Bank of America Corporation

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Bank of America Corporation

Bank of America Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255
U.S.A.
Telephone: (704) 386-1845
Toll Free: (800) 299-2265
Fax: (704) 386-6699
Web site: http://www.bankofamerica.com

Public Company
Incorporated: 1904 as Bank of Italy; 1960 as North Carolina National Bank
Employees: 142,724
Total Assets: $621.7 billion (2001)
Stock Exchanges: New York
Ticker Symbol: BAC
NAIC: 551111 Offices of Bank Holding Companies; 52211 Commercial Banking

Bank of America Corporation was formed in the 1998 merger of NationsBank Corporation and BankAmerica Corporation. It operates as the third-largest bank in the U.S. with over 4,200 retail consumer banking locations in 21 states and the District of Columbia. The company is ranked number one in terms of deposit market share in Texas, California, Florida, Georgia, North Carolina, and Washington. Bank of America has four main business segments, comprising Consumer Banking, Commercial Banking, Global Corporate and Investment Banking, and Asset Management. Through these segments, the firm provides financial products, services, and solutions to customers in 48 states and 38 countries across the globe.

The History of BankAmerica Corporation

BankAmerica was founded in 1904 as the Bank of Italy. Its credo was radical at the time: to serve “the little fellows.” From its humble beginnings in a former tavern, BankAmerica grew to become a force that revolutionized U.S. banking. With deregulation, however, its traditional emphasis on the general consumer created problems for the bank.

Amadeo Peter Giannini, founder of BankAmerica, became one of the most important figures in twentieth-century American banking. Giannini, an Italian immigrant, was seven when his father died. By age 21, he had earned half ownership of his stepfather’s produce business. He married into a wealthy family, and profits from the produce business, combined with shrewd real estate investments in San Francisco, enabled him to retire at age 31.

His retirement was brief. When his father-in-law died, he left a sizable estate, including a directorship of a small San Francisco savings bank. When Giannini failed to convince the board of this bank that the poor but hardworking people who had recently come to the West Coast were good loan risks, he resigned his position and set out to start his own bank—a bank for “people who had never used one.”

The year, 1904, was an inauspicious one; an up-and-down economy and the financial irresponsibility of many banks during this period gave banking such a bad name that the government was eventually prompted to create the Federal Reserve system, in 1917. But Giannini’s bank was atypical. His policy of lending money to the average citizen was unheard of in the early 1900s, when most banks lent only on a wholesale basis to commercial clients or wealthy individuals.

Giannini raised capital for his new bank, called the Bank of Italy, by selling 3,000 shares of stock, mostly to small investors, none of whom were allowed to own more than 100 shares. Although Giannini never held a dominant share of stock, the extreme loyalty of these and subsequent stockholders allowed him to rule the bank as though it were closely held. His innovative policies made the Bank of Italy and its successor, the Bank of America of California, the most controversial bank in the United States. The nation watched with wary eyes as he created a system of branch banking that made it the world’s largest bank in a mere 41 years.

During the famous San Francisco earthquake of 1906, Giannini rescued $80,000 in cash before the bank building burned by hiding it in a wagon full of oranges and bringing it to his house for safekeeping. With this money he reopened his bank days before any other bank and began making loans from a plank-and-barrel counter on the waterfront, urging demoralized San Franciscans to rebuild an even better city.

Giannini’s original vision led naturally to branch banking. Expense made it difficult for small depositors to travel long distances to a bank, so Giannini decided his bank would go to them, with numerous well-placed branches. Accordingly, the Bank of Italy bought its first branch, a struggling San Jose bank, in 1909.

Giannini made up the rules as he went; he was not a banker, and his was the first attempt ever at branch banking. Going his own way included loudly denouncing the “big interests,” and he repeatedly offended influential members of the financial community, including local bankers, major Californian bankers, and many state and federal regulators, who were already uncertain about how to handle an entirely new kind of banking. Some did support Giannini’s vision though, including William Williams, an early California superintendent of banks, and the Crocker National Bank, which lent money to a subsidiary of the Bank of Italy expressly for acquiring branch banks.

The Formation of Bank of America of California and Transamerica: Late 1920s

The bank grew rapidly; in 1910 it had assets of $6.5 million. By 1920, assets totaled $157 million, far outstripping the growth of any other California bank and dwarfing its onetime benefactor, Crocker National. Further expansion was stymied, however, by the state of California and by the new Federal Reserve system, which did not allow member banks to open new branches. Giannini shrewdly sidestepped this regulation by establishing separate state banks for southern and northern California (in addition to the Bank of Italy) as well as another national bank, and putting them all under the control of a new holding company, Bancltaly. Finally, in 1927, California regulations were changed to permit branch banking, and Giannini consolidated his four banks into the Bank of America of California.

