10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q/A

Amendment No. 1

(Mark One)

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

For the quarterly period ended June 30, 2011

¨ 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.)

4800 Wilshire Boulevard, Los Angeles, California	90010
(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: 1,744,565 shares of the Company’s Common Stock, par value $0.01 per share, were outstanding as of August 9, 2011.

TABLE OF CONTENTS

			Page
PART II.	OTHER INFORMATION
	Item 6.	Exhibits	1
	Signatures		2
	Ex 31.1	Section 302 Certification of CEO
	Ex 31.2	Section 302 Certification of CFO
	Ex 32	Section 906 Certifications of CEO and CFO

Explanatory Note

This Amendment No. 1 on Form 10-Q/A amends the registrant’s Quarterly Report on Form 10-Q for the three months ended June 30, 2011, as filed by the registrant with the Securities and Exchange Commission on August 15, 2011, and is being filed solely to include the 101 XBRL Interactive Data File exhibits required by Item 6. No other items are being amended except as described in this Explanatory Note and this Amendment does not reflect any events occurring after the filing of our original Quarterly Report on Form 10-Q for the three months ended June 30, 2011.

Pursuant to Rules 12b-15 and 13a-14 of the Exchange Act, we are including with this Amendment currently dated certifications of our chief executive officer and chief financial officer.

PART II. OTHER INFORMATION

Item 6.	EXHIBITS
	Exhibit 31.1	-	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	Exhibit 31.2	-	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
	Exhibit 32	-	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
	101.INS		XBRL Instance Document (1)
	101.SCH		XBRL Taxonomy Extension Schema Document (1)
	101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document (1)
	101.DEF		XBRL Taxonomy Extension Definitions Linkbase Document (1)
	101.LAB		XBRL Taxonomy Extension Label Linkbase Document (1)
	101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document (1)

(1) 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.

1

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: August 23, 2011	By:	/s/ Paul C. Hudson
	Paul C. Hudson Chief Executive Officer
Date: August 23, 2011	By:	/s/ Samuel Sarpong
	Samuel Sarpong Chief Financial Officer

2

EX-31.1

Exhibit 31.1

SECTION 302 CERTIFICATION

I, Paul C. Hudson, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A 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: August 23, 2011	By:	/s/ Paul C. Hudson
	Paul C. Hudson Chief Executive Officer

EX-31.2

Exhibit 31.2

SECTION 302 CERTIFICATION

I, Samuel Sarpong, certify that:

1. I have reviewed this quarterly report on Form 10-Q/A 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: August 23, 2011	By:	/s/ Samuel Sarpong
	Samuel Sarpong Chief Financial Officer

EX-32

Exhibit 32

SECTION 906 CERTIFICATION

The following statement is provided by the undersigned to accompany the foregoing Report on Form 10-Q/A 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.

Each of the undersigned certifies that the foregoing Report on Form 10-Q/A 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: August 23, 2011	By:	/s/ Paul C. Hudson
		Paul C. Hudson Chief Executive Officer
Date: August 23, 2011	By:	/s/ Samuel Sarpong
		Samuel Sarpong Chief Financial Officer

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data	Jun. 30, 2011	Dec. 31, 2010
Securities held to maturity, fair value	$ 12,226	$ 13,261
Loans receivable, allowance	22,245	20,458
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	8,000,000	8,000,000
Common stock, shares issued	2,013,942	2,013,942
Common stock, shares outstanding	1,744,565	1,743,965
Accumulated other comprehensive income, tax	204	176
Treasury stock, shares	269,377	269,977
Series D | Cumulative preferred stock
Preferred non-voting stock, par value	$ 0.01	$ 0.01
Preferred non-voting stock, shares authorized	9,000	9,000
Preferred non-voting stock, shares issued	9,000	9,000
Preferred non-voting stock, shares outstanding	9,000	9,000
Preferred stock, liquidation preference	9,394	9,169
Series E | Cumulative preferred stock
Preferred non-voting stock, par value	$ 0.01	$ 0.01
Preferred non-voting stock, shares authorized	6,000	6,000
Preferred non-voting stock, shares issued	6,000	6,000
Preferred non-voting stock, shares outstanding	6,000	6,000
Preferred stock, liquidation preference	6,263	6,113
Series A | Noncumulative preferred stock
Preferred non-voting stock, shares issued	55,199	55,199
Preferred non-voting stock, shares outstanding	55,199	55,199
Preferred stock, liquidation preference	552	552
Series B | Noncumulative preferred stock
Preferred non-voting stock, shares issued	100,000	100,000
Preferred non-voting stock, shares outstanding	100,000	100,000
Preferred stock, liquidation preference	1,000	1,000
Series C | Noncumulative preferred stock
Preferred non-voting stock, shares issued	76,950	76,950
Preferred non-voting stock, shares outstanding	76,950	76,950
Preferred stock, liquidation preference	$ 1,000	$ 1,000
Noncumulative preferred stock
Preferred non-voting stock, par value	$ 0.01	$ 0.01
Preferred non-voting stock, shares authorized	1,000,000	1,000,000

