Hugh McColl

Hugh McColl
Hugh McColl
McColl in 2009.
Born	Hugh Leon McColl Jr. 1935-06-18June 18, 1935 (age 91) Bennettsville, South Carolina, U.S.
Nationality	American
Education	University of North Carolina at Chapel Hill (B.S., business administration, 1957)
Alma mater	University of North Carolina at Chapel Hill
Occupation	Banker
Years active	1959-2001
Employer	American Commercial Bank North Carolina National Bank NationsBank Bank of America
Company	Bank of America Corporation
Title	Chairman and chief executive officer, Bank of America Corporation
Term	1983-2001
Predecessor	Thomas Storrs (NCNB)
Successor	Ken Lewis
Known for	Building NationsBank and Bank of America through acquisition Creating the first coast-to-coast bank in the United States
Spouse	Jane Bratton Spratt (m. 1959)
Children	3

Hugh Leon McColl Jr. (born June 18, 1935) is an American banker who served as chief executive officer of North Carolina National Bank and its successors NationsBank and Bank of America from 1983 until 2001.

McColl assembled, through several hundred acquisitions over four decades, the first banking network in the United States to span the country from the Atlantic to the Pacific. He took over a regional bank in Charlotte, North Carolina, with assets measured in billions and left an institution with a presence in 21 states and a market capitalisation among the largest in the world. Tony Plath, then director of banking studies at the University of North Carolina at Charlotte, described the transformation in 2005 as "the most significant banking story of the late 20th century."

The decisive transaction came in April 1998, when NationsBank agreed to acquire BankAmerica of San Francisco in a stock exchange valued at about $62 billion. NationsBank was the surviving entity and the combined company remained headquartered in Charlotte, but it took the better-known Bank of America name. The merger closed on September 30, 1998.

McColl conducted his acquisitions in a manner he described in explicitly military terms, a habit formed during two years in the United States Marine Corps, and he was known for presenting successful executives with crystal hand grenades. He also pledged very large sums for community development lending in advance of his mergers, most notably a ten-year, $350 billion commitment announced with the BankAmerica transaction, which was at the time the largest such undertaking by any financial institution.

He gave up day-to-day management in 1999 and retired fully in 2001, succeeded by Ken Lewis. His legacy is contested: he is credited with transforming Charlotte into the second largest banking centre in the United States and with demonstrating that a southern bank could compete with New York, and he has been criticised, particularly after 2008, for having helped create institutions regarded as too big to fail.

Early life and education

Family

Hugh Leon McColl Jr. was born in Bennettsville, South Carolina, on June 18, 1935, to Hugh Leon McColl, a cotton farmer and banker, and Frances Pratt Carroll McColl, an artist. He is of Scottish Presbyterian descent and had a sister and two brothers.

Banking ran through four generations. His paternal great-grandfather, Duncan Donald McColl, was an attorney who built the 50-mile South Carolina Pacific Railway and the first cotton mills in Marlboro County, and who founded the Bank of Marlboro. The bank passed to his son and then to his grandson. McColl's father liquidated it in 1939 during the Depression and afterwards bought a controlling interest in the Marlboro Trust Company.

Childhood and schooling

From the age of 14 McColl worked part-time for the trust company and for his father's business, McColl Cotton Mills. He learned double-entry bookkeeping, handled payments and drove across North and South Carolina making deposits.

His mother read to her four children at length, an influence he has repeatedly credited. "My mother taught everyone in the family to love books, and we have prospered from having access to them and, perhaps more important, knowing where to turn to find the information we need," he said. "I think we were educated far beyond my school system."

He was elected student council president at Bennettsville High School and class president in his senior year, 1953, and was voted Best All-Round Boy. His yearbook quotation read: "He who is talented in leadership holds the world's dream in his grip."

University and the Marine Corps

McColl graduated from the University of North Carolina at Chapel Hill in 1957 with a degree in business administration.

He then joined the United States Marine Corps and served a two-year tour until 1959. The experience shaped his management vocabulary and his approach to competition for the rest of his career, and he continued to describe business in terms of campaigns, objectives and taking ground.