With California conquered, Giannini turned to the national scene. He believed that a few large regional and national banks would come to dominate American banking by using branches, and he intended to blaze the trail. He already owned New York’s Bowery and East River National Bank (as well as a chain of banks in Italy); next he established Bank of America branches in Washington, Oregon, Nevada, and Arizona, again before branch banking was explicitly permitted.

Federal regulators, objecting to Giannini’s attempts to dictate the law, took exception to some of his practices. In response, Giannini created another holding company in 1928, to supplant Bancltaly. The new company was called Transamerica, to symbolize what Giannini hoped to accomplish in banking.

Giannini knew he needed a Wall Street insider to help him realize his dream of nationwide branch banking, and he thought Elisha Walker, the head of Blair and Company, an old-line Wall Street investment-banking firm, was just the man. So, in 1929, the year Bank of America passed the $1 billion mark in assets, Transamerica bought Blair.

A year later, Giannini consolidated his two banking systems into the Bank of America National Trust and Savings Association, under the control of Transamerica. Sixty years old and in poor health, he relinquished the presidency to Walker, retired for the second time, and went to Europe to recuperate. It was again a short retirement. His stay ended abruptly in 1931, when he received news that Walker was trying to liquidate Transamerica.

Giannini headed straight for California, where three-quarters of the bank’s stockholders remained. What followed was one of the most dramatic proxy fights in U.S. history. Giannini crisscrossed California, holding stockholder meetings in town halls, gymnasiums, courthouses, and other public spaces. A poor public speaker, he hired orators to drive home the message that Walker and eastern interests, the dreaded “big guys” Giannini had battled against for years, were trying to ruin the bank. The campaign succeeded and the stockholders returned control of the Bank of America to Giannini.

The bank had suffered, though. By the end of 1932, deposits had shrunk to $876 million, from a high of $1.16 billion in 1930. No dividend was paid that year, for the first time since 1905, and the battle had cost Giannini his New York banks. Depositor confidence had to be rebuilt.

Giannini’s presence seemed to be just the right thing. By 1936, Bank of America was the fourth-largest banking institution in the United States (and the second-largest savings bank) and assets had grown to $2.1 billion. The bank continued to innovate, instituting a series of new loans called Timeplan installment loans. Timeplan included real estate loans, new and used car financing, personal credit loans from $50 to $1,000, home appliance financing, and home-improvement loans, all industry firsts.

As the Bank of America became more influential, Giannini took on bigger and bigger foes, among them the Federal Reserve, Wall Street, the Treasury Department, the Securities and Exchange Commission (SEC), Hans Morgenthau, and J.P. Morgan, Jr. Eventually, the enmity Giannini aroused in his war against the American financial establishment cost the bank its chance for nationwide branch banking. The beginning of the end came in 1937, when the Federal Reserve made its first attempt to force Transamerica and Bank of America to separate.

Company Perspectives:

Bank of America seeks to build broad, deep and long-lasting relationships with its customers by providing a full range of banking, investing and insurance products and services, and to create value for customers by delivering financial solutions within the context of each customer’s complete banking relationship and financial situation, as one company with one customer experience. Middle-market and large corporate clients also benefit from the company’s relationship-based approach, with client managers coordinating delivery of a broad range of products and services, including (but not limited to) commercial lending, treasury management, debt and equity capital raising, risk management and mergers and acquisitions advisory services.

Postwar Growth

World War II brought tremendous growth to the Bank of America. As people and businesses flocked to California during the war, the bank more than doubled in size: in 1945, with assets of $5 billion, it passed Chase Manhattan to become the world’s largest bank.

As California began to rival New York as the most populous state, Bank of America continued to expand. Giannini continued to battle, and win, against the big interests, until his death in 1949. From radical outsider to the leader of what Business Week called the “new orthodoxy” of banking—the trend toward serving average consumers—Giannini’s was one of the most innovative careers in twentieth-century banking.

He was succeeded as president of Transamerica by his son, Lawrence Mario, long a top official at the bank, who continued in his father’s tradition. In 1952, however, Lawrence Mario succumbed to lifelong health problems. Following the deaths of the Gianninis, Bank of America slowly made itself over. New chief Clark Beise moved to decentralize operations, encouraging branch managers to assume more responsibility for their branches. This approach paid off with tremendous growth; by 1960, assets totaled $11.9 billion. The bank continued to innovate. In 1959, it was the first bank to fund a small-business investment company. It was also the first U.S. bank to adopt electronic and computerized record-keeping; by 1961, operations were completely computerized. Other new programs included student loans, an employee loan-and-deposit plan that let workers transact bank business through their offices (a response to increased competition from credit unions), and the first successful credit card, BankAmericard, the predecessor of Visa.

