Bank of America
The Bank of America Corporation is an American multinational investment bank and financial services holding company headquartered at the Bank of America Corporate Center in Charlotte, North Carolina, with investment banking and auxiliary headquarters in Manhattan. The bank was founded by the merger of NationsBank and Bank of America in 1998. It is the second-largest banking institution in the United States and the second-largest bank in the world by market capitalization, both after JPMorgan Chase. Bank of America is one of the Big Four banking institutions of the United States, and one of eight systemically important financial institutions in the United States. It serves about 10 percent of all American bank deposits, in direct competition with JPMorgan Chase, Citigroup, and Wells Fargo. Its primary financial services revolve around commercial banking, wealth management, and investment banking.
Through mergers, the oldest branch of the Bank of America franchise dates back to 1784, when Massachusetts Bank was chartered, becoming the first federally chartered joint-stock-owned bank in the United States. Another branch of its history goes back to the American-based Bank of Italy, founded by Amadeo Pietro Giannini in 1904, which provided various banking services to Italian immigrants who faced service discrimination at the time. Headquartered in San Francisco, California, Giannini acquired Banca d'America e d'Italia in 1922 and eventually did business as Bank of America.
In the 1950s, the passage of landmark federal banking legislation facilitated rapid growth, quickly establishing prominent shares for the present bank's predecessors. After suffering significant losses during the 1998 Russian financial crisis, BankAmerica, as it was then known, was acquired by the Charlotte-based NationsBank for $62 billion. Following what was then the largest bank acquisition in history, the Bank of America Corporation was founded. Through a series of mergers and acquisitions, it built upon its commercial banking business by establishing Merrill Lynch for wealth management and Bank of America Merrill Lynch for investment banking in 2008 and 2009, respectively, and since renamed BofA Securities.
Both Bank of America and Merrill Lynch Wealth Management retain large market shares in their respective offerings. As of 2018, the investment bank was considered within the "bulge bracket" as the world's third-largest investment bank. Its wealth management unit manages $1.08 trillion in assets under management as the second-largest wealth manager in the world, after UBS. In commercial banking, Bank of America has operations, but does not necessarily maintain retail branches in all 50 states of the United States, Washington, D.C., and over 40 other countries. Its commercial banking footprint encapsulates 46 million consumer and small-business relationships at 4,600 banking centers and 16,000 automated teller machines.
The bank's large market share, business activities, and economic impact have led to numerous lawsuits and investigations regarding both mortgages and financial disclosures dating back to the 2008 financial crisis. Its corporate practices of servicing the middle class and wider banking community have yielded a substantial market share since the early 20th century., Bank of America has a $313.5 billion market capitalization, making it the 13th largest company in the world. As the sixth-largest American public company, it garnered $102.98 billion in sales as of 2018. Bank of America was ranked No. 25 on the 2020 Fortune 500 rankings of the largest US corporations by total revenue. Likewise, Bank of America was also ranked No. 6 on Forbes' 2023 Global 2000 rankings. Bank of America was named the "World's Best Bank" by Euromoney Institutional Investor in its 2018 Awards for Excellence.
History
, was founded in California in 1923. In 1928, this entity was acquired by the Bank of Italy of San Francisco, which took the Bank of America name two years later.The eastern portion of the Bank of America franchise can be traced to 1784, when the Massachusetts Bank was chartered, the first federally chartered joint-stock owned bank in the United States and only the second bank to receive a charter in the United States. This bank became FleetBoston, with which Bank of America merged in 2004. In 1874, Commercial National Bank was founded in Charlotte. That bank merged with American Trust Company in 1958 to form American Commercial Bank. Two years later, it became North Carolina National Bank when it merged with Security National Bank of Greensboro. In 1991, it merged with C&S/Sovran Corporation of Atlanta and Norfolk to form NationsBank.
The central portion of the franchise dates to 1910, when Commercial National Bank and Continental National Bank of Chicago merged to form Continental & Commercial National Bank, which evolved into Continental Illinois National Bank & Trust.
Bank of America
The history of Bank of America dates back to October 17, 1904, when Amadeo Giannini founded the Bank of Italy in San Francisco. In 1922, the Bank of America, Los Angeles, was established with Giannini as a minority investor. The two banks merged in 1928 and consolidated with other bank holdings to create what would become the largest banking institution in the country.In 1918, another corporation, Bancitaly Corporation, was organized by A. P. Giannini, the largest stockholder of which was Stockholders Auxiliary Corporation. This company acquired the stocks of various banks located in New York City and certain foreign countries.
In 1928, Giannini merged his bank with the Bank of America, Los Angeles, headed by Orra E. Monnette. The Bank of Italy was renamed on November 3, 1930, to Bank of America National Trust and Savings Association, which was the only such designated bank in the United States at that time. Giannini and Monnette headed the resulting company, serving as co-chairs.
