Bank of America Stock Split History

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Bank of America (NYSE: BAC) has split its shares three times since 1978, but only once as the modern-day B of A we know today. The last split occurred on Aug. 27, 2004, when Bank of America paid a stock dividend to split its shares two for one.

The table below shows all of the stock splits for Bank of America and its predecessors since 1978.

Data sources: SEC filings, New York Times, and Google Finance.

Hidden history in its stock splits

If you look up Bank of America on Google Finance or other portals, you'll see three stock splits in its history. But only the 2004 stock split happened under the Bank of America name.

The 1997 stock split was done by its predecessor, NationsBank. And the 1986 split actually points to a stock split done by North Carolina National Bank (NCNB).NCNB acquired C&S/Sovran Corp. in 1991, and renamed the combined company NationsBank.NationsBank acquired BankAmerica in 1998, changing the name of the combined entity to Bank of America that year.

With each acquisition, the history of NCNB's stock price performance lived on, even if its name and banking charter changed. All stock history prior to the creation of the modern Bank of America in 1998 is the stock trading history of NationsBank, and before that, NCNB.

What happens when companies split their shares

Companies typically enact stock splits by paying a stock dividend. While most dividends are paid in cash, they can also be paid in stock. By paying a stock dividend of 1 share for every 1 share an investor owns, a company can split its stock two for one.

Following a two-for-one stock split, the number of shares outstanding will double, but the value of each share is halved. The result is that shareholders own twice as many shares, with each share worth half as much.

A good way to conceptualize stock splits is to think about a company as a pizza. Whether you slice a pizza into four, six, or eight slices, the amount of pizza you have does not change. The only thing that changes is the size of each slice.The same can be said of companies. A company is worth the same amount whether it has 10 shares outstanding or 10 billion shares outstanding; the only difference is the value of each share.

Why companies split their stock

Theoretically, a lower share price allows more people to buy a company's stock. In fact, when Bank of America last split its shares in 2004, its then-CEO, Ken Lewis, noted that the stock split should make Bank of America more attractive to retail investors.

In practice, stock splits may not be as important as they once were. Before electronic stock trading, trading so-called "odd lots" of stock could cost you more in commissions. An odd lot is any buy or sell order for 99 shares or less. Today, however, electronic trading makes pairing up buy and sell orders easier than ever, and odd lots are no longer penalized with higher commissions for each trade.

Some companies split their shares for inclusion in price-weighted indexes like the Dow Jones Industrial Average, which rises and falls based on the dollar change in stock prices of its 30 components. Because of its price weighting mechanism, the Dow does not include companies with high-priced shares.Appleengaged in a 7-for-1 stock split in 2014, and was added to the Dow in 2015.

Other companies prefer not to split, believing that high stock prices make their shares less attractive to speculators. Berkshire Hathaway has famously never split its Class A shares, which now trade for more than $218,000 each.

Regardless of the arguments for or against stock splits, fewer companies are splitting their shares. The Wall Street Journal reported that 2016 was on pace to be the third slowest year for stock splits, as only 63 companies split their shares in the first nine months of the year.

Will Bank of America split its stock again?

It could happen, but there is little justification for it happening anytime soon. Bank of America's share price is actually one of the lowest of companies its size.

Of the companies in the S&P 500 index, Bank of America's share price was the 22ndlowest at the time of writing. In fact, more than 80% of S&P 500 companies have a share price that is twice as high as Bank of America's. B of A also has the lowest share price of any of the big four U.S. banks.

Given the above, it would be difficult to make the case that Bank of America's current share price of $16 is prohibitively expensive for small investors, which is the underlying reason for most stock splits.

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