##### Table of Contents





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 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
incorporation or organization) |  | (I.R.S. Employer 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   ̈    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.









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##### Table of Contents

TABLE OF CONTENTS



|         |  |                       |  |                                                                                                                                         |    |  |    | 
|-------- |  | --------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------- | -- |  | -- | 
|         |  |                       |  | Page                                                                                                                                    |   
|PART I.  |  | FINANCIAL INFORMATION |  |                                                                                                                                         |    | 
|         |  |                       | 
|         |  | Item 1.               |  | Financial Statements                                                                                                                    |    |  |    | 
|         |  |                       |  | Consolidated Balance Sheets as of June 30, 2011 (unaudited) and December 31, 2010                                                       |    |  | 1  | 
|         |  |                       |  | Consolidated Statements of Operations and Comprehensive Earnings (unaudited) for the three and six months
 ended June 30, 2011 and 2010 |    |  | 2  | 
|         |  |                       |  | Consolidated Statements of Cash Flows (unaudited) for the three and six months ended June 30, 2011 and 2010                             |    |  | 3  | 
|         |  |                       |  | Notes to Unaudited Consolidated Financial Statements                                                                                    |    |  | 4  | 
|         |  |                       | 
|         |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                                   |    |  | 20 | 
|         |  |                       | 
|         |  | Item 4.               |  | Controls and Procedures                                                                                                                 |    |  | 26 | 
|         |  |                      
|PART II. |  | OTHER INFORMATION     |  |                                                                                                                                         |    | 
|         |  |                       | 
|         |  | Item 1.               |  | Legal Proceedings                                                                                                                       |    |  | 27 | 
|         |  |                       | 
|         |  | Item 1A.              |  | Risk Factors                                                                                                                            |    |  | 29 | 
|         |  |                       | 
|         |  | Item 2.               |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                                             |    |  | 29 | 
|         |  |                       | 
|         |  | Item 3.               |  | Defaults Upon Senior Securities                                                                                                         |    |  | 29 | 
|         |  |                       | 
|         |  | Item 4.               |  | Reserved                                                                                                                                |    |  | 29 | 
|         |  |                       | 
|         |  | Item 5.               |  | Other Information                                                                                                                       |    |  | 29 | 
|         |  |                       | 
|         |  | Item 6.               |  | Exhibits                                                                                                                                |    |  | 29 | 
|         |  |                      
|         |  | Signatures            |  |                                                                                                                                         | 30 | 
|         |  |                       | 
|         |  | 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                                                                                               |    |  |    | 



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##### Table of Contents

BROADWAY FINANCIAL CORPORATION AND
SUBSIDIARIES

Consolidated Balance Sheets



|                                                                                                                                                                                                                                                                                                                                                                                |  |                                                  |         |   |                   |   |         |  
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------ | ------- | - | ----------------- | - | ------- | -
|                                                                                                                                                                                                                                                                                                                                                                                |  | June 30, 2011(Unaudited)                         |         |   | December 31, 2010 |  
|Assets                                                                                                                                                                                                                                                                                                                                                                          |  | (Dollars in thousands, except per share amounts) |        
|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:                                                                                                                                                                                                                                                                                                                                                           |  |                                                  |         |   |                   |   |         |  
|Senior preferred, cumulative and non-voting stock, $.01 par value, authorized, issued and outstanding 9,000 shares of Series D at
June 30, 2011 and December 31, 2010; liquidation preference of $9,394 at June 30, 2011 and $9,169 at December 31, 2010                                                                                                                        |  |                                                  | 8,963   |   |                   |   | 8,963   |  
|Senior preferred, cumulative and non-voting stock, $.01 par value, authorized, issued and outstanding 6,000 shares of Series E at
June 30, 2011 and December 31, 2010; liquidation preference of $6,263 at June 30, 2011 and $6,113 at December 31, 2010                                                                                                                        |  |                                                  | 5,974   |   |                   |   | 5,974   |  
|Preferred, non-cumulative and non-voting stock, $.01 par value, authorized 1,000,000 shares; issued and outstanding 55,199 shares
of Series A, 100,000 shares of Series B and 76,950 shares of Series C at June 30, 2011 and December 31, 2010; liquidation preference of $552 for Series A, $1,000 for Series B and $1,000 for Series C at June 30, 2011 and
December 31, 2010 |  |                                                  | 2       |   |                   |   | 2       |  
|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 |  
|                                                                                                                                                                                                                                                                                                                                                                                |  |                                                  |         |   |                   |   |         |  

See accompanying notes to unaudited consolidated financial statements.



1



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##### Table of Contents

BROADWAY FINANCIAL CORPORATION AND
SUBSIDIARIES

Consolidated Statements of Operations and Comprehensive Earnings (Loss)

(Unaudited)



|                                                     |  |                                                  |        |   |                           |   |       |      |  |   |        |   |  |   |        |  
|---------------------------------------------------- |  | ------------------------------------------------ | ------ | - | ------------------------- | - | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                     |  | Three Months Ended June 30,                      |        |   | Six Months Ended June 30, |  
|                                                     |  | 2011                                             |        |   | 2010                      |   |       | 2011 |  |   | 2010   |  
|                                                     |  | (Dollars in thousands, except per share amounts) |       
|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   |  
|                                                     |  |                                                  |        |   |                           |   |       |      |  |   |        |   |  |   |        |  

See accompanying notes to unaudited consolidated financial statements.



