BofA Shines on Low-Income Lending - Analyst Blog

Bank of America Corp. (BAC) said on Thursday that it has gained an “outstanding” rating from the Office of Comptroller of the Currency for fulfilling or going beyond the requirements of affordable housing, small business lending and many other areas of underserved communities. The latest rating marks BofA’s seventh consecutive achievement of outstanding rating.

 

The current rating follows the Office of Comptroller of the Currency’s most recent exam under the 1977 Community Reinvestment Act (CRA). The federal authorities periodically conduct such exams to evaluate lenders to underserved communities.

 

Under the exam, BofA’s performance achieved the highest rating on the test categories of lending, services and investments. During the performance period, BofA was rated in 306 geographic assessment areas within 32 states and the District of Columbia.

 

Including mortgage, small business and community development loans, BofA originated more than $266 billion CRA-reportable loans. It has also made more than 13,000 investments for a total value of $5.2 billion.

 

Small business owners were hit hard by the market turmoil. Providing more business to these organizations will be a key to economic recovery as small and medium-sized businesses are the lifeblood of an economy.

 

As a leading bank, this will be a vital role for BofA to help regain economic growth. Apart from providing technical support, banking services and credit, BofA sees this as an opportunity to assist small and medium-sized businesses to create more jobs in the challenged economy.

 

Similarly, JPMorgan Chase & Co. (JPM) continues to make contributions to the economic recovery by lending to small businesses. Building on the efforts of the Obama Administration, the company has launched an initiative to increase small-business lending to $10 billion by the end of 2010.
Wells Fargo & Company (WFC) also remained one of the largest providers of credit to the U.S. economy in the first half of 2010 and continued to lend to small businesses and other commercial customers. 



 

BofA’s second quarter earnings came in at 27 cents per share, 3 cents ahead of the Zacks Consensus Estimate of 24 cents. However, this compares unfavorably with the earnings of 33 cents in the prior-year quarter.

 

Lower credit costs and the sale of non-core assets were primarily responsible for the better-than-expected results. However, pressure on trading and mortgage banking income was the primary offsetting factor. An increased charge related to the U.K. payroll tax was also among the negatives.

 

Though continuing pressure on trading revenues will hurt the profitability of BofA in the upcoming quarters, a slowdown in loan loss reserves like other large banks will support the bottom line.