BankAmerica Corp. has brought its community development bank to the nation's capital, home field for much of the community reinvestment community.
But while the development bank is getting rave reviews from community activists, its president, Mike Mantle, said his aim is to make money rather than simply improve BankAmerica's relations with regulators.
"I've got to make the thing work from a profitability standpoint," Mr. Mantle said. "All the good will in the world doesn't pay the rent."
Bank of America FSB is looking to make small-business and affordable- housing loans ranging in size from $50,000 to $15 million in the Washington-Baltimore urban corridor.
"We see this as an opportunity to make a contribution to this market," said C. Howie Hodges 2d, vice president and regional manager of the community development bank. "We will do as much lending as the market will bear."
Community activists said Bank of America's efforts put it on the cutting edge of Community Reinvestment Act work. Anthony Reese, associate director of the Greenlining Institute, said he hopes to see other banks follow suit.
Small businesses "are leading economic growth, he said. "They are creating new jobs."
Dan Immergluck, vice president of the Chicago-based Woodstock Institute, said Bank of America's focus on making credit available to small business would be particularly helpful to the national capital.
Several recent studies show that small-business lending does more to spur inner-city development than home mortgage credit, he said.
"For too long, community development lending has been correlated only with housing lending," Mr. Immergluck said. "We really need to bring CRA to bear on small-business lending."
Mr. Hodges said he's ready to produce. The Washington office of his bank is close to closing four deals, and he expects to sign dozens more shortly.
The office, which was opened Jan. 1, gives the San Francisco-based company its first banking presence in the capital. The facility, just two blocks from the White House, doesn't have any tellers, and it doesn't accept deposits. Rather, it houses Mr. Hodges and two full-time lenders.
Bart Harvey, chairman of the Enterprise Foundation, said the new office would let his Maryland-based development group work more closely with the bank.
"Presence is important, particularly in community development lending," Mr. Harvey said. "There is no standard deal. There are always issues to be brought forth."
BankAmerica's operation here is definitely low-rent. The development bank is subleasing space from BankAmerica's government relations staff. It didn't even buy new desks and chairs, Mr. Hodges said.
"Our equipment is a phone, a pager, and a mobile phone," he said. "We meet the clients at the clients' offices. We are like street people. We get out."
His lenders are searching for very small small-business loans, a market for which few banks compete. "I'd rather get the guy under $100,000 and grow him into the market," Mr. Hodges said. "We really like this business."
Most of his customers have never obtained bank financing before, so Mr. Hodges has created a full array of support services. In addition, companies without adequate records aren't rejected outright, he said. "I'm not giving them a 'no,'" he said. "It's a 'not yet. Come back later.'"
His bank uses a special incentive system to reward loan officers who find such emerging small businesses, Mr. Mantle said. "Some of our guys have made (hay) off the smaller loans that most of our competitors, including the finance companies, won't go near," he said.
Almost all the loans are backed by the Small Business Administration or other government loan guarantors, Mr. Hodges said.