2



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##### Table of Contents

BROADWAY FINANCIAL CORPORATION AND
SUBSIDIARIES

Consolidated Statements of Cash Flows

(Unaudited)



|                                                                                           |  |                           |         |   |      |   |        |  
|------------------------------------------------------------------------------------------ |  | ------------------------- | ------- | - | ---- | - | ------ | -
|                                                                                           |  | Six Months Ended June 30, |        
|                                                                                           |  | 2011                      |         |   | 2010 |  
|                                                                                           |  | (Dollars in thousands)    |        
|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  |  
|                                                                                           |  |                           |         |   |      |   |        |  

See accompanying notes to unaudited consolidated financial statements.



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##### Table of Contents

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

June 30, 2011

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.

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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##### Table of Contents

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

June 30, 2011



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 endedJune 30,       |           |   | For the six months endedJune 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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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

June 30, 2011



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    |        |  | GrossUnrealizedGains |   |     | GrossUnrealizedLosses |  |   | 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    |        |  | GrossUnrealizedGains |   |     | GrossUnrealizedLosses |  |   | 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 | 
|                            |  |                    |       |  |                  |   |       |                |  |   |            |  |  |   |        | 



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##### Table of Contents

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

June 30, 2011



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.

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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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

June 30, 2011



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 fourunits                         |       |   | Five ormore 
units |   |       | Commercialreal 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 fourunits                         |       |   | Five ormore units  |   |       | Commercialreal 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 |  
|                          |  |                                          |       |   |                    |   |       |                       |  |   |        |   |  |              |       |   |            |   |    |          |  |   |       |   |  |   |        |   |  |   |        |  



8



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##### Table of Contents

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

June 30, 2011



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



|                          |  |                                        |        |   |                                      |   |        |  
|------------------------- |  | -------------------------------------- | ------ | - | ------------------------------------ | - | ------ | -
|                          |  | For the threemonths endedJune 30, 2010 |        |   | For the sixmonths endedJune 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 tofour units  |        |  | Five ormore units |   |         | Commercialreal 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 tofour units  |        |  | Five ormore units |   |         | Commercialreal 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 | 
|                                                |  |                   |        |  |                   |   |         |                       |  |   |        |  |  |              |        |  |            |   |       |          |  |   |        |  |  |   |       |  |  |   |         | 



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##### Table of Contents

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

June 30, 2011



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  |  
|                                    |  | UnpaidPrincipalBalance |        |  | RecordedInvestment |   |        | Allowancefor LoanLossesAllocated |  |   | UnpaidPrincipalBalance |  |  | RecordedInvestment |        |  | Allowancefor LoanLossesAllocated |  
|                                    |  | (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 | 
|                                    |  |                        |        |  |                    |   |        |                                  |  |   |                        |  |  |                    |        |  |                                  |   |        |  |  |   |       | 



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##### Table of Contents

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

June 30, 2011



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 |       
|                                    |  | AverageRecordedInvestment              |        |  | InterestIncomeRecognized |   |     | Cash 
BasisInterestIncome | 
|                                    |  | (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 
endedJune 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 | 
|                                 |  |                |        |  |                   |   |        | 



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##### Table of Contents

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

June 30, 2011



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     |       
|                       |  | 30-59DaysPast Due |        |  | 60-89DaysPast Due |   |       | Greater than90 DaysPast Due |  |   | TotalPast Due |  |  | Total LoansNot 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  |       
|                       |  | 30-59DaysPast Due |        |  | 60-89DaysPast Due |   |       | Greater than90 Days
PastDue |  |   | TotalPast Due |  |  | Total LoansNot 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.



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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

June 30, 2011



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 | 
|                       |  |                     |         |  |                 |   |        |             |  |   |          |  |  |      |     |  |  |   |     | 



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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

June 30, 2011



|                       |  |                         |         |  |                 |   |        |             |  |   |          |  |  |      |     |  |  |   |    | 
|---------------------- |  | ----------------------- | ------- |  | --------------- | - | ------ | ----------- |  | - | -------- |  |  | ---- | --- |  |  | - | -- | 
|                       |  | 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 | 
|                       |  |                         |         |  |                 |   |        |             |  |   |          |  |  |      |     |  |  |   |    | 

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.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

June 30, 2011



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.

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.



