, including loans receivable held for sale, as of September 30, 2013 and December 31, 2012 by type of loans:

	September 30, 2013
	30-59DaysPast Due		60-89DaysPast Due		Greater than90 DaysPast Due		TotalPast Due		Total Loans Not Past Due
	(In thousands)
Loans receivable held for sale:
Church	$	-	$	-	$	785	$	785	$	300
Loans receivable held for investment:
One-to-four units	876		-		1,694		2,570		47,726
Five or more units	-		-		3,041		3,041		101,260
Commercial real estate	-		-		1,451		1,451		31,493
Church	419		-		13,002		13,421		57,299
Construction	-		-		-		-		434
Commercial:
Sports	-		-		-		-		1,423
Other	-		20		162		182		488
Consumer:
Other	-		-		-		-		36
Total	$	1,295	$	20	$	20,135	$	21,450	$	240,459

	December 31, 2012
	30-59DaysPast Due		60-89DaysPast Due		Greater than90 DaysPast Due		TotalPast Due		Total Loans Not Past Due
	(In thousands)
Loans receivable held for sale:
One-to-four units	$	-	$	871	$	6,656	$	7,527	$	389
Five or more units	-		-		1,956		1,956		3,839
Commercial real estate	-		-		-		-		1,358
Church	-		-		1,556		1,556		2,744
Loans receivable held for investment:
One-to-four units	1,077		-		1,489		2,566		55,167
Five or more units	587		554		2,312		3,453		79,897
Commercial real estate	-		-		7,090		7,090		34,034
Church	1,617		-		15,689		17,306		58,948
Construction	-		-		273		273		462
Commercial:
Sports	-		-		-		-		1,711
Other	-		-		69		69		2,115
Consumer:
Other	-		-		-		-		35
Total	$	3,281	$	1,425	$	37,090	$	41,796	$	240,699

Troubled Debt Restructurings

During the nine months ended September 30, 2013, the terms of certain loans were modified as troubled debt restructurings (“TDRs”).  The modification of the terms of such loans included payments of delinquent property taxes, which the borrower would be required to repay over a period greater than six months.

At September 30, 2013, loans classified as TDRs totaled $32.2 million, of which $13.0 million were included in non-accrual loans and $19.2 million were on accrual status.  At December 31, 2012, loans classified as TDRs totaled $41.1 million, of which $22.8 million were included in non-accrual loans and $18.3 million were on accrual status.  The Company has allocated $2.1 million and $2.5 million of specific reserves for accruing TDRs as of September 30, 2013 and December 31, 2012.  TDRs on accrual status are comprised of loans that were accruing at the time of restructuring or loans that have complied with the terms of their restructured agreements for a satisfactory period of time, and for which the Bank anticipates full repayment of both principal and interest.  TDRs that are on non-accrual status can be returned to accrual status after a period of sustained performance, generally determined to be six months of timely payments as modified.  As of September 30, 2013 and December 31, 2012, the Company has no commitment to lend additional amounts to customers with outstanding loans that are classified as TDRs.

The following tables present loans by type modified as troubled debt restructurings during the three and nine months ended September 30, 2013 and 2012:

	Three Months Ended September 30, 2013					Nine Months Ended September 30, 2013
	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(Dollars in thousands)
One-to-four units	-	$	-	$	-	5	$	739	$	789
Commercial real estate	-	-		-		1	1,456		1,497
Total	-	$	-	$	-	6	$	2,195	$	2,286

	Three Months Ended September 30, 2012					Nine Months Ended September 30, 2012
	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(Dollars in thousands)
One-to-four units	-	$	-	$	-	1	$	36	$	36
Commercial real estate	-	-		-		2	734		740
Church	1	503		503		9	3,902		3,907
Total	1	$	503	$	503	12	$	4,672	$	4,683

The troubled debt restructurings described above increased the allowance for loan losses by $0 thousand and $57 thousand for the three and nine months ended September 30, 2013 and by $0 thousand and $228 thousand for the same periods in 2012.  These TDRs resulted in charge-offs of $23 thousand during the nine months ended September 30, 2013, compared to $100 thousand for the same period in 2012.

At September 30, 2013, there were no loans modified as troubled debt restructurings within the previous 12 months for which there was a payment default.  A loan is considered to be in payment default once it is 90 days contractually past due under the modified terms.

All loan modifications during the nine months ended September 30, 2013 were considered troubled debt restructurings.  The terms of certain other loans were modified during the nine months ended September 30, 2012 that did not meet the definition of a troubled debt restructuring.  These loans had a total recorded investment of $2.2 million as of September 30, 2012.  The modification of these loans involved either a modification of the terms of a loan to borrowers who were not experiencing financial difficulties or a delay in a payment that was considered to be insignificant.

In order to determine whether a borrower is experiencing financial difficulty, an evaluation is performed to determine the likelihood that the borrower will be in payment default on any of its debt in the foreseeable future without the modification.  This evaluation is performed under the Company’s internal underwriting policy.

Credit Quality Indicators

The Company categorizes loans into risk categories based on relevant information about the ability of borrowers to service their debt such as:  current financial information, historical payment experience, credit documentation, public information, and current economic trends, among other factors.  For one-to-four family residential, consumer and other smaller balance homogenous loans, a credit grade is established at inception, and generally only adjusted based on performance.  Information about payment status is disclosed elsewhere.  The Company analyzes all other loans individually by classifying the loans as to credit risk. This analysis is performed at least on a quarterly basis.  The Company uses the following definitions for risk ratings:

· Special Mention.  Loans classified as special mention have a potential weakness that deserves management’s close attention. If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the loan or of the institution’s credit position at some future date.

· Substandard.  Loans classified as substandard are inadequately protected by the current net worth and paying capacity of the obligor or of the collateral pledged, if any. Loans so classified have a well-defined weakness or weaknesses that jeopardize the liquidation of the debt. They are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

· Doubtful.  Loans classified as doubtful have all the weaknesses inherent in those classified as substandard, with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions, and values, highly questionable and improbable.

· Loss.  Loans classified as loss are considered uncollectible and of such little value that to continue to carry the loan as an active asset is no longer warranted.

Loans not meeting the criteria above that are analyzed individually as part of the above described process are considered to be pass rated loans.  Based on the most recent analysis performed, the risk category of loans by type of loans as of September 30, 2013 and December 31, 2012 is as follows:

	September 30, 2013
	Pass		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
One-to-four units	$	45,048	$	3,554	$	1,694	$	-	$	-
Five or more units	95,955		2,742		5,604		-		-
Commercial real estate	23,219		1,632		8,093		-		-
Church	35,389		16,898		18,433		-		-
Construction	434		-		-		-		-
Commercial:
Sports	-		1,423		-		-		-
Other	488		20		162		-		-
Consumer:
Other	36		-		-		-		-
Total	$	200,569	$	26,269	$	33,986	$	-	$	-

	December 31, 2012
	Pass		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
One-to-four units	$	55,613	$	631	$	1,489	$	-	$	-
Five or more units	73,673		5,250		4,427		-		-
Commercial real estate	25,605		2,541		12,921		57		-
Church	33,532		19,502		23,220		-		-
Construction	462		-		273		-		-
Commercial:
Sports	-		1,711		-		-		-
Other	1,877		141		166		-		-
Consumer:
Other	35		-		-		-		-
Total	$	190,797	$	29,776	$	42,496	$	57	$	-

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Securities

9 Months Ended

Sep. 30, 2013

Securities

Securities

NOTE (4) – Securities

The following table summarizes the amortized cost and fair value of the available-for-sale investment securities portfolios at September 30, 2013 and December 31, 2012 and the corresponding amounts of unrealized gains which are recognized in accumulated other comprehensive income (loss):

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
September 30, 2013:
Residential mortgage-backed	$	9,652	$	496	$	-	$	10,148
Total available-for-sale securities	$	9,652	$	496	$	-	$	10,148
December 31, 2012:
Residential mortgage-backed	$	12,660	$	718	$	-	$	13,378
Total available-for-sale securities	$	12,660	$	718	$	-	$	13,378

There were no securities with unrealized losses at September 30, 2013 and December 31, 2012.  At September 30, 2013, the Bank’s investment portfolio consisted of residential mortgage-backed securities with an estimated remaining life of 5.4 years.  Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties.

At September 30, 2013 and December 31, 2012, securities pledged to secure public deposits and FHLB advances had a carrying amount of $10.1 million and $1.5 million, respectively.  At September 30, 2013 and December 31, 2012, there were no holdings of securities of any one issuer, other than the U.S. Government and its agencies, in an amount greater than 10% of stockholders’ equity.  There were no sales of securities during the nine months ended September 30, 2013.  During the nine months ended September 30, 2012, $1.0 million of U.S federal agency bonds were sold and the Company recognized a gain of $50 thousand.

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Fair Value (Details 4) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Financial Assets:
Securities available-for-sale	$ 10,148	$ 13,378
Level 1
Financial Assets:
Cash and cash equivalents	60,224	64,360
Level 2
Financial Assets:
Securities available-for-sale	10,148	13,378
Accrued interest receivable	31	42
Financial Liabilities:
Deposits	(211,263)	(253,155)
Federal Home Loan Bank advances	(91,145)	(84,769)
Accrued interest payable	(65)	(87)
Advance payments by borrowers for taxes and insurance	(1,034)	(711)
Level 3
Financial Assets:
Loans receivable held for sale	1,085	19,051
Loans receivable held for investment	258,332	252,043
Accrued interest receivable	1,085	1,208
Financial Liabilities:
Junior subordinated debentures	(5,510)	(4,852)
Other borrowings	(1,398)	(4,205)
Accrued interest payable	(559)	(1,527)
Total
Financial Assets:
Cash and cash equivalents	60,224	64,360
Securities available-for-sale	10,148	13,378
Loans receivable held for sale	1,085	19,051
Loans receivable held for investment	258,332	252,043
Accrued interest receivable	1,116	1,250
Financial Liabilities:
Deposits	(211,263)	(253,155)
Federal Home Loan Bank advances	(91,145)	(84,769)
Junior subordinated debentures	(5,510)	(4,852)
Other borrowings	(1,398)	(4,205)
Accrued interest payable	(624)	(1,614)
Advance payments by borrowers for taxes and insurance	(1,034)	(711)
Carrying Value
Financial Assets:
Cash and cash equivalents	60,224	64,360
Securities available-for-sale	10,148	13,378
Loans receivable held for sale	1,085	19,051
Loans receivable held for investment	251,504	251,723
Federal Home Loan Bank stock	4,113	3,901
Accrued interest receivable	1,116	1,250
Financial Liabilities:
Deposits	(218,569)	(257,071)
Federal Home Loan Bank advances	(87,500)	(79,500)
Junior subordinated debentures	(6,000)	(6,000)
Other borrowings	(2,960)	(5,000)
Accrued interest payable	(674)	(1,941)
Advance payments by borrowers for taxes and insurance	$ (1,034)	$ (711)