In addition, Bank of America stepped up its international presence, becoming one of only four U.S. banks with significant impact on international lending. It also began to pursue wholesale accounts, to supplement its traditional retail base. Finally, in 1957, the Federal Reserve forced Transamerica to separate from Bank of America, an event the two institutions had anticipated.

Bank of America’s efforts to become a “department store of finance” in the late 1950s and early 1960s marked the last significant period of innovation in the bank’s history until the 1980s. It was a time when the bank strove to sell the widest variety of banking services to the widest possible market. Beise felt there was more room for innovation, saying in 1959 that “there are new frontiers to develop,” but warning that “we are constantly fighting against the attitude of entrenched success.” It was a battle that the Bank of America lost, as it eventually became a conservative, stodgy, and inflexible institution.

The Formation of BankAmerica Corporation: 1968

In 1968, BankAmerica Corporation was created as a holding company to hold the assets of Bank of America N.T. & S.A. and to help the bank expand and better challenge its arch-rival, Citibank. This came just before banking deregulation, which affected Bank of America more adversely than was predicted. Bank of America’s branch banking system was a major problem, since it gave the bank the highest overhead in the banking industry. Through this period the retail division provided 50 percent of the bank’s profits. It was not until interest rates exploded in the 1970s that the bank’s bulk of low-interest-bearing mortgages became damaging, as it was for many savings and loans.

Key Dates:

1874:: Several prominent Charlotte, North Carolina, citizens form The Commercial National Bank.
1887:: The Citizens Bank of Savannah, Georgia, begins operation.
1904:: Amadeo Peter Giannini forms the Bank of Italy in San Francisco, California.
1906:: Citizens Bank merges with Southern Bank to form Citizens and Southern (C&S) Bank.
1909:: Bank of Italy buys its first branch, a struggling San Jose bank.
1927:: California regulations allow for branch banking; Giannini consolidates his holdings into the Bank of America of California.
1928:: Giannini forms holding company Transamerica.
1929:: Bank of America surpasses $1 billion in assets; Blair and Company is purchased.
1930:: Giannini consolidates his banking systems into the Bank of America National Trust and Savings Association, which falls under control of Transamerica.
1945:: Bank of America becomes the world’s largest bank during World War II.
1957:: The Federal Reserve forces Transamerica to separate from Bank of America.
1960:: The North Carolina National Bank (NCNB) is created.
1968:: BankAmerica Corporation is created as a holding company for Bank of America N.T. & S.A.
1975:: BankAmerica’s assets reach $60 billion.
1981:: BankAmerica begins to experience a loan crisis; NCNB expands into Florida.
1984:: Two major institutions, Virginia National Bankshares and First and Merchants, merge to form Sovran Financial Corp.
1987:: BankAmerica begins restructuring efforts.
1990:: C&S and Sovran merge.
1991:: NationsBank Corp. is formed from the merger of NCNB and C&S/Sovran Corp.
1992:: BankAmerica Corp. and Security Pacific Corp. merge.
1997:: NationsBank announces the purchase of Barnett Banks Inc.; BankAmerica acquires Robertson, Stephens and Company L.P.
1998:: BankAmerica and NationsBank merge in a $62 billion deal and offically adopt the name Bank of America Corporation soon thereafter.
2001:: Kenneth D. Lewis is named chairman and CEO; the company focuses on brand recognition.

As the largest bank in the world, the Bank of America was a natural target for groups with statements to make during the 1960s. It became the first major employer in California to sign a statement of racial equality in hiring. At the time, the Bank of America had more than 3,500 minority employees—more than 10 percent of its workforce. The bank also responded to complaints from women’s groups by creating a $3.8 million fund for training female employees in 1974, and set itself the goal of a 40 percent-female workforce.

By 1970, Bank of America had established a $100 million loan fund for housing in poverty-stricken areas and purchased municipal bonds that other California banks would not touch. This was in keeping with the tradition Giannini had established when he bought rural school bonds and bonds for the Golden Gate Bridge at a time when no other bank would buy such issues.

A.W. “Tom” Clausen succeeded Rudy Peterson as chief executive officer (CEO) in 1971. He presided over Bank of America’s last tremendous growth spurt—assets jumped 50 percent (to $60 billion) just between 1973 and 1975. Bank of America was the only one of the 20 largest U.S. banks to average 15 percent growth between 1971 and 1978; its seemingly unstoppable growth earned its management great praise during the 1970s.

Restructuring: 1980s

When Clausen left Bank of America in 1981 to head the World Bank, Bank of America had $112.9 billion in assets. Clausen was replaced by 40-year-old Samuel Armacost. Soon the Bank of America began to fall apart. Energy loans, shipping loans, farming loans (Bank of America was the largest agricultural lender in the world) and loans to third-world countries all started to go bad. Bank of America, whose large deposit base had traditionally made it exceptionally liquid but had also given it trouble in maintaining proper capital reserves, was ill prepared to meet the crisis. Suddenly, the biggest bank in the world had no money. It could not even raise capital in the stock market because its stock price had plummeted at a time when most bank stocks were rising.

