An uncertain future at Bank of America

Kenneth D. Lewis bet Bank of America Corp.'s future on America at a time when America went bust.

Lewis, who said this week he would resign as chief executive officer at the end of the year, will leave his successor to capitalize on, or salvage, the messy acquisitions that led to his downfall.

For now, he has become a distraction to the bank, pilloried by regulators and lawmakers since he engineered the $29 billion takeover of Merrill Lynch & Co. in January and bought subprime mortgage lender Countrywide Financial Corp. in 2008 for $4 billion, said CreditSights Inc. analyst David Hendler.

"He's drifting out to sea like a dying Eskimo, knowing the company can do better and thrive without him," Hendler said.

The bank said yesterday it was creating a six-member "CEO transition committee" to find a successor to Lewis.

Bank of America is based in Charlotte, N.C., but its reach extends nationwide. In the Philadelphia market, it ranked as the fourth-largest bank in terms of deposits as of June 2008, the latest government data available.

The bank has more than tripled in size since Lewis took over in April 2001 and became the biggest U.S. lender by assets and deposits. He spent more than $130 billion on acquisitions.

Lewis' legacy at Bank of America will likely be determined by whether his successor can do what he couldn't: prove that the bank's messy acquisition of Merrill Lynch and the purchase of Countrywide were worth the money. The deals took place as the nation's financial and housing markets were collapsing.

The resignation announcement capped nearly a year of turmoil for Lewis, who has endured withering attacks for his handling of the Merrill deal and is entangled in several state and federal probes into whether he and other bank executives misled shareholders by allowing the payment of billions of dollars in bonuses to Merrill employees.

Analysts said a leading candidate to succeed him was Brian Moynihan, head of the bank's consumer and small-business banking unit. Moynihan joined Bank of America in 2004.

"They have a have a fairly deep talent pool in the bank, and certainly there are a number of outsiders that could take the job," said Donald Thomas, senior analyst at Denver-based research firm Earnings Expert.

"I don't know what [Lewis'] legacy is going to be and I don't think we'll really know until we get to the bottom of the Merrill Lynch acquisition and what really happened there," said Donald Thomas, at the Denver research firm Earnings Expert.

Although the timing of Lewis' decision caught some off guard, the move itself was not a complete surprise. Shareholders had stripped Lewis of his chairman's title earlier this year amid an outcry over the Merrill Lynch deal, including criticism about billions of dollars in bonuses given to Merrill Lynch employees. At that time, many observers started wondering how long Lewis would last.

He also has been criticized for buying Countrywide - during the worst housing slump since the 1930s. Countrywide was the nation's biggest home lender.

Other potholes for Lewis included the reduction of the bank's quarterly dividend to 1 cent from 64 cents in 2008, and a drop in the company's stock price. When he became chief executive in April 2001, the stock was at more than $28. It closed yesterday at $16.34.

Entering the market: It came to the Philadelphia area

in April 2004 by buying FleetBoston Financial Corp.

Deposits: $10.11 billion

in the eight-county area,

as of June 30, 2008.

Market share: 8.5 percent

of local deposits.

Rank: Fourth, based

on deposits.

Branches: 117 in the eight-county area,

as of June 30, 2008.*

Local employees: 8,000,

as of mid-2008.

*The bank recently closed some area branches as part of a nationwide restructuring.

SOURCES: Federal Deposit Insurance Corp., Inquirer research.

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