What Would Happen if Bank of America Acquired Countrywide Financial?

In the past few weeks, rumors have circulated that Bank of America (BAC) is considering the acquisition of California-based Countrywide Financial (CFC), 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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