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His April departure from Bank of America will put Ken Lewis in charge of an overhaul that will test his ability as a leader.
By JEFF HARRINGTON
© St. Petersburg Times, published January 25, 2001
During a 32-year ascension in Bank of America Corp., Ken Lewis became known as the go-to guy who made Hugh McColl's empire-building work. Whenever "General McColl" charged into a new acquisition, from Florida to Texas, "Chief Lieutenant Lewis" was there picking up the pieces.
Now as Lewis prepares to take the reins of the Charlotte, N.C., megabank, he already is engaged in his toughest task yet: Tearing down part of the House that Hugh Built.
McColl, as expected, said Wednesday that he will retire as chief executive and chairman at the bank's annual meeting April 25, two months shy of his 66th birthday. The ex-Marine leaves the legacy of the nation's first coast-to-coast bank, created largely through his drive and determination. But for all his swagger, McColl also leaves behind an empire mired in problems.
Losses from bad loans are rising. The bank is still smarting from customer defections in 1998 after the poorly executed takeover of Florida's largest bank, Barnett Banks. Investment banking revenue is off. The megabank's stock is down 10 percent since it was created by the 1998 merger of NationsBank and the former BankAmerica of San Francisco. The stock closed Wednesday at $51.06, up 69 cents.
Lewis, 53, already has been juggling the challenges, running most day-to-day operations for more than a year. He is slashing thousands of jobs and looking outside the company for help. Last week, he tapped a former Eastman Kodak executive to boost customer relationships and a former FedEx Corp. executive to improve the bank's check processing business.
Working in tandem with chief financial officer James Hance, Lewis is paring down the consumer banking business to focus on relationships with profitable customers. He quietly shut down the company's subprime lending outfit, NationsCredit, and pulled back from the money-losing auto leasing business.
Some investors are calling for more radical surgery.
Dick Bove, banking analyst for Raymond James of St. Petersburg, thinks the weakest and least profitable part of the Bank of America operation is its most visible: the 4,400-branch network across 21 states that McColl created through merger upon merger.
Bove's advice to Lewis: continue to sharpen your focus on the profitable stuff such as investment banking, investment management, financial processing and credit cards. Then figure out how to make branch banking pay off -- or get rid of as much of it as possible.
Consumer banking "isn't the core or heart of the business for Bank of America, and it may be one of the biggest drags on the business," the analyst maintained.
Bove is more reserved in predicting whether Lewis is up for such an overhaul.
"The impression of the man is that he has a high degree of skill and has the capability of generating the kind of profits we're talking about," he said, "but I don't know how free he is going to be. . . . I don't know if his loyalties to Hugh McColl, who was a genius in his own right, are such that he is going to be constrained."
Like his predecessor, Lewis, 53, clearly plays to win. In speeches and interviews, he has warned against underestimating Bank of America or its ability to learn from its mistakes.
"He's a top-flight corporate executive," said Ben Bishop, president of the Jacksonville investment bank Allen C. Ewing & Co., "but I think he has to establish his own style. Hugh McColl was sort of born with a style."
McColl personified and permeated his bank's culture. After the 1998 merger with Bank-America, he said he would stay until mid-2002 to see through merger details. In a filing Wednesday with the Securities and Exchange Commission, though, McColl indicated he is ready to leave because he views the transition as complete.
During his almost 18 years as CEO, McColl became a cliche of the hard-charging general of the business world. He fostered the image, passing out crystal hand grenades to top-performing subordinates and giving his takeover plans military names such as "Operation Overlord."
Lewis is much more introverted and had trouble adjusting to the public limelight.
Adelaide "Alex" Sink, a protege of Lewis and former president of the bank's Florida operation, compared Lewis to another cerebral type who recently tried to succeed a charismatic-though-polarizing leader. "It's kind of like Al Gore" running to succeed Bill Clinton, she said. "He has to be his own man."
Lewis has downplayed the importance of the individual in a post-McColl Bank of America. "The company going forward will be so large and will be so focused on (the Bank of America) brand that the brand is going to overcome any one individual," Lewis said in an interview with the Times after becoming president in April.
A native of Meridian, Miss., Lewis joined what was then NCNB Corp. in 1969 after graduating from Georgia State University.
In December 1985, he came to Tampa for a three-year tenure running the Florida franchise in the early stages of building what would become the state's dominant bank. Lewis' community involvement included a stint as chairman of the Tampa Museum of Art.
He was president of NationsBank before its $42.8-billion merger with BankAmerica. That put him in a key role to oversee the integration of several acquisitions, notably the $15-billion buyout of Barnett Banks in 1997.
The overhaul under Lewis is likely to be less drastic than the one under way across town in Charlotte under First Union Corp.'s new chief executive, Ken Thompson.
Like Lewis, McColl was not made available for interviews Wednesday.
But his advice on how to be a CEO may best be summed up in an interview after the 1997 takeover of Barnett. "You do not manage corporations," McColl said. "It's not something you can do. But you can lead corporations."
- Contact Jeff Harrington at harrington@sptimes.com or (813) 226-3407.