Bank of America Corporation (BAC) recently declared that it had employed over 70 small business bankers across the Northern California region to provide assistance to local small business setups. This action is part of BofA’s strategy to employ about 1000 small bankers by mid-2012 to improve the scenario for small businesses.
Earlier in 2010, BofA came up with a strategy to help small businesses, which were facing difficulties in obtaining expertise on how to run operations and maintain finances. This was concluded in a survey conducted by BofA.
According to the survey report, a majority of these small business firms were in need of some guidance that could help them in revenue maximization and provide assistance for generating more customers by marketing their business innovatively. Further, they needed local bank branches to be sufficient to provide them with expert knowledge and more customized services so that they can enhance their businesses and overcome challenges as well as gain from opportunities.
According to BofA, small businesses are critical to the development of the economy as a whole. In spite of their significant contribution to the economy, they do not have access to better banking facilities. Thus, BofA has taken up the initiative to sort out their problems and provide them with assistance to smoothly conduct their business operations.
Consequently, BofA has been able to help its 4 million small business customers. Moreover, it has been creating jobs after slashing workforce in areas like mortgage lending and investment banking.
In its efforts, BofA has been constantly pursuing active lending to small-scale firms. In the first quarter of 2012, BofA has extended approximately $669.2 million in credit to firms across California that generate less than $20 million in revenue.
BofA has been actively contributing to the Community Development Financial Institutions (:CDFI) program by providing $200 million worth of finance to small businesses, which are incapable of qualifying for conventional loans. The CDFI program was initiated in 2010 to help some 9000 odd small businesses and maintain around 14,000 jobs.
For small businesses, this is an excellent opportunity to explore facilities hitherto unavailable. BofA’s effort will help them more confidently play an active role in uplifting the performance of the regional as well as the national economy.
Following BofA’s steps, The Toronto-Dominion Bank (TD) had recently conducted a market survey of northeast small business owners and had concluded that small business will generate better returns along with constant employment generation in the future. The bank has a devoted team of local bankers in the region to cater to the needs of small firms.
Conclusion
We anticipate BofA’s initiatives to work in its favor as far as revenue growth is concerned after the debacle of its mortgage products and risky loans that generated losses. By helping out small organizations, it is trying to expand its footprint in the small-scale business arena, which plays substantial role in the growth of the economy.
This will help BofA to stabilize itself and repair its dented image by recruiting staff after extensive job cuts recently. In addition, this initiative will enable BofA to execute the social responsibility that large organizations are expected to perform for the betterment of the society.
Currently, BofA retains a Zacks #3 Rank, which translates into a short-term Hold rating. Considering the fundamentals, we also maintain our long-term Neutral recommendation on the stock.
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