If one had to sum up H. Furlong Baldwin's life in a word, it would be "consistency."
The chairman of Mercantile Bankshares Corp. has always been a banker. He never wavered from his strategy. He refused to sell out while others did so for huge profits. And he always made money, even when other banks were losing millions of dollars or simply failing.
For someone who began his career counting checks in the back office of Mercantile-Safe Deposit and Trust Co., Baldwin's career has been remarkable in its duration and for its accomplishments. For a quarter-century he was Mercantile's chief executive officer and his results rank among the best in the industry.
Under Baldwin, Mercantile's net income grew every year - even in recession - from $9 million to $175 million at the end of 2000. Cash dividends increased 24 consecutive years. And its stock rose from $1.36 per share in 1976 to an all-time high of $44.69 in December. Of the top 60 banks in the country, Mercantile ranks first in capital strength, second in profitability and fourth in efficiency.
The numbers are "the best of the best," said John B. Bowers, the former head of the Maryland Bankers Association. "He has left a very undisputed footprint on the landscape of banking and in the community that he has lived and worked in for 40-plus years."
In an interview - his first since he stopped running the company's day-to-day operations - Baldwin, 69, a tall and imposing figure, sat in a small conference room on the eighth floor of Mercantile's headquarters in downtown Baltimore and reflected on his career. Three themes emerged: Baldwin's strategy for building the bank; his quest for profitability; and the pressure of the job.
Walked into a career
Baldwin was 24 in July 1956 when he took a job counting checks in the proof and collections department at Mercantile-Safe Deposit and Trust Co.
He had graduated from Princeton University with a degree in history in 1954, then spent two years in the Marine Corps. Baldwin needed work but didn't know what field to try. His family banked at Mercantile, so he decided to inquire about work there.
"I just walked in and said, 'I am coming out of the Marine Corps, and I need a job,'" Baldwin recalled. The head of the banking division "offered me a job and I accepted it. I really didn't have a clue what a bank did. I didn't know what a debit and credit meant. I knew I had to get a job."
He moved soon to teller, worked in the loan cage and posted the general ledger - a mammoth, canvas-covered book about 2 feet high and a foot-and-a-half wide.
"You had pen and ink, and God bless you if you made a blur or a spill," he said. "It was a sacred book that you opened. ... You stood at a desk ... and you posted it by hand."
Eventually, Baldwin became the bank's first calling officer and was sent out to drum up business with freshly printed calling cards in hand.
He might not have known a lot about banking when he started, but he was good at it, quickly rising through the ranks.
Baldwin became a director of Mercantile-Safe in 1968. Two years later, at the age of 38, he was named president of the bank, and president and chief executive of the parent company, Mercantile Bankshares Corp. Six years later, he was given the additional titles of chairman and chief executive officer of the lead bank.
"All of a sudden, I realized this was fun. By the time I was president, I was hooked," Baldwin said. "You had the ability to do something and create something, and see things grow."
Baldwin wasted little time putting his stamp on the bank. Mercantile had been known for its huge trust department. But with the blessing of William E. McGuirk Jr., the parent company's chairman, Baldwin pushed the bank into commercial lending.
"Nobody had ever gone out and asked for commercial business," Baldwin recalled. "It seemed to me that is where the growth and profits were. In our case, it turned out to be the right thing."
Under Baldwin, Mercantile stressed lending to businesses, many of them family-run. It also handled their pension plans and cash management, and offered trust services for the owners' families. The bank helped sell businesses or pass them on to the next generation.
It was personal banking at its best, catering to the needs of customers - many of them wealthy - and Mercantile stuck with the strategy no matter how simple it was and no matter what other banks did.
Sometimes, though, Mercantile seemed out of stride.
In 1970, it became a multibank holding company. Instead of opening branches in various counties, as other banks did, Mercantile snapped up strong community banks, retaining their names and boards of directors. Not only did the approach keep customers happy because they saw familiar faces, but Mercantile instantly tapped into the market. The arrangement also offered the new partner Mercantile's expertise and a stock that traded frequently.
"Everybody said, 'Why are you doing that?' And I was perfectly comfortable that we knew what we were up to," Baldwin said. "But you had to say, 'Hell, is everybody out of step but Johnny?'"
Despite his skeptics, Baldwin was convinced Mercantile's strategy was right, and he refused to follow the pack. When banks began issuing credit cards in the 1970s, Mercantile stayed away. It also refused to join in when banks began offering discount brokerage services in the 1980s, and insurance in the 1990s.
When merger mania took hold in the 1990s, creating giant national banks, Baldwin watched and waited.
Those banks didn't want only consumers' savings accounts, they wanted to be their broker, insurer, mutual fund adviser and lender. The more transactions they could push through the machinery, the more money they could make.
Baldwin knew Mercantile couldn't do that because it was too small. His plan relied on providing service and on the skills of his lenders and wealth managers.