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Loans Receivable Held for Investment (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Loans receivable held for investment
Total gross loans receivable	$ 260,824	$ 263,126
Loans in process	(25)	(74)
Net deferred loan costs	784	557
Unamortized premium (discounts)	260	(17)
Allowance for loan losses	(10,339)	(11,869)
Loans receivable, net	251,504	251,723
One-to-four units
Loans receivable held for investment
Total gross loans receivable	50,296	57,733
Five or more units
Loans receivable held for investment
Total gross loans receivable	104,301	83,350
Commercial real estate
Loans receivable held for investment
Total gross loans receivable	32,944	41,124
Church
Loans receivable held for investment
Total gross loans receivable	70,720	76,254
Construction
Loans receivable held for investment
Total gross loans receivable	434	735
Commercial Sports
Loans receivable held for investment
Total gross loans receivable	1,423	1,711
Commercial Other
Loans receivable held for investment
Total gross loans receivable	670	2,184
Consumer Other
Loans receivable held for investment
Total gross loans receivable	$ 36	$ 35

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Loans Receivable Held for Investment (Details 5) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Impaired loans
Average Recorded Investment	$ 36,669,000	$ 56,112,000	$ 38,079,000	$ 56,811,000
Cash Basis Interest Income Recognized	360,000	487,000	971,000	1,514,000
Interest income if impaired loans had performed according to terms			2,500,000	3,400,000
One-to-four units
Impaired loans
Average Recorded Investment	3,699,000	14,143,000	3,822,000	13,844,000
Cash Basis Interest Income Recognized	30,000	120,000	91,000	354,000
Five or more units
Impaired loans
Average Recorded Investment	3,347,000	2,266,000	3,215,000	3,047,000
Cash Basis Interest Income Recognized	15,000	10,000	55,000	50,000
Commercial real estate
Impaired loans
Average Recorded Investment	6,986,000	8,251,000	7,778,000	7,847,000
Cash Basis Interest Income Recognized	182,000	115,000	405,000	260,000
Church
Impaired loans
Average Recorded Investment	22,472,000	31,094,000	23,027,000	31,709,000
Cash Basis Interest Income Recognized	131,000	237,000	407,000	834,000
Construction
Impaired loans
Average Recorded Investment		288,000	81,000	294,000
Cash Basis Interest Income Recognized		3,000	5,000	12,000
Commercial Other
Impaired loans
Average Recorded Investment	165,000	70,000	156,000	70,000
Cash Basis Interest Income Recognized	$ 2,000	$ 2,000	$ 8,000	$ 4,000

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Junior Subordinated Debentures and Other Borrowings (Details) (USD $)	3 Months Ended	9 Months Ended		9 Months Ended		0 Months Ended		3 Months Ended	0 Months Ended
	Sep. 30, 2013	Sep. 30, 2013	Dec. 31, 2012	Sep. 30, 2013 Floating Rate Junior Subordinated Debentures	Mar. 17, 2004 Floating Rate Junior Subordinated Debentures	Feb. 28, 2010 Line of Credit	Aug. 22, 2013 Line of Credit Recapitalization of the Company payment	Sep. 30, 2013 Line of Credit Recapitalization of the Company	Aug. 22, 2013 Line of Credit Recapitalization of the Company Series F non-cumulative preferred stock
Junior subordinated debentures and other borrowings
Face amount of debt issued	$ 6,000,000	$ 6,000,000	$ 6,000,000		$ 6,000,000
Line of credit outstanding	5,000,000	5,000,000				5,000,000	2,400,000
Line of credit borrowing capacity						5,000,000
Accrued interest	674,000	674,000	1,941,000	609,000
Number of shares issued in the Debt Exchange									2,575
Value of shares issued in the Debt Exchange									2,600,000
Principal amount of debt converted									2,600,000
Accrued interest forgiven							1,800,000
Number of quarterly payments of interest only, beginning three months following the closing of the recapitalization							6
Period following closing of recapitalization for commencement of quarterly interest only payments							3 months
Number of fully amortizing monthly payments of principal and interest, beginning 19 months following the closing of the recapitalization							48
Period following closing of recapitalization for commencement of fully amortizing equal monthly payments of principal and interest							19 months
Debt instrument interest rate description				3-month LIBOR		Prime Rate	Prime Rate
Basis spread (as a percent)				2.54%		1.00%	2.00%
Effective interest rate on debentures (as a percent)				2.79%
Floor rate (as a percent)						6.00%	6.00%
Default rate margin forgiven (as a percent)							5.00%
Percentage of line of credit secured by investment in bank							100.00%
Gain on restructuring of debt	1,221,000	1,221,000						1,200,000
Increase in principal balance on restructuring of debt								$ 535,000

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Consolidated Statements of Financial Condition (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Allowance for loan losses (in dollars)	$ 10,339	$ 11,869
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized	8,000,000	8,000,000
Common stock, shares issued	6,249,442	2,013,942
Common stock, shares outstanding	6,145,451	1,917,422
Accumulated other comprehensive income, tax (in dollars)	$ 400	$ 400
Treasury stock, shares	103,991	96,520
Preferred stock | Series D Fixed Rate Cumulative Perpetual Preferred Stock
Preferred stock, shares issued	0	9,000
Preferred stock, shares outstanding	0	9,000
Preferred stock | Series E Fixed Rate Cumulative Perpetual Preferred Stock
Preferred stock, shares issued	0	6,000
Preferred stock, shares outstanding	0	6,000
Preferred stock | Series A Preferred Stock
Preferred stock, shares issued	0	55,199
Preferred stock, shares outstanding	0	55,199
Preferred stock | Series B Perpetual Preferred Stock
Preferred stock, shares issued	0	100,000
Preferred stock, shares outstanding	0	100,000
Preferred stock | Series C Noncumulative Perpetual Convertible Preferred Stock
Preferred stock, shares issued	0	76,950
Preferred stock, shares outstanding	0	76,950
Preferred stock | Series F non-cumulative preferred stock
Preferred stock, shares authorized		0
Preferred stock, shares issued	13,997	0
Preferred stock, shares outstanding	13,299	0
Preferred stock | Series G non-cumulative preferred stock
Preferred stock, shares authorized		0
Preferred stock, shares issued	6,982	0
Preferred stock, shares outstanding	6,982	0

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Stock-based Compensation

9 Months Ended

Sep. 30, 2013

Stock-based Compensation

Stock-based Compensation

NOTE (9) –Stock-based Compensation

In 2008, we adopted the 2008 Long-Term Incentive Plan (“2008 LTIP”), which was approved by the stockholders.  The 2008 LTIP replaced the Company’s 1996 Long-Term Incentive Plan (“1996 LTIP”) and 1996 Stock Option Plan (“Stock Option Plan”), which have expired and are no longer effective except as to outstanding awards. The 2008 LTIP permits the grant of non-qualified and incentive stock options, stock appreciation rights, full value awards and cash incentive awards to the Company’s non-employee directors and certain officers and employees for up to 437,390 shares of common stock.  Since the end of the third quarter, the Company mailed a proxy statement to its stockholders that, among other matters, solicits stockholder approval to increase the number of shares reserved for issuance under the 2008 LTIP to 2 million shares of common stock.  Option awards are generally granted with an exercise price equal to the market price of the Company’s common stock at the date of grant; those option awards have vesting periods ranging from immediate vesting to 5 years and have 10-year contractual terms.  The Company has a policy of using shares held as treasury stock to satisfy share option exercises.  Currently, the Company has a sufficient number of treasury shares to satisfy expected share option exercises on outstanding options.

No options were granted during the nine months ended September 30, 2013 and 2012.  The Company recorded $33 thousand and $36 thousand of stock-based compensation expense, net of tax, during the first nine months of 2013 and 2012.

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Cash flows from operating activities:
Net income (loss)	$ (260)	$ 1,238
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Provision for loan losses	414	1,190
Provision for (recapture of) losses on loans receivable held for sale	153	(81)
Provision for losses on REO	544	739
Depreciation	161	249
Net amortization of deferred loan origination costs	149	115
Net amortization of premiums on mortgage-backed securities	28	44
Amortization of investment in affordable housing limited partnership	164	126
Stock-based compensation expense	33	60
Earnings on bank owned life insurance	(51)	(60)
Net (gains) losses on sales of REO	10	(288)
Net (gains) losses on sales of loans	(97)	280
Gain on sale of office properties and equipment		(2,523)
Gain on sale of securities		(50)
Gain on restructuring of debt	(1,221)
Net change in accrued interest receivable	134	303
Net change in deferred tax assets		850
Net change in other assets	955	(4)
Net change in accrued interest payable	489	535
Net change in other liabilities	(9)	638
Net cash provided by operating activities	1,596	3,361
Cash flows from investing activities:
Net change in loans receivable held for investment	(2,041)	35,096
Proceeds from sales of loans receivable held for sale	15,502	1,486
Principal repayments on loans receivable held for sale	1,520	366
Available-for-sale securities:
Sales		1,050
Maturities, prepayments and calls	2,980	3,229
Proceeds from sales of REO	3,583	7,750
Investment in affordable housing limited partnership		(350)
Net (purchase) redemption of Federal Home Loan Bank stock	(212)	188
Proceeds from sale of office properties and equipment		4,237
Additions to office properties and equipment	(232)	(9)
Net cash provided by investing activities	21,100	53,043
Cash flows from financing activities:
Net change in deposits	(38,502)	(31,878)
Proceeds from FHLB advances	36,000	17,000
Repayments on FHLB advances	(28,000)	(17,000)
Net proceeds from issuance of common stock	3,347
Reissuance of treasury stock		150
Net change in advance payments by borrowers for taxes and insurance	323	272
Net cash used in financing activities	(26,832)	(31,456)
Net change in cash and cash equivalents	(4,136)	24,948
Cash and cash equivalents at beginning of period	64,360	31,597
Cash and cash equivalents at end of period	60,224	56,545
Supplemental disclosures of cash flow information:
Cash paid for interest	3,314	4,464
Cash paid for income taxes	4
Supplemental disclosures of non-cash investing and financing activities:
Transfers of loans receivable held for investment to REO	1,832	3,461
Transfers of loans receivable held for sale to REO	753	333
Transfers of loans receivable from held for investment to held for sale	7,259	616
Transfers of loans receivable from held for sale to held for investment	7,394
Exchange of other borrowings to equity	2,575
Exchange of dividends payable to equity	2,646
Transfer of accrued interest to other borrowings	$ 535