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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

June 30, 2011



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             |  
|                                                            |  | CarryingValue  |        |  | Quoted Pricesin ActiveMarkets forIdentical Assets(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |  |   | SignificantUnobservableInputs(Level
 3) | 
|                                                            |  | (In thousands) |       
|Assets:                                                     |  |                |        | 
|Securities available-for-sale - residential mortgage-backed |  | $              | 9,172  |  |                                                            | $ |  |                                           |  | $ | 9,172                                   |  |  | $ |  | 
|                                                            |  |               
|                                                            |  |                |        |  | Fair Value Measurements at December 31, 2010 Using         |  
|                                                            |  | CarryingValue  |        |  | Quoted Pricesin ActiveMarkets forIdentical Assets(Level 1) |   |   | SignificantOtherObservableInputs(Level 2) |  |   | SignificantUnobservableInputs(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 | 



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BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

June 30, 2011



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.



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                                 |        |  |                                    |   |       |                                              |  |   |       | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------- | ------ |  | ---------------------------------- | - | ----- | -------------------------------------------- |  | - | ----- | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | PrincipalAmount atJune 30, 2011 |        |  | ValuationAllowance atJune 30, 2011 |   |       | Losses for thesix 
months endedJune 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.



|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  |                                    |        |  |                                       |   |       |                                          |  |   |       | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------- | ------ |  | ------------------------------------- | - | ----- | ---------------------------------------- |  | - | ----- | 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |  | PrincipalAmount atDecember 31,2010 |        |  | ValuationAllowance atDecember 31,2010 |   |       | Losses for theyear
endedDecember 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. | 



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##### Table of Contents

BROADWAY FINANCIAL CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements (continued)

June 30, 2011



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    |  
|                                                      |  | CarryingAmount |          |   | EstimatedFair 
Value |   |          | CarryingAmount |  |   | EstimatedFair 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.

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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##### Table of Contents

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 forCapital AdequacyPurposes |  |       | To Be WellCapitalized UnderPrompt CorrectiveAction Regulations |  |   | CapitalRequirementsunder Cease andDesist 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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##### Table of Contents

|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, 2010.

Overview

Total assets decreased during the first six months of 2011 primarily due to a decrease in our loan portfolio. The decline in assets
reflected the strategy that we have been implementing since the second quarter of 2010 to reduce and resolve non-performing assets and to slow down asset growth, in our efforts to maintain our capital ratios above the required thresholds. Total
deposits decreased during the first six months of 2011, as we continued to allow maturing certificates of deposit and brokered deposits, including deposits obtained through the CDARS reciprocal referral system, to run off as total assets declined.

Our net loss for the three and six months ended June 30, 2011 were ($1.7) million and ($1.9) million, respectively,
compared to net earnings of $846 thousand and $1.8 million, respectively, for the same period a year ago, representing a decrease in net earnings of $2.6 million and $3.7 million, respectively. The decrease in net earnings was primarily due to
higher provision for loan losses and lower net interest income for the three and six months ended June 30, 2011.

The
annualized returns on average equity for the three and six months ended June 30, 2011 were (21.41%) and (11.32%), compared to 10.28% and 11.29% for the three and six months ended June 30, 2010. The annualized returns on average assets
for the three and six months ended June 30, 2011 were (1.48%) and (0.78%), compared to 0.62% and 0.69% for the three and six months June 30, 2010. The efficiency ratios for the three and six months ended June 30, 2011 were 73.68%
and 74.40%, compared to 60.63% and 59.68% for the comparable periods in 2010.

Results of Operations

Net Earnings

Net loss
for the second quarter of 2011 was ($1.7) million, or ($1.15) per diluted common share, compared to net earnings of $846 thousand, or $0.32 per diluted common share, for the second quarter of 2010. The net loss for the second quarter of 2011 was
primarily due to higher provision for loan losses and lower net interest income.

For the six months ended June 30, 2011,
net loss totaled ($1.9) million, or ($1.39) per diluted common share, compared to net earnings of $1.8 million, or $0.72 per diluted common share, for the same period in 2010.

Net Interest Income

For the quarter ended June 30, 2011, our net
interest income before provision for loan losses was $4.4 million, which represented a decrease of $903 thousand, or 17%, from the second quarter of 2011. The decrease in net interest income was primarily attributable to a decrease in average
interest-earning assets, combined with a decrease in net interest margin. The decline in our net interest margin primarily reflected elevated levels of non-performing assets.

Average interest-earning assets for the second quarter of 2011 decreased to $459.7 million, down $78.5 million from the second quarter of 2010. The decrease in average interest-earning assets resulted in
a $1.0 million reduction in interest income. Additionally, the annualized yield on our average interest-earning assets decreased 11 basis points to 5.64% for the second quarter of 2011, compared to the annualized yield of 5.75% for the same period a
year ago. The 11 basis point decline in the annualized yield on our average interest-earning assets resulted in a decrease of $244 thousand in interest income. Higher levels of non-performing assets, primarily non-performing loans and REOs,
contributed to the decline in the annualized yield on our interest-earning assets.



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##### Table of Contents

Average interest-bearing liabilities for the second quarter of 2011 decreased to $429.3
million, down $75.7 million from the second quarter of 2010. The decrease in average interest-bearing liabilities resulted in a $353 thousand reduction in interest expense. The annualized cost of our average interest-bearing liabilities decreased 1
basis point to 1.91% for the second quarter of 2011 from the annualized cost of 1.92% for the same period a year ago, and resulted in a decrease of $18 thousand in interest expense.

