Bank of America, meet Countrywide?
Written by Bryan Revis (contact - e-mail) -- March 6th, 2007 | Recommend ThisIn the past few weeks, rumors have circulated that Bank of America is considering the acquisition of California-based Countrywide Financial, but publicly Bank of America has been tight-lipped about any deals in the works. With federal laws prohibiting any bank from making an acquisition that would raise its share of US deposits above 10 percent, the acquisition of a mortgage lender like Countrywide would be a creative way for Bank of America to expand its reach within the confines of this law.
So what would happen if Countrywide shook hands with the nation’s largest consumer bank? Would Bank of America acquire a significant amount of additional home loan shoppers or would it simply see the same visitors as before? We have the answer…
To explore the potential impacts of a merger, we compared the number of people shopping (a.k.a. researching) for a mortgage or home equity loan on both websites from July through December of 2006. Despite the ease of shopping for mortgages on multiple sites when surfing the web, we discovered that very few people were visiting both Bank of America and Countrywide’s websites. In fact, by acquiring Countrywide, Bank of America would almost double the number of people shopping for a mortgage on its website every month.
So what does this mean in your state? In 25 states Countrywide receives a larger share of online home lending shoppers.
Among those states, the largest gains for Bank of America from a merger exists in Ohio, where Countrywide receives more than three times as many lending prospects as Bank of America. Other states with potentially large gains for Bank of America include Indiana, Michigan, Minnesota, Colorado and Utah. If Bank of America is looking to target regional growth in the middle of the country, this is one way to do it.
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March 8th, 2007 at 11:00 am
Can you comment on how you gathered the data for the BA and Countrywide visitors? It would seem to
me that if one was shopping for a loan, you’d go to multiple sources. In which case, there should be a
high likelihood that there would be overlap. How do you explain it?
March 13th, 2007 at 4:32 pm
For this analysis, we identified specific pages on the Bank of America and Countrywide websites that contained information about home loans products (mortgage, refinance, and home equity). Any person who visited any of those pages was then tagged as a home loans “prospect.” We wanted to make sure our comparison was “apples-to-apples,” and it would not have been an accurate view to overlap all visitors to both sites, as Bank of America has many online bankers on its site who are not in-market for home loans products.
As to your second question about why, we think the regional data provides some insight to this. In many states there was a wide margin between market share of the two, especially those dominated by Bank of America. This division of share by region reveals that both competitors have adopted different strategies to marketing their home loans products, thus the division of online prospects.
March 26th, 2007 at 5:08 pm
When Countrywide converted its charter from a national bank to a federal savings bank on March 12, did it effectively derail B of A’s merger attempt? My logic is that when Countrywide converted, it effectively became a “bank” rather than simply a mortgage lender and thus prohibiting the B of A acquisition because of the 10% U.S. share of deposits restriction you have cited.
April 18th, 2007 at 10:22 pm
why would BOA want to aquire more business in a region where forclosures are at an all time high??? Countrywide would certainly walk away with the last laugh!
May 22nd, 2007 at 12:11 pm
There is no truth to the BofA acquiring Countrywide rumor. BofA was in talks with Countrywide to start a joint venture with BofA’s mortgage to Division to operate it for BofA, and split the profit since BofA could not run it successfully despite being a banking powerhouse. BofA also told Countrywide if word gets out that that they are seeking their assitance the deal is off.
It is rumored Angelo Mozillo himself leaked the rumor becasue in constant stock sale mode to keep the price of the stock high.
Countrywide is falling apart with a 400% increase in defaults, a salesforce on the brink of a mutiny from uncompetitive rates, an increasing rigid underwriting approach and overly comservative appraisal service.
No one is buying Countywide. Buy Puts or the short stock.
June 21st, 2007 at 4:29 am
Please let me know if there are any equally great sites like this you can recommend to me. Thanks Again
June 22nd, 2007 at 7:47 am
SarahBell ( ) wrote:
June 22nd, 2007 at 12:23 pm
Nice site try it here.
June 25th, 2007 at 11:09 am
I see we share a common interest! Excellent job on the website!
August 23rd, 2007 at 12:03 am
I believe the critics are underestimating the assets and strengh of Countrywide. I predict that Countrywide stock will double in the next one to two years as they show the nation how they were not only capable of weathering the credit crunch storm but were also capable of growing their business during the most difficult time in the companies history!! Go Countrywide!!! and thank you for helping one out of seven families!!
August 30th, 2007 at 7:40 pm
mortgage direct lender mortgage buying lender
January 11th, 2008 at 1:50 pm
It would be great if you can update this post with new data now that the deal is real!
January 17th, 2008 at 6:39 pm
Do you think its reasonable that Bank of Americas’ share price increased after the acquisition of Countrywide?