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Consolidated Statements of Financial Condition (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Assets
Cash	$ 8,964	$ 13,420
Federal funds sold	51,260	50,940
Cash and cash equivalents	60,224	64,360
Securities available-for-sale, at fair value	10,148	13,378
Loans receivable held for sale, at lower of cost or fair value	1,085	19,051
Loans receivable held for investment, net of allowance of $10,339 and $11,869	251,504	251,723
Accrued interest receivable	1,116	1,250
Federal Home Loan Bank (FHLB) stock	4,113	3,901
Office properties and equipment, net	2,688	2,617
Real estate owned (REO)	6,611	8,163
Bank owned life insurance	2,739	2,688
Investment in affordable housing limited partnership	1,364	1,528
Other assets	4,079	5,034
Total assets	345,671	373,693
Liabilities:
Deposits	218,569	257,071
FHLB advances	87,500	79,500
Junior subordinated debentures	6,000	6,000
Other borrowings	2,960	5,000
Accrued interest payable	674	1,941
Dividends payable		2,104
Advance payments by borrowers for taxes and insurance	1,034	711
Other liabilities	3,350	3,359
Total liabilities	320,087	355,686
Stockholders' Equity:
Common stock, $.01 par value, authorized 8,000,000 shares at September 30, 2013 and December 31, 2012; issued 6,249,442 shares at September 30, 2013 and 2,013,942 shares at December 31, 2012; outstanding 6,145,451 shares at September 30, 2013 and 1,917,422 shares at December 31, 2012	62	20
Preferred stock discount		(598)
Additional paid-in capital	21,785	10,095
Accumulated deficit	(9,027)	(7,988)
Accumulated other comprehensive income, net of taxes of $400 at September 30, 2013 and December 31, 2012	96	318
Treasury stock-at cost, 103,991 shares at September 30, 2013 and 96,520 shares at December 31, 2012	(1,329)	(1,234)
Total stockholders' equity	25,584	18,007
Total liabilities and stockholders' equity	345,671	373,693
Preferred stock | Series D Fixed Rate Cumulative Perpetual Preferred Stock
Stockholders' Equity:
Preferred stock		8,963
Preferred stock | Series E Fixed Rate Cumulative Perpetual Preferred Stock
Stockholders' Equity:
Preferred stock		5,974
Preferred stock | Non-cumulative and non-voting stock
Stockholders' Equity:
Preferred stock		2,457
Preferred stock | Series F non-cumulative preferred stock
Stockholders' Equity:
Preferred stock	13,299
Preferred stock | Series G non-cumulative preferred stock
Stockholders' Equity:
Preferred stock	$ 698

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Loans Receivable Held for Investment (Details 2) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Allowance for loan losses
Beginning balance	$ 10,579	$ 17,856	$ 11,869	$ 17,299
Provision for loan losses	414	129	414	1,190
Recoveries	80	119	608	415
Loans charged off	(734)	(1,120)	(2,552)	(1,920)
Ending balance	10,339	16,984	10,339	16,984
One-to-four units
Allowance for loan losses
Beginning balance	2,445	4,701	2,060	4,855
Provision for loan losses	(315)	453	(150)	654
Recoveries			259
Loans charged off	(51)	(539)	(90)	(894)
Ending balance	2,079	4,615	2,079	4,615
Five or more units
Allowance for loan losses
Beginning balance	1,169	2,897	2,122	2,972
Provision for loan losses	351	(326)	56	(401)
Recoveries		1		1
Loans charged off	(3)	(14)	(661)	(14)
Ending balance	1,517	2,558	1,517	2,558
Commercial real estate
Allowance for loan losses
Beginning balance	1,674	2,640	2,685	3,108
Provision for loan losses	72	135	(96)	(305)
Recoveries	16	15	117	45
Loans charged off	(190)	(346)	(1,134)	(404)
Ending balance	1,572	2,444	1,572	2,444
Church
Allowance for loan losses
Beginning balance	5,060	7,223	4,818	5,742
Provision for loan losses	523	3	929	1,864
Recoveries	5	3	18	10
Loans charged off	(490)	(221)	(667)	(608)
Ending balance	5,098	7,008	5,098	7,008
Construction
Allowance for loan losses
Beginning balance	8	106	8	249
Provision for loan losses	(1)	(1)	(1)	(144)
Ending balance	7	105	7	105
Commercial
Allowance for loan losses
Beginning balance	213	270	167	316
Provision for loan losses	(213)	(126)	(322)	(427)
Recoveries	59	97	214	352
Ending balance	59	241	59	241
Consumer
Allowance for loan losses
Beginning balance	10	19	9	57
Provision for loan losses	(3)	(9)	(2)	(51)
Recoveries		3		7
Ending balance	$ 7	$ 13	$ 7	$ 13

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Going Concern, Regulatory Matters and Recapitalization of the Company (Details) (USD $)					9 Months Ended				0 Months Ended
	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2012	Oct. 30, 2013 Subsequent event director	Sep. 30, 2013 Minimum	Sep. 30, 2013 Maximum	Feb. 28, 2010 Line of Credit	Jun. 30, 2013 Recapitalization of the Company	Aug. 22, 2013 Recapitalization of the Company Common Stock	Aug. 22, 2013 Recapitalization of the Company Issuance of Common Stock Equivalents for five series of preferred stock Series F non-cumulative preferred stock item	Aug. 22, 2013 Recapitalization of the Company Issuance of Non-Voting Preferred Stock for Common Stock Equivalents Series F non-cumulative preferred stock	Aug. 22, 2013 Recapitalization of the Company Issuance of Non-Voting Preferred Stock for Common Stock Equivalents Series G non-cumulative preferred stock	Aug. 22, 2013 Recapitalization of the Company Line of Credit	Aug. 22, 2013 Recapitalization of the Company Line of Credit Series F non-cumulative preferred stock	Sep. 30, 2013 Stockholder approval of amendment to increase authorized shares of common stock Series F non-cumulative preferred stock
Going Concern, Regulatory Matters and Recapitalization of the Company
Period of raising additional capital for continuing payments of operating expenses					12 months	18 months
Aggregate principal amount of Floating Rate Junior Subordinated Debentures	$ 6,000,000		$ 6,000,000
Senior line of credit	5,000,000						5,000,000						2,400,000
Value of shares issued in the Debt Exchange														2,600,000
Principal amount of debt converted														2,600,000
Accrued interest forgiven													1,800,000
Tier 1 (Core) capital to adjusted total assets required under consent order, ratio (as a percent)				9.00%
Total Risk-Based Capital to Risk-Weighted Assets, ratio per consent order (as a percent)				13.00%
Tier 1 (Core) Capital to Adjusted Total Assets, ratio generally required under OCC regulations (as a percent)	4.00%		4.00%
Total Risk-Based Capital to Risk-Weighted Assets, ratio generally required under OCC regulations (as a percent)	8.00%		8.00%
Minimum number of independent directors required to be on Compliance Committee				3
Number of shares issued in exchange for preferred stock										8,776		6,982
Number of series of the entity's formerly outstanding preferred stock										5
Aggregate liquidation value or preference of converted stock										17,600,000
Value of shares issued in exchange for preferred stock										8,800,000
Number of shares issued in exchange for accumulated dividends										2,646
Value of shares issued in exchange for accumulated dividends										2,600,000
Number of shares issued in the Debt Exchange														2,575
Number of shares converted											698
Number of shares of Common Stock issued in private sales									4,235,500
Price per share (in dollars per share)									$ 1.00
Gross proceeds from issuance of Common Stock in private sales									4,200,000
Portion of common stock proceeds used for additional capital investment in the Bank and to repay inter-company payables due to the Bank									$ 1,200,000
Tier 1 Capital (as a percent)	9.75%	9.48%	8.82%					9.75%
Tier 1 Risk Based Capital (as a percent)	14.79%	14.98%	13.12%					15.51%
Total Risk Based Capital (as a percent)	16.08%	16.27%	14.41%					16.80%
Number of shares of common stock in which preferred stock will be automatically converted															1,000

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Income Taxes (Details) (USD $)	9 Months Ended
	Sep. 30, 2013	Dec. 31, 2012
Income Taxes
Prior period considered in determining tax asset valuation allowance	2 years
Deferred tax asset valuation allowance	$ 9,500,000	$ 9,000,000
Net deferred tax asset	$ 0	$ 0

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Fair Value (Details 2) (USD $) In Thousands, unless otherwise specified			3 Months Ended		9 Months Ended		3 Months Ended	9 Months Ended		3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2013 Level 3	Dec. 31, 2012 Level 3	Sep. 30, 2013 Non-recurring basis	Sep. 30, 2012 Non-recurring basis	Sep. 30, 2013 Non-recurring basis	Sep. 30, 2012 Non-recurring basis	Sep. 30, 2012 Non-recurring basis Non-performing loans receivable held-for-sale	Sep. 30, 2013 Non-recurring basis Non-performing loans receivable held-for-sale	Sep. 30, 2012 Non-recurring basis Non-performing loans receivable held-for-sale	Sep. 30, 2013 Non-recurring basis Impaired loans carried at fair value of collateral	Sep. 30, 2012 Non-recurring basis Impaired loans carried at fair value of collateral	Sep. 30, 2013 Non-recurring basis Impaired loans carried at fair value of collateral	Sep. 30, 2012 Non-recurring basis Impaired loans carried at fair value of collateral	Sep. 30, 2013 Non-recurring basis Real estate owned	Sep. 30, 2012 Non-recurring basis Real estate owned	Sep. 30, 2013 Non-recurring basis Real estate owned	Sep. 30, 2012 Non-recurring basis Real estate owned	Dec. 31, 2012 Non-recurring basis Level 3 One-to-four units Non-performing loans receivable held-for-sale	Sep. 30, 2013 Non-recurring basis Level 3 One-to-four units Impaired loans carried at fair value of collateral	Dec. 31, 2012 Non-recurring basis Level 3 One-to-four units Impaired loans carried at fair value of collateral	Dec. 31, 2012 Non-recurring basis Level 3 Five or more units Non-performing loans receivable held-for-sale	Sep. 30, 2013 Non-recurring basis Level 3 Five or more units Impaired loans carried at fair value of collateral	Dec. 31, 2012 Non-recurring basis Level 3 Five or more units Impaired loans carried at fair value of collateral	Sep. 30, 2013 Non-recurring basis Level 3 Commercial real estate Impaired loans carried at fair value of collateral	Dec. 31, 2012 Non-recurring basis Level 3 Commercial real estate Impaired loans carried at fair value of collateral	Sep. 30, 2013 Non-recurring basis Level 3 Commercial real estate Real estate owned	Dec. 31, 2012 Non-recurring basis Level 3 Commercial real estate Real estate owned	Sep. 30, 2013 Non-recurring basis Level 3 Church Non-performing loans receivable held-for-sale	Dec. 31, 2012 Non-recurring basis Level 3 Church Non-performing loans receivable held-for-sale	Sep. 30, 2013 Non-recurring basis Level 3 Church Impaired loans carried at fair value of collateral	Dec. 31, 2012 Non-recurring basis Level 3 Church Impaired loans carried at fair value of collateral	Sep. 30, 2013 Non-recurring basis Level 3 Church Real estate owned	Dec. 31, 2012 Non-recurring basis Level 3 Church Real estate owned
Fair Value
Loans receivable, fair value	$ 258,332	$ 252,043																$ 6,656	$ 1,494	$ 1,284	$ 1,956	$ 908	$ 1,679	$ 1,451	$ 3,385			$ 785	$ 1,556	$ 8,793	$ 6,649
Assets, fair value																										1,294	2,752					5,317	5,411
Gains (losses) recognized on assets measured at fair value			$ (992)	$ (1,392)	$ (2,086)	$ (2,433)	$ (296)	$ (471)	$ (109)	$ (671)	$ (669)	$ (1,071)	$ (1,585)	$ (321)	$ (427)	$ (544)	$ (739)

