April 21 (Bloomberg) -- Bank of America Corp. Chief Executive Officer Kenneth D. Lewis, lead director Temple Sloan Jr. and director Tom Ryan won’t get the vote of Connecticut State Treasurer Denise L. Nappier at next week’s board election.

Nappier said she’ll cast her ballot against the three directors and called on Lewis, 62, to step down, according to an e-mailed statement today. The board should “substantially reconstitute itself by the next annual meeting,” she wrote.

“It’s time to clean house and set the financial health of the company on a sustainable path,” Nappier said about management at the Charlotte, North Carolina-based bank. The state holds 3.2 million shares and has an unrealized loss of $57 million, she said.

Investors cast ballots April 29 on whether to re-elect Lewis to the board and split his roles as chairman and CEO. He’s under fire after the bank spent more than $30 billion on takeovers including Merrill Lynch & Co. and posted a fourth-quarter loss. Directors are concerned the vote may be close and were counting on first-quarter results to bolster support for the bank, people familiar with the matter have said.

Instead, Bank of America shares fell 24 percent after yesterday’s quarterly report. The bank gained 74 cents, or 9.2 percent today to $8.76 a share at 4:15 p.m. in New York Stock Exchange composite trading.

Quarterly Profit

Spokesman Scott Silvestri declined to comment on Connecticut’s action today. He said April 17 the bank’s officials “believe we have acted legally and appropriately in our disclosures around the Merrill Lynch acquisition and that the acquisition will ultimately create value for Bank of America Shareholders.”

Citigroup board members today each received at least 70 percent votes in favor of their elections at the New York-based company’s annual meeting. The Treasury Department, which will become Citigroup’s biggest shareholder when the bank converts as much as $52 billion of preferred stock into common shares, may force resignations of some directors, Peter Sorrentino, a senior portfolio manager at Huntington Asset Advisors in Cincinnati, said in an interview today.

It’s unlikely Bank of America investors will oust Lewis, said John Poelker, an industry consultant and a former chief financial officer at the lender before its 1998 merger with NationsBank Corp.

‘Outstanding Executive’

“Ken has demonstrated over a long period that he is an outstanding executive,” said Poelker, who lives in Atlanta. “The fact that all banks are caught up in this 500-year flood doesn’t suggest that Ken somehow doesn’t have a grasp on the issues.”

Bank of America swung to a profit in the first quarter from the fourth quarter’s $1.79 billion loss, with net income rising to $4.25 billion from $1.21 billion a year earlier, the lender said in a statement. After the results were released yesterday, spokesman Robert Stickler said the board was “100 percent” behind Lewis.

The vote at the annual shareholder meeting includes the company’s executive pay package and a resolution to split the chairman and CEO jobs. Nappier plans to vote against the pay package and in favor of the split, citing lack of confidence in both Lewis and the board because of their handling of the Merrill Lynch takeover.

Two telephone calls to Nappier were not immediately returned.

‘Mixed’ Reception

Lewis, CEO since 2001, has been criticized by shareholders including Jerry Finger’s Finger Interests LLC in Houston, as well as proxy advisers Glass Lewis & Co. and RiskMetrics Group Inc. for not telling investors that Merrill’s fourth-quarter loss was spiraling toward $15.8 billion before they voted to approve the takeover in December. Finger has said his firm controls about 1.1 million shares.

Bank officials have contacted some of the biggest shareholders to round up support for Lewis and received a “mixed” reception, according to the people familiar with the situation.

“We’re not celebrating yet,” said Jonathan Finger, managing partner at Finger Interests, in an interview today, adding that he hasn’t spoken with Nappier. “It’s going to be a difficult battle, and I think it’s going to be a very close vote,” Finger said. “At this point there is a realistic opportunity to split the chairman and CEO.”

Nappier Criticized

Nappier also opposed the re-election of board members at American International Group Inc., the New York-based insurer rescued by the U.S. government with a package of $182.5 billion in capital, loans and asset guarantees. She cited executive compensation and bonuses in a March 31 letter.

Municipal officials in Connecticut have criticized Nappier for investing in commercial paper from structured investment vehicles, typically offshore companies created by banks to sell lower-yielding short-term debt. The proceeds were then used to buy higher-yielding mortgage securities, many of which have collapsed in value since late 2007.

Connecticut’s Short-Term Investment Fund, which Nappier’s office manages, held $197.5 million in four SIVS as of Dec. 31, according to a regulatory filing.

Connecticut is regarded as an activist investor and it’s not unusual for the state to take a public stance, according to Charles Elson, director of the Weinberg Center for Corporate Governance at the University of Delaware.

“They’ve been active in compensation issues and whatnot for a long time,” he said.

To contact the reporters on this story: David Mildenberg in Charlotte at dmildenberg@bloomberg.net; Linda Shen in New York at lshen21@bloomberg.net

Last Updated: April 21, 2009 16:54 EDT