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Consolidated Statements Of Operations And Comprehensive Earnings (Loss) (USD $) In Thousands, except Per Share data	3 Months Ended		6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010	Jun. 30, 2011	Jun. 30, 2010
Consolidated Statements Of Operations And Comprehensive Earnings (Loss)
Interest and fees on loans receivable	$ 6,284	$ 7,478	$ 12,668	$ 14,955
Interest on mortgage backed and other securities	182	257	363	539
Other interest income	10	15	19	25
Total interest income	6,476	7,750	13,050	15,519
Interest on deposits	1,197	1,568	2,436	3,071
Interest on borrowings	851	851	1,840	1,646
Total interest expense	2,048	2,419	4,276	4,717
Net interest income before provision for loan losses	4,428	5,331	8,774	10,802
Provision for loan losses	3,434	309	4,674	883
Net interest income after provision for loan losses	994	5,022	4,100	9,919
Non-interest income:
Service charges	175	213	357	402
Net gains (losses) on mortgage banking activities	32	(109)	7	(85)
Net losses on sale of REO	(34)	(61)	(49)	(35)
Other	26	141	65	174
Total non-interest income	199	184	380	456
Non-interest expense:
Compensation and benefits	1,555	1,796	3,364	3,727
Occupancy expense, net	334	348	688	710
Information services	220	186	447	404
Professional services	292	386	460	596
Provision for losses on loans held-for-sale	6	472	26	547
Provision for losses on REO	702	30	782	111
FDIC insurance	354	215	637	462
Office services and supplies	140	133	282	277
Other	514	280	933	543
Total non-interest expense	4,117	3,846	7,619	7,377
Earnings (loss) before income taxes	(2,924)	1,360	(3,139)	2,998
Income tax expense (benefit)	(1,202)	514	(1,288)	1,164
Net earnings (loss)	(1,722)	846	(1,851)	1,834
Other comprehensive income, net of tax:
Unrealized gain on securities available for sale	86	168	71	257
Income tax effect	(34)	(67)	(28)	(103)
Other comprehensive income, net of tax	52	101	43	154
Comprehensive earnings (loss)	(1,670)	947	(1,808)	1,988
Net earnings (loss)	(1,722)	846	(1,851)	1,834
Dividends and discount accretion on preferred stock	(283)	(281)	(566)	(581)
Earnings (loss) available to common shareholders	$ (2,005)	$ 565	$ (2,417)	$ 1,253
Earnings (loss) per common share-basic	$ (1.15)	$ 0.32	$ (1.39)	$ 0.72
Earnings (loss) per common share-diluted	$ (1.15)	$ 0.32	$ (1.39)	$ 0.72
Dividends declared per share-common stock				$ 0.01

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Document And Entity Information	6 Months Ended
	Jun. 30, 2011	Aug. 09, 2011
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2011
Entity Central Index Key	0001001171
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	Q2
Entity Registrant Name	BROADWAY FINANCIAL CORP \DE\
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		1,744,565

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Junior Subordinated Debentures, Other Borrowings And Management's Capital Plan

6 Months Ended

Jun. 30, 2011

Junior Subordinated Debentures, Other Borrowings And Management's Capital Plan

Junior Subordinated Debentures, Other Borrowings And Management's Capital Plan

NOTE (7) – Junior Subordinated Debentures, Other Borrowings and Management's Capital Plan

On March 17, 2004, the Company issued $6.0 million of Floating Rate Junior Subordinated Debentures in a private placement. The debentures mature in 10 years 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 June 30, 2011. The Company stopped paying interest on the debentures and the senior line of credit discussed below in September 2010. As disclosed previously, the Company is not permitted to make payments on any debts without prior notice to and receipt of written notice of non-objection from the Office of Thrift Supervision ("OTS") Regional Director. 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.

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. The interest rate on the line of credit adjusts annually, subject to a minimum of 6.00% and increases by an additional 5% in the event of default. Borrowings under this line of credit are secured by the Company's assets. The full amount of this borrowing became due and payable on July 31, 2010. This senior line of credit has not been repaid and the Company is now in default under the line of credit agreement. On April 7, 2011, the lender agreed to forbear from exercising its rights (other than increasing the interest rate by the default rate margin) pursuant to the line of credit agreement until January 1, 2012 subject to the following conditions:

• The Company shall make a forbearance payment in the amount of $25,000 to the lender no later than July 31, 2011 provided that the Company is able to obtain the necessary approval to make such payment from the OTS or its successors, and in the event the Company is unable to obtain such approval by said date, the Company shall make such payment as soon as permitted thereafter. The Company has not received the required regulatory approval for such payment to date.

• The Company shall use its best efforts to continue to attempt to raise a minimum of $5.0 million in private placements under the Company's Recapitalization Plan as discussed below.

• The Bank shall not experience anything that would constitute an Event of Default, or be placed into receivership by the FDIC.

The Company is pursuing a comprehensive Recapitalization Plan to improve the Company's capital structure. To date, the Company has obtained the written consent of the U.S. Treasury to exchange the Company's Series D and E Fixed Rate Cumulative Perpetual Preferred Stock for common stock at a discount of 50% of the liquidation amount, plus an undiscounted exchange of the accumulated but unpaid dividends on such preferred stock for common stock. In addition, the Company is in negotiations with the holders of Series A and Series B Perpetual Preferred Stock and Series C Noncumulative Perpetual Convertible Preferred Stock to exchange their holdings for common stock at a discount of 50% of the liquidation amount. The Company is also in negotiations with the lender to exchange a portion of the Company's senior line of credit, which is currently in default, for common stock at 100% of the face amount to be exchanged and to forgive the accrued interest on the entire amount of the line of credit to the date of the exchange.

The Company plans to concurrently complete private placements or other sales of the Company's common stock aggregating $5 million or more in gross proceeds. The Company anticipates that these transactions would, if completed, result in the issuance of approximately 7.5 million new shares of the Company's common stock, which would constitute approximately 80% of the pro forma outstanding shares of the Company's common stock. There can be no assurance that management's capital plan will be achieved.

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Earnings Per Common Share

6 Months Ended

Jun. 30, 2011

Earnings Per Common Share

Earnings Per Common Share

NOTE (3) – Earnings Per Common Share

Basic earnings per common share is computed by dividing earnings available to common shareholders by the weighted average number of shares of common stock outstanding for the period. Diluted earnings per common share is computed by dividing earnings available to common shareholders by the weighted average number of shares of common stock outstanding for the period, increased for the dilutive effect of common stock equivalents.

The following table shows how we computed basic and diluted earnings per common share for the three and six months ended June 30, 2011 and 2010.