Expansion in California
Giannini introduced branch banking shortly after California's 1909 legislation allowed for branch banking in the state, establishing the bank's first branch outside San Francisco in 1909 in San Jose. By 1929, the bank had 453 banking offices in California with aggregate resources of over US$1.4 billion. There is a replica of the 1909 Bank of Italy branch bank in History Park in San Jose, and the 1925 Bank of Italy Building is an important downtown landmark. Giannini sought to build a national bank, expanding into most of the western states as well as into the insurance industry, under the aegis of his holding company, Transamerica Corporation.In 1953, regulators succeeded in forcing the separation of Transamerica Corporation and Bank of America under the Clayton Antitrust Act. The passage of the Bank Holding Company Act of 1956 prohibited banks from owning non-banking subsidiaries such as insurance companies. Bank of America and Transamerica were separated, with the latter company continuing in the insurance sector. However, federal banking regulators prohibited Bank of America's interstate banking activity, and Bank of America's domestic banks outside California were forced into a separate company that eventually became First Interstate Bancorp, later acquired by Wells Fargo and Company in 1996. Only in the 1980s, with a change in federal banking legislation and regulation, could Bank of America again expand its domestic consumer banking activity outside California.
New technologies also enabled the direct linking of credit cards with individual bank accounts. In 1958, the bank introduced the BankAmericard, which was renamed to Visa in 1977. A coalition of regional bankcard associations introduced Interbank in 1966 to compete with BankAmericard. Interbank became Master Charge in 1966 and then Mastercard in 1979.
From February 1970 through September 1971, there were 66 attacks on Bank of America branches in California, including 53 bombings or fire-bombings, and 13 arson fires. There were "few injuries" and the property damage cost about $500,000, 80% of which was from the burning of the Isla Vista branch during a February 1970 riot.
Expansion outside California
Following the passage of the Bank Holding Company Act of 1956 by the U.S. Congress, BankAmerica Corporation was established for the purpose of owning and operating Bank of America and its subsidiaries.In 1983, Bank of America expanded outside California, through acquisition, orchestrated in part by Stephen McLin of Seafirst Corporation in Seattle, and its wholly owned banking subsidiary, Seattle-First National Bank. Seafirst was at risk of seizure by the federal government after becoming insolvent due to a series of bad loans to the oil industry. BankAmerica continued to operate its new subsidiary as Seafirst rather than Bank of America until the 1998 merger with NationsBank.
BankAmerica experienced huge losses in 1986 and 1987 due to the placement of a series of bad loans in the Third World. The company fired its CEO, Sam Armacost, in 1986. Though Armacost blamed the problems on his predecessor, A. W. Clausen, Clausen was appointed to replace Armacost. The losses resulted in a huge decline of BankAmerica stock, making it vulnerable to a hostile takeover. First Interstate Bancorp of Los Angeles, launched such a bid in the fall of 1986, although BankAmerica rebuffed it, mostly by selling operations. It sold its FinanceAmerica subsidiary to Chrysler and the brokerage firm Charles Schwab and Co. back to Mr. Schwab. It also sold Bank of America and Italy to Deutsche Bank. By the time of the 1987 stock-market crash, BankAmerica's share price had fallen to $8, but by 1992 it had rebounded mightily to become one of the biggest gainers of that half-decade.
BankAmerica's next big acquisition came in 1992. The company acquired Security Pacific Corporation and its subsidiary Security Pacific National Bank in California and other banks in Arizona, Idaho, Oregon, and Washington, which Security Pacific had acquired in a series of acquisitions in the late 1980s. This represented, at the time, the largest bank acquisition in history. Federal regulators, however, forced the sale of roughly half of Security Pacific's Washington subsidiary, the former Rainier Bank, as the combination of Seafirst and Security Pacific Washington would have given BankAmerica too large a share of the market in that state. The Washington branches were divided and sold to West One Bancorp and KeyBank. Later that year, BankAmerica expanded into Nevada by acquiring Valley Bank of Nevada.
In 1994, BankAmerica acquired the Continental Illinois National Bank and Trust Co. of Chicago. At the time, no bank possessed the resources to bail out Continental, so the federal government operated the bank for nearly a decade. Illinois then regulated branch banking extremely heavily, so Bank of America Illinois was a single-unit bank until the 21st century. BankAmerica moved its national lending department to Chicago in an effort to establish a financial beachhead in the region.
These mergers helped BankAmerica Corporation to once again become the largest U.S. bank holding company in terms of deposits, but the company fell to second place in 1997 behind North Carolina's fast-growing NationsBank Corporation, and to third in 1998 behind First Union Corp.
On the capital markets side, the acquisition of Continental Illinois helped BankAmerica to build a leveraged finance origination- and distribution business, which allowed the firm's existing broker-dealer, BancAmerica Securities, to become a full-service franchise. In addition, in 1997, BankAmerica acquired Robertson Stephens, a San Francisco–based investment bank specializing in high technology for $540 million. Robertson Stephens was integrated into BancAmerica Securities, and the combined subsidiary was renamed "BancAmerica Robertson Stephens".