Sunday, July 14, 2024

Pillars of NC: Luther Hodges Jr. reinvented himself throughout his career

Luther Hodges Jr. thought being the son of an influential governor would make for a smooth ride, he was mistaken. Hodges made his way through banking, politics and business by adapting to a variety of complex situations.

Hodges, 87, grew up in Leaksville, in Rockingham County near the Virginia border. He earned his bachelor’s degree at UNC Chapel Hill in 1957, during his father’s gubernatorial reign from 1954-61. The younger Hodges served in the Navy from 1957 to 1959, then earned an MBA from Harvard in 1961.

Though he had worked for a summer at then-dominant Wachovia Bank, Hodges chose to join North Carolina National Bank in Charlotte, which was formed in 1960 after mergers of banks in Charlotte and Greensboro.  His peers included Hugh McColl Jr., who had joined the organization in 1959.

“They would sit up late at night and talk about how they were going to turn NCNB into a banking powerhouse,” says Greensboro author Howard Covington Jr., who with Marion Ellis co-wrote a history of NationsBank, which became Bank of America.  “They were competitors and good friends.”

Over the next 15 years, the duo helped NCNB CEOs Addison Reese and Tom Storrs to build one of the nation’s 25 largest banks. Hodges spent lots of time attracting clients in the Northeast states, while McColl focused on lending to Carolinas’ businesses. At age 38, Hodges became chairman of the bank’s board, which was distinct from the holding company.

“(Hodges) was a good public face for the bank,” Covington says. “Luther had a recognizable name. He was a handsome guy. He did well in front of the public and the legislature, or wherever he was needed.”

By the mid-1970s, many U.S. banks were struggling because of high inflation and growing levels of uncollectible consumer and real estate loans. To help steer NCNB through the difficult period, then-CEO Tom Storrs preferred McColl’s “driving force of energy” to Hodges’ “glitz and glamor,” Covington says.

Like his father, Hodges had political ambitions. A 1974 Time magazine feature on “Leadership in America” spotlighted one emerging leader in every state. Hodges, then 37, represented North Carolina. Pundits expected him to launch his political career “before the decade is out,” Time reported.

In 1977, Hodges resigned from NCNB to run for U.S. Senate. (McColl became CEO in 1983 and built what is now the second-largest U.S. bank.) Democrats hoped to defeat Republican Jesse Helms, who was completing his first term. In a surprising primary upset, N.C. Democrats chose John Ingram, the state’s populist insurance commissioner, over Hodges. Helms easily defeated Ingram in the general election.

Hodges then focused on Washington, D.C., when President Jimmy Carter tapped him as a deputy secretary of Commerce during the second half of Georgia peanut farmer’s single term. (Luther Hodges Sr. had been Commerce secretary for four years under Presidents John F. Kennedy and Lyndon Johnson.)

In 1980, Hodges was named chief executive of the National Bank of Washington. a much smaller bank than NCNB but the oldest financial institution in the nation’s capital. The bank was then owned by the United Mine Workers union, which sold its stake to a group led by Hodges in 1985. After a disagreement with minority investors from Saudi Arabia, he resigned in 1990 and moved to Santa Fe, New Mexico, for a fresh start. He invested in the Hotel Santa Fe and a city magazine, served on the local college board and bought lots of Southwest-themed art.

Hodges returned to North Carolina in 2000, living in the Boone area. His current residence has stunning views of Grandfather Mountain and other peaks and a large office lined with photos from his career and art collected over the decades. His son is a money manager in the Seattle area and his daughter works in banking in Charlotte. He has four grandchildren.

Comments are edited for length and clarity.

Everyone thought I had a leg up because the governor was my father. But it was also a liability. You have to be good. Fortunately, I was successful and everything went well.

When I got out of Harvard, I chose the North Carolina National Bank, which was just formed by a merger between banks in Charlotte and Greensboro in 1960.  We were competing with the Wachovia Bank, and we did very well. Banking was the biggest
business in North Carolina – it was where the action was.

We (Hugh McColl Jr.) were at Chapel Hill together.
We were in ROTC together. I went to the Navy, he went into the Marine Corps.

Hugh and I were close friends,
but we were also competitors. We were equals at NCNB, and we both worked quite hard and were quite successful. I became chairman of the board and he became president of the bank. We complemented each other, but there was also jealousy between the two of us, which I would admit to.

I traveled to northern states for the first few years.
We were trying to get the banks and corporations to do business with NCNB. We wanted to cultivate relationships.

In 1977, I quit the bank and ran for United States Senate. Everyone told me I could save the world from Jesse Helms. He was a bit controversial but had his own following. I ran for office in 1978, and it didn’t work. My people didn’t vote (in the Democratic primary runoff); they assumed I was going to win.

Mr. Carter was then president and he asked me to join his team. Carter was an interesting commodity. He wasn’t a strong person. I worked there until Carter left. I get a Christmas card every year.

A lot of the problems I had at the bank (Bank of Washington) was raising the money, largely from a Saudi Arabian investor. They owned a big piece of it. They decided they wanted to run the bank. They did not want me to run the bank. They paid me to go away. I wanted to sell the bank, and they didn’t.

That’s when I went to Santa Fé and started another life. I owned the (Santa Féan) magazine in Santa Fé. I was trying to create another career for myself.

As my father used to say, everybody in the South is born a Democrat and a Methodist or Baptist. Give them a little bit of money and they become a Republican.

The South, 40 years ago, had conservative Democrats. I certainly, as was my father, a conservative Democrat. There’s no such thing today. A conservative Democrat is an oxymoron right now.

We’re too divided and there’s very little interaction between one side and the other. That’s not a good way to be. Right now, we’ve got two very different parties and God knows what’s going to happen.

It’s going to be an interesting time. It’s difficult to predict at this moment, but I’m very worried and pessimistic about it. We don’t really cooperate with each other anymore. It’s not a good scene. I’m too old to do much about it.

I came back to North Carolina in 2000. I always wanted to come back.

North Carolina has done very well. It’s got education, decent government, and I’m sort of proud of what it’s done.

A 1978 primary defeat ended Hodges’ political plans. College classmates included former N.C. Supreme Court Judge James Exum, far left.

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