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Loans Receivable Held for Investment (Details 8) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012 loan	Sep. 30, 2013 loan	Sep. 30, 2012 loan	Dec. 31, 2012
Troubled debt restructuring
Loans classified as Troubled Debt Restructurings	$ 32,200,000		$ 32,200,000		$ 41,100,000
Specific reserves allocated to TDRs	2,100,000		2,100,000		2,500,000
Timely payment period for return to accrual status			6 months
Commitments to lend additional amounts to customers with TDRs	0		0		0
Number of Loans		1	6	12
Pre-Modification Outstanding Recorded Investment		503,000	2,195,000	4,672,000
Post- Modification Outstanding Recorded Investment		503,000	2,286,000	4,683,000
Increase in allowance for loan losses due to troubled debt restructurings	0	0	57,000	228,000
Troubled debt restructurings, charge-offs			23,000	100,000
Number of loans modified as TDRs in last 12 months, with payment default			0
Past due period for loan to be in payment default			90 days
Loan modifications other than TDRs		2,200,000		2,200,000
Minimum
Troubled debt restructuring
Period for repayment of delinquent property taxes for TDRs			6 months
Non-accrual status
Troubled debt restructuring
Loans classified as Troubled Debt Restructurings	13,000,000		13,000,000		22,800,000
Accrual status
Troubled debt restructuring
Loans classified as Troubled Debt Restructurings	19,200,000		19,200,000		18,300,000
One-to-four units
Troubled debt restructuring
Number of Loans			5	1
Pre-Modification Outstanding Recorded Investment			739,000	36,000
Post- Modification Outstanding Recorded Investment			789,000	36,000
Commercial real estate
Troubled debt restructuring
Number of Loans			1	2
Pre-Modification Outstanding Recorded Investment			1,456,000	734,000
Post- Modification Outstanding Recorded Investment			1,497,000	740,000
Church
Troubled debt restructuring
Number of Loans		1		9
Pre-Modification Outstanding Recorded Investment		503,000		3,902,000
Post- Modification Outstanding Recorded Investment		$ 503,000		$ 3,907,000

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Loans Receivable Held for Investment (Details 9) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Credit Quality Indicators
Loans receivable	$ 260,824	$ 263,126
One-to-four units
Credit Quality Indicators
Loans receivable	50,296	57,733
Five or more units
Credit Quality Indicators
Loans receivable	104,301	83,350
Commercial real estate
Credit Quality Indicators
Loans receivable	32,944	41,124
Church
Credit Quality Indicators
Loans receivable	70,720	76,254
Construction
Credit Quality Indicators
Loans receivable	434	735
Commercial Sports
Credit Quality Indicators
Loans receivable	1,423	1,711
Commercial Other
Credit Quality Indicators
Loans receivable	670	2,184
Consumer Other
Credit Quality Indicators
Loans receivable	36	35
Pass
Credit Quality Indicators
Loans receivable	200,569	190,797
Pass | One-to-four units
Credit Quality Indicators
Loans receivable	45,048	55,613
Pass | Five or more units
Credit Quality Indicators
Loans receivable	95,955	73,673
Pass | Commercial real estate
Credit Quality Indicators
Loans receivable	23,219	25,605
Pass | Church
Credit Quality Indicators
Loans receivable	35,389	33,532
Pass | Construction
Credit Quality Indicators
Loans receivable	434	462
Pass | Commercial Other
Credit Quality Indicators
Loans receivable	488	1,877
Pass | Consumer Other
Credit Quality Indicators
Loans receivable	36	35
Special Mention
Credit Quality Indicators
Loans receivable	26,269	29,776
Special Mention | One-to-four units
Credit Quality Indicators
Loans receivable	3,554	631
Special Mention | Five or more units
Credit Quality Indicators
Loans receivable	2,742	5,250
Special Mention | Commercial real estate
Credit Quality Indicators
Loans receivable	1,632	2,541
Special Mention | Church
Credit Quality Indicators
Loans receivable	16,898	19,502
Special Mention | Commercial Sports
Credit Quality Indicators
Loans receivable	1,423	1,711
Special Mention | Commercial Other
Credit Quality Indicators
Loans receivable	20	141
Substandard
Credit Quality Indicators
Loans receivable	33,986	42,496
Substandard | One-to-four units
Credit Quality Indicators
Loans receivable	1,694	1,489
Substandard | Five or more units
Credit Quality Indicators
Loans receivable	5,604	4,427
Substandard | Commercial real estate
Credit Quality Indicators
Loans receivable	8,093	12,921
Substandard | Church
Credit Quality Indicators
Loans receivable	18,433	23,220
Substandard | Construction
Credit Quality Indicators
Loans receivable		273
Substandard | Commercial Other
Credit Quality Indicators
Loans receivable	162	166
Doubtful
Credit Quality Indicators
Loans receivable		57
Doubtful | Commercial real estate
Credit Quality Indicators
Loans receivable		$ 57

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Fair Value

9 Months Ended

Sep. 30, 2013

Fair Value

Fair Value

NOTE (8) – Fair Value

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.  There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The Company used the following methods and significant assumptions to estimate fair value:

The fair values of securities available-for-sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique to value debt securities without relying exclusively on quoted prices for the specific securities, but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The fair value of non-performing loans receivable held-for-sale and impaired loans that are collateral dependent is generally based upon the fair value of the collateral which is obtained from recent real estate appraisals.  These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.  Non-performing loans held for sale and impaired loans are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Assets acquired through or instead of loan foreclosure are initially recorded at fair value less costs to sell when acquired, establishing a new cost basis.  These assets are subsequently accounted for at lower of cost or fair value less estimated costs to sell.  Fair value is commonly based on recent real estate appraisals which are updated every nine months.  These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.  Adjustments are routinely made in the appraisal process by the independent appraisers to adjust for differences between the comparable sales and income data available.  Such adjustments are usually significant and typically result in a Level 3 classification of the inputs for determining fair value.  Real estate owned properties are evaluated on a quarterly basis for additional impairment and adjusted accordingly.

Appraisals for collateral-dependent impaired loans, non-performing loans held for sale and real estate owned are performed by certified general appraisers (for commercial properties) or certified residential appraisers (for residential properties) whose qualifications and licenses have been reviewed and verified by the Company.  Once received, an independent third-party licensed appraiser reviews the appraisals for accuracy and reasonableness, reviewing the assumptions and approaches utilized in the appraisal as well as the overall resulting fair value in comparison with independent data sources such as recent market data or industry-wide statistics.

Assets Measured on a Recurring Basis

Assets measured at fair value on a recurring basis are summarized below:

	Fair Value Measurements at September 30, 2013 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
Assets:
Securities available-for-sale - residential mortgage-backed	$	-	$	10,148	$	-	$	10,148

	Fair Value Measurements at December 31, 2012 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
Assets:
Securities available-for-sale - residential mortgage-backed	$	-	$	13,378	$	-	$	13,378

There were no transfers between Level 1, Level 2, or Level 3 during the three and nine months ended September 30, 2013 and 2012.

Assets Measured on a Non-Recurring Basis

The following table provides information regarding the carrying values of our assets measured at fair value on a non-recurring basis at the dates indicated.  The fair value measurement for all of these assets falls within Level 3 of the fair value hierarchy.

	September 30, 2013		December 31, 2012
	(In thousands)
Assets:
Non-performing loans receivable held-for-sale:
One-to-four units	$	-	$	6,656
Five or more units	-		1,956
Church	785		1,556
Impaired loans carried at fair value of collateral:
One-to-four units	1,494		1,284
Five or more units	908		1,679
Commercial real estate	1,451		3,385
Church	8,793		6,649
Real estate owned:
Commercial real estate	1,294		2,752
Church	5,317		5,411

The following table provides information regarding gains (losses) recognized on assets measured at fair value on a non-recurring basis for the three and nine months ended September 30, 2013 and 2012.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(In thousands)
Non-performing loans receivable held-for-sale	$	-	$	(296)	$	(471)	$	(109)
Impaired loans carried at fair value of collateral	(671)		(669)		(1,071)		(1,585)
Real estate owned	(321)		(427)		(544)		(739)
Total	$	(992)	$	(1,392)	$	(2,086)	$	(2,433)

The following tables present quantitative information about level 3 fair value measurements for financial instruments measured at fair value on a non-recurring basis at September 30, 2013 and December 31, 2012:

	September 30, 2013
	Fair Value		Valuation  Technique(s)	Unobservable  Input(s)	Range
	(Dollars in thousands)
Non-performing loans held for sale – church	$	785	Sales comparison approach	Adjustment for differences between the comparable sales	1%
Impaired loans – one-to-four units	1,494		Sales comparison approach	Adjustment for differences between the comparable sales	-2% to 8%
Impaired loans – five or more units	908		Sales comparison approach	Adjustment for differences between the comparable sales	-10 to 0%
			Income approach	Capitalization rate	7.25% to 9%
Impaired loans – commercial real estate	1,451		Sales comparison approach	Adjustment for differences between the comparable sales	-2 to 0%
			Income approach	Capitalization rate	4.5% to 8.25%
Impaired loans – church	8,793		Sales comparison approach	Adjustment for differences between the comparable sales	-32 to 50%
			Income approach	Capitalization rate	6.75%
Real estate owned – commercial real estate	1,294		Sales comparison approach	Adjustment for differences between the comparable sales	-9% to 3%
			Income approach	Capitalization rate	10%
Real estate owned – church	5,317		Sales comparison approach	Adjustment for differences between the comparable sales	-24% to 11%
			Income approach	Capitalization rate	6.5% to 11.5%

	December 31, 2012
	Fair Value		Valuation  Technique(s)	Unobservable  Input(s)	Range
	(Dollars in thousands)
Nonperforming loans held for sale – one-to-four units	$	6,656	Sales comparison approach	Adjustment for differences between the comparable sales	-30% to 23%
Nonperforming loans held for sale – five or more units	1,956		Sales comparison approach	Adjustment for differences between the comparable sales	-13% to 17%
			Income approach	Capitalization rate	6% to 8.5%
Nonperforming loans held for sale – church	1,556		Sales comparison approach	Adjustment for differences between the comparable sales	-27% to 29%
Impaired loans – one-to-four units	1,284		Sales comparison approach	Adjustment for differences between the comparable sales	-5% to 18%
Impaired loans – five or more units	1,679		Sales comparison approach	Adjustment for differences between the comparable sales	-26% to 16%
			Income approach	Capitalization rate	6.5% to 9%
Impaired loans – commercial real estate	3,385		Sales comparison approach	Adjustment for differences between the comparable sales	-17% to -1%
			Income approach	Capitalization rate	7% to 9%
Impaired loans – church	6,649		Sales comparison approach	Adjustment for differences between the comparable sales	-45% to 8%
			Income approach	Capitalization rate	6.75% to 8%
Real estate owned – commercial real estate	2,752		Sales comparison approach	Adjustment for differences between the comparable sales	-67% to 1%
			Income approach	Capitalization rate	8% to 11%
Real estate owned – church	5,411		Sales comparison approach	Adjustment for differences between the comparable sales	-12% to 7%
			Income approach	Capitalization rate	11.5%

Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments, at September 30, 2013 and December 31, 2012 were as follows:

			Fair Value Measurements at September 30, 2013 Using
	Carrying Value		Level 1			Level 2			Level 3			Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	60,224	$	60,224		$	-		$		-	$	60,224
Securities available-for-sale	10,148		-			10,148			-			10,148
Loans receivable held for sale	1,085		-			-			1,085			1,085
Loans receivable held for investment	251,504		-			-			258,332			258,332
Federal Home Loan Bank stock	4,113		N/A			N/A			N/A			N/A
Accrued interest receivable	1,116		-			31			1,085			1,116
Financial Liabilities:
Deposits	$	(218,569)	$	-		$	(211,263)		$		-	$	(211,263)
Federal Home Loan Bank advances	(87,500)		-			(91,145)			-			(91,145)
Junior subordinated debentures	(6,000)		-			-			(5,510)			(5,510)
Other borrowings	(2,960)		-			-			(1,398)			(1,398)
Accrued interest payable	(674)		-			(65)			(559)			(624)
Advance payments by borrowers for taxes and insurance	(1,034)		-			(1,034)			-			(1,034)
			Fair Value Measurements at December 31, 2012 Using
	Carrying Value		Level 1			Level 2			Level 3			Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	64,360	$		64,360	$		-	$	-		$		64,360
Securities available-for-sale	13,378		-			13,378			-			13,378
Loans receivable held for sale	19,051		-			-			19,051			19,051
Loans receivable held for investment	251,723		-			-			252,043			252,043
Federal Home Loan Bank stock	3,901		N/A			N/A			N/A			N/A
Accrued interest receivable	1,250		-			42			1,208			1,250
Financial Liabilities:
Deposits	$	(257,071)	$		-	$		(253,155)	$	-		$		(253,155)
Federal Home Loan Bank advances	(79,500)		-			(84,769)			-			(84,769)
Junior subordinated debentures	(6,000)		-			-			(4,852)			(4,852)
Other borrowings	(5,000)		-			-			(4,205)			(4,205)
Accrued interest payable	(1,941)		-			(87)			(1,527)			(1,614)
Advance payments by borrowers for taxes and insurance	(711)		-			(711)			-			(711)

The methods and assumptions, not previously presented, used to estimate fair values are described as follows:

(a) Cash and Cash Equivalents

The carrying amounts of cash and cash equivalents approximate fair values and are classified as Level 1.

(b) Loans receivable held for sale

The fair value of loans held for sale is estimated based upon binding contracts and quotes from third party investors or appraisal reports adjusted by sales commission assumptions resulting in a Level 3 classification.

(c) Loans receivable held for investment

Fair values of loans, excluding loans held for sale, are estimated as follows:  For variable rate loans that reprice frequently and with no significant change in credit risk, fair values are based on carrying values resulting in a Level 3 classification.  Fair values for other loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality resulting in a Level 3 classification.  Impaired loans are valued at the lower of cost or fair value as described previously.  The methods utilized to estimate the fair value of loans do not necessarily represent an exit price.

(d) FHLB Stock

It is not practical to determine the fair value of FHLB stock due to restrictions placed on its transferability.

(e) Deposits and Advance Payments by Borrowers for Taxes and Insurance

The fair values disclosed for demand deposits (e.g., interest and non-interest checking, passbook savings, and certain types of money market accounts) are, by definition, equal to the amount payable on demand at the reporting date (i.e., their carrying amount) resulting in Level 2 classification.  Fair values for fixed rate certificates of deposit are estimated using discounted cash flow calculations that apply interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities on time deposits resulting in a Level 2 classification.

(f) Federal Home Loan Bank Advances

The fair values of the Federal Home Loan Bank advances are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 2 classification.

(g) Junior Subordinated Debentures and Other Borrowings

The fair values of the Company’s junior subordinated debentures and other borrowings are estimated using discounted cash flow analyses based on the current borrowing rates for similar types of borrowing arrangements resulting in a Level 3 classification.

(h) Accrued Interest Receivable

The carrying amounts of accrued interest receivable approximate their fair value and are classified the same as the related asset.

(i) Accrued Interest Payable

The carrying amounts of accrued interest on deposits and Federal Home Loan Bank advances approximate their fair value.  The carrying amounts of accrued interest on junior subordinated debentures and other borrowings are estimated by applying a discount similar to the related debt.  The fair values of accrued interest are classified the same as the related liability.

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Loans Receivable Held for Investment (Details 3) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Jun. 30, 2013	Dec. 31, 2012	Sep. 30, 2012	Jun. 30, 2012	Dec. 31, 2011
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$ 2,450		$ 2,732
Collectively evaluated for impairment	7,889		9,137
Total ending allowance balance	10,339	10,579	11,869	16,984	17,856	17,299
Loans:
Loans individually evaluated for impairment	38,550		44,376
Loans collectively evaluated for impairment	222,274		218,750
Total ending loans balance	260,824		263,126
One-to-four units
Ending allowance balance attributable to loans:
Individually evaluated for impairment	508		719
Collectively evaluated for impairment	1,571		1,341
Total ending allowance balance	2,079	2,445	2,060	4,615	4,701	4,855
Loans:
Loans individually evaluated for impairment	3,674		4,576
Loans collectively evaluated for impairment	46,622		53,157
Total ending loans balance	50,296		57,733
Five or more units
Ending allowance balance attributable to loans:
Individually evaluated for impairment	147		125
Collectively evaluated for impairment	1,370		1,997
Total ending allowance balance	1,517	1,169	2,122	2,558	2,897	2,972
Loans:
Loans individually evaluated for impairment	4,226		3,766
Loans collectively evaluated for impairment	100,075		79,584
Total ending loans balance	104,301		83,350
Commercial real estate
Ending allowance balance attributable to loans:
Individually evaluated for impairment	293		543
Collectively evaluated for impairment	1,279		2,142
Total ending allowance balance	1,572	1,674	2,685	2,444	2,640	3,108
Loans:
Loans individually evaluated for impairment	7,936		10,364
Loans collectively evaluated for impairment	25,008		30,760
Total ending loans balance	32,944		41,124
Church
Ending allowance balance attributable to loans:
Individually evaluated for impairment	1,486		1,276
Collectively evaluated for impairment	3,612		3,542
Total ending allowance balance	5,098	5,060	4,818	7,008	7,223	5,742
Loans:
Loans individually evaluated for impairment	22,552		25,328
Loans collectively evaluated for impairment	48,168		50,926
Total ending loans balance	70,720		76,254
Construction
Ending allowance balance attributable to loans:
Collectively evaluated for impairment	7		8
Total ending allowance balance	7	8	8	105	106	249
Loans:
Loans individually evaluated for impairment			273
Loans collectively evaluated for impairment	434		462
Total ending loans balance	434		735
Commercial
Ending allowance balance attributable to loans:
Individually evaluated for impairment	16		69
Collectively evaluated for impairment	43		98
Total ending allowance balance	59	213	167	241	270	316
Loans:
Loans individually evaluated for impairment	162		69
Loans collectively evaluated for impairment	1,931		3,826
Total ending loans balance	2,093		3,895
Consumer
Ending allowance balance attributable to loans:
Collectively evaluated for impairment	7		9
Total ending allowance balance	7	10	9	13	19	57
Loans:
Loans collectively evaluated for impairment	36		35
Total ending loans balance	$ 36		$ 35

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Stock-based Compensation (Details) (2008 LTIP, USD $) In Thousands, except Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Stock-based Compensation
Shares authorized to be granted under stock compensation plan	437,390
Stock Options
Stock-based Compensation
Stock options granted (in shares)	0	0
Contractual term of option awards	10 years
Stock based compensation expense, net of tax	$ 33	$ 36
Stock Options | Maximum
Stock-based Compensation
Vesting period of option awards	5 years
Subsequent event
Stock-based Compensation
Shares for which authorization to grant is pending stockholder approval	2,000,000

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Income Taxes

9 Months Ended

Sep. 30, 2013

Income Taxes

Income Taxes

NOTE (11) –Income Taxes

The Company and its subsidiaries are subject to U.S. federal and state income taxes.  Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities.  Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards.  Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.  The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized.  In assessing the realization of deferred tax assets, management evaluates both positive and negative evidence, including the existence of cumulative losses in the current year and the prior two years, the amount of taxes paid in available carry-back years, the forecasts of future income and tax planning strategies.  This analysis is updated quarterly.  Based on this analysis, the Company determined that a valuation allowance of $9.5 million was required as of September 30, 2013, resulting in $0 net deferred tax assets.  The Company had recorded a valuation allowance of $9.0 million and $0 net deferred tax assets as of December 31, 2012.

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Junior Subordinated Debentures and Other Borrowings

9 Months Ended

Sep. 30, 2013

Junior Subordinated Debentures and Other Borrowings

Junior Subordinated Debentures and Other Borrowings

NOTE (7) – Junior Subordinated Debentures and Other Borrowings

On March 17, 2004, the Company issued $6.0 million of Floating Rate Junior Subordinated Debentures in a private placement.  The Debentures mature on March 17, 2014 and interest is payable quarterly at a rate per annum equal to the 3-month LIBOR plus 2.54%.  The interest rate is determined as of each March 17, June 17, September 17, and December 17, and was 2.79% at September 30, 2013.  The Company stopped paying interest on the Debentures in September 2010 and the accrued interest on the Debentures was $609 thousand as of September 30, 2013.  Under the Order applicable to the Company discussed in Note 2, the Company is not permitted to make payments on its debt without prior notice to and receipt of written notice of non-objection from the FRB.  In addition, under the terms of the Debentures, the Company is not allowed to make payments on the Debentures if the Company is in default on any of its senior indebtedness, which term includes the senior line of credit described below.

On February 28, 2010, the Company borrowed an aggregate of $5.0 million under its $5.0 million line of credit with another financial institution, and invested all of the proceeds in the equity capital of the Bank.  Pursuant to a directive from the FRB and subsequently the Order applicable to the Company discussed in Note 2, the Company has not been permitted to make principal or interest payments on this senior debt since June 2010.  The line of credit matured at the end of July 2010, but was not repaid and remains in default.

As part of the recapitalization that closed in August 2013, the Company exchanged 2,575 shares of Common Stock Equivalents with an agreed upon value of $2.6 million for $2.6 million principal amount of this line of credit.  In addition, the lender forgave all of the accrued interest, totaling $1.8 million, on the entire amount of the line of credit as of the date of the exchange and modified the terms of the remaining principal amount of $2.4 million.  The modified terms for the remaining loan include, among others items, an extension of the maturity of the line of credit to February 22, 2019 and a repayment schedule that specifies six quarterly payments of interest only beginning three months following the closing of the recapitalization, followed by 48 fully amortizing equal monthly payments of principal and interest on the loan beginning 19 months after the closing of the recapitalization; provided, that each payment on the loan must receive prior approval from the FRB.  Failure to make such any payment due to an inability to obtain such approval despite the exercise by the Company of required efforts to obtain such approval will not constitute an event of default under the revised loan terms.  In addition the interest rate on the remaining loan has been increased to the Wall Street Journal Prime Rate plus 2%, with a floor (minimum) rate of 6%, from the original loan interest rate of the Wall Street Journal Prime Rate plus 1%, with a floor rate of 6%.  As part of the modification, the Default Rate Margin of 5% has been forgiven.  Borrowings under this line of credit continue to be secured by 100% of the Company’s investment in the Bank.