Entry into banking

McColl has said his father pushed him into banking on the grounds that he "didn't have the brains for farming."

He married shortly after university and declined an offer from his father-in-law, John McKee Spratt, a banker, attorney and judge, to join the small family-owned Bank of Fort Mill. Instead his father arranged an introduction at another institution, and McColl joined American Commercial Bank in Charlotte as a management trainee.

Career

NCNB, 1960-1991

Early years

In 1960, a year after McColl joined, American Commercial Bank merged with Security National Bank of Greensboro to form North Carolina National Bank.

McColl advanced quickly and became president of NCNB in 1974, at the age of 39. He became chief executive in 1983.

Interstate expansion

American banking was then fragmented by law. The McFadden Act and state statutes prevented banks from operating across state lines, which preserved thousands of local institutions and confined even the largest banks to a single state or region.

NCNB found a way through in 1982, using a provision of Florida law to acquire the First National Bank of Lake City, Florida, its first significant out-of-state purchase. The move was defensive in conception: McColl and his contemporaries in the South believed that if regional banks did not grow large enough, they would be bought by New York money centre banks once interstate restrictions fell.

A regional compact permitting bank mergers among south-eastern states followed, and NCNB became its most active user.

Texas

NCNB's purchase in 1988 of the failed First Republic Bank Corporation of Dallas from the Federal Deposit Insurance Corporation drew national attention. The transaction was structured to preserve First Republic's very large tax losses, which made it far more valuable to NCNB than the headline price suggested, and it gave a North Carolina bank a leading position in Texas.

Between 1989 and 1992 NCNB acquired more than 200 thrifts and community banks, many of them through the Resolution Trust Corporation established to dispose of institutions that failed in the savings and loan crisis.

NationsBank

In 1991 NCNB acquired C&S/Sovran, itself the product of a merger the previous year between the Citizens and Southern National Bank of Atlanta and Sovran Bank of Norfolk, Virginia. The enlarged company was renamed NationsBank.

A further series of acquisitions followed: Maryland National Corporation in 1992, the Chicago Research and Trading Group in 1993, BankSouth in 1995, Boatmen's Bancshares of St. Louis in 1996, and in 1997 both Barnett Banks of Jacksonville, Florida, the largest bank in that state, and Montgomery Securities, a San Francisco investment bank that gave NationsBank an equity underwriting capability.

Bank of America, 1998-2001

The BankAmerica merger

In April 1998 NationsBank agreed to acquire BankAmerica Corporation of San Francisco in a stock-for-stock transaction valued at about $62 billion. NationsBank was the legal survivor and Charlotte remained the headquarters, but the combined company adopted the Bank of America name, which was better known and carried a national rather than regional connotation.

The merger closed on September 30, 1998. It created the first bank with retail branches from the Atlantic to the Pacific, realising an ambition McColl had described as a young man with a colleague.

David Coulter, BankAmerica's chief executive, was to have become president of the combined company but left shortly after completion following losses at BankAmerica connected to the hedge fund D. E. Shaw, and McColl took sole charge.

Community development commitments

McColl consistently disarmed opposition to his mergers by making large public commitments to lending in low-income neighbourhoods, which addressed the objections raised by community groups at the Federal Reserve hearings required for bank mergers.

The largest was announced on May 20, 1998, in connection with the BankAmerica transaction: a ten-year, $350 billion community development lending and investment commitment, described at the hearings as the largest ever announced by a financial institution.

The commitments were criticised at the same hearings as unenforceable, lacking specific undertakings by state, region, product or programme, and as a device for securing regulatory approval rather than a binding obligation.

Retirement

McColl handed day-to-day operations to Ken Lewis in 1999 and retired from Bank of America in 2001. The bank continued to expand under Lewis, acquiring FleetBoston Financial in 2004, which brought with it the oldest bank charter in the United States, dating from 1784, and later MBNA, Countrywide Financial and Merrill Lynch.

Later career

McColl formed McColl Partners with other Charlotte banking executives, an investment bank advising mid-sized companies on mergers and acquisitions, with offices in Charlotte and Dallas. It joined Clairfield Partners, an international network of investment banks, in 2009.

