Hugh's view

Looking back, Hugh McColl recalls two turning points in a career that created the biggest bank in America.
As told to Spencer Campbell

clientuploads/Archive_Images/2012/11/Hugh_McColl.gifHugh McColl Jr., 77, built the nation’s largest bank, but in 1959, nearing his discharge from the Marines, all he wanted was a job at the family cotton brokerage and gin in Bennettsville, S.C. His father told him the business was doing fine without him; he’d better head to Charlotte, where a position at American Commercial Bank awaited, to make his fortune. The former CEO of Bank of America Corp. and founder of Falfurrias Capital Partners, a Charlotte-based private-equity firm, recalls two watershed moments that helped him find it. The interview has been edited for brevity and clarity.

When I came to Charlotte, there were maybe 200,000 in the area. You could fire a shotgun down the street at 5 p.m. and not hit another human being. It was a dead city full of churches and no bars. You couldn’t buy a whiskey by the drink.

I had great aspirations. I probably had a good touch of fear of failure that drove me. I wanted to please my parents. My father, particularly. I was a young man, 26, 27 years old. You’ve got the economic pressures of being married, two children, not making much money. I wasn’t sure I was going to stay with the bank. I’d been offered a job at a smaller bank making more money. All it was was money. It certainly wouldn’t have been a better opportunity. Nothing could have been as good an opportunity as I had. But when you’re young, you don’t know that.

I was traveling as a salesman in the correspondent-banking division with another young man way superior to me and clearly, by everybody’s view including my own, the rising star in the company. We’d been on the road for about three days and were in Greenwood, S.C. We were drinking at the bar — vodka and orange juice — and had quite a bit to drink. This person said to me, “McColl, I can work with you, but I’m not going to work for you.”

I was at the lowest level of officer at the company, and here was a guy three layers above me already sensing, more than I did, that I was going to the top. I remember coming stone-cold sober when he said that. I heard it, and all of its implications hit me. I think I knew then that I was going to win. I’ve never lacked for confidence. But the fact that you believe in yourself doesn’t mean everybody else does.

American Commercial became North Carolina National Bank Corp. in 1960, and McColl became CEO in 1983. At the time, NCNB had about $12 billion in assets. Five years later, after buying the failed First Republic Bank Corp. of Texas, it had around $60 billion. In 1998, the bank, then known as NationsBank Corp., was in merger talks with San Francisco-based BankAmerica Corp., a deal that would create the largest U.S. bank, with more than $500 billion in assets.

I’ve arrived at the moment of truth in buying BankAmerica. I’ve had 12 hours of preliminary conversation with their CEO, David Coulter, and we agreed to meet in Phoenix, where a convention was going on. We sneak off to this hotel and meet. The most important discussion was about directors. My chief financial officer and their chief financial officer, acting on instructions from their CEOs, had agreed the board would be split 10-10. But Coulter couldn’t come up with 10 who would meet the criteria of NationsBank. We had no accountants, lawyers or educators on our board by policy. He was one short, and I said, “Well, that doesn’t matter. My company’s market cap is 55% of the total, and yours is 45%. We’ll take 11 directors, you take nine, the same as 55% is to 45%, so we have symmetry.” He was an engineer. He liked symmetry. It made intellectual sense. It made no sense in terms of control.

I might add that we’d been drinking heavily. This was late at night. Lagavulin, straight scotch. I remember that we ordered a bottle from the bar. It cost $100. Normally cost about $44, but it cost $100 to have it sent up to the room. Again, I went stone sober. When he agreed to that, I did everything in my power to not smile, laugh, cheer. I went on to the next point. I was just trying to get through the list.

My secretary had flown out to Phoenix. I had holed her up in the hotel, and she had a typewriter. So I called to her room, this was maybe at 11 o’ clock at night, and said, “Can you come up to my room?” We had written it out longhand. I read it to her, and then she read it back. Coulter listened to it and agreed that that’s what we’d agreed on. She went and typed it. We had another scotch. She shows up with the finished typed 10-point agreement, and we sign it. That became the framework for the merger agreement. What it did was cede control to us. It was not a merger of equals.

It began 15 days after the merger when we let Coulter go. He had gotten us into a terrific, terrible jam, truthfully against his own board’s advice, where we were exposed to losing $50 billion to $100 billion. Ended up losing only about $750 million or $1.5 billion, I can’t remember. We recovered most of it. But it put the whole company at risk. So before we’d ever had our first board meeting, I went to the chairman of my executive committee and the former chairman of BankAmerica’s executive committee and said, “He’s got to go.” The three of us agreed, and he did go. He had been theoretically my successor, but he never made it to the first board meeting.

Control matters. Power is all about having it. You don’t have to use it necessarily, but you have to have it. What does power enable you to do? Whatever you want to.

Regrets

I probably would not have made a hostile tender offer for Atlanta-based Citizens and Southern Corp. I guess I learned the hard way that hostile tender offers don’t work. Never did it again.

I’ve certainly handled interviews poorly. Gave someone a one-liner that I could’ve used back. When we were being interviewed about doing business in South Africa, I had a four-hour interview, and they took one quote away from it, totally out of context, in which I said apartheid never killed anybody. That was their takeaway from a four-hour interview. My mother was drawing near her death, and I got drawn-and-quartered in the press every day for about six months. I felt picked on, and I’m sure she did.

A lot of people kid me about saying, “I don’t want to go down every pig path in Georgia” when somebody asked me why I wasn’t buying Georgia Railroad Bank. That was said in jest, over drinks, in a private room. The reporter was a friend, theoretically. People think, “Oh, that’s a terrible thing Hugh said and caused him a lot of grief.” But it never has. You can say something humorously, but when someone writes it, the humor goes out of it. There’s no body language in it, there’s no context, you can’t reconstruct the moment, and the reporter doesn’t try to.

Charlotte

I live 5,000 meters from the bank — 3.1 miles. I used to run to work.

We have hundreds of ethnic groups represented here now, and we seem to get along with each other well. The reason is this is a city that’s about business. Raleigh is about politics. Charlotte’s a city that’s about business. I’ve always said the business of Charlotte is business.

I would say we’re the most liberal city in the state. If you’re not liberal, you can’t attract the brainpower that you really want. A city has to have an open mind toward everything. We have a libertarian view of the world, and we tend to be socially more liberal, which I think makes for a better town. We’re a live-and-let-live town.

It’s been a work of love. I’ve spent almost every day of my business life looking out a window, saying we ought to build ‘X’ here, there or wherever, like an artist looking at a canvas they would paint on. Yes, I’m more proud of the city than I am the business.

Whiskey

I don’t drink whiskey anymore. Doesn’t mean I don’t drink.

Retirement

I hope not. Well, yeah, when I die. People die. It’s not something you can control. But my friends, my teammates, would say I don’t work much. And I don’t. I work some.