In accordance with Accounting Standards Codification (“ASC”) 470-60 - Troubled Debt Restructurings by Debtors, $1.2 million of the forgiven interest has been recorded as a gain on restructuring in the income statement for the third quarter, and the balance of the forgiven interest ($535 thousand) has been added to the principal balance of the line of credit that remains outstanding after consummation of the recapitalization.  Furthermore, any future payments made on the remaining loan amount pursuant to the modified terms shall be applied to the carrying amount of the loan payable, and no interest expense will be recorded on the modified loan between the date that it was restructured (i.e., the closing of the recapitalization) and the new maturity of the modified loan provided that the floating rate on the remaining modified loan does not exceed the floor of 6%.

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Going Concern, Regulatory Matters and Recapitalization of the Company

9 Months Ended

Sep. 30, 2013

Going Concern, Regulatory Matters and Recapitalization of the Company

Going Concern, Regulatory Matters and Recapitalization of the Company

NOTE (2) – Going Concern, Regulatory Matters and Recapitalization of the Company

Going Concern

The Company’s financial statements have been prepared assuming that the Company will continue as a going-concern, which contemplates continuity of operations, and realization of assets and liquidation of liabilities in the ordinary course of business.  The ability of the Company to continue as a going concern is dependent on many factors, including regulatory actions. The following discussion describes matters that raise substantial doubt about the Company’s ability to continue as a going concern, as well as management’s plans for responding to these matters.

Holding Company Liquidity

The Company has limited liquidity to pay operating expenses over an extended period of time and will need to raise additional capital within the next 12 to 18 months to continue paying operating expenses, including allocations of shared expenses from the Bank, on a timely basis.  Additionally, the Company stopped paying interest expense on its $6.0 million aggregate principal amount of Floating Rate Junior Subordinated Debentures (the “Debentures”) in September 2010 and does not have sufficient capital to repay the Debentures when they mature on March 17, 2014.  Also, the Company had to restructure its $5.0 million senior line of credit, payable to another financial institution (see Note 7).  This restructuring was completed as part of the Company’s recapitalization that closed on August 22, 2013.  Pursuant to that restructuring the Company exchanged $2.6 million of common stock equivalents for $2.6 million principal amount of the line of credit and the lender forgave all of the $1.8 million of accrued interest on the entire amount of the line of credit as of the closing of the recapitalization.  The Company must obtain approval from the Federal Reserve Bank of San Francisco (the “FRB”) before making principal or interest payments on the remaining $2.4 million principal amount of the modified senior loan.  The Company has received approval from the FRB to make the first payment of interest only due in November 2013 (see Note 7).

The Company’s principal sources of funds have historically been dividends from the Bank and, to a lesser extent, additional capital from investors.  At the current time the Bank cannot pay dividends to the Company because of its recent operating losses and because of limitations in a Consent Order the Bank entered into with the Office of the Comptroller of the Currency (“OCC”) on October 30, 2013.  Management does not anticipate that the Bank will receive approval to pay dividends for at least the next several quarters.  Accordingly, the Company will not be able to meet its payment obligations on its debt noted above within the foreseeable future unless the Company is able to secure new capital.

Regulatory Matters

As a result of significant deficiencies in the Company’s and the Bank’s operations noted in a regulatory examination in early 2010, the Company and the Bank were declared to be in “troubled condition” and entered into cease and desist orders (the “Orders”) issued by the OCC’s regulatory predecessor effective September 9, 2010, requiring, among other things, that the Company and the Bank take remedial actions to improve the Bank’s loan underwriting and internal asset review procedures, to reduce the amount of its non-performing assets and to improve other aspects of the Bank’s business, as well as the Company’s management of its business and the oversight of the Company’s business by the Board of Directors.  Effective October 30, 2013, the Order for the Bank was superseded by a Consent Order entered into by the Bank and the OCC.  As part of the Consent Order, the Bank is required to attain, and thereafter maintain, a Tier 1 (Core) Capital to Adjusted Total Assets ratio of at least 9% and a Total Risk-Based Capital to Risk-Weighted Assets ratio of at least 13%, both of which ratios are greater than the respective 4% and 8% levels for such ratios that are generally required under OCC regulations.  The Bank’s regulatory capital exceeded both of these higher capital ratios at September 30, 2013 (see Note 10).

Additionally, the Consent Order issued by the OCC imposes certain other requirements on the Bank.  These requirements include the following, among others:

· The Bank must create a Compliance Committee consisting of at least three independent Directors to monitor compliance with the Consent Order, among other matters.

· The Board of the Bank must prepare and submit a Strategic Plan and a Capital Plan that is consistent with the Strategic Plan. The Capital Plan requirement includes requirements regarding targeted capital ratios and prior approval requirements for the payment of dividends, both of which are mentioned above.

· The Bank must implement an enhanced set of business operational and corporate governance processes, as well as create a commercial real estate concentration risk management program and a written program to reduce the level of assets considered doubtful, substandard or special mention. This latter program requirement includes requirements to monitor the levels of such assets on an ongoing basis and prepare and implement corrective actions as deemed necessary.

· The Bank must also implement an independent ongoing loan review system and adopt new policies with respect to maintaining an adequate allowance for loan and lease losses (“ALLL”).

The Consent Order does not include certain restrictions on the Bank that had been imposed by the Order, such as the specific limitation on the Bank’s ability to increase its assets during any quarter or certain limitations on employment agreements and compensation arrangements.  Management believes that the Order issued to the Company, which has been administered by the FRB since July 2012, remains in effect.  This Order imposes limitations and restriction on several matters, including the following:

· The Company may not declare or pay any dividends or make any other capital distributions without the prior written approval of the FRB.

· The Company may not make any changes in its directors or senior executive officers without prior notice to and receipt of notice of non-objection from the FRB.

· The Company is subject to limitations on severance and indemnification payments and on entering into or amending employment agreements and compensation arrangements, and on the payment of bonuses to Bank directors and officers.

· The Company may not incur, issue, renew, repurchase, make payments on or increase any debt or redeem any capital stock without prior notice to and receipt of written notice of non-objection from the FRB.

Recapitalization of the Company

Management’s plan to address the conditions described above has consisted of completing a recapitalization of the Company and then raising additional equity capital for the Company and negotiating an extension of the maturity of the Debentures.  The Company completed the recapitalization on August 22, 2013, which improved the Company’s liquidity and capital structure, and enhanced the Bank’s capital ratios as described below.  The Company’s ability to continue as a going concern is dependent on the timely implementation and success of these next steps: raising more capital and extending the maturity of the Debentures.  There can be no assurance that management’s plan will be achieved.

The recapitalization strengthened and simplified the Company’s capital structure through completion of the following transactions:

(1) The issuance of 8,776 shares of Series F Non-cumulative Voting Preferred Stock (the “Common Stock Equivalents”) in exchange for the five series of the Company’s formerly outstanding preferred stock with an aggregate liquidation value or preference of $17.6 million, including the TARP Preferred Stock that was issued to the Treasury Department pursuant to the Capital Purchase Program component of the Treasury Department’s Troubled Asset Relief Program, which the parties agreed to value at $8.8 million based on the price at which shares of the Common Stock were sold in the Subscription Offering referred to below;

(2) The issuance of 2,646 shares of Common Stock Equivalents in exchange for all of the accumulated dividends on the TARP Preferred Stock, totaling $2.6 million as of the date of the exchange;

(3) The issuance of 2,575 shares of Common Stock Equivalents in exchange for $2.6 million principal amount of the Company’s bank debt (the “Debt Exchange”);

(4) The modification of the terms of the remaining $2.4 million principal amount of the senior line of credit to, among other matters, extend the maturity and eliminate the default rate;

(5) The forgiveness of the $1.8 million of accrued interest on the entire amount of the Company’s bank debt as of the date of the exchange;

(6) The exchange of 698 shares of Common Stock Equivalents issued in the Debt Exchange for 6,982 shares of Series G Non-Voting Preferred Stock; and

(7) The issuance of 4,235,500 shares of Common Stock in private sales (the “Subscription Offering”) at a price of $1.00 per share, yielding $4.2 million in gross proceeds. Of the $4.2 million in gross proceeds, $1.2 million were used to invest additional capital into the Bank and to repay all of the inter-company payables due to the Bank from the Company.  As a result, the Bank’s capital ratios increased on a pro forma basis as of June 30, 2013 from 9.48% to 9.75% for Tier 1 Capital, from 14.98% to 15.51% for Tier 1 Risk Based Capital and from 16.27% to16.80% for Total Risk Based Capital.

The Common Stock Equivalents are a new series of preferred stock of the Company that will automatically convert into shares of the Company’s common stock, at the rate of 1,000 shares of common stock for each of the shares of Common Stock Equivalents upon stockholder approval of an amendment to the Company’s certificate of incorporation increasing the number of shares of common stock the Company is authorized to issue so as to permit such conversion.  The Series G Non-Voting Preferred Stock will automatically convert into shares of non-voting common stock of the Company upon approval by the stockholders of an amendment of the Company’s certificate of incorporation authorizing the Company to issue non-voting common stock.  The board of directors of the Company will present the amendments required to effect such conversions at the Company’s Annual Meeting of Stockholders, which will be held on November 27, 2013.  Management believes that the conversions will improve the Company’s ability to raise additional capital.

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Loans Receivable Held for Investment (Details 6) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2013	Dec. 31, 2012
Investment in non-accrual loans by class of loans
Total non-accrual loans	$ 20,135	$ 37,090
Loans 90 days or more delinquent that were accruing interest	0	0
Loans receivable held for sale | One-to-four units
Investment in non-accrual loans by class of loans
Total non-accrual loans		6,656
Loans receivable held for sale | Five or more units
Investment in non-accrual loans by class of loans
Total non-accrual loans		1,956
Loans receivable held for sale | Church
Investment in non-accrual loans by class of loans
Total non-accrual loans	785	1,556
Loans receivable held for investment | One-to-four units
Investment in non-accrual loans by class of loans
Total non-accrual loans	1,694	1,489
Loans receivable held for investment | Five or more units
Investment in non-accrual loans by class of loans
Total non-accrual loans	3,041	2,312
Loans receivable held for investment | Commercial real estate
Investment in non-accrual loans by class of loans
Total non-accrual loans	1,451	7,090
Loans receivable held for investment | Church
Investment in non-accrual loans by class of loans
Total non-accrual loans	13,002	15,689
Loans receivable held for investment | Construction
Investment in non-accrual loans by class of loans
Total non-accrual loans		273
Loans receivable held for investment | Commercial Other
Investment in non-accrual loans by class of loans
Total non-accrual loans	$ 162	$ 69

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Securities (Tables)

9 Months Ended

Sep. 30, 2013

Securities

Summary of amortized cost and fair value of available-for-sale investment and corresponding amounts of unrealized gains

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
September 30, 2013:
Residential mortgage-backed	$	9,652	$	496	$	-	$	10,148
Total available-for-sale securities	$	9,652	$	496	$	-	$	10,148
December 31, 2012:
Residential mortgage-backed	$	12,660	$	718	$	-	$	13,378
Total available-for-sale securities	$	12,660	$	718	$	-	$	13,378

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Regulatory Capital

9 Months Ended

Sep. 30, 2013

Regulatory Capital

Regulatory Capital

NOTE (10) –Regulatory Capital

The Bank is subject to regulatory capital requirements now administered by the Office of the Comptroller of the Currency, or OCC, which is the statutory successor under the Dodd-Frank Act to the former Office of Thrift Supervision, or OTS.  The capital requirements involve quantitative measures of assets, liabilities, and certain off balance sheet items calculated under regulatory accounting practices.  Capital amounts and classifications are also subject to qualitative judgments by the OCC.  Failure to meet capital requirements can result in regulatory action.