He co-founded the Charlotte private equity firm Falfurrias Capital Partners in 2006. He established McColl Garella, an investment bank serving companies owned by women, which operated from 2002 to 2006, opened McColl Fine Art in Charlotte in 2003, and helped create MME Fine Art in New York in 2005.

He was chairman of MBL Advisors Holdings, a Charlotte firm providing wealth transfer planning, business succession and executive benefits services, with his son-in-law Luther Lockwood as managing principal.

McColl has served on the boards of Sykes Enterprises, Canal Industries, Atrium Health, Charlotte Center City Partners, Charlotte Latin School, Cousins Properties, Faison Associates, Foundation for the Carolinas, General Parts, NuTech Solutions, Harris Teeter and Sonoco Products.

Business philosophy and management style

McColl's strategy rested on a single conviction held over 40 years: that the restrictions separating American banking by state were artificial, that they would eventually fall, and that the banks positioned to act when they did would acquire the rest. He pursued that view through periods when it was legally impossible to act on directly, finding routes through state statutes and federal resolution programmes.

He managed by campaign. The military vocabulary was not decorative; he set objectives, assigned them to named executives and measured progress against them, and the crystal hand grenades he awarded for successful acquisitions were understood inside the bank as the highest recognition available.

He was unusually direct about the competitive motive. The expansion was framed internally as a contest with New York, and later with First Union, the other large Charlotte bank run by Ed Crutchfield, a rivalry that drove both institutions to acquire at pace.

He also recognised earlier than most bank chief executives that community and political opposition was the binding constraint on merger approval, and he treated community development lending as a strategic instrument rather than a public relations matter. Whatever the enforceability of the pledges, the practice made him acceptable to constituencies that opposed most large bank mergers.

His weakness, in the assessment of critics, was that acquisition became an end rather than a means. Integration frequently lagged, the combined institution was difficult to manage, and the culture of continuous expansion he established outlasted him.

Controversies

Responsibility for too big to fail

Bank of America received $45 billion in federal support during the 2008 financial crisis, seven years after McColl's retirement, and was widely described as too big to fail.

In a 2012 article in Rolling Stone titled "Bank of America: Too Crooked to Fail", the journalist Matt Taibbi traced the conditions of the crisis directly to McColl's creation of a coast-to-coast bank, writing that the concept of an over-massive, acquiring-everything-in-sight bicoastal megabank was hatched in a "terminal inferiority complex", and describing McColl, together with Ed Crutchfield of First Union, as having launched "a cartoonish arms race of bank acquisitions that would ultimately turn the American business world upside down".

McColl's defenders note that the acquisitions that caused Bank of America's crisis losses, Countrywide Financial and Merrill Lynch, were made by Ken Lewis in 2008 and that the bank McColl left in 2001 held no significant subprime mortgage exposure. The broader criticism, that scale itself created the systemic risk, is not answered by that point.

The Rick Hendrick pardon

Rick Hendrick founded the Hendrick Automotive Group in 1976 as a single Chevrolet dealership in Bennettsville, South Carolina, McColl's home town, and sat on the board of NationsBank and subsequently Bank of America during McColl's chairmanship.

Hendrick pleaded guilty to mail fraud, admitting that he had given hundreds of thousands of dollars, along with cars and houses, to executives of American Honda Motor Company. He subsequently sought a pardon from President Bill Clinton.

McColl wrote to Clinton recommending the pardon. On December 7, 2000, the Bank of America Foundation announced a donation of $500,000 to the Clinton Foundation. Clinton granted Hendrick a pardon on December 21, 2000.

McColl denied any connection between the two, saying he had no role in the foundation's contribution and noting that the foundation had also given $500,000 to the presidential library of George H. W. Bush and $225,000 to that of Ronald Reagan.

Merger integration and job losses

McColl's acquisitions were followed by substantial job reductions in the acquired institutions and by the removal of head office functions from the cities involved, including Atlanta, Norfolk, St. Louis, Jacksonville and San Francisco. Civic leaders in those cities objected to the loss of locally headquartered banks, and the pattern contributed to a broader argument about the effect of banking consolidation on regional economies.

