The solar power industry has seen its ups and downs, but Eastern Bank in Boston sees it as a good lending opportunity.

Eastern, the largest mutual thrift with $8.5 billion of assets, inked a deal this month to provide $42 million in financing to build five solar farms in Massachusetts and New Jersey. They are the first solar-power projects for Eastern, says Bob Rivers, president and chief operating officer.

"It's an extension of our socially responsible mission," Rivers says. "As much we are interested in the altruistic aspects of it, it's also good business."

Other banks, including Heartland Financial USA (HTLF) in Dubuque, Iowa, and U.S. Bancorp (USB) in Minneapolis, have seen opportunities this year in lending for energy-efficiency and alternative-energy projects, as mainstream investors have become more comfortable with the category.

Eastern Bank's solar deals are a product of its March 2011 acquisition of Wainwright Bank & Trust in Boston. Wainwright employed a number of community-development lenders with expertise in making leveraged loans in the alternative energy field, Rivers says.

Solar-power financing deals are complex, involving multiple parties and including tax credits, Rivers says. For each of the solar-power transactions, Eastern is providing about half of the total loan proceeds, with the developer and private investors contributing 20% and government organizations providing 30%.

"We look at it like we've got a 50% loan-to-value project," Rivers says.

Three privately held companies are developing the farms, which will provide energy to supply about 2,500 homes in Massachusetts.

Eastern has more deals in its alternative energy pipeline, not all of them involving solar power. Leveraged loans now make up only about $300 million of Eastern's $4.6 billion loan book. But it's a rapidly growing category, Rivers says.

"It's not huge relative to our size, but that's not meant to contain it," he says. "We've been growing it substantially."

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