Chief executive officer, Bank of America Corporation
Born: April 9, 1947, in Meridian, Mississippi.
Education: Georgia State University, BS, 1969; Stanford University, graduate of Executive Program.
Family: Son of Brydine Lewis (nurse; maiden name unknown); married (divorced, 1978); married Donna (maiden name unknown), 1980; children: one.
Career: North Carolina National Bank, 1969–1977, credit analyst; NCNB International Banking Corporation, 1977–1979, manager; NCNB U.S. Department, 1979–1983, senior vice president; NCNB and NationsBank, 1983–1990, president of various divisions; 1990–1993, president of Consumer and Commercial Banking; NationsBank, 1993–1999, president; Bank of America, 1999–2001, chief operating officer; 2001–, chief executive officer.
Awards: Named Banker of the Year, American Banker newspaper, 2002; named Top Chief Executive Officer, U.S. Banker magazine, 2002.
Address: Bank of America Corporation, Bank of America Corporation Center, 100 North Tyron Street, Charlotte, North Carolina 28255; http://www.bankofamerica.com.
■ Kenneth D. Lewis began his career in 1969 and continued with the same company as it became one of the largest banks in the United States. As North Carolina National Bank (NCNB) became NationsBank and eventually Bank of America, Lewis moved up the ranks making his mark as an astute manager who concentrated on efficiency and profit. His innovative ideas in specific areas of the company became standards within the whole corporation. He was named chief executive officer (CEO) in 2001. As CEO he continued his focused style while remaining close to day-to-day operations. Despite investigations into Wall Street trading improprieties by some bank executives, Lewis continued to expand Bank of America.
Lewis said he came to NCNB in 1969 with one goal. He wanted to be president of the banking corporation because that is what his mother always said he should be. When he told his mother 30 years later that he had indeed been named president, she told him that at the time she had not known about the position of chief executive officer and that perhaps he should aim even higher.
Lewis's parents divorced when he was seven. After the divorce, Brydine Lewis and her son moved from Meridian, Mississippi, to Columbus, Georgia, where Brydine worked as a nurse. Her son also helped bring income into the household. He told BusinessWeek in 2002 that he delivered newspapers, bagged groceries, and sold Christmas cards to neighbors. As a teenager he sold women's shoes, which he said ended up being his hardest job. "I made a six percent commission and the most expensive shoes were $5.99," he said. "You quickly learn how good a salesman you are" (November 11, 2002). After graduating from Georgia State University with a business degree, Lewis received job offers from Wachovia Corporation, an established and respected banking institution, and NCNB. He chose the latter because they were the underdogs, which appealed to Lewis because he viewed himself in the same manner.
He began at NCNB, the predecessor of NationsBank and Bank of America, as a credit analyst in Charlotte. He worked in many parts of the corporation as it went through major growth to become the Bank of America in the late 1990s. Lewis managed the international department in New York before heading up the operations in several states as the bank continued its expansion. In Texas he introduced innovative programs that established his reputation as a focused and careful banker. In Florida he oversaw the acquisition of Barnett Banks, which many industry insiders viewed as a disaster because of the volume of mergers occurring within the bank at the time. Lewis attempted to cut costs and standardize operations.
As the president of NationsBank's retail division in 1993, Lewis introduced an innovative program known as Vision '95. This program took on the difficult task of unifying a bank that had grown enormously. Between 1988 and 1993 Nations-Bank, under CEO Hugh L. McColl Jr., acquired 25 financial institutions. The result was a patchwork of disparate companies under one name. It became Lewis's job to pull the rapidly growing company together. He told reporters in 1993 that Vision '95, if successful, would make NationsBank the best consumer bank in the United States, which was his vision for the company. By that time, industry insiders had begun speculating that Lewis would succeed McColl as CEO.
Vision '95 consisted of several components; Project '95, which Lewis had begun in Texas in 1991, was the most prominent of them. Due to its success, all regions adopted Project '95 by 1993. This project centered on hiring more part-time employees to work during lunchtime, Fridays, and payroll days. In Texas the number of part-time tellers increased from 35 to 50 percent of the total work force, lowering the number of full-time employees. Since part-time employees are paid lower wages than full-time ones and do not receive benefits, Lewis saved 12 to 15 percent on branch staffing in the state in 1992. What most pleased Lewis, however, was the increased customer service; customers spent less time waiting in line for tellers. Lewis told Kenneth Cline of American Banker that "We're very pleased to show it's not necessarily a contradiction to be both more efficient and more effective" (February 9, 1993).
The plans for revamping NationsBank included more long-term projects, such as unifying the bank's computer software, simplifying language in promotional materials, and consolidating many of the options available to customers. Lewis predicted that the high cost of his plans would be offset within a few years, allowing the company to continue expanding. By the end of 1993 Lewis's efforts on cost cutting in the retail division paid off in his being named president of the company.