Armacost started a general campaign to cut costs. The bank dropped a third of its 3,000 corporate clients, sold subsidiaries and its headquarters building, closed 187 branches, and began to lay off employees, something it had never done before. In 1986, the wounded BankAmerica became the target of a takeover bid from a company half its size. First Interstate Bancorp offered $2.78 billion for the nation’s second-largest banking group. A few days after this bid was made public in early October, Armacost resigned and was replaced by none other than Tom Clausen, the man many blamed for BankAmerica’s troubles in the first place. Clausen resisted the takeover, but Joe Pinola, Interstate’s chairman, was determined, and by the end of October had sweetened the deal to $3.4 billion. Clausen was equally determined to prevent BankAmerica’s takeover. He rejected First Interstate’s bid and battened down the hatches for a hostile assault. In the end, Clausen was able to rally shareholders behind him and thwart First Interstates’ plans.

In 1987, BankAmerica set about restructuring its operations. Clausen sold nonessential assets—including the Charles Schwab discount securities brokerage and Bank of America’s Italian subsidiary—and refocused the bank’s attention on the domestic market. New services, including advanced automated teller machines and extended banking hours, lured Californian customers back. In addition, the bank went after the corporate business it had neglected in the early 1980s. Clausen cut back substantially on staff, cleaned up the nonperforming loans in Bank of America’s portfolio, and hired a number of exceptional managers to execute BankAmerica’s new directives. By the end of 1988, the bank was in the black again. Though still plagued by a good deal of exposure to Third World debt, BankAmerica was able to record a profit of $726 million, its first in three years.

By 1989, BankAmerica’s recovery was so strong that it was able to declare its first dividend since the fourth quarter of 1985. Industry analysts called the recovery the biggest turnaround in the history of U.S. banking. Retail operations were expanded in Nevada with the acquisition of Nevada First Bank, and in Washington with the purchase of American Savings Financial Corp. by the subsidiary Seafirst Corp., the largest bank in the Pacific Northwest. During this year, BankAmerica was the first major bank in California to announce that it would open all its branches on Saturdays and extend weekday hours for greater consumer convenience.

Acquisitions and Mergers: 1990s

In 1990, BankAmerica showed further evidence of its recovery by announcing that its revenues exceeded $1 billion for the first time. Industry analysts theorized that the bank had the cleanest loan portfolio of the nation’s big banks. Acquisitions included Woodburn State Bank of Oregon, Western Savings and Loan branches in Arizona, and Benjamin Franklin and MeraBank Federal Savings, the largest S&Ls in Oregon and Arizona, respectively. The bank also opened a new international branch in Milan, Italy.

In 1990, BankAmerica surpassed Chase Manhattan to become the second-largest bank holding company in the nation. Also, in keeping with the bank’s policy of community responsibility, it began an Environmental Program that included activities directed toward saving paper and other materials through recycling, and energy and water conservation.

Seeking to expand its operations beyond its branches in seven western states, the bank added branches in two more states with the 1991 acquisitions of ABQ and Sandia Federal Savings banks of New Mexico, and Village Green National Bank in Houston. Another purchase was a subsidiary of GNA Securities that had operated an investment program in the bank’s branches since 1988. The program, called Bank of America Investment Services, offered mutual funds and tax-deferred annuities. In spite of the nation’s economic recession at this time as well as higher deposit insurance premiums and higher credit losses and non-accruals, BankAmerica was able to post its third straight year of record earnings—more than $1 billion.

Expanding services to customers continued with the opening of full-service branches in grocery stores in southern California. In addition, to allow customers access to money anytime and anywhere, the bank opened several hundred new Versateller ATM’s for a total of 2,300 in nine states.

After nine months of preparation, the merger of BankAmerica Corp. and Security Pacific Corp. became final on April 22,1992. After the merger BankAmerica became the nation’s second-largest bank. The joining of the California banks was the largest merger in the history of banking at the time and created an institution with nearly $190 billion in assets and $150 billion in deposits. The merger was part of a national trend of bank consolidation that sought to strengthen troubled and even healthy institutions. For BankAmerica, the merger offered an opportunity to become more efficient and save money—an estimated $1.2 billion annually within the next three years. The merger also helped the bank expand into new markets and geographic locations. By the end of 1992, consumer banking services were provided in ten western states, trust and consumer financial services were provided nationwide, and commercial and corporate banking operations were located in 35 countries worldwide.

Acquisition activity continued with the purchase of Sunbelt Federal Savings, which held 111 branches in 76 cities in Texas; HonFed, the largest thrift in Hawaii; and Valley Bank of Nevada, which made BankAmerica the largest depository institution in that state. However, the persistent national recession, combined with a recession in the state of California, caused a decline in earnings reported for 1992.