For the six months ended June 30, 2011, net interest income before provision for loan losses totaled $8.8 million, down $2.0
million, or 19%, from $10.8 million of net interest income before provision for loan losses for the same period a year ago. The $2.0 million decrease in net interest income primarily resulted from a $59.2 million decrease in average interest-earning
assets and a 35 basis point decrease in net interest margin.

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 losses inherent 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 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.

The provision for loan losses for the second quarter of 2011 totaled $3.4 million compared to $309 thousand for the same period a year
ago. The $3.1 million increase in the provision for loan losses from the second quarter of 2010 to the second quarter of 2011 primarily reflected the increase in specific valuation allowance on impaired loans, which was partially offset by the
decrease in the general valuation allowance due to the reduction in our gross loan portfolio. During the second quarter of 2011, we recorded a $3.0 million specific loss allocation on a commercial real estate loan. The Bank decided on the specific
loss allocation due to insufficient cash flow from the property to service the debt, a decline in real estate values resulting in the loan being substantially under collateralized and deteriorating borrower financial capacity to repay the loan from
personal reserves.

For the six months ended June 30, 2011, the provision for loan losses totaled $4.7 million compared
to $883 thousand of provisions for the same period a year-ago. The increase in loan loss provision was primarily due to the $3.0 million specific loss allocation on a commercial real estate loan (as discussed above), higher levels of non-performing
loans and classified loans, which were partially offset by the $59.4 million decline in our loan portfolio as compared to the same period in 2010. During the six months ended June 30, 2011, the dollar amount and number of our classified loans and
delinquent loans declined from the levels at December 31, 2010.

Net loan charge-offs during the first six months of 2011
were $2.9 million, or 1.38% of average loans on an annualized basis, compared to $2.9 million, or 1.22% during the first six months of 2010. Consumer loans represented 63% of the charge-offs during the first six months of 2011, primarily because of
one write-off related to the settlement of litigation concerning a consumer loan secured by a deposit account. We believe that settling this litigation, which was initiated in 2008, was the best course of action for our shareholders because the
settlement eliminates any uncertainty regarding the matter and avoids any further drain on our managements time and resources. As of June 30, 2011, the consumer loan and the deposit account securing the loan have been closed and no additional
losses are expected to be incurred on this matter. Commercial real estate loans represented 21% of charge-offs while church, multi-family and one-to-four family residential real estate loans, combined, represented 16% of charge-offs during the first
six months of 2011. Of the $2.9 million of loan charge-offs during 2011, $2.2 million were specifically reserved for at year-end 2010 and $716 thousand were specifically reserved for during 2011.

At June 30, 2011 our allowance for loan losses was $22.2 million, or 5.83% of our gross loans, compared to $20.5 million, or 5.08%
of our gross loans, at year-end 2010. The ratio of the allowance for loan losses to NPLs, excluding loans held for sale, decreased to 52.27% at June 30, 2011, compared to 54.53% at year-end 2010. Our coverage ratio (general allowance as a
percentage of total non-impaired loans) was 4.19% as of June 30, 2011 and December 31, 2010. Our allowances for losses after considering reserves for loans held for sale and REO totaled $23.8 million at June 30, 2011, compared to $21.8 million
at year-end 2010.

Management believes that the allowance for loan losses is adequate to cover probable incurred losses in the
loan portfolio as of June 30, 2011, but there can be no assurance that actual losses will not exceed the estimated amounts. In



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##### Table of Contents

addition, the OTS 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 quarter ended June 30, 2011 totaled $199 thousand compared to $184 thousand for the
second quarter of 2010. The increase from the second quarter of 2010 was primarily due to higher net gains on mortgage banking activities and lower net losses on sales of REO in the second quarter of 2011.

For the six months ended June 30, 2011, non-interest income totaled $380 thousand compared to $456 thousand for the same period a
year ago. The decrease primarily reflects lower service charges and other income for the first six months of 2011.

Non-interest Expense

Non-interest expense for the quarter ended June 30, 2011 totaled $4.1 million, compared to $3.8 million for the
second quarter of 2010. Higher non-interest expense in the second quarter of 2011 was primarily due to a $672 thousand increase in provision for losses on REO, a $139 thousand increase in FDIC insurance expense, and a $234 thousand increase in other
expense, primarily higher REO expenses and appraisal expenses related to delinquent loans. These increases were partially offset by a $466 thousand decrease in provision for losses on loans held for sale, and a $241 thousand decrease in compensation
and benefits expense.

For the six months ended June 30, 2011, non-interest expense totaled $7.6 million compared to $7.4
million for the same period a year ago. The increase in non-interest expense during the first half of 2011 primarily reflected higher provision for losses on REO, FDIC insurance expense, REO expenses, and appraisal expenses related to delinquent
loans, which were partially offset by lower provision for losses on loans held for sale, compensation and benefits expense, and professional services expense.