Lewis's appointment as president signaled that he would be the logical choice to replace McColl and that NationsBank was serious about cutting expenses. Analysts said the decision to put Lewis in the center of power for NationsBank confirmed the corporation's dedication to controlling expenses, since Lewis was known as an efficient cost-cutter prior to his appointment as president. When the announcement of Lewis's presidency was made, industry insiders credited Lewis with an increase of loans within the branches, which had been under Lewis's control and which showed higher growth than other banks in the quarter immediately preceding his selection as president. In addition, Lewis received credit for the decrease in expenses, since most of Bank of America's costs came directly from its branches.
Lewis was assigned the task of keeping McColl's bank in top working order, not always an easy task. NationsBank had grown from a company with $29 billion in assets in 1988 to $170 billion in assets by the end of 1993, making it the third-largest bank in the United States. Lewis announced two programs aimed at standardizing and simplifying operations within NationsBank. The Model Banking Center program sought to standardize the technology, products, and services used in all 1,900 branches in nine states, and the Freedom to Act program attempted to cut the bureaucracy within the corporation while allowing employees at each branch to make empowering decisions. Lewis feared that too many layers of management within the company would not allow branch managers the ability to act in individual customer situations. The Freedom to Act program gave those employees at the customer-contact level the freedom to use their best judgment to make decisions in order to best serve the consumer.
The plans followed the same pattern as Vision '95 in that Lewis sought to cut costs but not the quality of service to customers. He began implementing these projects by learning more about the customers who banked with NationsBank. He told American Banker in 1994 that customers used branch offices 50 percent of the time, rather than using a phone or ATM machine. He predicted that branch usage would decline by 15 percent within five years as ATM and phone usage increased, and he wanted to be prepared for the change in level of service. He began authorizing plans to develop the technologies necessary for the coming dependence on computer banking. Lewis also turned his attention to the corporate level as he implemented plans for developing the company's investment banking, syndication, and foreign exchange businesses, which offered higher potential profits than did retail banking.
Much of Lewis's vision was put on hold, however, as McColl continued making acquisitions a priority for the company. In 1996 NationsBank acquired Boatmen's Bancshares of St. Louis, with $41 billion in assets, and in 1997 Barnett Banks of Florida, with $44 billion in assets. Even though McColl set the agenda of growth, details of the Barnett acquisition fell under the domain of Lewis, which brought a great challenge to both Lewis and the corporation. Lewis told US Banker that the acquisitions of both Bancshares and Barnett created two years of transition for Bank of America. He said, "It was a transition unlike any company has ever seen, at least in the banking industry" (April 2001).
The next few years were spent in transition as the company attempted to absorb its new banks. Analysts said the Barnett deal was a disaster. They said that McColl had bought too many companies, including Barnett, too quickly and for too much money. As a result, 200 branches had to be closed in Florida to cut costs. Credit problems resulting from bad loans to companies such as Sunbeam and Finova hurt some of Lewis's plans to increase profits.
In 1998 NationsBank joined with BankAmerica to become Bank of America, a merger overseen by McColl. The merger hurt many of Lewis's efforts to bring the differing branches into a standardized whole. In 1999 Lewis's job title expanded to include chief operating officer. In early 2001 McColl announced that he would retire by the end of April. As Lewis stood poised to take over the top position at Bank of America, the company faced falling profits of 27 percent because of loan problems and mounting complaints from customers regarding service.
Before his appointment as CEO, Lewis told reporters that the bank had to let customers know that service, not acquisitions, was its top priority. By the time of his appointment, Bank of America had $642 billion in assets, and analysts and investors were dismayed that it was not yielding the results expected of such a large corporation. Lewis told US Banker that 2001 would be "the year of no excuses and the year of execution" (April 2001).
Lewis approached his new position with a different attitude than his predecessor. On the day of his appointment he announced that Bank of America was on the path of building up shareholder profits after two decades of solid acquisitions. He did not, however, rule out future acquisitions. American Banker reported that McColl told shareholders in his farewell speech that Lewis "is a better businessman than I am; he is young, tough, and, in the tradition of the company's leadership, eminently fair" (April 26, 2001). Analysts agreed with this assessment even though Lewis had been a member of the McColl's inner circle. He brought a youthful perspective and had shown initiative by hiring key executives from outside the company even before his appointment as CEO.
As industry insiders watched Lewis take over the largest consumer bank in the United States, and the 13th-biggest U.S. corporation, many thought the opportunity afforded Lewis the chance to create enormous wealth for Bank of America. First, however, he had to deal with problems that had grown steadily over the previous five years.
He began by selling more services to the same customers and encouraging customers to consolidate their banking by moving their portfolios from big firms such as Fidelity and Merrill Lynch. This effort to lure lucrative clients brought Bank of America into the new area of asset management. By the end of 2001 Lewis had shrunk Bank of America to bring more profits from under-performing franchise operations. Specifically, he got rid of low-profit-margin businesses while increasing customer service in branches, and he brought in new managers who could implement his goals.
