'Fiscal cliff' woes could extend into 2014-BofA

CHARLOTTE, North Carolina Fri Dec 7, 2012 5:50pm EST

CHARLOTTE, North Carolina (Reuters) - If the United States goes off the "fiscal cliff" and stays there for too long, the economy could suffer into 2014, Bank of America Corp's (BAC.N) head of commercial banking says.

Concern about the so-called fiscal cliff is already causing mid-sized businesses to pause activity and to issue special dividends ahead of possible tax increases, Laura Whitley said in an interview this week.

"It will push you into planning season when people are thinking about not 2013 but 2014," Whitley said.

The "fiscal cliff" is a $600 billion combination of steep tax hikes and deep spending cuts that will kick in next year unless Congress intervenes.

Whitley remains confident that her business will continue to increase total loans, a bright spot for a bank still struggling to recover from the financial crisis.

"We will finish the year strong," she said.

In some cases, the "fiscal cliff" is actually providing a boon to the bank because customers are using debt to finance their dividend payments. Whitley's group works with public and private companies.

Bank of America's total loans in the third quarter fell 4 percent from a year ago to $893 billion as the No. 2 U.S. bank by assets continued to shed unwanted consumer mortgages. But commercial loans, including ones made to large corporations, climbed 7 percent to $330.8 billion.

After a year of building capital to meet new international requirements, Bank of America CEO Brian Moynihan said at an investor conference this week that he is pushing his team to make more loans.

Whitley, 51, has led Bank of America's commercial banking business since the fall of 2011, when the previous head, David Darnell, became co-chief operating officer, overseeing consumer banking and wealth management.

Over a nearly 30-year career at the bank and predecessor companies, she has held posts in middle-market banking, investment banking and wealth management. In 2011, she was also one of the leaders steering a company-wide cost-cutting program called Project New BAC.

Whitley's unit provides mid-sized businesses with loans, cash management services and other products. In a presentation this week, the bank said lending and treasury management services for commercial customers with revenues between $50 million and $2 billion brought in $6.1 billion in revenue in the first nine months of the year, nearly one-tenth of the company's total.

The growth comes in a year in which the bank eliminated an undisclosed number of jobs in the commercial lending unit as part of New BAC. The unit, which has just under 5,000 employees, is not planning any more cuts and is now adding 50 lenders in key markets such as Colorado, Georgia and Florida, she said. The bank is also adding staff in sectors such as new media and energy.

Commercial lending has been a growth area for many banks, so Bank of America has faced competition for loans and for employees. Earlier this year, JPMorgan Chase & Co (JPM.N) hired some of its bankers as part of an expansion into Bank of America's hometown of Charlotte, North Carolina.

"At that time I think we were more vulnerable because it was the middle of New BAC and people were concerned about what would that mean for our business," Whitley said. "The business was very sound."

(Reporting by Rick Rothacker in Charlotte, North Carolina; Editing by Dan Grebler)