	For the three months ended June 30,						For the six months ended June 30,
	2011			2010			2011			2010
	(Dollars in thousands, except per share)
Basic
Net earnings (loss)	$	(1,722	)	$	846		$	(1,851	)	$	1,834
Less: Preferred stock dividends and accretion		(283	)		(281	)		(566	)		(581	)
Earnings (loss) available to common shareholders	$	(2,005	)	$	565		$	(2,417	)	$	1,253
Weighted average common shares outstanding		1,744,216			1,743,609			1,744,091			1,743,488
Basic earnings (loss) per common share	$	(1.15	)	$	0.32		$	(1.39	)	$	0.72
Diluted
Net earnings (loss)	$	(1,722	)	$	846		$	(1,851	)	$	1,834
Less: Preferred stock dividends and accretion		(283	)		(281	)		(566	)		(581	)
Earnings (loss) available to common shareholders	$	(2,005	)	$	565		$	(2,417	)	$	1,253
Weighted average common shares outstanding		1,744,216			1,743,609			1,744,091			1,743,488
Add: dilutive effects of assumed exercises of stock options		N/A			900			N/A			3,485
Average shares and dilutive potential common shares		1,744,216			1,744,509			1,744,091			1,746,973
Diluted earnings (loss) per common share	$	(1.15	)	$	0.32		$	(1.39	)	$	0.72

Stock options for 227,075 shares of common stock were not considered in computing diluted earnings per common share for the three and six months ended June 30, 2011 and stock options for 237,547 and 212,700 shares of common stock were not considered in computing diluted earnings per common share for the three and six months ended June 30, 2010 because they were anti-dilutive.

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2011

Stock-Based Compensation

Stock-Based Compensation

NOTE (9) – Stock-based Compensation

In 2008, we adopted the 2008 Long-Term Incentive Plan ("2008 LTIP"), which is shareholder approved. 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 351,718 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.

There were no options granted during the first six months of 2011. The Company recorded $27 thousand of stock-based compensation expense, net of tax, during the first six months of 2011 compared to $48 thousand for the first six months of 2010.

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Regulatory Matters

6 Months Ended

Jun. 30, 2011

Regulatory Matters

Regulatory Matters

NOTE (10) – Regulatory Matters

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, which remain the same as when administered by the OTS, 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.

Prompt corrective action regulations provide five classifications: well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized, and critically undercapitalized, although these terms are not used to represent overall financial condition. If only adequately capitalized, regulatory approval is required to accept brokered deposits. If undercapitalized, capital distributions are limited, as is asset growth and expansion, and capital restoration plans are required.

The Company and the Bank have consented to the issuance to them of cease and desist orders by the OTS 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. The cease and desist orders require the Bank to attain, and thereafter maintain, a Tier 1 (Core) Capital to Adjusted Total Assets ratio of at least 8% and a Total Risk-Based Capital to Risk-Weighted Assets ratio of at least 12%, both of which ratios are greater than the respective 6% and 10% levels for such ratios that are generally required under OTS (now OCC) regulations. The cease and desist orders also prohibit the Bank from paying dividends to the Company, and prohibit the Company from paying dividends to its stockholders, without the prior written approval of the OCC. In addition, the Company is not permitted to 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 OCC.

We have met the minimums required to be well capitalized at June 30, 2011 and December 31, 2010 based on the prompt corrective action regulations, however we cannot be considered well capitalized while under the cease and desist order.

Actual and normally required capital amounts and ratios at June 30, 2011 and December 31, 2010, 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					To Be Well Capitalized Under Prompt Corrective Action Regulations					Capital Requirements under Cease and Desist Order
	Amount		Ratio			Amount		Ratio			Amount		Ratios			Amount		Ratios
	(Dollars in thousands)
June 30, 2011:
Tangible Capital to adjusted total assets	$	39,381		8.87	%	$	6,662		1.50	%		N/A		N/A			N/A		N/A
Tier 1(Core) Capital to adjusted total assets	$	39,381		8.87	%	$	17,765		4.00	%	$	22,206		5.00	%	$	35,529		8.00	%
Tier 1(Core) Capital to risk weighted assets	$	39,381		11.94	%		N/A		N/A		$	19,785		6.00	%		N/A		N/A
Total Capital to risk weighted assets	$	43,627		13.23	%	$	26,379		8.00	%	$	32,974		10.00	%	$	39,569		12.00	%
December 31, 2010:
Tangible Capital to adjusted total assets	$	42,630		8.82	%	$	7,252		1.50	%		N/A		N/A			N/A		N/A
Tier 1(Core) Capital to adjusted total assets	$	42,630		8.82	%	$	19,338		4.00	%	$	24,172		5.00	%	$	38,676		8.00	%
Tier 1(Core) Capital to risk weighted assets	$	42,630		11.76	%		N/A		N/A		$	21,754		6.00	%		N/A		N/A
Total Capital to risk weighted assets	$	47,299		13.05	%	$	29,006		8.00	%	$	36,257		10.00	%	$	43,508		12.00	%

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Fair Value

6 Months Ended

Jun. 30, 2011

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 the fair value of each type of financial instrument:

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 widely used in the industry 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 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 appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Impaired loans, other than performing TDRs, are generally collateral dependent and, as such, are carried at the estimated fair value of the collateral less estimated selling costs. Fair values are estimated through current appraisals, broker opinions or automated valuation models and adjusted as necessary, by management, to reflect current market conditions and, as such, are classified as Level 3.

Nonrecurring adjustments to certain commercial and residential real estate properties classified as real estate owned ("REO") are measured at the lower of carrying amount or fair value, less costs to sell. Fair values are generally based on third party appraisals of the property, resulting in a Level 3 classification. In cases where the carrying amount exceeds the fair value, less costs to sell, an impairment loss is recognized.

Assets Measured on a Recurring Basis

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

			Fair Value Measurements at June 30, 2011 Using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets:
Securities available-for-sale - residential mortgage-backed	$	9,172	$	—	$	9,172	$	—
			Fair Value Measurements at December 31, 2010 Using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets:
Securities available-for-sale - residential mortgage-backed	$	10,524	$	—	$	10,524	$	—

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.

