Although October 17th is the birthday of at least one banker I know (yours truly), more importantly it’s the founding anniversary for the Bank of Italy. Yep, that’s right, it all started in 1904 in San Francisco by an Italian-American named Amadeo Giannini.
You might know that bank better today by its successor name of sorts, after literally hundreds of mergers, acquisitions and street fights, Bank of America.
Giannini was a director of the Columbus Savings & Loan in which his father-in-law owned an interest. At the time, banks were run for the benefit of the wealthy and the well-connected. Giannini observed an opportunity to service the increasing immigrant population that were without a bank. At loggerheads with the other directors who did not share his sentiment, he quit the board in frustration and started his own bank.
The new bank was originally housed in a converted saloon as an institution for the “little fellow,” hardworking immigrants other banks would not serve. Giannini offered them savings accounts and loans, judging them not by their wealth, but by their character. Deposits on that first day totaled $8,780, but within a year soared above $700,000 (almost $17 million in 2014 dollars).
In 1928, Giannini merged his bank with the Bank of America, Los Angeles, established by Orra E. Monnette in a series of several mergers between Los Angeles based banks between 1909 and 1923. Monnette’s intention was to build capital for national expansion.
The bank was an attractive merger partner for Giannini for its advanced bank branch system that employed centralized accounting and cash distribution system. They even had their own fleet of secure armored cars to transport branch cash supplies. Giannini grew this branch banking strategy to become the world’s largest commercial bank in 1945, with $5 billion in assets and 493 California branches.
You are probably more familiar with recent history when Bank of America merged with NationsBank of Charlotte NC in 1998. While NationsBank was the nominal survivor, the merged bank took the Bank of America name and still operates under the original charter for Bank of Italy.
While Amadeo Giannini’s ideals may have long been lost on the likes of Hugh McColl, Jr. and Kenneth Lewis, the bank has more recently been successful at retrenching, rather than growing. Now led by Brian Moynihan, the bank faced multiple challenges brought on by its acquisition of Countrywide Mortgage and Merrill Lynch just ahead of the 2008 financial crisis, and gave up its position as America’s largest bank.