Bank of America Merrill Lynch, a wing of Bank of America Corporation (BAC - Free Report) , granted $855 million towards community development in the first half of 2012. Its activities for the first six months of 2012 included contributions of $600 million in Community Development Banking commercial real estate-based lending, almost $252 million in tax credit investments and further $3 million in other community development equity.
BofA’s community development banking business has been working with several local organizations in numerous states to provide affordable housing to the masses. The key actions include sound advice and innovative solutions for the housing developers. This initiative has helped create nearly 2,800 housing units.
Housing Projects Undertaken
In North Easton, Massachusetts, Community banking is transforming a former factory complex into 113 residences and is providing $28.4 million in credit and equity for the conversion.
Moreover, the banking program is extending $19.8 million in credit and equity for the development of 74 residential apartments in Baltimore for families with incomes below the 50% area median income (AMI).
Further, in Dickson, Tennessee, the community development banking is financing a residential project catering to the needs of the senior households with incomes below 60% AMI.
BofA has correctly perceived the immeasurable significance of the role played by the regional economy in development of the national economy. Therefore, it has engaged itself in various pursuits that will help to uplift regional development. Besides engaging in community development banking, BofA has been hiring small business bankers to serve the needs of small businesses.
These small traders often face unique and complex financial demands. To understand such needs of the small business owners, customized guidance and constant attention of small business bankers are very much needed. Therefore, BofA is hiring small business bankers to tap the huge demand for personalized help in the region.
Much like BofA, JPMorgan Chase & Co. (JPM - Free Report) is trying to accelerate economic recovery by lending to small businesses. In 2011, the bank increased its small business lending to $17 billion through nearly 400,000 new loans and lines to small businesses. Since 2009, JPMorgan has provided more than $35 billion in working capital, term loans for expansion, commercial mortgages, lines of credit and business credit cards to small businesses.
BofA has been enthusiastically executing its social responsibility like other big organizations, for the betterment of the society. Such a step would help the company to expand its footprint in the small business arena and improve its top-line growth. Of late, BofA’s image has been dented because of various problems like legal hassles, debacles of its mortgage products and risky loans as well as job cuts. However, we believe that through these initiatives BofA will be able to mend its damaged image to some extent.
Currently, BofA retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we also maintain a long-term ‘Neutral’ recommendation on the stock.