	Carrying Value at
	June 30, 2011		December 31, 2010
	(In thousands)
Assets:
Non-performing loans receivable held-for-sale, net:
Five or more units	$	1,548	$	366
Church		4,441		4,783
Impaired loans carried at fair value of collateral:
One to four units		2,957		3,775
Five or more units		1,940		1,606
Commercial real estate		2,193		2,542
Church		8,906		5,591
Commercial		2,773		2,826
Consumer		—		749
Real estate owned:
One to four units		1,269		1,086
Five or more units		279		260
Commercial real estate		3,943		568
Church		1,199		1,122

The following table provides information regarding our assets measured at fair value on a non-recurring basis at June 30, 2011, and the losses recognized on these assets for the six months ended June 30, 2011.

	Principal Amount at June 30, 2011		Valuation Allowance at June 30, 2011		Losses for the six  months ended June 30, 2011
	(In thousands)
Non-performing loans receivable held-for-sale, net (1)	$	6,764	$	776	$	—
Impaired loans carried at fair value of collateral (2)		26,320		7,551		5,060
Real estate owned (3)		6,920		230		782
Total	$	40,004	$	8,557	$	5,842
(1)    Losses are charged to provision for losses on loans receivable held-for-sale. (2)    Losses are charged against the allowance for loan losses. Includes $7.1 million of loans that were carried at cost as the fair value of the collateral on these loans exceeded the book value as a result of charge-offs. (3)    Losses are charged against the allowance for loan losses in the case of a write-down upon the transfer of a loan to REO. Losses subsequent to the transfer of a loan to REO are charged to provision for losses on REO.

The following table provides information regarding our assets measured at fair value on a non-recurring basis at December 31, 2010, and the losses recognized on these assets for the year ended December 31, 2010.

	Principal Amount at December 31, 2010		Valuation Allowance at December 31, 2010		Losses for the year ended December 31, 2010
	(In thousands)
Non-performing loans receivable held-for-sale, net (1)	$	5,918	$	769	$	902
Impaired loans carried at fair value of collateral (2)		21,509		4,420		4,829
Real estate owned (3)		3,090		54		1,102
Total	$	30,517	$	5,243	$	6,833
(1)    Losses are charged to provision for losses on loans receivable held-for-sale. (2)    Losses are charged against the allowance for loan losses. Includes $5.4 million of loans that were carried at cost as the fair value of the collateral on these loans exceeded the book value as a result of charge-offs. (3)    Losses are charged against the allowance for loan losses in the case of a write-down upon the transfer of a loan to REO. Losses subsequent to the transfer of a loan to REO are charged to provision for losses on REO.

Fair Values of Financial Instruments

The carrying amounts and estimated fair values of financial instruments, at June 30, 2011 and December 31, 2010 were as follows:

	June 30, 2011						December 31, 2010
	Carrying Amount			Estimated Fair  Value			Carrying Amount			Estimated Fair Value
	(In thousands)
Financial Assets:
Cash and cash equivalents	$	17,861		$	17,861		$	21,978		$	21,978
Securities available-for-sale		9,172			9,172			10,524			10,524
Securities held-to-maturity		11,692			12,226			12,737			13,261
Loans receivable held for sale, net		16,005			16,005			29,411			29,411
Loans receivable, net		360,144			360,871			382,616			384,274
Federal Home Loan Bank stock		4,089			N/A			4,089			N/A
Accrued interest receivable		1,957			1,957			2,216			2,216
Financial Liabilities:
Deposits	$	(312,371	)	$	(311,113	)	$	(348,445	)	$	(347,373	)
Federal Home Loan Bank advances		(87,000	)		(91,906	)		(87,000	)		(91,615	)
Junior subordinated debentures		(6,000	)		(4,974	)		(6,000	)		(4,609	)
Other borrowings		(5,000	)		(4,979	)		(5,000	)		(4,979	)
Advance payments by borrowers for taxes and insurance		(743	)		(743	)		(272	)		(272	)
Accrued interest payable		(915	)		(915	)		(550	)		(550	)

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

Carrying amount is the estimated fair value for cash and cash equivalents, accrued interest receivable and payable, demand deposits, short term debt, advance payments by borrowers for taxes and insurance, and variable rate loans, deposits and borrowings that reprice frequently and fully. The methods for determining the fair values for securities were described previously. For fixed rate loans and deposits and for variable rate loans and deposits with infrequent repricing or repricing limits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk without consideration of widening credit spreads due to market illiquidity. Fair value of debt is based on current rates for similar financing. It was not practicable to determine the fair value of FHLB stock due to restrictions placed on its transferability. The fair values of off-balance-sheet items are not considered material (or are based on the current fees or cost that would be charged to enter into or terminate such arrangements) and, as such, they are not presented herein.

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Basis Of Financial Statement Presentation

6 Months Ended

Jun. 30, 2011

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, 2010 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 six months ended June 30, 2011 are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

Some items in the consolidated financial statements for the prior period were reclassified to conform to the current presentation.