The Bank met the minimum capital requirements under the cease and desist order at September 30, 2013 and December 31, 2012.  Actual required capital amounts and ratios at September 30, 2013 and December 31, 2012, together with the higher capital requirements that the Bank is required to meet under the cease and desist order applicable to it, are presented below.

	Actual		Required for Capital Adequacy  Purposes		Capital Requirements under Cease and Desist Order
	Amount	Ratio	Amount	Ratio	Amount	Ratios
			(Dollars in thousands)
September 30, 2013:
Tangible Capital to adjusted total assets	$33,670	9.75%	$   5,182	1.50%	N/A	N/A
Tier 1(Core) Capital to adjusted total assets	$33,670	9.75%	$ 13,819	4.00%	$ 27,637	8.00%
Tier 1(Core) Capital to risk weighted assets	$33,670	14.79%	N/A	N/A	N/A	N/A
Total Capital to risk weighted assets	$36,608	16.08%	$ 18,208	8.00%	$ 27,312	12.00%
December 31, 2012:
Tangible Capital to adjusted total assets	$32,936	8.82%	$   5,603	1.50%	N/A	N/A
Tier 1(Core) Capital to adjusted total assets	$32,936	8.82%	$ 14,940	4.00%	$ 29,881	8.00%
Tier 1(Core) Capital to risk weighted assets	$32,936	13.12%	N/A	N/A	N/A	N/A
Total Capital to risk weighted assets	$36,183	14.41%	$ 20,090	8.00%	$ 30,135	12.00%

On October 30, 2013, the Bank entered into a Consent Order with the OCC that superseded the cease and desist order that had been in effect since September 2010.  The Consent Order raises the minimum capital requirements to 9% for Tier 1 (Core) Capital and 13% for Total Capital to risk weighted assets.  The Bank’s regulatory capital exceeded both ratios as of September 30, 2013.

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Regulatory Capital (Tables)

9 Months Ended

Sep. 30, 2013

Regulatory Capital

Schedule of actual and required capital amounts and ratios

	Actual		Required for Capital Adequacy  Purposes		Capital Requirements under Cease and Desist Order
	Amount	Ratio	Amount	Ratio	Amount	Ratios
			(Dollars in thousands)
September 30, 2013:
Tangible Capital to adjusted total assets	$33,670	9.75%	$   5,182	1.50%	N/A	N/A
Tier 1(Core) Capital to adjusted total assets	$33,670	9.75%	$ 13,819	4.00%	$ 27,637	8.00%
Tier 1(Core) Capital to risk weighted assets	$33,670	14.79%	N/A	N/A	N/A	N/A
Total Capital to risk weighted assets	$36,608	16.08%	$ 18,208	8.00%	$ 27,312	12.00%
December 31, 2012:
Tangible Capital to adjusted total assets	$32,936	8.82%	$   5,603	1.50%	N/A	N/A
Tier 1(Core) Capital to adjusted total assets	$32,936	8.82%	$ 14,940	4.00%	$ 29,881	8.00%
Tier 1(Core) Capital to risk weighted assets	$32,936	13.12%	N/A	N/A	N/A	N/A
Total Capital to risk weighted assets	$36,183	14.41%	$ 20,090	8.00%	$ 30,135	12.00%

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Loans Receivable Held for Investment (Tables)

9 Months Ended

Sep. 30, 2013

Loans receivable held for investment

Activity in the Allowance for Loan Losses by Portfolio Segment

	Three Months Ended September 30, 2013
	One-to- four units			Five or more units			Commercial real estate			Church			Construction			Commercial			Consumer			Total
	(In thousands)
Beginning balance	$	2,445		$	1,169		$	1,674		$	5,060		$	8		$	213		$	10		$	10,579
Provision for loan losses	(315		)	351			72			523			(1		)	(213		)	(3		)	414
Recoveries	-			-			16			5			-			59			-			80
Loans charged off	(51		)	(3		)	(190		)	(490		)	-			-			-			(734		)
Ending balance	$	2,079		$	1,517		$	1,572		$	5,098		$	7		$	59		$	7		$	10,339
	Nine Months Ended September 30, 2013
	One-to- four units			Five or more units			Commercial real estate			Church			Construction			Commercial			Consumer			Total
	(In thousands)
Beginning balance	$	2,060		$	2,122		$	2,685		$	4,818		$	8		$	167		$	9		$	11,869
Provision for loan losses	(150		)	56			(96		)	929			(1		)	(322		)	(2		)	414
Recoveries	259			-			117			18			-			214			-			608
Loans charged off	(90		)	(661		)	(1,134		)	(667		)	-			-			-			(2,552		)
Ending balance	$	2,079		$	1,517		$	1,572		$	5,098		$	7		$	59		$	7		$	10,339

	Three Months Ended September 30, 2012
	One-to- four units			Five or more units			Commercial real estate			Church			Construction			Commercial			Consumer			Total
	(In thousands)
Beginning balance	$	4,701		$	2,897		$	2,640		$	7,223		$	106		$	270		$	19		$	17,856
Provision for loan losses	453			(326		)	135			3			(1		)	(126		)	(9		)	129
Recoveries	-			1			15			3			-			97			3			119
Loans charged off	(539		)	(14		)	(346		)	(221		)	-			-			-			(1,120		)
Ending balance	$	4,615		$	2,558		$	2,444		$	7,008		$	105		$	241		$	13		$	16,984
	Nine Months Ended September 30, 2012
	One-to- four units			Five or more units			Commercial real estate			Church			Construction			Commercial			Consumer			Total
	(In thousands)
Beginning balance	$	4,855		$	2,972		$	3,108		$	5,742		$	249		$	316		$	57		$	17,299
Provision for loan losses	654			(401		)	(305		)	1,864			(144		)	(427		)	(51		)	1,190
Recoveries	-			1			45			10			-			352			7			415
Loans charged off	(894		)	(14		)	(404		)	(608		)	-			-			-			(1,920		)
Ending balance	$	4,615		$	2,558		$	2,444		$	7,008		$	105		$	241		$	13		$	16,984

Allowance for Loan Losses and Recorded Investment in Loans By Portfolio Segment and Based on Impairment Method

	September 30, 2013
	One-to-four units		Five or more units		Commercial real estate		Church		Construction		Commercial		Consumer		Total
	(In thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	508	$	147	$	293	$	1,486	$	-	$	16	$	-	$	2,450
Collectively evaluated for impairment	1,571		1,370		1,279		3,612		7		43		7		7,889
Total ending allowance balance	$	2,079	$	1,517	$	1,572	$	5,098	$	7	$	59	$	7	$	10,339
Loans:
Loans individually evaluated for impairment	$	3,674	$	4,226	$	7,936	$	22,552	$	-	$	162	$	-	$	38,550
Loans collectively evaluated for impairment	46,622		100,075		25,008		48,168		434		1,931		36		222,274
Total ending loans balance	$	50,296	$	104,301	$	32,944	$	70,720	$	434	$	2,093	$	36	$	260,824

	December 31, 2012
	One-to-four units		Five or more units		Commercial real estate		Church		Construction		Commercial		Consumer		Total
	(In thousands)
Allowance for loan losses:
Ending allowance balance attributable to loans:
Individually evaluated for impairment	$	719	$	125	$	543	$	1,276	$	-	$	69	$	-	$	2,732
Collectively evaluated for impairment	1,341		1,997		2,142		3,542		8		98		9		9,137
Total ending allowance balance	$	2,060	$	2,122	$	2,685	$	4,818	$	8	$	167	$	9	$	11,869
Loans:
Loans individually evaluated for impairment	$	4,576	$	3,766	$	10,364	$	25,328	$	273	$	69	$	-	$	44,376
Loans collectively evaluated for impairment	53,157		79,584		30,760		50,926		462		3,826		35		218,750
Total ending loans balance	$	57,733	$	83,350	$	41,124	$	76,254	$	735	$	3,895	$	35	$	263,126

Loans Individually Evaluated for Impairment by Type of Loans

	September 30, 2013						December 31, 2012
	Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated		Unpaid Principal Balance		Recorded Investment		Allowance for Loan Losses Allocated
	(In thousands)
With no related allowance recorded:
One-to-four units	$	2,348	$	1,694	$	-	$	1,986	$	1,484	$	-
Five or more units	2,703		2,647		-		2,038		1,819		-
Commercial real estate	4,869		1,451		-		10,184		6,423		-
Church	12,938		9,695		-		18,664		15,689		-
Construction	-		-		-		279		273		-
Commercial:
Sports	3,850		-		-		3,888		-		-
With an allowance recorded:
One-to-four units	1,980		1,980		508		3,092		3,092		719
Five or more units	1,586		1,579		147		1,947		1,947		125
Commercial real estate	6,491		6,485		293		3,941		3,941		543
Church	12,911		12,857		1,486		9,677		9,639		1,276
Commercial:
Other	162		162		16		69		69		69
Total	$	49,838	$	38,550	$	2,450	$	55,765	$	44,376	$	2,732

Average of Loans Individually Evaluated for Impairment by Type of Loans and Related Interest Income

	Three Months Ended September 30, 2013				Nine Months Ended September 30, 2013
	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
	(In thousands)
One-to-four units	$	3,699	$	30	$	3,822	$	91
Five or more units	3,347		15		3,215		55
Commercial real estate	6,986		182		7,778		405
Church	22,472		131		23,027		407
Construction	-		-		81		5
Commercial:
Other	165		2		156		8
Total	$	36,669	$	360	$	38,079	$	971

	Three Months Ended September 30, 2012				Nine Months Ended September 30, 2012
	Average Recorded Investment		Cash Basis Interest Income Recognized		Average Recorded Investment		Cash Basis Interest Income Recognized
	(In thousands)
One-to-four units	$	14,143	$	120	$	13,844	$	354
Five or more units	2,266		10		3,047		50
Commercial real estate	8,251		115		7,847		260
Church	31,094		237		31,709		834
Construction	288		3		294		12
Commercial:
Other	70		2		70		4
Total	$	56,112	$	487	$	56,811	$	1,514

Recorded Investment in Nonaccrual Loans by Type of Loans

	September 30, 2013		December 31, 2012
	(In thousands)
Loans receivable held for sale:
One-to-four units	$	-	$	6,656
Five or more units	-		1,956
Church	785		1,556
Loans receivable held for investment:
One-to-four units	1,694		1,489
Five or more units	3,041		2,312
Commercial real estate	1,451		7,090
Church	13,002		15,689
Construction	-		273
Commercial:
Other	162		69
Total non-accrual loans	$	20,135	$	37,090