Income Taxes

The Companys effective income tax rate was 41.11% and
41.03% for the three and six months ended June 30, 2011 compared to 37.79% and 38.83% for the three and six months ended June 30, 2010. Income taxes for interim periods are 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. The Companys change in its effective income tax rate for the three and six months ended June 30, 2011, versus the three and six months ended June 30, 2010, includes the impact of low-housing income
credit and increase in valuation allowance related to the future utilization of the state deferred tax assets. Based on the future projected book income and utilization of the federal deferred tax assets, the management has determined that a
valuation allowance against the federal deferred tax assets is not required.

Financial Condition

Total Assets

Total
assets were $447.1 million at June 30, 2011, which represented a decrease of $36.9 million, or 8%, from December 31, 2010. During the first six months of 2011, net loans decreased by $22.5 million, loans held for sale decreased by $13.4
million, cash and cash equivalents decreased by $4.1 million and securities decreased by $2.4 million while REO increased by $3.7 million.

Loan Portfolio

Our
gross loan portfolio decreased by $20.9 million to $381.7 million at June 30, 2011 from $402.6 million at December 31, 2010, primarily as loan repayments exceeded loan originations during the six months ended June 30, 2011. The $20.9
million decrease in our loan portfolio primarily consisted of a $6.6 million decrease in our commercial real estate loan portfolio, a $6.5 million decrease in our multi-family residential real estate loan portfolio, a $2.6 million decrease in our
church loan portfolio, a $2.3 million decrease in our consumer loan portfolio, a $1.7 million decrease in our one-to-four family residential real estate loan portfolio, and a $1.1 million decrease in our construction loan portfolio.



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Loan originations for the first six months of 2011 totaled $2.3 million compared to $15.3
million for the first six months of 2010. Loan repayments for the six months ended June 30, 2011 totaled $12.8 million compared to $19.3 million for the comparable period in 2010. Loans transferred to REO during the first six months of 2011
totaled $6.4 million, compared to $4.0 million during the first six months of 2010. Loans transferred to loans held for sale during the first six months of 2011 totaled $1.1 million, compared to $1.4 million during the first six months of 2010.

Loans held for sale decreased from $29.4 million at December 31, 2010 to $16.0 million at June 30, 2011. The $13.4
million decrease during the first six months of 2011 was primarily due to loan sales of $10.8 million, which were sold at par, and loan repayments of $3.4 million.

Deposits

Deposits totaled $312.4 million at June 30, 2011, down $36.1
million, or 10%, from year-end 2010. During the first six months of 2011, core deposits (NOW, demand, money market and passbook accounts) decreased by $9.8 million and represented 32% of total deposits at June 30, 2011 and December 31,
2010. Our certificates of deposit (CDs) decreased by $26.3 million during the first six months of 2011 and represented 68% of total deposits at June 30, 2011 and December 31, 2010. The $26.3 million decrease in CDs was
primarily due to maturities of $20.0 million of State of California CDs and a reduction of $8.3 million in brokered deposits. Over the past year, our funding strategy has included a plan to substantially eliminate brokered deposits, including
deposits under the Certificate of Deposit Account Registry Service. To date, we have successfully reduced our brokered deposits to a level representing only 3% of total deposits at June 30, 2011, compared to 5% at December 31, 2010 and 17%
at June 30, 2010.

Borrowings

Since the end of 2010, FHLB borrowings remained unchanged at $87.0 million, as we borrowed $7.0 million from the FHLB to repay $7.0 million of maturing advance. Subordinated debentures remained unchanged
at $6.0 million and other borrowings remained unchanged at $5.0 million. See Liquidity and Capital Resources for further information on other borrowings.

Non-Performing Assets

Non-performing assets, comprised of NPLs and REO,
were $56.0 million, or 12.53% of total assets, at June 30, 2011, compared to $46.5 million, or 9.60% of total assets, at December 31, 2010. During the first six months of 2011, NPLs, including non-performing loans held for sale, increased
by $5.9 million to $49.3 million from $43.4 million at the end of 2010. These loans consist of delinquent loans that are 90 days or more past due and certain loans and TDRs that do not qualify for accrual status. Despite the increase in NPAs during
the first six months of 2011, our total delinquencies and our total classified loans, which include NPLs, decreased in number and dollar amount during the first six months of 2011. In addition, at June 30, 2011, approximately $20.8 million, or
42.2%, of our NPLs were paying currently.

The NPLs included 31 church loans totaling $25.3 million, 13 commercial real estate
loans totaling $9.1 million, 19 one-to-four family residential real estate loans totaling $5.8 million, 10 multi-family residential real estate loans totaling $4.2 million, four commercial loans totaling $4.6 million, and one land loan of $0.3
million. In addition to the NPLs discussed above, there were $20.6 million and $22.5 million of accruing TDRs at June 30, 2011 and December 31, 2010. These TDRs are on accrual status as the loans have complied with the terms of their
restructured agreements for a period of six months or longer.