Domestic expansion continued in 1993 with the acquisition of First Gibraltar of Texas and with an agreement to make a $1 million equity investment in Founders National Bank, the only African-American-owned bank on the West Coast. Additional overseas expansion occurred when BankAmerica received approval from the People’s Bank of China to upgrade its Guangzhou representative office into a full-service branch, the first U.S. bank to have such a branch. Consolidation of consumer and commercial finance units was undertaken, and one year after the merger, the bank had consumer operations in much of the United States, wholesale offices in 37 nations, retail branches in ten western states, and consumer finance company operations in 43 states.

As BankAmerica moved into the mid-1990s, it focused on many of the policies it had begun in the 1980s. Under the leadership of David Coulter—named chairman and CEO in 1996—BankAmerica’s strategies included development of new products and services for consumers; geographic diversification into such fast-growing economies as Asia and Latin America, which would enable the bank to better withstand the economic cycles of the domestic market; community investments; environmental programs; and loans to students and those with low income. BankAmerica also continued to hope for changes in laws and regulations that would allow interstate banking and more effective competition with non-bank institutions providing similar financial services. The company got its wish when federal laws began to allow banks to participate in the securities industry. As such, BankAmerica purchased investment banking firm Robertson, Stephens & Co. in 1997 for $540 million.

The History of NationsBank Corporation

NationsBank was one of the United States’ largest banking and financial companies. Based in Charlotte, North Carolina, the company grew at breakneck speed through the late 1980s and early 1990s to claim a spot as one of the nation’s top five financial institutions. Industry analysts credit this phenomenal growth to the company’s foundation of bold, aggressive management and thorough, professional planning. They also credit the company’s success to the personality and leadership of Hugh L. McColl, Jr., who served as NationsBank’s CEO from 1983 to 1998 and then as Bank of America Corp.’s chairman and CEO to 2001. McColl’s style, that of a southern-born and bred ex-Marine, contrasted sharply with that of most members of the banking community and contributed to NationsBank’s image as one of the mavericks of the banking world.

NationsBank was officially formed on December 31, 1991, with a merger between the $69 billion asset North Carolina National Bank Corporation (NCNB) and the $49 billion asset C&S/Sovran Corporation. The merger created the fourth-largest banking company in the United States. McColl became the first president and chief executive officer of NationsBank and Bennett A. Brown became the first chairman.

The two companies entered the merger having both completed a decade of rapid growth that was typical of the banking industry in the 1980s. NCNB and C&S/Sovran both followed the common industry pattern of numerous mergers and acquisitions in the 1980s. After expanding into South Carolina and Florida in the early to mid-1980s, Charlotte-based NCNB took an unprecedented leap forward through a unique expansion into Texas in 1988. The FDIC selected NCNB to manage the restructured subsidiary banks of First RepublicBank Corporation of Texas. Atlanta-based C&S Bank had banking offices throughout Georgia, Florida, and South Carolina. In 1990, this company merged with similarly sized Sovran Financial of Norfolk, Virginia. Sovran had banking offices throughout Virginia, the District of Columbia, and Maryland, as well as in Tennessee and Kentucky. After these two companies merged, the resulting organization established dual headquarters in Atlanta and in Norfolk.

The Growth of NCNB

NCNB traces its illustrious history back to the Commercial National Bank, which was organized by several prominent Charlotte citizens in 1874. Its initial start-up capital was $50,000. A series of mergers with other North Carolina financial institutions in the 1950s ultimately led to the creation of North Carolina National Bank on July 1, 1960. At the time of its formation, NCNB had 1,300 employees, 40 offices in 20 North Carolina communities and assets of $480 million. The bank continued to acquire smaller institutions, and by 1969 NCNB had grown to 91 offices in 27 North Carolina counties with deposits of more than one billion dollars. Ten years later, it stood as the state’s largest bank.

In the mid-1950s, however, when the nation talked about banking in the state of North Carolina, most people were talking about Wachovia Bank and Trust Company, NCNB’s arch-rival. Based in Winston-Salem, Wachovia had offices from the mountains to the coast and exercised considerable political clout in the capitol city of Raleigh. Bankers at other institutions stood in envy of Wachovia. Many bankers thrived on the competition, and some, such as Addison Reese at American Commercial Bank—one of NCNB’s predecessor institutions—in Charlotte, considered that competition the reason for going to work each morning.

At the time, Reese believed that North Carolina banking was poised for a change and nothing could stop him from meeting Wachovia’s threats. North Carolina’s banking laws were more liberal than in most states. They had been on the books since the early 1800s, when a Wilmington, North Carolina, bank appealed to the state legislature for permission to open an office about ninety miles away in Fayetteville. The legislature complied with the bank. Unlike law-makers in most states, the North Carolina legislature saw no reason to restrict branch banking during the intervening 150 years. In retrospect, many people believe that it was the close competition with backyard rival Wachovia that spurred NCNB’s rapid growth.

