Bank of America Corp., the biggest U.S. consumer bank, said credit weakness is spreading to commercial borrowers from residential customers, and loan losses probably will deepen in the third quarter.
Homebuilders unable to repay their loans are contributing to deterioration among commercial borrowers, said Brian Moynihan, head of the global corporate and investment banking unit, at a New York conference Wednesday. About $7.3 billion of the Charlotte, N.C.-based bank’s $13.4 billion in loans to builders are considered troubled, and losses are likely to mount.
The bank’s commercial loans were $335 billion as of June 30, and a homebuilder portfolio that accounts for less than 4 percent “won’t create major pain for us, but it’s going up,” he said. “It’s not pretty.”
