Bank Of America Corp. Essay

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Bank of America Corp. is a bank holding company headquartered in Charlotte, North Carolina. As of December 2007, it had $1,716 billion in assets, and 210,000 employees, more than any other U.S. bank except Citigroup. Ranked by deposits, it is the largest bank in the United States, and by market capitalization, the fourth largest in the world. Although it has operations in over 30 countries, and provides an extensive range of global corporate and investment banking and asset management services, its core business has always been U.S. consumer banking. On revenues of $124 billion, it earned $15 billion in 2007, over half of which came from consumer deposits and credit cards.

Like many banks, Bank of America suffered an earnings decline in 2007 as a result of the subprime mortgage debacle in the United States. The bank was not hit as hard as some of its competitors, however, and used the occasion to continue a long-term process of growth by acquisition, most notably by buying Countrywide Financial, previously the nation’s largest mortgage lender.

Between 1984 and 2004 the number of commercial banks in the United States was cut in half, mainly due to mergers. Bank of America is a leading example of this consolidation trend. The current bank was created when Nationsbank of North Carolina acquired San Francisco–based Bank of America in 1998 and adopted its name. The post-1998 group has made further acquisitions, including MBNA in 2005 (by which Bank of America became the country’s largest credit card issuer).

Nationsbank was formed in 1991 out of the merger of North Carolina National Bank (NCNB) with Citizens and Southern. Subsequent acquisitions soon made it the largest bank in the American south. During this same time, Bank of America took over two large competitors, Security Pacific (1992) and Continental Illinois (1994).

For three decades after World War II, Bank of America had been the largest bank in the world, measured by assets, a position it achieved more by internal growth than by acquisition. Bank of America was originally formed out of several small southern California banks in the early 1900s, but a more important predecessor was A. P. Giannini’s Bank of Italy, which acquired Bank of America and its name in the late 1920s. Among Giannini’s signal achievements with Bank of Italy were the provision of financial services for the mass consumer market, and expansion by development of a branch network, although his ambitions to expand nationwide were thwarted by U.S. regulators. Nevertheless, under the leadership of Giannini and his successors, Bank of America spread rapidly across the large and fastgrowing retail financial market in California. The bank also funded Walt Disney movies and the Golden Gate Bridge, and in 1958 introduced Bankamericard (predecessor of VISA), the first credit card widely licensed to other banks.

In the late 1970s and early 1980s, when rising interest rates on monies financing Bank of America’s large portfolio of fixed-rate home mortgages weakened it relative to “money center” competitors, and a falling U.S. dollar slowed its growth relative to non-U.S. institutions, the bank fell below the top 10 worldwide. A spate of problem loans added further difficulties. After a period of restructuring in the late 1980s, growth then resumed and was followed by the rapid succession of mergers in the 1990s described above. Hugh McColl, head of NCNB and Nationsbank during these mergers, continued as chairman of the new Bank of America from 1998 until 2001, when he was succeeded by Kenneth Lewis.

In addition to its dominant position in consumer banking, Bank of America in 2007 was also among the top 10 mergers and acquisitions advisers, and one of the 10 largest investment managers in the United States. The bank’s commitment to environmentally friendly business is symbolized by the construction of a new office building in New York in 2008 that includes insulating glass and facilities for recycling water.


  1. Bank of America Corp., Annual Report for 2007;
  2. com, “Bank of America’s Countrywide Purchase Boosts Stocks,” (cited March 2009);
  3. Gary Hector, Breaking the Bank (Little, Brown, 1988);
  4. Marquis James and Bessie R. James, Biography of a Bank (Bank of America, 1954, 1982);
  5. “The League Tables: Will Bof A Get a Parting Gift?,” Wall Street Journal (October 31, 2007).

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