North Carolina National Bank broke new ground when it expanded into Florida in 1981 with its purchase of First National Bank of Lake City, Florida. At the time, it became the first non-Florida bank to expand its retail services into the state. After a quick approval of the purchase by the Federal Reserve Board of Governors, NCNB rapidly purchased several other Florida banks.

In 1986, NCNB benefited from a change in North Carolina’s interstate banking laws. With the advent of reciprocal interstate banking in the Southeast, North Carolina National Bank moved into South Carolina with the purchase of Bankers Trust Company. In 1985, it acquired Southern National Bankshares of Atlanta and Prince William Bank of Dumfries, Virginia, in 1986. North Carolina National Bank moved into Maryland in 1987 with the purchase of CentraBank of Baltimore. In 1989, NCNB acquired full ownership of First RepublicBank in Texas. During this period of growth, North Carolina National Bank established several “firsts” in its industry. For example, NCNB was the first U.S. bank to use commercial paper to finance the activities of nonbank subsidiaries; to open a branch in London; to operate a full-service securities company; and to list its common stock on the Tokyo Exchange.

The Development of C&S/Sovran

The C&S/Sovran side of the NationsBank puzzle traces its roots back to the 1860s. The company that would eventually become Sovran opened its doors in Richmond during that decade. At the time, its customer base included Confederate Army commander Robert E. Lee. More than a century later, in 1984, two major institutions—Virginia National Bankshares and First and Merchants—merged to form Sovran Financial Corporation. At the time, it was the largest banking merger in Virginia’s state history.

Sovran’s management team decided to merge with D.C. National Bancorp, headquartered in Bethesda, Maryland, in 1986. By November of 1987, Sovran was moving west by merging with Commerce Union, a 71-year-old bank holding company based in Nashville. Commerce Union’s business at the time spanned Tennessee and had a presence in Kentucky. The merger gave Sovran strongholds in both of those states.

Around the time Sovran Bank’s foundations were being laid, the Citizens Bank of Savannah, Georgia, opened its doors in the temperate coastal city on November 2, 1887. At the time, the bank had $200,000 in startup capital. In 1906, it merged with its crosstown rival, Southern Bank, to form Citizens and Southern Bank. The resulting organization became the state’s largest financial institution. It began to spread rapidly across the state of Georgia. Citizens and Southern began opening offices in South Carolina in 1928, but the company sold its operations there in 1940 when it anticipated federal rules preventing banks from owning branches in multiple states. The resulting C&S Bank of South Carolina was rejoined with Citizens and Southern in 1986 when the Georgian giant bought them back. That acquisition, along with the purchase of Landmark Banks of Florida in 1985, helped Citizens and Southern double its size within eighteen months during the mid-1980s.

C&S can also claim several firsts in the industry. Among the highlights in C&S history are being the first bank to figure “to the penny” balances, one of the first to offer checking accounts in the South and to issue its own credit card, and the first bank in the nation to offer 24-hour access to its services via automated teller machines. The nation’s first ATM machine was set up in Valdosta, Georgia, under the C&S banner.

In spring of 1989, C&S was successful in resisting a takeover bid by NCNB. At the time, C&S cited what it considered a low price offer and concerns about NCNB’s recent entry into the then-depressed Texas banking market. Soon thereafter, C&S and Sovran merged in a deal finalized on September 1, 1990.

The C&S/Sovran and NCNB Merger

The banking environment, however, was in the midst of tremendous change. Large banks were continuing to consolidate. As a result, smaller banks were under constant pressure to find new ways to improve their efficiency and productivity and reduce their workforces. In addition, the nation as a whole experienced a downturn in the real estate market—an area responsible for much of an average bank’s business. The newly merged C&S/Sovran (the merger was announced in the spring of 1989 and consummated in the fall of 1990) was suffering from the recession in the Southeast, and it had been particularly hard hit by mounting losses on loans in the District of Columbia metropolitan area. Real estate loans made up 32 percent of the bank’s $34 billion portfolio at the end of 1990, with Washington, D.C., accounting for 21 percent of the real estate total. C&S/Sovran’s stock price had dropped from $35.88 at the close of the first quarter in 1989, when NCNB announced its merger intentions, to $15.63 at the close of the fourth quarter in 1990. Under these circumstances, North Carolina National Bank renewed its offer to merge with C&S/Sovran.

