The resignation of a top senior Bank of America executive in Los Angeles, coming barely a month after the completion of NationsBank Corp.’s $47 billion acquisition of BankAmerica Corp., has raised questions about the newly merged bank’s future commitments to local community lending.
Donald A. Mullane, BankAmerica Corp.’s executive vice president for corporate community development and chairman of Bank of America’s Community Development Bank, announced that he will leave by year end.
Mullane’s resignation comes on the heels of the unexpected Oct. 20 resignation of BofA Chairman David Coulter. It also fuels expectations that as Bank of America and NationsBank continue to integrate, more senior BofA executives in L.A. and elsewhere in California may leave.
“NationsBank knows and understands their people best,” said Bruce Raabe, an analyst at Collins & Co. in San Francisco. “So it wouldn’t surprise me to see them leave their people in the key positions.”
According to sources within the bank, Mullane offered his resignation after NationsBank handed over day-to-day control of community lending operations to Catherine Bessant, a NationsBank executive based in Charlotte.
While Mullane declined to be interviewed, sources close to him confirmed that he was uncomfortable with the new hierarchy being established by NationsBank.
“He said that he was resigning, not retiring,” said Robert Gnaizda at the Greenlining Institute, a public policy center in San Francisco that monitors banking activities. “He said he was not prepared to be in a situation where he couldn’t make decisions in his areas of responsibility.”
Resigning along with Mullane was Mike Mantle, president of the Bank of America Community Development Bank, who was based in the Northern California city of Walnut Creek.
Mullane’s pending departure is being viewed as a loss for economic development efforts in Los Angeles. Mullane, who had been based in L.A., was seen as having a deep understanding of local business conditions.
“The exit of Don Mullane will be a blow to the leadership of community lending in Los Angeles,” said John Bryant, chairman of Operation Hope, an L.A.-based grassroots banking organization. “While we didn’t always agree on what should be done here, we always agreed that something had to be done.”
Since opening in 1990, BofA’s Community Development Bank has funded more than $4 billion in small-business and affordable-housing loans, much of that in Los Angeles.
Another area overseen by Mullane was Bank of America’s SBA loan program, a major source of capital for local small businesses. In fact, BofA was the largest source of Small Business Administration-guaranteed loans in L.A. County for the fiscal year ended Sept. 30.
It awarded 527 SBA loans in L.A. County during that period for a total of $73.1 million, up from the 196 SBA loans for $47.2 million it made in the prior year.
In addition, Mullane was instrumental in getting NationsBank to pledge to invest $350 billion in under-served areas nationwide over 10 years under the Community Reinvestment Act a move that helped secure regulatory approval for the merger, according to sources within the bank.
While Bessant has a good reputation in community lending circles, local players said it will be impossible for her to serve the needs of L.A. as well as Mullane did.
“You have to be a part of the community to serve it,” said Peter Villegas, who heads the L.A.-area community development operations for Washington Mutual Inc. “You have to be here to understand the rapid changes that are going on in the community. If you don’t understand, you miss out.”
To that end, Villegas, who is based in Rancho Cucamonga, sees the loss of Mullane as an opportunity for Washington Mutual to expand its community lending business.
“It’s like a football team changing its coach in mid season,” he said. “It is an opportunity for us to get a leg up.”
Carry Walker, a BofA spokesman, said the pending departure of Mullane would not crimp the bank’s community lending activities.
“Our CEO, Hugh McColl, has repeatedly said that we intend to be the preeminent community lender in the country,” Walker said. “L.A. is the new company’s largest, fastest-growing and most profitable market. Our local President Liam McGee grew up in L.A. and has a keen understanding of the local economic and ethnic diversity that sets it apart.”
Nonetheless, Gnaizda said he is worried that the end result of Mullane’s departure will be that lower-income, higher-risk borrowers will have a harder time getting loans from the new BofA.
“I think their lending could become less focused. So the borrowers at the upper end of the credit scale will get more, but people with a weaker credit record will get less.”