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Securities

6 Months Ended

Jun. 30, 2011

Securities

Securities

NOTE (4) – Securities

The following table summarizes the amortized cost and fair value of the available-for-sale and held-to-maturity investment securities portfolios at June 30, 2011 and December 31, 2010 and the corresponding amounts of unrealized gains which are recognized in accumulated other comprehensive income (loss), for available-for-sale investment securities, were as follows:

	June 30, 2011
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Available-for-sale
Residential mortgage-backed	$	8,662	$	510	$	—	$	9,172
Total available-for-sale	$	8,662	$	510	$	—	$	9,172
Held-to-maturity
Residential mortgage-backed	$	10,692	$	445	$	—	$	11,137
U.S. Government and federal agency		1,000		89		—		1,089
Total held-to-maturity	$	11,692	$	534	$	—	$	12,226
	December 31, 2010
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
	(In thousands)
Available-for-sale
Residential mortgage-backed	$	10,085	$	439	$	—	$	10,524
Total available-for-sale	$	10,085	$	439	$	—	$	10,524
Held-to-maturity
Residential mortgage-backed	$	11,737	$	425	$	—	$	12,162
U.S. Government and federal agency		1,000		99		—		1,099
Total held-to-maturity	$	12,737	$	524	$	—	$	13,261

The amortized cost and fair value of the investment securities portfolios are shown by contractual maturity at June 30, 2011. Expected maturities may differ from contractual maturities if borrowers have the right to call or prepay obligations with or without call or prepayment penalties. Securities not due at a single maturity date, primarily residential mortgage-backed securities, are shown separately.

	Available-for-Sale				Held-to-Maturity
Maturity	Amortized Cost		Fair Value		Amortized Cost		Fair Value
	(In thousands)
Within one year	$	—	$	—	$	—	$	—
One to five years		—		—		1,000		1,089
Five to ten years		—		—		—		—
Beyond ten years		—		—		—		—
Residential mortgage-backed		8,662		9,172		10,692		11,137
Total	$	8,662	$	9,172	$	11,692	$	12,226

Securities pledged at June 30, 2011 and December 31, 2010 had a carrying amount of $11.7 million and $12.7 million and were pledged to secure public deposits and FHLB advances. At June 30, 2011 and December 31, 2010, 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 six months ended June 30, 2011 and 2010.

There were no securities with unrealized losses at June 30, 2011 and December 31, 2010. We evaluate securities for other-than-temporary impairment at least quarterly, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to the financial condition and near-term prospects of the issuer, the length of time and the extent to which the fair value has been less than the cost, and our intent and ability to retain our investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value. In analyzing an issuer's financial condition, we consider whether the securities are issued by the federal government or its agencies, whether downgrades by bond rating agencies have occurred, and the results of reviews of the issuer's financial condition.

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Loans Receivable Held-For-Sale, Net

6 Months Ended

Jun. 30, 2011

Loans Receivable Held-For-Sale, Net

Loans Receivable Held-For-Sale, Net

NOTE (5) – Loans Receivable Held-for-Sale, net

Loans receivable held-for-sale at June 30, 2011 and December 31, 2011 were as follows:

	June 30, 2011			December 31, 2010
	(In thousands)
Loans receivable, held for sale:
Multi-family residential	$	6,488		$	16,217
Commercial real estate		2,068			5,067
Church		8,756			9,408
Valuation allowance for unrealized losses		(1,307	)		(1,281	)
Loans receivable, held for sale, net	$	16,005		$	29,411

Loans receivable held-for-sale, net, consisted of multi-family and commercial real estate loans originated for sale and multi-family loans transferred from our loan portfolio. Non-performing loans receivable held-for-sale included in loans receivable held-for-sale, net, totaled $6.0 million, net of charge-offs of $122 thousand and a $776 thousand valuation allowance, as of June 30, 2011 and totaled $5.1 million, net of charge-offs of $414 thousand and a $769 thousand valuation allowance, at December 31, 2010. Restructured loans receivable held-for-sale that have complied with the terms of their restructured agreements for a satisfactory period of time and certain performing loans receivable held-for-sale with delinquency or other weaknesses totaled $4.1 million, net of a $531 thousand valuation allowance, as of June 30, 2011 and totaled $8.0 million, net of a $512 thousand valuation allowance, as of December 31, 2010. A loan receivable held-for-sale secured by a church building, which had a carrying amount of $266 thousand, net of charge-off of $292 thousand, was transferred to REO during the six months ended June 30, 2011.

We recorded a lower of cost or market recovery on non-performing loans receivable held-for-sale of $35 thousand for the six months ended June 30, 2011. Net lower of cost or market write-downs on non-performing loans receivable held-for-sale totaled $131 thousand for the six months ended June 30, 2010. During the six months ended June 30, 2011 and 2010, we increased our valuation allowance by $61 thousand and $416 thousand, respectively, on some of our loans held for sale that are still considered performing loans.

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Loans Receivable And Allowance For Loan Losses

6 Months Ended

Jun. 30, 2011

Loans Receivable And Allowance For Loan Losses

Loans Receivable And Allowance For Loan Losses

NOTE (6) – Loans Receivable and Allowance for Loan Losses

Loans at June 30, 2011 and December 31, 2010 were as follows:

	June 30, 2011			December 31, 2010
	(In thousands)
Loans receivable, net:
One to four units	$	81,022		$	82,764
Five or more units		122,074			128,534
Commercial real estate		66,155			72,770
Church		95,050			97,634
Construction		4,271			5,421
Commercial:
Sports		5,698			5,768
Other		6,370			6,410
Consumer:
Loan on savings		1,006			3,259
Other		13			29
Total gross loans receivable		381,659			402,589
Less:
Loans in process		119			371
Net deferred loan fees (costs)		(881	)		(889	)
Unamortized discounts		32			33
Allowance for loan losses		22,245			20,458
Loans receivable, net	$	360,144		$	382,616

The activity in the allowance for loan losses by segment of loans for the three and six months ended June 30, 2011 was as follows:

	For the three months ended June 30, 2011
	One to four units			Five or more  units			Commercial real estate			Church			Construction			Commercial			Consumer			Total
	(In thousands)
Beginning balance	$	3,977		$	2,622		$	3,530		$	7,387		$	54		$	1,598		$	1,823		$	20,991
Provision for loan losses		319			419			2,723			(46	)		14			(60	)		65			3,434
Recoveries		—			—			—			—			—			—			6			6
Loans charged off		(67	)		(149	)		—			(144	)		—			—			(1,826	)		(2,186	)
Ending balance	$	4,229		$	2,892		$	6,253		$	7,197		$	68		$	1,538		$	68		$	22,245
	For the six months ended June 30, 2011
	One to four units			Five or more units			Commercial real estate			Church			Construction			Commercial			Consumer			Total
	(In thousands)
Beginning balance	$	4,579		$	2,469		$	3,493		$	6,909		$	74		$	1,300		$	1,634		$	20,458
Provision for loan losses		(245	)		572			3,369			477			(6	)		238			269			4,674
Recoveries		—			—			—			—			—			—			8			8
Loans charged off		(105	)		(149	)		(609	)		(189	)		—			—			(1,843	)		(2,895	)
Ending balance	$	4,229		$	2,892		$	6,253		$	7,197		$	68		$	1,538		$	68		$	22,245

The activity in the allowance for loan losses for the three and six months ended June 30, 2010 was as follows:

	For the three months ended June 30, 2010			For the six months ended June 30, 2010
	(In thousands)
Beginning balance	$	20,110		$	20,460
Provision for loan losses		309			883
Recoveries		—			—
Loans charged off		(1,957	)		(2,881	)
Ending balance	$	18,462		$	18,462

The allowance for loan losses is comprised of specific loss allowances for impaired loans and general loan loss allowances based on quantitative and qualitative analyses.

The following table presents the balance in the allowance for loan losses and the recorded investment in loans by segment of loans and based on impairment method as of June 30, 2011 and December 31, 2010:

	June 30, 2011
	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	$	871	$	183	$	3,400	$	3,127	$	—	$	1,210	$	—	$	8,791
Collectively evaluated for impairment		3,358		2,709		2,853		4,070		68		328		68		13,454
Total ending allowance balance	$	4,229	$	2,892	$	6,253	$	7,197	$	68	$	1,538	$	68	$	22,245
Loans:
Loans individually evaluated for impairment	$	10,492	$	3,067	$	11,925	$	30,850	$	317	$	3,983	$	—	$	60,634
Loans collectively evaluated for impairment		70,530		119,007		54,230		64,200		3,954		8,085		1,019		321,025
Total ending loans balance	$	81,022	$	122,074	$	66,155	$	95,050	$	4,271	$	12,068	$	1,019	$	381,659
	December 31, 2010
	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	$	423	$	69	$	935	$	2,118	$	—	$	942	$	1,541	$	6,028
Collectively evaluated for impairment		4,156		2,400		2,558		4,791		74		358		93		14,430
Total ending allowance balance	$	4,579	$	2,469	$	3,493	$	6,909	$	74	$	1,300	$	1,634	$	20,458
Loans:
Loans individually evaluated for impairment	$	9,962	$	2,260	$	13,206	$	26,251	$	320	$	3,768	$	2,265	$	58,032
Loans collectively evaluated for impairment		72,802		126,274		59,564		71,383		5,101		8,410		1,023		344,557
Total ending loans balance	$	82,764	$	128,534	$	72,770	$	97,634	$	5,421	$	12,178	$	3,288	$	402,589

Impaired loans were as follows:

	June 30, 2011		December 31, 2010
	(In thousands)
Impaired loans with no allocated allowance:
Without charge-off	$	20,873	$	20,767
With charge-off		7,087		5,424
Impaired loans with allocated allowance:
Without charge-off		32,095		29,532
With charge-off		579		2,309
Total	$	60,634	$	58,032
Amount of the allowance for loan losses allocated	$	8,791	$	6,028

The following table presents loans individually evaluated for impairment by class of loans as of June 30, 2011 and December 31, 2010:

	June 30, 2011						December 31, 2010
	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	$	6,664	$	5,330	$	—	$	7,953	$	5,991	$	—
Five or more units		2,142		1,974		—		600		586		—
Commercial real estate		5,795		5,156		—		8,409		8,133		—
Church		15,652		15,183		—		11,782		11,161		—
Construction		317		317		—		320		320		—
With an allowance recorded:
One to four units		5,338		5,162		871		4,129		3,971		423
Five or more units		1,088		1,093		183		1,674		1,674		69
Commercial real estate		6,769		6,769		3,400		5,072		5,073		935
Church		15,766		15,667		3,127		15,183		15,090		2,118
Commercial:
Sports		4,000		3,698		925		4,000		3,768		942
Other		285		285		285		—		—		—
Consumer:
Loan on savings		—		—		—		2,249		2,249		1,525
Other		—		—		—		16		16		16
Total	$	63,816	$	60,634	$	8,791	$	61,387	$	58,032	$	6,028

The following table presents the average recorded investment, interest income recognized and cash basis interest income related to our impaired loans by segment and class for the six months ended June 30, 2011.

	For the six months ended June 30, 2011
	Average Recorded Investment		Interest Income Recognized		Cash  Basis Interest Income
	(In thousands)
With no related allowance recorded:
One to four units	$	5,767	$	25	$	25
Five or more units		1,739		13		13
Commercial real estate		8,369		37		36
Church		14,481		98		92
Construction		319		—		—
With an allowance recorded:
One to four units		3,860		113		116
Five or more units		808		—		—
Commercial real estate		4,268		57		57
Church		14,712		312		320
Commercial:
Sports		3,728		—		—
Other		247		—		—
Consumer:
Loan on savings		1,479		—		—
Total	$	59,777	$	655	$	659

	For the six months  ended June 30, 2010
	(In thousands)
Average recorded investment in impaired loans	$	48,678
Interest income recognized		740
Cash basis interest income		555

Interest income recognized during impairment represents interest income earned on accruing impaired loans. Cash-basis interest income recognized represents cash received for interest payments on performing TDRs.