Prior to reissuing his offer, McColl gathered with his advisors. According to Howard Covington and Marion Ellis in the book The Story of NationsBank: Changing the Face of American Banking, McColl told Senior Vice-President C.J. “Chuck” Cooley, “I am going to buy C&S/Sovran. I don’t know when. I don’t know how.” He instructed Cooley to hire the best talent available and deliver a complete psychological profile on C&S/Sovran’s key players, including Bennett Brown and Dennis Bottoroff. Cooley handled the job himself, and several weeks later, he handed McColl a profile of Brown as well as a profile of McColl himself, as seen by Brown.

Cooley told his boss that the keys to Brown’s relationships with people were honesty, sincerity, warmth, and friendliness. To McColl’s chagrin, however, each of those traits was opposite the characteristics that McColl portrayed to Brown. From Brown’s vantage point, McColl was arrogant, crude, and ungentlemanly. After hearing Cooley’s report, McColl and several other advisors began an intense series of role-playing sessions. McColl was schooled to avoid the use of militaristic terms and other verbal and nonverbal examples of his usual aggressive style. His staff coached him to become softer, more receptive, and friendlier in his approach.

Meanwhile, McColl’s confidence was growing as C&S/Sovran’s problems continued to multiply. The credit problems in the D.C. area increased, and the bank’s board split badly between an Atlanta faction and a Tennessee and Virginia faction. News filtered down to the NCNB leaders that although both factions preferred to remain independent, a merger with NCNB was the second choice among those on both sides. With this knowledge, McColl renewed his merger efforts with Brown.

On June 20, McColl departed Charlotte in the NCNB plane for Atlanta to make Bennett Brown a second offer. The two banking leaders sat down in Brown’s home to discuss the terms of the deal. Brown’s concerns were predictable: he wanted to know about leadership, cuts in personnel and staff, the name of the new bank, and—most important—the price.

McColl supplied the right answers to all of Brown’s questions. The merged bank would carry the name NationsBank, which eased concerns about the North Carolina flag flying over Georgia. Shortly after NCNB’s Texas acquisitions, the marketing group began experimenting with new names that would better reflect the company’s size and geographic diversity, as well as be more acceptable in new markets. At that time, the company began working with the Naming Center in Dallas. The Naming Center enlisted the work of academic linguists who worked with Latin teachers and poets to develop names rather than generating them by computers.

On the list of prospective names was the word “Nation.” Using poster-sized flash cards, the company combined two of them to create the single word “NationsBank.” Everyone was surprised when lawyers determined that the new name was not in use anywhere else in the world, and it soon cleared marketing surveys conducted nationwide. Ironically, NationsBank consistently scored as one of the most recognized and highly regarded names in banking, although it had never been used before. The corporate identity firm of Seigel and Gale in New York then developed a graphic look for the word that would reinforce its characteristics.

As for the issue of leadership, McColl wanted Brown to take the chairmanship, while he retained the title of CEO and president. McColl also pulled a sheet of paper from his coat that illustrated an exchange of 0.75 shares of NCNB stock for each share of C&S/Sovran. That exchange would mean a total payout of $3.99 billion for C&S/Sovran’s shareholders. Brown was receptive to the deal, but could not supply McColl with a firm answer.

It was on June 25 that the news about the probable merger broke in the Charlotte community. Even the national media focused on the possibility of this mega-deal between these banks in the South. C&S/Sovran’s leadership soon received the second offer with enthusiasm. Among other issues, NCNB had proven the wisdom and success of the large Texas acquisition, and C&S/Sovran was seeking the efficiencies and economies of scale inherent in a merger of this magnitude. The merger was approved by the Federal Reserve on November 29, 1991, and NationsBank officially opened its doors on January 2, 1992. At the time of the union, North Carolina National Bank was the tenth-largest bank in the United States, and C&S/Sovran was the twelfth largest. Together, they thrust each other to a position among the top three banking leaders in the United States.

The new entity quickly went to work to establish its presence in its chosen corporate headquarter city of Charlotte. Already, NCNB’s office buildings jutted into the southern skyline, but as NationsBank the company decided to build a new headquarters building. The result of this goal was the new NationsBank Corporate Center, a pristine sixty-story tower designed by architect Cesar Pelli. At the time it was built, it became the tallest building in the Southeast, and NationsBank firmly established itself as one of the nation’s financial heavyweights. As tribute to the man who led this building effort, many Charlotte onlookers began to call the new Corporate Center the “Taj McColl.”

The new bank had more domestic deposits than New York’s Citibank, market capitalization to rival J.P. Morgan & Company, more branch offices than almost any other competitor, and assets of nearly $120 billion. In addition to serving as a leader in the financial world, in the early 1990s NationsBank served as a role model to the larger corporate community as well. Nationwide, it was known as a company that exercised not only sound management practices, but cultural consciousness as well. Under McColl’s leadership, NCNB had already established flexible hours for working parents and a pre-tax child care expense reimbursement fund. Maternity leave was extended to six months, and the concept was expanded to include time off for new fathers. These ground-breaking policies attracted the attention of the Wall Street Journal, which in its centennial issue edition in 1989 selected NCNB as one of twelve companies in the world to watch in the future. Fortune magazine also chose McColl as one of the year’s twenty-five most fascinating business people—the only one selected from the banking industry—in its January 1989 issue.