Personal life

McColl married Jane Bratton Spratt of York, South Carolina, on October 3, 1959. She is the daughter of a banker and the sister of John Spratt, later a Democratic member of the United States House of Representatives from South Carolina. They have three children, Hugh Leon McColl III, John Spratt McColl and Jane Bratton McColl Lockwood, and eight grandchildren.

He is a member of Augusta National Golf Club. An avid quail hunter, he leased 60,000 acres of the Kenedy Ranch in Kenedy County, Texas, in 2005.

Politics

McColl supported Bill Clinton for president, voted at one point for George W. Bush and supported Barack Obama. Speaking of his politics in 2000, he said: "I guess, by today's definition, I'm a liberal. The reason I am is, I believe that a chief guarantee of our country, of citizenship, is the right of freedom of speech, the right to be who we are."

He has supported civil rights and gay rights causes.

Philanthropy and civic activity

McColl has given extensively to academic, civic and arts causes in Charlotte, North Carolina and the wider South.

He promoted Charlotte's urban redevelopment, using Bank of America to revitalise the Fourth Ward and to build Gateway Village in the Third Ward, and played a central part in attracting the Carolina Panthers of the National Football League and the Charlotte Hornets of the National Basketball Association. He supported Habitat for Humanity, chaired the Forum for Corporate Responsibility in 2003, financed inner-city and minority-owned businesses, and advocated light and high-speed rail.

The headquarters of the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill was named the McColl Building on its completion in 1997. He served on the board of trustees of Queens University of Charlotte for 19 years, from 1991 to 2005, and mentored students at its McColl School of Business. His daughter Jane McColl Lockwood is president of the Charlotte-based McColl Foundation.

In 1995 Bank of America bought a burnt-out church on North Tryon Street in Charlotte with the intention of converting it into an artists' residency. With McColl's support, and working with FMK Architects and the Arts and Science Council, the building was refurbished and became the McColl Center for Art and Innovation.

He endowed the Charlotte Children's Theatre, which includes the McColl Family Theater; endowed an English professorship at Norfolk Academy in Virginia in honour of his first cousin Edith Pratt Breeden Masterson; and endowed a professorship at the University of North Carolina School of Information and Library Science in honour of his mother and his sister Frances Carroll McColl Covington.

In 1991 he purchased, restored and relocated one of his great-grandfather's houses in Bennettsville and donated it to Marlboro County, where it became the home of the county chamber of commerce and the South Carolina Cotton Trail.

In 1998 and 2004, Jane Spratt McColl and Hugh McColl donated 400 acres on the Catawba River in York County, South Carolina, near Rock Hill, for an environmental museum, with a building designed by the architect William McDonough.

Awards and honours

McColl entered the South Carolina Business Hall of Fame in 1990 and the North Carolina Business Hall of Fame in 2005, and was admitted to the Junior Achievement U.S. Business Hall of Fame in 2007. He was voted Tarheel of the Year in 1997.

Working Mother magazine named him a Family Champion in 1993. He received the Pioneer Award from the Organization for a New Equality in 1996 and the Applause Award from the Women's Business Enterprise National Council in 2001.

In 2005 he received the Echo Foundation Award Against Indifference, established in 1997 to carry forward the message of the Nobel Peace Prize laureate Elie Wiesel. He was named South Texan of the Year in 2008 and received the North Carolina Award for public service in 2009.

In literature

Two books have been written about McColl's career:

• Yockey, Ross (1999). McColl: The Man with America's Money.
• Covington, Howard E. Jr.; Seidman, L. William (2001). The Story of NationsBank: Changing the Face of American Banking.

Dearest Hugh: The Courtship Letters of Gabrielle Drake and Hugh McColl, 1900-1901 (2008), edited by Suzanne Cameron Linder Hurley, recounts through their letters the courtship of his grandparents.

The Southern Historical Collection at the University of North Carolina at Chapel Hill holds approximately 8,600 McColl family papers, and the South Caroliniana Library at the University of South Carolina holds the Duncan Donald McColl papers.

UNC-TV recorded a series of interviews with him in 2010, Biographical Conversations with Hugh Leon McColl Jr., broadcast in three parts.

External links

• McColl Center for Art and Innovation