The following table presents the recorded investment in nonaccrual loans by class of loans:

	June 30, 2011		December 31, 2010
	(In thousands)
Loans receivable, held for sale:
Five or more units	$	1,574	$	385
Church		5,190		5,533
Loans receivable, net:
One to four-units		5,824		6,227
Five or more units		2,675		1,865
Commercial real estate		9,061		10,321
Church		20,132		12,748
Construction		317		320
Commercial:
Sports		3,698		3,768
Other		285		—
Consumer:
Loan on Savings		—		2,249
Other		—		16
Total nonaccrual loans	$	48,756	$	43,432

As of June 30, 2011, a commercial loan for $569 thousand was more than 90 days past due and was accruing interest. The loan has matured and is currently being modified but since the loan has always been current with monthly payments, the loan remained on accruing status. There were no loans 90 days or more delinquent that were accruing interest as of December 31, 2010.

The following table presents the aging of the recorded investment in past due loans, including loans held for sale, as of June 30, 2011 and December 31, 2010 by class of loans:

	June 30, 2011
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total Loans Not Past Due
	(In thousands)
One to four units	$	5,795	$	—	$	5,824	$	11,619	$	69,403
Five or more units		251		769		4,249		5,269		123,293
Commercial real estate		733		1,424		9,061		11,218		57,005
Church		4,895		1,851		25,322		32,068		71,738
Construction		—		120		317		437		3,834
Commercial:
Sports		—		—		3,698		3,698		2,000
Other		99		—		854		953		5,417
Consumer:
Loan on savings		—		—		—		—		1,006
Other		—		—		—		—		13
Total	$	11,773	$	4,164	$	49,325	$	65,262	$	333,709
	December 31,2010
	30-59 Days Past Due		60-89 Days Past Due		Greater than 90 Days Past Due		Total Past Due		Total Loans Not Past Due
	(In thousands)
One to four units	$	2,716	$	71	$	6,227	$	9,014	$	73,750
Five or more units		2,014		1,068		2,250		5,332		139,419
Commercial real estate		769		1,287		10,321		12,377		65,460
Church		12,914		5,230		18,281		36,425		70,617
Construction		898		—		320		1,218		4,203
Commercial:
Sports		—		—		3,768		3,768		2,000
Other		325		—		—		325		6,085
Consumer:
Loan on savings		—		—		2,249		2,249		1,010
Other		—		—		16		16		13
Total	$	19,636	$	7,656	$	43,432	$	70,724	$	362,557

At June 30, 2011, loans classified as a troubled debt restructurings ("TDR") totaled $36.5 million, of which $15.9 million were included in nonaccrual loans and $20.6 million were on accrual status as the loans have complied with the terms of their restructured agreements for a satisfactory period of time. At December 31, 2010, loans classified as a TDR totaled $37.1 million, of which $14.6 million were included in nonaccrual loans and $22.5 million were on accrual status as the loans have complied with the terms of their restructured agreements for a satisfactory period of time. The Company has specific allowances of $1.7 million and $1.6 million allocated to performing TDRs as of June 30, 2011 and December 31, 2010. As of June 30, 2011 and December 31, 2010, we did not have any outstanding commitments to extend additional funds to these borrowers.

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. The Company analyzes 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 class of loans as of June 30, 2011 and December 31, 2010 is as follows:

	As of June 30, 2011
	Pass		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
One to four units	$	69,883	$	3,220	$	7,919	$	—	$	—
Five or more units		114,116		3,541		4,368		—		49
Commercial real estate		43,321		4,923		17,826		85		—
Church		39,488		12,457		42,136		370		599
Construction		1,046		2,908		317		—		—
Commercial:
Sports		—		2,000		3,698		—		—
Other		856		5,049		465		—		—
Consumer:
Loan on savings		1,006		—		—		—		—
Other		13		—		—		—		—
Total	$	269,729	$	34,098	$	76,729	$	455	$	648

	As of December 31, 2010
	Pass		Special Mention		Substandard		Doubtful		Loss
	(In thousands)
One to four units	$	71,846	$	2,440	$	8,478	$	—	$	—
Five or more units		118,490		6,412		3,632		—		—
Commercial real estate		46,692		5,281		20,797		—		—
Church		42,931		14,229		40,204		270		—
Construction		4,203		320		898		—		—
Commercial:
Sports		—		2,000		3,768		—		—
Other		925		4,870		615		—		—
Consumer:
Loan on savings		1,010		—		2,249		—		—
Other		13		—		—		—		16
Total	$	286,110	$	35,552	$	80,641	$	270	$	16

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Consolidated Statements Of Cash Flows (USD $) In Thousands	6 Months Ended
	Jun. 30, 2011	Jun. 30, 2010
Cash flows from operating activities:
Net earnings (loss)	$ (1,851)	$ 1,834
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Provision for loan losses	4,674	883
Provision for losses on loans receivable held-for-sale	26	547
Provision for losses on REO	782	111
Depreciation	206	214
Net amortization of deferred loan origination (fees) costs	20	(6)
Net amortization of premiums on mortgage-backed securities	59	102
Stock-based compensation expense	45	80
Earnings on bank owned life insurance	(44)	(48)
Net losses on sales of REO	49	35
Net (gains) losses on sales of loans	(11)	136
Net change in:
Accrued interest receivable	259	(98)
Deferred tax assets	(767)	(127)
Other assets	(1,543)	2,353
Other liabilities	790	(663)
Net cash provided by operating activities	2,694	5,353
Cash flows from investing activities:
Net change in loans receivable	10,136	3,037
Proceeds from sales and principal repayments of loans receivable held-for-sale	14,243	2,864
Available-for-sale securities:
Maturities, prepayments and calls	1,367	2,718
Held-to-maturity securities:
Maturities, prepayments and calls	1,042	1,998
Proceeds from sales of REO	2,305	1,396
Investment in affordable housing limited partnership	(286)	(359)
Redemption (Purchase) of FHLB stock		(62)
Additions to office properties and equipment	(21)	(102)
Net cash provided by investing activities	28,786	11,490
Cash flows from financing activities:
Net change in deposits	(36,074)	28,661
Proceeds from FHLB advances	7,000
Repayments on FHLB advances	(7,000)	(3,600)
Net increase in other borrowings		5,000
Cash dividends paid		(412)
Reissuance of treasury stock	6	6
Net change in advance payments by borrowers for taxes and insurance	471	(178)
Net cash provided by (used in) financing activities	(35,597)	29,477
Net change in cash and cash equivalents	(4,117)	46,320
Cash and cash equivalents at beginning of period	21,978	7,440
Cash and cash equivalents at end of period	17,861	53,760
Supplemental disclosures of cash flow information:
Cash paid for interest	3,912	4,796
Cash paid for income taxes	865
Supplemental disclosures of non-cash investing and financing activities:
Transfers of loans receivable to REO	6,414	3,957
Transfers of loans receivable held-for-sale to REO	266
Transfers of loans receivable from loans receivable, net to loans receivable held-for-sale		$ 1,422