The company’s financial strength also served as a resource for the many communities it supported. Charlotte itself was one of the nation’s fastest growing metropolitan areas, due largely to the growth and visibility of NationsBank. In 1994, the company had 1,800 branch offices, which made it the second-largest branch network in America. By providing traditional banking products to retail and corporate customers, as well as investing in innovative products and services, the company’s assets had grown to $165 billion.

As the banking industry continued to consolidate and change during the mid-1990s, NationsBank made several key purchases. In 1996, the company announced the $9.6 billion acquisition of St. Louis, Missouri-based Boatmen’s Bancshares Inc. McColl commented on the purchase in a 1997 St. Louis Business Journal article, claiming that “it brings NationsBank into contact with 100 million Americans, 40 percent of the population. That’s exciting to us. Also, I’m a classical strategist. It denies it to the enemy, the enemy being everyone else.” NationsBank then went on to purchase Barnett Banks Inc., Florida’s largest bank. The $15.5 billion deal was completed in January 1998.

The 1998 BankAmerica and NationsBank Merger

NationsBank, which had completed over 70 deals since 1980, made another aggressive move in 1998 when McColl approached BankAmerica’s Coulter about merging the two companies. Both McColl and Coulter knew that by joining forces, the combined entity would be the first coast-to-coast banking company in the United States with $572 billion in assets and offices in 22 states. Coulter agreed to a “merger of equals” and on April 13, 1998, BankAmerica announced that it would team up with NationsBank in a $62 billion merger. It soon became apparent however, that NationsBank would be the dominant partner.

The merged entity, whose name officially became Bank of America Corporation, took headquarters in Charlotte and served 30 million households in the U.S. as well as customers in 38 different countries. McColl took control of the new company as chairman and CEO. Coulter, however, resigned his presidency in the Fall of 1998 amid speculation that he and McColl had come into conflict over some of BankAmerica’s previous bad loans and lost earnings. McColl—slated to retire after the deal—had his work cut out for him upon completion of the merger, as he tried to integrate both BankAmerica and NationsBank, as well as the purchases both companies had made just before their merger. Industry analysts began to speculate that perhaps McColl may have taken on more than he could handle with the BankAmerica deal.

During 1999 and into 2000, Bank of America was plagued with integration problems which forced it to post lower than anticipated revenue growth, net income, and earnings. The company cited credit problems and bad loans as culprits in its lackluster financial performance. As such, Bank of America began to restructure in order to streamline operations. Nearly 10,000 jobs were cut, mostly in middle management. The firm also began to refocus on customer service.

McColl retired in April 2001 and left Kenneth D. Lewis to take over as chairman and CEO. Under new leadership, Bank of America turned its efforts to independent growth, which had taken a back seat to deal-making activity for years. “Our priority is organic growth. Our strategy is to deepen, to expand relationships … and to focus on quality of service,” claimed Bank of America’s chief financial officer James Hance in a 2001 American Banker article. The company also went to work on its brand image, increasing its 2002 advertising budget to $145 million—an increase of 50 percent over the previous year.

When the dust settled around the BankAmerica-Nations-Bank deal, the new Bank of America stood as the third largest bank in the U.S. and the thirteenth-largest U.S. corporation. Many analysts argued the firm had yet to reach the potential created by the 1998 merger and looked to Lewis to implement strategies that would secure increased earnings and positive financial results. While Bank of America appeared to be well positioned for success amid the turbulent and ever-changing banking industry, its ability to integrate the purchases of the 1990s remained key in securing future profits.

Principal Subsidiaries

American Financial Service Group, Inc.; BA Merchant Services, Inc.; BA Mortgage, LLC; Banc of America Advisors, Inc.; Banc of America Business Finance Corporation; Banc of America Capital Management, Inc.; Banc of America Commercial Corporation; Banc of America E-Commerce Holdings, Inc.; Banc of America Investment Services, Inc.; Banc of America Securities LLC; Bank of America Capital Corporation; Bank of America (Asia) Limited (Hong Kong); Bank of America (Polska) S.A.; Bank of America Brasil Holdings Ltda.; Bank of America Canada; Bank of America International Limited (UK); Bank of America, S.A. (Spain); BankAmerica Acceptance Corp.; Barnett Bank Premises Company–Brickell; Boatmen’s Financial Services, Inc.; C&S Premises, Inc. CSF Holdings, Inc.; Fleetwood Credit Corp.; NationsBanc Charlotte Center, Inc.; NationsBank Trust Company of New York; NCNB Corporate Services, Inc.