Broadway Fed expects it will soon get $1 million capital investment.

Broadway Federal Savings & Loan, which had its headquarters burned down in the April 1992 riot, will receive a $1 million capital investment from a local corporation later this month, the thrift's president has told the Business Journal.

Paul C. Hudson, president of South Central L.A.-based Broadway Federal, the oldest black-owned financial institution in the state, declined to name the corporate donor, but said an announcement will be made later this month.

It is the last of three local black-owned financial institutions to get hefty post-riot corporate investments. Each of the other two has received $2 million of investments from two different sets of corporations.

"We have been concerned about the fact there seems to be an imbalance in the corporate community infusion of capital," Hudson said, noting that until this month Broadway has not gotten any corporate investment funds.

South Central-based Founders National Bank received a $1 million capital investment from Atlantic Richfield Co. in December 1992 and another $1 million one from Bank of America in January 1993.

In March 1993, Crenshaw-based Family Savings Bank received capital investments of $1 million each from Walt Disney Co. and First Interstate Bank.

No large corporate investments have been made to date in Broadway. Yet the thrift, which has just begun to get a handle on perhaps the worst nonperforming assets problem in its 47-year history, probably needed a capital infusion the most. It had been placed on the watch lists of two nationally known bank rating services due to a high level of nonperformers.

Broadway has suffered not only from having its headquarters torched but has seen its loan portfolio deteriorate since the L.A. riot, Hudson said. Although the thrift had only one loan on a building burned in the riot, some borrowers have been affected by the job loss in South Central following the tumult, Hudson said.

But while other black-owned institutions were receiving $1 million capital injections, Founders has been solving its own problems internally, Hudson said. The bank has in recent months reduced nonperforming loans and increased its reserves against loan losses, which peaked in December, Hudson said.

Based on Dec. 31 data, Broadway was placed on the "problem thrift" list issued by Bauer Financial Reports, a nationally known bank rating service based in Coral Gables, Fla.

Another rating service, Veribanc Inc. of Wakefield, Mass., ranked Broadway as yellow, no stars, second lowest of eight categories, based on March 31 data, said Warren Heller, Veribanc's director of research. Though the thrift was adequately capitalized under federal standards, its rating was pulled down by a high volume of nonperforming loans, Heller explained.

The $1 million investment "will go a long way" towards improving Broadway's financial situation, Heller said. But, he added, "they could use a couple of million" in order to get into top financial condition.

Hudson said Broadway has been improving its balance sheet over the last six months without any outside capital injection. The $98-million-in-assets institution has decreased the amount of loans delinquent 30 days or more from $5.1 million at Dec. 31 to $3.4 million at June 30.

Loans which are 90 days or more delinquent have dropped from about $2 million to about $870,000, Hudson said. In addition, the thrift had net earnings of $70,000 and operating income of about $1 million for the first six months of 1993.

Hudson said the $1 million investment may place Broadway in the "well capitalized" category of thrifts and enable it to boost lending by $20 million.

"Last year has to be, in the historical perspective (of Broadway Federal), an aberration," he said. "We had our headquarters burn down. We housed 50 percent of our employees there. It influenced all of 1992."