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SENIOR employees of Bank of America (BofA) packed into the auditorium at the company's headquarters in Charlotte on July 20th. They had gathered to hear Kenneth Lewis, the chief executive, deliver a long-awaited message: thanks to BofA's earnings of $5.5 billion in the second quarter, they now worked for the most profitable financial institution in the world. To cheers, he added: "It was nothing personal; Citi just got in the way."

"Citi", of course, is Citigroup. For BofA, passing Citigroup's profit number is a joy to be topped only when it has the greatest stockmarket value, too. A year ago that would have been laughable: the gap exceeded $40 billion. Today it is merely $4 billion (see chart).

Mr Lewis could always take the top spot by promising never to make another dilutive acquisition. He won't, but BofA may reach the summit anyway. Citigroup, it is true, has more revenue. It also has better prospects for growth, because it is present in many immature markets. Yet its growth has stalled since a series of scandals brought close regulatory scrutiny, discouraged acquisitions and rattled management. BofA has hardly been unscathed by regulators, but it has not been hurt anything like as much. A scandal over mutual funds began with its dealings with a hedge fund, and it has been sued for its role in the financing of Parmalat, Enron and Adelphia, but all this has had little effect on its overall business.

From a distance, Citigroup and BofA are similar creatures. Both have grown to huge size through acquisitions. Both make about one-third of their profit from their corporate banks and most of the rest from consumers. Both have big shares of the credit-card market. Still, they are different animals on closer inspection. Citigroup sells complex investment products and has a big investment bank, operations in lots of countries and a tiny domestic retail franchise concentrated in three states, California, New York and Texas. It is not clear how these various bits fit together.

Bank of America, in contrast, lives up to its name. It makes almost all its money at home. Its sprawling branch network covers most of the heavily populated states. It has a vast banking business serving individuals and small firms, and a big share of the loan-syndication market. Much of what it does can be standardised and BofA goes to great lengths to discourage the kind of individualism that can produce great rewards but add huge risks.

In BofA, critics see a dull, if powerful, beast lumbering forward. Annual revenue growth per share has averaged only 6% in the past decade, notes Tom Brown, of Second Curve Capital, a hedge fund, and a long-standing critic. Institutions such as Downey Financial, in California, Flagstar Bank, in Michigan, and New York Community Bancorp have been growing at 17%.

All these banks are fairly small and have a narrow range of products: all relied heavily on mortgages in a strong housing market. BofA's defenders, notably its own management, contend that it has a uniquely strong and diversified franchise (at least in America) and that it is just beginning to exploit its reach, without depending on any one product.

It is not clear who has the better of this argument. According to SNL Financial, a research firm, big banks are making higher returns on equity than smaller ones. Among the biggest, BofA's are higher than most, though not as high as those of US Bancorp, Wells Fargo or (yes) Citigroup. The large banks, though, suffer from lower price/earnings ratios than smaller ones. That could be because the smaller banks carry a takeover premium; or it could be that the market doubts that large banks' profitability can be sustained.

A history of big bets

Being seen as a big, stodgy bank--even, you might say, something like a utility--is a novelty for BofA. Not long ago, it was anything but dull, expanding at an astronomical rate through one big deal after another.

Back in 1969 when Mr Lewis joined what was then known as North Carolina National Bank, it was not even among the largest institutions in North Carolina. The "national" in its headline was a regulatory nuance rather than a description. It had no branches outside the state.

Then it grew and grew. It is said that BofA has made more money for investors than any other company in the world (in second place is its Charlotte rival, now known as Wachovia). However, most of this money was made not by its own shareholders but by those of the banks it scooped up after rules blocking interstate banking were relaxed in the 1980s. Under one name or another, BofA was responsible for too many deals to count, from the purchase of First National Bank of Lake City, Florida (in 1982, for $6m) to those of Bank of America, then the name of a Californian institution (1998, $65 billion), and FleetBoston (2004, $48 billion).

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