Lewis let go of some lagging businesses, added to customer service, and hired new managers. He also raised Bank of America's dividend by 7 percent. Wall Street watched carefully as stock increased by 37 percent from the beginning of 2001 to $61.95 per share by the end of the year. At the end of the first quarter of 2002, profits soared to $2.18 billion, the biggest ever for Bank of America. In early November the stock price rose to $70. In less than three years Lewis had driven stocks up 40 percent. He improved customer service by increasing teller training and organizing services around customer categories rather than product type.
Comparisons between the styles of McColl and Lewis began almost as soon as the ascension of Lewis became clear. McColl's acquisition-based management style accompanied his larger-than-life personality. Lewis, on the other hand, had a quieter style that emphasized internal growth. Industry insiders said that even though Lewis seemed calmer than his predecessor, he matched McColl in enthusiasm. When Lewis was president of the retail division, the media began referring to him as unflappable, wry, and cool. As calm and quiet as he appeared on the surface, however, his reputation as an efficient, demanding manager grew along with the corporation. He told Kenneth Cline, "I take great pride in being able to improve things and get things more profitable because at the end of the day, that's what you're going to have to do" ( American Banker , October 26, 1994).
Lewis was demanding of his employees and himself, but colleagues praised his focus and clarity in thinking about issues and problems, saying his style was systematic rather than rigid. Fortune magazine reported in 2001 that Lewis's management style was reflected in his personal life. On Friday nights he drove to his weekend house in the Blue Ridge Mountains, stopping along the way for ribs and fries. On Saturdays he played golf. The reporter said this pattern of always doing the same thing in a simple, uncomplicated way showed Lewis's style of planning carefully and following that plan, rather than showing the qualities of a gambler.
Lewis hired many people from outside the company, which differed from McColl's style. While he brought in new blood, however, observers remarked that he took care not to alienate those already on the inside track of Bank of America. One analyst said Lewis was a hands-on CEO who pulled things together at Bank of America through his own hard work. A former executive at Bank of America told BusinessWeek that Lewis "is the most dispassionate man I've ever met. He has ice water in his veins" (November 11, 2002). Another employee disagreed, stating that Lewis spent much of his time meeting with employees to solve problems. Either way, he still called the shots as he saw them. Industry insiders were surprised to hear Lewis speak disparagingly to his own bankers at a conference in 2000 regarding a mismanaged loan to a large company. One member of the audience told BusinessWeek , "To hear him [Lewis] call his own bankers sniveling wimps was pretty stunning," said Thomas K. Brown of Second Curve Capital LLC (November 11, 2002).
The praise heaped on Lewis for his management style and leadership initiative began to lessen in 2003. His plans to attract investors and business from Fidelity and Merrill Lynch hit a rough spot when one of his former employees faced criminal charges and Bank of America became the focus of an investigation by the Securities and Exchange Commission (SEC). Theodore C. Sihpol III, a broker for Bank of America, sold shares at closing prices after the market had closed for the day. He plead not guilty to the charges, however, and his lawyer said he did not have criminal intent.
Employees at Bank of America's headquarters were upset at the rigorous way in which Lewis pursued the move into money management. In addition, clients whose assets were managed by Bank of America began complaining in 2003 that brokers with the bank had lost money for them. Despite all of these troubles, the company stressed its dedication to the asset-management part of the business.
Lewis quickly fired employees who came under scrutiny by the SEC. First to go was Sihpol, but Lewis also terminated Robert H. Gordon, who ran the mutual funds division for the bank. This division had been implicated by the New York Attorney General's office for mutual fund trading abuses. In 2004 Lewis announced that he was canceling his employment agreement with Bank of America. He asked that his pay correspond to the company's performance. Previously, Lewis's contract provided him with agreements concerning performance bonuses and severance packages. Lewis surprised many with a $48 billion bid to take over FleetBoston Financial in 2004. Investors had been lulled into thinking that Lewis was growing the company from within and would not make such big moves.
See also entry on Bank of America Corporation in International Directory of Company Histories .
Boraks, David, "Hugh L. McColl Resigns Chairman and Chief Executive Officer Positions at Bank of America Corp.," American Banker , April 26, 2001.
Cline, Kenneth, "NationsBank's Lewis Puts His Retail Vision To a Test," American Banker , February 9, 1993.
——, "Taming the Beast at NationsBank," American Banker , October 26, 1994.
Foust, Dan, and David Fairlamb, "Boffo At BofA; CEO Ken Lewis' Hard-Nosed Approach Is Paying Off," BusinessWeek November 11, 2002, p. 124.
Stewart, Thomas A., "Where the Money Is: Bank of America's Ken Lewis Has a Chance To Create More Wealth Than Any Other Freshman CEO," Fortune , September 3, 2001, pp. 153–155.
"Year of No Excuses," US Banker , April 2001, p. 34.
—Patricia C. Behnke