Bank of America
On the 17th of October 1904, Amadeo Giannini opened a small storefront in San Francisco called Bank of Italy. He targeted Italian immigrants who faced discrimination from established banks and refused to serve them. The bank grew rapidly after the Great Earthquake of 1906 when Giannini moved money out of his vaults on a wagon to help displaced residents. This act of service built immense loyalty among customers who had lost everything else. By 1928, Giannini merged his institution with Bank of America Los Angeles to create a larger entity. The new company adopted the name Bank of America National Trust and Savings Association on the 3rd of November 1930. It became the only bank of its kind in the United States at that time. Giannini served as co-chair alongside Orra E. Monnette until regulators forced a separation of his holding company Transamerica Corporation in 1953. Federal laws prohibited banks from owning non-banking subsidiaries like insurance firms. This legal shift limited Giannini's ability to expand into other industries but solidified the core banking franchise.
BankAmerica Corporation emerged as a major force following the passage of the Bank Holding Company Act of 1956. In 1983, the company expanded outside California by acquiring Seafirst Corporation based in Seattle. This move brought significant risks due to bad loans made to the oil industry which nearly caused Seafirst to collapse. BankAmerica faced huge losses in 1986 and 1987 because of investments in Third World countries. CEO Sam Armacost was fired during this period while A.W. Clausen took over leadership. The stock price fell to $8 before rebounding to become one of the biggest gainers of the half-decade. A hostile takeover attempt by First Interstate Bancorp failed after BankAmerica sold off operations including FinanceAmerica to Chrysler. The bank acquired Security Pacific Corporation in 1992 representing the largest bank acquisition in history at that time. Regulators forced the sale of roughly half of Security Pacific's Washington subsidiary to prevent market dominance. BankAmerica then acquired Continental Illinois National Bank and Trust Co. of Chicago in 1994. These mergers helped BankAmerica regain its position as the largest U.S. bank holding company in terms of deposits until NationsBank surpassed it in 1997.
On the 23rd of August 2007, Bank America announced a $2 billion repurchase agreement for Countrywide Financial. This purchase provided an option to buy common stock at $18 per share. The deal closed in July 2008 giving the bank substantial control over the mortgage business. Countrywide serviced nine million mortgages valued at $1.4 trillion as of the 31st of December 2007. On the 14th of September 2008, Bank of America announced plans to acquire Merrill Lynch & Co. Inc. in an all-stock deal worth approximately $50 billion. Merrill Lynch was days away from collapse when this acquisition saved it from bankruptcy. The combined entity became the largest financial services company in the world. Shareholders approved the merger on the 5th of December 2008 and the deal closed the 1st of January 2009. Internal emails revealed that CEO Ken Lewis faced pressure from federal officials to complete the transaction or risk losing his job. Merrill recorded an operating loss of $21.5 billion in the fourth quarter mainly due to trading losses led by Tom Montag. The bank's stock price sank to $7.18 its lowest level in 17 years after these earnings were released.
On the 16th of January 2009, Bank of America received $20 billion and a guarantee of $118 billion in potential losses through the Troubled Asset Relief Program. This funding came in addition to $25 billion provided earlier in the fall of 2008. The government bailout aimed to preserve the merger with Merrill Lynch. Members of Congress expressed concern over how the money was spent while some recipients faced accusations of misuse. On the 3rd of August 2009, the bank agreed to pay a $33 million fine to the Securities and Exchange Commission regarding non-disclosure of bonuses totaling up to $5.8 billion at Merrill. A federal judge rejected this settlement on the 14th of September 2009 calling it half-baked justice. The actual amount paid out was $3.6 billion shared among 39,000 workers who received average payments of $91,000. Six hundred ninety-six people received more than $1 million in bonuses including one individual who got over $33 million. In December 2009, the bank announced repayment of the entire $45 billion received from TARP using excess liquidity and common equivalent securities.
Bank of America now operates 4,600 retail financial centers and approximately 15,900 automated teller machines across the United States. Consumer Banking represents 38% of total revenue as of 2016 providing services like banking investments merchant services and lending products. The company has 31 million active online users and 16 million mobile users as reported recently. Mobile usage increased to 25.3 million by 2018 while physical locations fell to 4,411 branches by June 2018. In 2015, Bank of America began expanding organically into cities where it previously lacked a retail presence such as Denver Minneapolis-Saint Paul and Indianapolis. By January 2018, the bank expanded further into Pittsburgh supplementing existing commercial lending businesses. As of 2021, Bank of America became the 9th largest bank by deposits in Ohio after entering Cleveland Columbus and Cincinnati. Global Markets division offers trading services to institutional clients including research market making risk management and derivatives. The bank generates 90% of its revenues within its domestic market focusing on being number one locally through key acquisitions.
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Common questions
When was Bank of America founded and by whom?
Bank of America traces its origins to the 17th of October 1904 when Amadeo Giannini opened a small storefront in San Francisco called Bank of Italy. The institution adopted the name Bank of America National Trust and Savings Association on the 3rd of November 1930 after merging with Bank of America Los Angeles.
What major acquisition did Bank of America complete in 2008?
On the 14th of September 2008, Bank of America announced plans to acquire Merrill Lynch & Co. Inc. in an all-stock deal worth approximately $50 billion. This merger made the combined entity the largest financial services company in the world and closed on the 1st of January 2009.
How much money did Bank of America receive from the Troubled Asset Relief Program?
Bank of America received $20 billion and a guarantee of $118 billion in potential losses through the Troubled Asset Relief Program on the 16th of January 2009. The bank repaid the entire $45 billion received from TARP in December 2009 using excess liquidity and common equivalent securities.
When did Bank of America become the ninth largest bank by deposits in Ohio?
As of 2021, Bank of America became the 9th largest bank by deposits in Ohio after entering Cleveland Columbus and Cincinnati. The bank had previously expanded organically into cities like Denver Minneapolis-Saint Paul and Indianapolis starting in 2015.
What were the consequences of the bad loans made to the oil industry for BankAmerica Corporation?
BankAmerica faced huge losses in 1986 and 1987 because of investments in Third World countries following its acquisition of Seafirst Corporation based in Seattle. CEO Sam Armacost was fired during this period while A.W. Clausen took over leadership and the stock price fell to $8 before rebounding.