Mortgage and Real Estate Blog

Before 1998, the Bank of America organization that exists today was known as NationsBank and was previously known in earlier years as North Carolina National Bank before being abbreviated to "NCNB" as it branched out of its home base of Charlotte, North Carolina. In 1998, NationsBank acquired San Francisco-based BankAmerica and renamed the corporation "Bank of America".

Merger of NationsBank and BankAmerica

In 1997, BankAmerica lent D. E. Shaw & Co., a large hedge fund, $1.4bn so that the hedge fund would run various businesses for the bank. However, D.E. Shaw suffered significant loss after 1998 Russia bond default. BankAmerica was later acquired by NationsBank that year.

The purchase of BankAmerica Corp. by the NationsBank Corporation was the largest bank acquisition in history at that time. While the deal was technically a purchase of BankAmerica Corporation by NationsBank, the deal was structured as merger with NationsBank renamed to Bank of America Corporation, and Bank of America NT&SA, changing its name to Bank of America, N.A. as the remaining legal bank entity. The bank still operates under Federal Charter 13044 which was granted to Giannini's Bank of Italy on March 1, 1927. However, SEC filings before 1998 are listed under NationsBank, not BankAmerica.

Following the US$64.8 billion acquisition of BankAmerica by NationsBank, the resulting Bank of America had combined assets of US$570 billion, as well as 4,800 branches in 22 states. Despite the mammoth size of the two companies, federal regulators insisted only upon the divestiture of 13 branches in New Mexico, in towns that would be left with only a single bank following the combination. This is because branch divestitures are only required if the combined company will have a larger than 25 percent FDIC deposit market share in a particular state or 10 percent deposit market share overall.

History since 1998

In 2001, Bank of America CEO and chairman Hugh McColl stepped down and named Ken Lewis as his successor. Lewis's greater focus on financial discipline and efficiency contrasted greatly with the expansionary mergers and acquisition strategy of his predecessor.

Acquisition of National Processing Company

In 2004, Bank of America purchased Louisville, Kentucky-based National Processing Company for $1.4 billion from National City Corp. The renamed company—BA Merchant Services—has been processing one in every five VISA and MasterCard transactions. The company also has been providing financial solutions for travel and healthcare companies. BA Merchant Services has been headquartered in Louisville.

FleetBoston Financial merger

Also in 2004, Bank of America acquired Boston, Massachusetts-based FleetBoston Financial for $47 billion in an all-stock deal to solidify Bank of America's position as the bank with the largest FDIC-rated deposit market share in the United States with $513 billion in deposits, well ahead of the number two bank holding company, newly-merged JPMorgan Chase-Bank One with $353 billion in deposits and number three Wells Fargo & Co. with $228 billion (as of 30 June 2003). This acquisition gave Bank of America access to the northeastern market.

Purchase of MBNA

On 30 June 2005, Bank of America announced it would purchase credit card giant MBNA for $35 billion in cash and stock. The Federal Reserve Board gave final approval to the merger on 15 December 2005, and the merger closed on 1 January 2006. The acquisition of MBNA provided Bank of America a leading credit card issuer at home and abroad. The combined Bank of America Card Services organization, including the former MBNA—had more than 40 million U.S. accounts and nearly $140 billion in outstanding balances.

[edit] Divestiture of operations in Brazil, Chile and Uruguay

In May 2006, the Bank of America and Banco Itaú (Investimentos Ita S.A.) entered into an acquisition agreement through which Itaú agreed to acquire BankBoston's operations in Brazil and was granted an exclusive right to purchase Bank of America's operations in Chile and Uruguay. A deal was signed in August 2006 under which Itaú agreed to purchase Bank of America's operations in Chile and Uruguay. Prior to the transaction, BankBoston's Brazilian operations included asset management, private banking, a credit card portfolio, and small, middle-market, and large corporate segments. It had 66 branches and 203,000 clients in Brazil. BankBoston in Chile had 44 branches and 58,000 clients and in Uruguay it had 15 branches. In addition, there was a credit card company, OCA, in Uruguay, which had 23 branches. BankBoston N.A. in Uruguay, together with OCA, jointly served 372,000 clients. While the BankBoston name and trademarks were not part of the transaction, as part of the sale agreement, they cannot be used by Bank of America in Brazil, Chile or Uruguay following the transactions. Hence, the BankBoston name has disappeared from Brazil, Chile and Uruguay. The Itaú stock received by Bank of America in the transactions has allowed Bank of America's stake in Itaú to reach 11.51%. Banco Boston do Brazil had been founded in 1947.

Purchase of US Trust

On 20 November 2006, Bank of America announced the purchase of The United States Trust Company for $3.3 billion, from the Charles Schwab Corporation. US Trust had about $100 billion of AUM and over 150 years of experience. The deal closed 1 July 2007.

Acquisition of ABN Amro North America and LaSalle Bank

On September 14, 2007, Bank of America won approval from the Federal Reserve to acquire ABN Amro North America, LaSalle Bank Corporation and LaSalle Corporate Finance from ABN AMRO for $21 billion. With this combination Bank of America will have 1.7 trillion in assets. A Dutch court blocked the sale until it was later approved in July. The acquisition was completed on October 1, 2007.

The deal increased Bank of America's presence in Illinois, Michigan, and Indiana by 411 branches, 17,000 commercial bank clients, 1.4 million retail customers and 1,500 ATMs. Bank of America has become the largest bank in the Chicago market with 197 offices and 14% of the deposit share, passing up JPMorgan Chase. LaSalle customers now have fee free access to Bank of America ATMs from coast to coast as well as access to the Global ATM Alliance.

Investment in Countrywide Financial

On August 23, 2007 the company announced a $2 billion dollar repurchase agreement for Countrywide Financial. This purchase of preferred stock is arranged to provide a return on investment of 7.25% per annum and provides the option to purchase common stock at a price of $18 per share.

Acquisition of Countrywide Financial

On January 11, 2008 Bank of America announced that they will buy Countrywide Financial for $4 billion

How else would the keep from losing their $2,000,000,000 down payment? A friend predicted this over 2 years ago. He predicted most of the mortgage lenders would be absorbed by larger banks, lenders that existed would stop offering wholesale in spite of the fact it is a boneheaded idea, and banks would -- once again -- control the mortgage industry. Great news for all those politicians wanting to protect the poor people from getting bad loans. If this keeps up not only will sub-prime be completely eradicated but we'll once again hear the left and the media screaming that the big banks are holding down the little people. Well, you're damned if you do and damneder if you don't!