CHARLOTTE, North Carolina - Bank of America Corp (BAC.N) pledged on Monday to loan an additional $5 billion to small businesses in 2010, after the top executives for the largest U.S. banks met U.S. President Barack Obama.
Bank of America Chief Executive Ken Lewis announced the effort at the meeting with Obama, where the president emphasized the critical role of U.S. banks in reigniting economic growth through loans to small and medium-sized businesses as the industry has come under fire for not lending enough.
Lewis pledged the bank will make at least $5 billion in additional loans to small business -- which the bank defines as clients with businesses posting less than $20 million in annual revenue -- next year.
We understand that small business owners have been especially hard hit by the decline in economic conditions, said Bank of America spokeswoman Anne Pace. Its time to do more.
The pledge comes as the bank reported an overall contraction in what federal bank regulators define broadly as commercial and industrial loans, which can include small business lending, but is a broad swath of loans to corporate customers.
Bank of America's commercial and industrial loans shrank 14.3 percent to $167 billion as of September 30, 2009, from a year prior, according to the most recent Federal Deposit Insurance Corp data.
The Charlotte, North Carolina-based bank, the largest in the United States, said it loaned roughly $12 billion to small businesses through the first nine months of 2009 across the lines it describes as small business, including credit card and other loans for small business purposes. The bank has modified loans for 49,000 small-business clients in the same period.
Jefferson Harralson, a Keefe Bruyette and Woods bank analyst, said the announcement combines the bank and the U.S. government's interests.
Getting more small business loans is a big key to getting this economy turned around, he said. But BofA has a business case too for lending money that can be repaid.
(Reporting by Joe Rauch; editing by Matthew Lewis and Andre Grenon)