During the six months ended June 30, 2011, REO increased
by $3.7 million to $6.7 million from $3.0 million at the end of 2010. At June 30, 2011 the Banks REO consisted of three one-to-four family residential properties, two multi-family residential properties and seven commercial real estate
properties, four of which are church buildings. As we continue our efforts to reduce non-performing assets, we sold nine REO properties totaling $2.4 million and recorded net loss of $49 thousand during the first six months of 2011. Net lower of
cost or market write-downs on REO totaled $782 thousand for the six months ended June 30, 2011 compared to $111 thousand for the same period in 2010.



23



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##### Table of Contents

Performance Ratios

The annualized returns on average equity for the three and six months ended June 30, 2011 were (21.41%) and (11.32%), compared to 10.28% and 11.29% for the three and six months ended
June 30, 2010. The annualized returns on average assets for the three and six months ended June 30, 2011 were (1.48%) and (0.78%), compared to 0.62% and 0.69% for the three and six months June 30, 2010. The decrease in our
annualized returns on average equity and average assets was primarily due to lower profitability for the three and six months ended June 30, 2011 as a result of higher provision for loan losses and lower net interest income.

The efficiency ratios for the three and six months ended June 30, 2011 were 73.68% and 74.40%, compared to 60.63% and 59.68% for the
comparable periods in 2010. The deterioration in our efficiency ratio in 2011 was primarily due to lower net interest income, which was caused by higher levels of nonperforming assets and lower average interest-earning assets, and higher
non-interest expenses, related to higher levels of costs related to REO, increase premiums charged by the FDIC and higher appraisal costs.

Liquidity

The
Banks primary source of funds is cash provided by principal and interest payments on loans and securities. In addition to cash provided by principal and interest payments on loans and securities, other sources of funds include cash provided by
operating activities, deposits and borrowings.

Sources of funds for the Company on a stand-alone basis include distributions
from the Bank and the issuance of equity and debt securities and other borrowings. The Companys primary uses of funds include payment of dividends, payment of interest on its debt obligations and repurchases of common stock. Dividends and
other capital distributions from the Bank, however, are subject to general regulatory restrictions and to the special restrictions arising under the cease and desist orders issued to the Bank and to the Company by the OTS that are summarized in Note
(10) to our Financial Statements included in Part I of this Report and are further described in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission. Under the cease and desist orders, neither the Bank nor the
Company may declare or pay dividends, and 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.

Net cash inflows from operating activities totaled $2.7 million and $5.4 million during the first six months of 2011
and 2010, respectively. Net cash inflows from operating activities for the six months ended June 30, 2011 were primarily attributable to payments of interest on loans.

Net cash inflows from investing activities totaled $28.8 million and $11.5 million during the first six months of 2011 and 2010, respectively. Net cash inflows from investing activities for the six months
ended June 30, 2011 were attributable primarily to proceeds from sales of loans receivable held for sale, principal repayments on loans and residential mortgage-backed securities and proceeds from sales of REOs.

Net cash inflows (outflows) from financing activities totaled ($35.6) million and $29.5 million during the first six months of 2011 and
2010, respectively. Net cash outflows from financing activities for the six months ended June 30, 2011 were attributable primarily to the net decrease in deposits.

On February 28, 2010, we borrowed an aggregate of $5.0 million under our $5.0 million line of credit with another financial institution and invested all of the proceeds in the equity capital of the
Bank. Borrowings under the 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 we are now in default under the
line of credit agreement. We do not have sufficient cash available to repay the borrowing at this time and would require approval of the OTS to make any payment on this senior line of credit or to obtain a dividend from the Bank for such purpose. On
April 7, 2011, the Lender agreed to forbear from exercising its rights (other than increasing the interest rate by the default rate margin) until January 1, 2012 subject to certain conditions described in Note 10 of the Notes to
Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2010. There is no assurance that the tender will extend this forbearance beyond January 1, 2012.



24



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##### Table of Contents

Capital Resources

On November 14, 2008, the Company issued 9,000 shares of the Companys Fixed Rate Cumulative Perpetual Preferred Stock, Series D, having a liquidation preference of $1,000 per share, together
with a ten-year warrant to purchase 183,175 shares of Company common stock at $7.37 per share, to the U.S. Treasury for gross proceeds of $9.0 million. The sale of the Senior Preferred Stock was made pursuant to the U.S. Treasurys TARP Capital
Purchase Program.

On December 8, 2009, the Company issued 6,000 shares of the Companys Fixed Rate Cumulative
Perpetual Preferred Stock, Series E, having a liquidation preference of $1,000 per share, to the U.S. Treasury for gross proceeds of $6.0 million. The sale of the Senior Preferred Stock was made pursuant to the U.S. Treasurys TARP Capital
Purchase Program.

