Statement on Bank of America's Ratings

Many of you may have read the news that Bank of America received a downgrade from Moody’s.  Since Bank of America is the Tennessee Municipal Bond Fund’s (TMBF) letter of credit provider, we felt a need to clarify what this news means to our borrowers.  It is important to understand and distinguish the difference in the ratings of Bank of America’s holding company (BAC) and Bank of America, N.A. (BANA).   Letters of credit trade based upon short-term ratings; therefore, since BANA is the letter of credit provider on our pooled loan programs, the rating with the potential to influence our pooled loan programs is the short term rating on BANA.  In its release on September 21, 2011, Moody’s stated, “The long-term deposit ratings of Bank of America N.A. (BANA) were downgraded to A2 from Aa3, while BANA's short-term rating was affirmed at Prime-1.  The actions conclude a review for downgrade announced on June 2, 2011.”  As you note above, Moody’s reaffirmed Bank of America’s short-term rating.  TMBF does not anticipate any significant impact to our very successful pooled loan program as a result of the action of Moody’s related to Bank of America.  We will continue to keep you informed if there are any further developments.