Bank of America warns about commercial loan portfolio...

In their recent conference call, BOA warned that their commercial portfolio is under-performing. Many fin ancial analysts think this may be the next shoe to drop. These loans are mostly construction loans to builders...

Sept. 10 (Bloomberg) -- 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.

Home builders 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 today. More than half the Charlotte, North Carolina-based bank's $13.4 billion in loans to builders are considered troubled, 19 percent are not paying interest and losses are likely to mount, Moynihan said.

Bank of America's commercial loans were $335 billion as of June 30, and a home-builder 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.''

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