Aging of Recorded Investment in Past Due Loans, Including Loans Receivable Held For Sale

	September 30, 2013
	30-59DaysPast Due		60-89DaysPast Due		Greater than90 DaysPast Due		TotalPast Due		Total Loans Not Past Due
	(In thousands)
Loans receivable held for sale:
Church	$	-	$	-	$	785	$	785	$	300
Loans receivable held for investment:
One-to-four units	876		-		1,694		2,570		47,726
Five or more units	-		-		3,041		3,041		101,260
Commercial real estate	-		-		1,451		1,451		31,493
Church	419		-		13,002		13,421		57,299
Construction	-		-		-		-		434
Commercial:
Sports	-		-		-		-		1,423
Other	-		20		162		182		488
Consumer:
Other	-		-		-		-		36
Total	$	1,295	$	20	$	20,135	$	21,450	$	240,459

	December 31, 2012
	30-59DaysPast Due		60-89DaysPast Due		Greater than90 DaysPast Due		TotalPast Due		Total Loans Not Past Due
	(In thousands)
Loans receivable held for sale:
One-to-four units	$	-	$	871	$	6,656	$	7,527	$	389
Five or more units	-		-		1,956		1,956		3,839
Commercial real estate	-		-		-		-		1,358
Church	-		-		1,556		1,556		2,744
Loans receivable held for investment:
One-to-four units	1,077		-		1,489		2,566		55,167
Five or more units	587		554		2,312		3,453		79,897
Commercial real estate	-		-		7,090		7,090		34,034
Church	1,617		-		15,689		17,306		58,948
Construction	-		-		273		273		462
Commercial:
Sports	-		-		-		-		1,711
Other	-		-		69		69		2,115
Consumer:
Other	-		-		-		-		35
Total	$	3,281	$	1,425	$	37,090	$	41,796	$	240,699

Loans by Type Modified as Troubled Debt Restructurings

	Three Months Ended September 30, 2013					Nine Months Ended September 30, 2013
	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(Dollars in thousands)
One-to-four units	-	$	-	$	-	5	$	739	$	789
Commercial real estate	-	-		-		1	1,456		1,497
Total	-	$	-	$	-	6	$	2,195	$	2,286

	Three Months Ended September 30, 2012					Nine Months Ended September 30, 2012
	Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Loans	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
	(Dollars in thousands)
One-to-four units	-	$	-	$	-	1	$	36	$	36
Commercial real estate	-	-		-		2	734		740
Church	1	503		503		9	3,902		3,907
Total	1	$	503	$	503	12	$	4,672	$	4,683

Risk Category of Loans by Type of Loans

	September 30, 2013
	Pass		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
One-to-four units	$	45,048	$	3,554	$	1,694	$	-	$	-
Five or more units	95,955		2,742		5,604		-		-
Commercial real estate	23,219		1,632		8,093		-		-
Church	35,389		16,898		18,433		-		-
Construction	434		-		-		-		-
Commercial:
Sports	-		1,423		-		-		-
Other	488		20		162		-		-
Consumer:
Other	36		-		-		-		-
Total	$	200,569	$	26,269	$	33,986	$	-	$	-

	December 31, 2012
	Pass		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
One-to-four units	$	55,613	$	631	$	1,489	$	-	$	-
Five or more units	73,673		5,250		4,427		-		-
Commercial real estate	25,605		2,541		12,921		57		-
Church	33,532		19,502		23,220		-		-
Construction	462		-		273		-		-
Commercial:
Sports	-		1,711		-		-		-
Other	1,877		141		166		-		-
Consumer:
Other	35		-		-		-		-
Total	$	190,797	$	29,776	$	42,496	$	57	$	-

Loans receivable held for investment

Loans receivable held for investment

Schedule of loans receivable

	September 30, 2013			December 31, 2012
	(In thousands)
Real estate:
One-to-four units	$	50,296		$	57,733
Five or more units	104,301			83,350
Commercial real estate	32,944			41,124
Church	70,720			76,254
Construction	434			735
Commercial:
Sports	1,423			1,711
Other	670			2,184
Consumer:
Other	36			35
Total gross loans receivable	260,824			263,126
Loans in process	(25		)	(74		)
Net deferred loan costs	784			557
Unamortized premium (discounts)	260			(17		)
Allowance for loan losses	(10,339		)	(11,869		)
Loans receivable, net	$	251,504		$	251,723

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 05, 2013
Document and Entity Information
Entity Registrant Name	BROADWAY FINANCIAL CORP \DE\
Entity Central Index Key	0001001171
Document Type	10-Q
Document Period End Date	Sep. 30, 2013
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		6,145,451
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q3

XML

Fair Value (Tables)

9 Months Ended

Sep. 30, 2013

Fair Value

Summary of assets measured at fair value on recurring basis

	Fair Value Measurements at September 30, 2013 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
Assets:
Securities available-for-sale - residential mortgage-backed	$	-	$	10,148	$	-	$	10,148

	Fair Value Measurements at December 31, 2012 Using
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(In thousands)
Assets:
Securities available-for-sale - residential mortgage-backed	$	-	$	13,378	$	-	$	13,378

Schedule of carrying values of assets measured at fair value on non-recurring basis

	September 30, 2013		December 31, 2012
	(In thousands)
Assets:
Non-performing loans receivable held-for-sale:
One-to-four units	$	-	$	6,656
Five or more units	-		1,956
Church	785		1,556
Impaired loans carried at fair value of collateral:
One-to-four units	1,494		1,284
Five or more units	908		1,679
Commercial real estate	1,451		3,385
Church	8,793		6,649
Real estate owned:
Commercial real estate	1,294		2,752
Church	5,317		5,411

Schedule of gains (losses) recognized on assets measured at fair value on non-recurring basis

	Three Months Ended September 30,				Nine Months Ended September 30,
	2013		2012		2013		2012
	(In thousands)
Non-performing loans receivable held-for-sale	$	-	$	(296)	$	(471)	$	(109)
Impaired loans carried at fair value of collateral	(671)		(669)		(1,071)		(1,585)
Real estate owned	(321)		(427)		(544)		(739)
Total	$	(992)	$	(1,392)	$	(2,086)	$	(2,433)

Schedule of quantitative information on financial instruments measured on non-recurring basis

	September 30, 2013
	Fair Value		Valuation  Technique(s)	Unobservable  Input(s)	Range
	(Dollars in thousands)
Non-performing loans held for sale – church	$	785	Sales comparison approach	Adjustment for differences between the comparable sales	1%
Impaired loans – one-to-four units	1,494		Sales comparison approach	Adjustment for differences between the comparable sales	-2% to 8%
Impaired loans – five or more units	908		Sales comparison approach	Adjustment for differences between the comparable sales	-10 to 0%
			Income approach	Capitalization rate	7.25% to 9%
Impaired loans – commercial real estate	1,451		Sales comparison approach	Adjustment for differences between the comparable sales	-2 to 0%
			Income approach	Capitalization rate	4.5% to 8.25%
Impaired loans – church	8,793		Sales comparison approach	Adjustment for differences between the comparable sales	-32 to 50%
			Income approach	Capitalization rate	6.75%
Real estate owned – commercial real estate	1,294		Sales comparison approach	Adjustment for differences between the comparable sales	-9% to 3%
			Income approach	Capitalization rate	10%
Real estate owned – church	5,317		Sales comparison approach	Adjustment for differences between the comparable sales	-24% to 11%
			Income approach	Capitalization rate	6.5% to 11.5%

	December 31, 2012
	Fair Value		Valuation  Technique(s)	Unobservable  Input(s)	Range
	(Dollars in thousands)
Nonperforming loans held for sale – one-to-four units	$	6,656	Sales comparison approach	Adjustment for differences between the comparable sales	-30% to 23%
Nonperforming loans held for sale – five or more units	1,956		Sales comparison approach	Adjustment for differences between the comparable sales	-13% to 17%
			Income approach	Capitalization rate	6% to 8.5%
Nonperforming loans held for sale – church	1,556		Sales comparison approach	Adjustment for differences between the comparable sales	-27% to 29%
Impaired loans – one-to-four units	1,284		Sales comparison approach	Adjustment for differences between the comparable sales	-5% to 18%
Impaired loans – five or more units	1,679		Sales comparison approach	Adjustment for differences between the comparable sales	-26% to 16%
			Income approach	Capitalization rate	6.5% to 9%
Impaired loans – commercial real estate	3,385		Sales comparison approach	Adjustment for differences between the comparable sales	-17% to -1%
			Income approach	Capitalization rate	7% to 9%
Impaired loans – church	6,649		Sales comparison approach	Adjustment for differences between the comparable sales	-45% to 8%
			Income approach	Capitalization rate	6.75% to 8%
Real estate owned – commercial real estate	2,752		Sales comparison approach	Adjustment for differences between the comparable sales	-67% to 1%
			Income approach	Capitalization rate	8% to 11%
Real estate owned – church	5,411		Sales comparison approach	Adjustment for differences between the comparable sales	-12% to 7%
			Income approach	Capitalization rate	11.5%

Schedule of carrying amounts and estimated fair values of financial instruments

			Fair Value Measurements at September 30, 2013 Using
	Carrying Value		Level 1			Level 2			Level 3			Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	60,224	$	60,224		$	-		$		-	$	60,224
Securities available-for-sale	10,148		-			10,148			-			10,148
Loans receivable held for sale	1,085		-			-			1,085			1,085
Loans receivable held for investment	251,504		-			-			258,332			258,332
Federal Home Loan Bank stock	4,113		N/A			N/A			N/A			N/A
Accrued interest receivable	1,116		-			31			1,085			1,116
Financial Liabilities:
Deposits	$	(218,569)	$	-		$	(211,263)		$		-	$	(211,263)
Federal Home Loan Bank advances	(87,500)		-			(91,145)			-			(91,145)
Junior subordinated debentures	(6,000)		-			-			(5,510)			(5,510)
Other borrowings	(2,960)		-			-			(1,398)			(1,398)
Accrued interest payable	(674)		-			(65)			(559)			(624)
Advance payments by borrowers for taxes and insurance	(1,034)		-			(1,034)			-			(1,034)
			Fair Value Measurements at December 31, 2012 Using
	Carrying Value		Level 1			Level 2			Level 3			Total
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	64,360	$		64,360	$		-	$	-		$		64,360
Securities available-for-sale	13,378		-			13,378			-			13,378
Loans receivable held for sale	19,051		-			-			19,051			19,051
Loans receivable held for investment	251,723		-			-			252,043			252,043
Federal Home Loan Bank stock	3,901		N/A			N/A			N/A			N/A
Accrued interest receivable	1,250		-			42			1,208			1,250
Financial Liabilities:
Deposits	$	(257,071)	$		-	$		(253,155)	$	-		$		(253,155)
Federal Home Loan Bank advances	(79,500)		-			(84,769)			-			(84,769)
Junior subordinated debentures	(6,000)		-			-			(4,852)			(4,852)
Other borrowings	(5,000)		-			-			(4,205)			(4,205)
Accrued interest payable	(1,941)		-			(87)			(1,527)			(1,614)
Advance payments by borrowers for taxes and insurance	(711)		-			(711)			-			(711)