We are pursuing our comprehensive Recapitalization Plan. To date, we have obtained, subject to
documentation and certain terms and conditions:



| |  |  | The consent of the U.S. Treasury to exchange our 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;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | An agreement in principle with the holders of both the Series A and Series B Perpetual Preferred Stock to exchange their holdings for common stock at a
discount of 50% of the liquidation amount;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | An agreement in principle with our senior bank lender to exchange a portion of our 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 conditions to each of the above exchanges include requirements that the holder of our outstanding Series C Noncumulative Perpetual Convertible Preferred Stock concurrently exchange such preferred
stock for our common stock on similar terms and that we concurrently complete private placements or other sales of our common stock aggregating $5 million or more in gross proceeds. Based on the agreements in principle that we have reached, we
anticipate that these transactions would, if completed, result in the issuance of approximately 7.5 million new shares of our common stock, which would constitute approximately 80% of the pro forma outstanding shares of our common stock.

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 currently 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 presently 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 June 30, 2011, 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 to them of cease and desist orders by the OTS effective September 9, 2010, which orders remain in effect and are now administered by the OCC.
The cease and desist orders require the Bank to achieve and maintain higher levels of regulatory capital than normally required. 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.



25



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##### Table of Contents

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 forCapital AdequacyPurposes |  |       | To Be WellCapitalized UnderPrompt CorrectiveAction Regulations |  |   | CapitalRequirementsunder Cease andDesist 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 | %



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

Evaluation of
Disclosure Controls and Procedures

As of June 30, 2011, an evaluation was performed under the supervision of the
Companys Chief Executive Officer (CEO) and Chief Financial Officer (CFO) of the effectiveness of the design and operation of the Companys disclosure controls and procedures. Based on that evaluation, the
Companys CEO and CFO concluded that the Companys disclosure controls and procedures were effective as of June 30, 2011. There were no significant changes in the Companys internal controls over financial reporting during the
Companys last fiscal quarter that could significantly affect those controls subsequent to June 30, 2011.



26



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##### Table of Contents

PART II. OTHER INFORMATION



|Item 1. | LEGAL PROCEEDINGS
|------- | -----------------

Litigation

The Bank is the defendant in Daniel D. Holliday III, Attorney at Law, LLC (Holliday) v. Broadway Federal
Bank (Case No. BC 398403), a lawsuit filed in the Superior Court of the State of California for Los Angeles County on September 18, 2008 and amended on March 4, 2009, November 20, 2009 and May 24, 2010. This legal action arises from a dispute over
the priority of the Banks lien against a $2.6 million deposit account balance in the Bank securing a land development loan. The lawsuit seeks damages of $2.6 million, plus interest, costs and attorneys fees according to proof. The plaintiff
also seeks injunctive relief to prevent the Bank from asserting a senior security interest in the deposit account and to prevent the Bank from applying the funds in the deposit account to satisfy the amount owing on the loan.

On April 17, 2009, the Bank filed a cross-complaint against Holliday (as an individual), Bachmann Springs Holdings, LLC (the developer),
Thomas T. Bachmann (the principal of the developer), Robert Estareja (an agent of Bachmann Springs Holdings), Alan Roberson (the loan broker), Canyon Acquisitions, LLC (Canyon) (the broker who located the investors for the real estate
project at issue and the entity funding Hollidays fees and costs), and Brent Borland (Canyons principal), alleging causes of action for: declaratory relief, money due on default on promissory note, judicial foreclosure on personal
property, money lent, fraud, negligent misrepresentation, conspiracy, implied equitable indemnity, rescission based on fraud, and equitable subordination. The allegations of the cross-complaint include that, among other things, the cross-defendants
conspired with each other to fraudulently induce the Bank to make the loan at issue.

On or about October 27, 2009, Holliday
filed and served a motion for leave to file a third amended complaint, which motion was granted on November 20, 2009. In addition to the causes of action pleaded against the Bank in the second amended complaint, the proposed third amended complaint
includes a cause of action against the Bank for equitable subordination as well as causes of action against Wayne Standback, a vice-president of the Bank (Mr. Standback passed away on October 13, 2009) and Paul Hudson, the Chairman and CEO of the
Bank, for negligence and conspiracy. Broadway filed a demurrer to and motion to strike the third amended complaint, the hearing on which took place on May 14, 2010. The demurrer was sustained. The fourth amended complaint, which was served on May
24, 2010, contains the same causes of action as the third amended complaint. Mr. Standback, however, is no longer a defendant. Hudson demurred to the fourth amended complaint and the Bank filed an answer.

On February 1, 2010, Canyon filed a complaint in Los Angeles County Superior Court against the Bank and several of its officers and
directors including Paul Hudson, Kellogg Chan, Javier Leon, Odell Maddox, Rick McGill, Daniel Medina, and Virgil Roberts, and certain non-Bank related defendants, for declaratory relief, breach of contract, interference with economic relations,
negligence, intentional concealment, conspiracy, breach of fiduciary duty, and equitable subordination (Canyon Acquisitions, LLC v. Broadway Federal Bank, Case No. BC 431035). The complaint arises out of the same transaction that is the subject of
the Holliday lawsuit discussed above. The Bank notified the court of this fact, which deemed the cases related. In the complaint, Canyon seeks general damages of not less than $10,000,000 and punitive damages in an unspecified amount. Service of the
Canyon Complaint was effective as of March 16, 2010. The Bank has filed a demurrer to and motion to strike the complaint, the hearings on which were set for June 18, 2010. However, on June 18, 2010, Canyon filed a first amended complaint alleging
similar causes of action and the scheduled hearing was not held. Then, on June 23, 2010, Canyon filed a motion to (1) consolidate the Canyon and Holliday lawsuits and (2) treat the Canyon lawsuit as a cross-complaint in the Holliday lawsuit. The
hearing on Canyons motion was set for July 16, 2010.

