Charlotte, North Carolina happens to be the headquarters of two of the nation's largest banks -- Wachovia (NYSE:WB) and Bank of America (NYSE:BAC). Charlotte's skyline changes in the last 30 years have been driven by a game of "mine's bigger" that drove the two companies to build, in succession, several buildings, each one slightly taller than the last. The Bank of America building, opened in 1992, is slightly taller than Wachovia's tower. Legend has it that the company kept its final design under wraps until First Union (as Wachovia was once known) unveiled its own building. The architects threw a crown on top of the Bank of America building design and voila!, it was the tallest in town.

The growth of formerly sleepy Charlotte into a banking powerhouse largely on the backs of these companies is a great source of pride for the city, as it should be. But a look at some of the big acquisitions that each company took on during the 1990s shows something else -- almost none of them paid off for the shareholders in the way they were supposed to, and as such both companies' stocks have underperformed their peers. The 1998 merger between NationsBank and Bank of America, for example, was supposed to be spectacularly accretive to shareholders, and yet earnings have generally remained well below projections. First Union's takeover of CoreStates Bank was a disaster.

As a result, Bank of America investors were somewhat cheered when new CEO Ken Lewis stated in 2000 that the company was getting off the acquisition train and moving more toward building its existing business. So pleased were they that the company's stock had nearly doubled between his taking over the top chair and this October. Then BofA shocked the investing world, announcing a $47 billion takeover of FleetBoston (NYSE:FBF), paying a 42% premium for the shares. The ghost of former CEO Hugh McColl was back, and the words "accretive" and "economies of scale" were once again bandied about Charlotte's uptown. BofA's stock immediately tanked 10%, and for investors who had grown to trust Lewis' word, it was like thinking their daughters were going to the prom with Wally Cleaver and having Eddie Haskell show up instead.

The stock should have gone down even more than that. This is a horrible, horrible deal for BofA shareholders. The company's investor presentation shows that the deal would be accretive to shareholders by 1% in 2005. Given that none of the previous mergers done by NationsBank/BofA have hit the projections they made upon execution of the deal, 1% does not seem like much of a cushion. It's also predicated on such things as 25% in cost reductions, even though there is no overlap of markets, and so no ability to eliminate costly branches, and includes a massive stock buyback valued at some $450 million dollars. We like buybacks, when the stock is cheap, but not to justify an acquisition, and certainly not in situations where that use of capital does not amount to a good use of shareholder equity.

Who this deal is good for is the management of Bank of America. One of the best linkages of management compensation isn't profitability, it isn't addition of shareholder value, it's size of the bank. One need only look at the compensation of Lewis at more than $18 million and then go up the road a bit to one of the best-run banks in America, Granite Falls, N.C.'s Bank of Granite (NASDAQ:GRAN), where John Forlines raked in $350,000, to see that this is the case.

Defend all you want, Mr. Lewis. This is a terrible deal that puts shareholders at great risk for at best little gain.