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Recently Issued Accounting Pronouncements

6 Months Ended

Jun. 30, 2011

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

NOTE (2) – Recently Issued Accounting Pronouncements

In April 2011, the FASB issued ASU No. 2011-02, A Creditor's Determination of Whether a Restructuring Is a Troubled Debt Restructuring, updated to amend previous guidance with respect to troubled debt restructurings. This updated guidance is designed to assist creditors with determining whether or not a restructuring constitutes a troubled debt restructuring. In particular, additional guidance has been added to help creditors determine whether a concession has been granted and whether a debtor is experiencing financial difficulties. Both of these conditions are required to be met for a restructuring to constitute a troubled debt restructuring. The amendments in the update are effective for the first interim period beginning on or after June 15, 2011, and should be applied retrospectively to the beginning of the annual period of adoption. Adoption of this guidance did not have a material effect on the Company's consolidated financial statements.

In May 2011, the FASB issued ASU 2011-04, Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs. ASU 2011-04 addresses convergence between GAAP and International Financial Reporting Standards ("IFRS") requirements for measurement of and disclosures about fair value. The amendments are not expected to have a significant impact on companies applying GAAP. Key provisions of the amendment include: a prohibition on grouping financial instruments for purposes of determining fair value, except when an entity manages market and credit risks on the basis of the entity's net exposure to the group; an extension of the prohibition against the use of a blockage factor to all fair value measurements (that prohibition currently applies only to financial instruments with quoted prices in active markets); and a requirement that for recurring Level 3 fair value measurements, entities disclose quantitative information about unobservable inputs, a description of the valuation process used and qualitative details about the sensitivity of the measurements. In addition, for items not carried at fair value but for which fair value is disclosed, entities will be required to disclose the level within the fair value hierarchy that applies to the fair value measurement disclosed. The amendments in ASU 2011-04 are effective during interim and annual periods beginning after December 15, 2011. Early adoption is not permitted. The Company does not expect the adoption of ASU 2011-04 to have a material effect on its consolidated financial statements.

In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220): Presentation of Comprehensive Income, which will require companies to present the components of net income and other comprehensive income either as one continuous statement or as two consecutive statements. It eliminates the option to present components of other comprehensive income as part of the statement of changes in stockholders' equity. The guidance in ASU 2011-05 does not change the items which must be reported in other comprehensive income, how such items are measured, or when they must be reclassified to net income. The guidance in ASU 2011-05 is effective for interim and annual periods beginning after December 15, 2011, and should be applied retrospectively. Early adoption is permitted. Since the provisions of ASU 2011-05 are presentation related only, the Company does not expect the adoption of ASU 2011-04 to have a material effect on its consolidated financial statements.

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Consolidated Balance Sheets (USD $) In Thousands	Jun. 30, 2011	Dec. 31, 2010
Assets
Cash	$ 12,621	$ 8,203
Federal funds sold	5,240	13,775
Cash and cash equivalents	17,861	21,978
Securities available for sale, at fair value	9,172	10,524
Securities held to maturity (fair value of $12,226 at June 30, 2011 and $13,261 at December 31, 2010)	11,692	12,737
Loans receivable held-for-sale, net	16,005	29,411
Loans receivable, net of allowance of $22,245 and $20,458	360,144	382,616
Accrued interest receivable	1,957	2,216
Federal Home Loan Bank (FHLB) stock, at cost	4,089	4,089
Office properties and equipment, net	4,909	5,094
Real estate owned (REO), net	6,690	3,036
Bank owned life insurance	2,566	2,522
Deferred tax assets	6,108	5,369
Other assets	5,881	4,338
Total assets	447,074	483,930
Liabilities and stockholders' equity
Deposits	312,371	348,445
Federal Home Loan Bank advances	87,000	87,000
Junior subordinated debentures	6,000	6,000
Other borrowings	5,000	5,000
Advance payments by borrowers for taxes and insurance	743	272
Other liabilities	5,232	4,353
Total liabilities	416,346	451,070
Stockholders' Equity:
Preferred stock discount	(1,188)	(1,380)
Common stock, $.01 par value, authorized 8,000,000 shares at June 30, 2011 and December 31, 2010; issued 2,013,942 shares at June 30, 2011 and December 31, 2010; outstanding 1,744,565 shares at June 30, 2011 and 1,743,965 shares at December 31, 2010	20	20
Additional paid-in capital	14,439	14,395
Retained earnings-substantially restricted	5,656	8,074
Accumulated other comprehensive income, net of taxes of $204 at June 30, 2011 and $176 at December 31, 2010	306	263
Treasury stock-at cost, 269,377 shares at June 30, 2011 and 269,977 shares at December 31, 2010	(3,444)	(3,451)
Total stockholders' equity	30,728	32,860
Total liabilities and stockholders' equity	447,074	483,930
Series D | Cumulative preferred stock
Stockholders' Equity:
Preferred non-voting stock, value	8,963	8,963
Series E | Cumulative preferred stock
Stockholders' Equity:
Preferred non-voting stock, value	5,974	5,974
Noncumulative preferred stock
Stockholders' Equity:
Preferred non-voting stock, value	$ 2	$ 2