However, on July 16, 2010, pursuant to the Stipulation between the
parties, which was approved by the Court, the two cases (Holliday and Canyon) were consolidated, the Canyon Complaint is treated as a cross-complaint in the Holliday lawsuit, the trial was postponed from October 5, 2010 to May 10, 2011, and the
following individuals were dismissed from the litigation with prejudice: all of the Broadway officers and directors who had been named as individual defendants in the Holliday and Canyon matters, Brent Borland, Daniel Holliday, III (as an individual
only), and the Estate of Wayne Standback.

On August 31, 2010, the Bank filed a demurrer to Canyons cross-complaint, the
hearing on which took place on December 8, 2010. At the hearing, the Court overruled the Banks demurrer to Canyons Second Cause of Action for Breach of Contract and sustained the Banks demurrer to Canyons Seventh Cause of
Action for Breach of Fiduciary Duty without leave to amend. The Bank subsequently filed an answer to Canyons cross-complaint and asserted various affirmative defenses.



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##### Table of Contents

In or about May 2011, the Bank and Holliday/Canyon entered into a written settlement
agreement to resolve the matter on the following terms: (1) Broadway paid the sum of $2,350,000 to Holliday/Canyon; (2) Holliday and Canyon dismissed their complaint and cross-complaint with prejudice as to Broadway; (3) Broadway dismissed its
cross-complaint with prejudice as to Holliday and Canyon; and (4) the parties executed mutual, general releases. The Holliday and Canyon complaint and the Broadway cross-complaint were dismissed with prejudice on June 9, 2011.

BancInsure, the Banks liability insurer, contributed $150,000 to the settlement in exchange for a release of all claims related to
Holliday, Canyon and the transactions described above. BancInsure, moreover, has paid the Bank in excess of $375,000 for the fees and costs incurred by the Bank in defending against the Holliday and Canyon actions.

With respect to the foregoing matters, management has closed the deposit account securing the loan and has written off the loan, which
was fully reserved for as of March 31, 2011.

OTS Investigation

In 2010, the OTS notified us that it had initiated a formal investigation of the activities of a former loan officer of the Bank whose
employment was terminated in March 2010. In connection with the investigation, the OTS issued subpoenas to the chief lending officer and chief executive officer requesting documents relating to our former loan officer and loans he originated while
employed by the Bank. The subpoenas also contemplate taking oral testimony from the officers. While the OTS did not inform us of the scope of its investigation, we believe the investigation includes, but may not be limited to, inquiry into whether
documentation submitted in connection with loan applications for loans originated by the loan officer contained inaccurate or deliberately falsified information and whether the loan officer received unauthorized direct or indirect benefits from
payments made by the borrowers on such loans to loan brokers or other persons associated with the lending process. All of the loans originated by the former loan officer have been reviewed by us and by the independent loan review firm we engaged to
perform a general review of our loan portfolio pursuant to the C&D issued to us by the OTS. See Item 1. Business  Regulation  Cease and Desist Orders of our Annual Report on Form 10-K for the year ended December 31,
2010. We have taken the results of these loan reviews into account, along with all other relevant information known to us, in determining the amounts of our loan loss provisions and the level of our loan loss reserves that we believe to be
appropriate as of June 30, 2011.



28



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##### Table of Contents

|Item 1A. | RISK FACTORS
|-------- | ------------

None



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

None



|Item 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------

None



|Item 4. | RESERVED
|------- | --------



|Item 5. | OTHER INFORMATION
|------- | -----------------

None



|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.LAB |  | XBRL Taxonomy Extension Label Linkbase Document (1)       
|        | 
|101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase Document (1)
|        | 
|101.DEF |  | XBRL Taxonomy Extension Definitions Linkbase Document (1) 



|(1) | 101 XBRL Interactive Data File will be filed by amendment to this Form 10-Q within 30 days of the filing date of this Form 10-Q, as permitted by
Rule 405(a)(2) of Regulation S-T.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

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 15, 2011 |  |  |  | By:                     |  | /s/ Paul C. Hudson
|                      |  |  |  | Paul C. Hudson         
|                      |  |  |  | Chief Executive Officer
|                      |  |  | 
|Date: August 15, 2011 |  |  |  | By:                     |  | /s/ Samuel Sarpong
|                      |  |  |  | Samuel Sarpong         
|                      |  |  |  | Chief Financial Officer



30