Bank of America Corporation (BAC: 15.47 -0.48 -3.01%) said on Nov 24 that it has lent and invested more than $1 billion to over 120 Community Development Financial Institutions (CDFIs) in 37 states.
These institutions include credit unions, investment funds and niche banks that focus on low-income and disadvantaged communities. The CDFIs primarily focus on small and micro businesses, charter schools, childcare centers, primary health care facilities, projects on Native American lands, and arranging pre-acquisition and development loans for low-income housing.
BofA’s lending and investment with CDFIs is part of its 10-year, $1.5 trillion community-development lending and investment goal. This is the largest ever established by a U.S. financial institution.
BofA has also taken initiatives to provide grants to more efficiently acquire foreclosed properties. BofA’s efforts related to the efficient acquisition of the foreclosed properties followed its commitment to offer loan modifications to as many as 630,000 borrowers over a three-year period, representing more than $100 billion in mortgages.
According to the BofA management, the company is investing more in community-based institutions, such as small businesses and nonprofit organizations and other local efforts, which are the main sources of jobs and can significantly stimulate economic activity domestically.
Though BofA’s third quarter earnings benefited from the profit from its wealth management business, the company experienced continued net interest yield compression and credit quality deterioration. Additionally, the company is facing problems over new CEO appointment, litigation issues over Merrill Lynch acquisition and repayment of TARP funds. Revenues are also expected to be negatively affected by the new credit card regulation. However, we anticipate continued synergies from the company’s large scale operation and balance sheet restructuring.
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