"Once you got into the product transaction business, you had to get big because you needed the economies of scale," he said. "We were relatively modest in size, so we said we can't catch up just in size. Nothing we did required size." That is not to say Mercantile didn't offer customers a credit card or a car loan if they wanted one. "Sure, we have some retail products," Baldwin said. "All of our banks will make you a car loan, but we are not selling them on the back of buses with 800 numbers."
Baldwin's strategy paid off as Mercantile consistently made money, while the big banks stumbled. Size didn't insulate Bank of America, First Union and Bank One Corp. from bad loans, botched acquisitions or weak profits.
"As we saw these people in this race [in the 1990s] ... we kept saying, 'Wait a minute, they are getting bigger but we don't see the ... profits coming out.' That is when we stopped worrying about was everybody out of step but Johnny."
While Baldwin believes that some large banks excelled at their brand of banking, he says others lacked "discipline."
"They say, 'Well, I am the 17th-largest east of the Mississippi,' or 'the 18th-largest west of the Ozark Mountains.' What does that have to do with it? It is about profitability."
Profitability as priority
Every New Year's Day, Baldwin rose at 6 a.m. "As of right now," he told himself, "my earnings are zero per share."
It didn't matter how Mercantile had done the year before - analysts and investors were interested only in performance. Baldwin drove himself to improve profits, regardless of whether the economy was booming or mired in recession.
Profitability "is everything," Baldwin said. "We budget profits. We don't ever budget size. That is what the shareholder wants. The shareholders are interested in profitability."
It took some time, but the soundness of his strategy was proved in the 1990s, and he recalls that period as one of his proudest moments.
As the country slipped into recession from July 1990 to March 1991, bank failures surged; 267 closed in 1990 or 1991. Bad loans peaked at more than $28 billion, or about 5 percent of all loans, and MNC Financial Inc., a large Baltimore competitor, lost hundreds of millions and was forced to sell.
But while the industry struggled, Mercantile made record profits in 1990, 1991 and 1992, and its assets, loans and deposits grew. That is when Baldwin knew he was right in his cautious, steady approach to banking.
"When it hit the fan around here, our underwriting standards stood up," Baldwin said. "We were still making construction loans, we were still making commercial loans. Not only were we the lender of last resort, we were the depositor of last resort."
Virtually every weekend, Baldwin boards a small charter plane to fly 200 miles to his family's estate on the Virginia Eastern Shore.
Known as Eyre Hall, the estate, which has been in the family for generations, features a manor house with magnificent boxwood gardens and ancient cedars that line the drive. It is Baldwin's sanctuary. "It has got to be damned important for me to stay up here on the weekend," he said.
But even when Baldwin hunted geese, boated or relaxed there, the bank was always on his mind.
"I tend to be able to do a lot of different things in the day because I can pigeonhole them. I can do that intensely and go on to the next thing," he said. "But this underlying responsibility is always under the surface."
Some of the pressure recently stemmed from Baldwin's inability to find a successor. He planned to retire when he turned 65, but he did not believe that he had found the right person to replace him. The board renewed his contract three times so he could stay on.
"I felt my responsibility was to find that individual who understood why we were different, appreciated why we were different and wanted to take us forward as an independent bank based on the platform that we had built," he said.
"The easiest thing in the world for me to do would have been to pick up the phone and sell the bank. I was so sure there was a future for a Mercantile - a brilliant future. Plus, I had my commitment to my colleagues and my customers and to this community. I knew there was a future."
After searching for more than four years, Baldwin found Edward J. Kelly III, a top investment banker at J. P. Morgan Chase & Co. and head of its Global Financial Institutions group.
Baldwin had known Kelly, 47, since 1996, and was impressed. By 1999, the two began talking about Kelly coming to run Mercantile, but there was a delay. Kelly was negotiating Morgan's $39 billion merger with Chase Manhattan Corp. in September.
"He has taken to this thing so well, and, not surprisingly, he is clearly the right choice for us," Baldwin said of Kelly, who started March 1 as president and chief executive of Mercantile Bankshares.
Baldwin, who vacated the CEO's suite on the second floor to an office on the eighth floor, has been out of the daily grind for 80 days. He still arrives at work at 7 a.m. in a suit, but leaves by 7 p.m.
In his new role, he is a consultant to the CEO and chairman of the company for at least three years. He is paid $500,000.
Does he miss the job? "No, I really don't," he said. "It is his [Kelly's] bank. It is his earnings, it is his decisions, it is his to run."
Devoted to Baltimore
Furlong Baldwin stands about 6 feet 4 inches tall, and has a full head of dark gray, combed-back hair. The father of two grown children, he is intensely private about his family and personal life.
But Baldwin isn't afraid to speak his mind, and there is little doubt who is in charge. He is as skillful a politician as he is a banker, and he is intensely devoted to Baltimore, something even detractors wouldn't deny.
He has helped raise money for the Baltimore Symphony Orchestra, the Walters Art Gallery and Johns Hopkins Medicine. He was chairman of John Hopkins Medicine's board of trustees from 1989 to 1994, and he is still sits on its board, as well as the board of the Johns Hopkins University.
Despite his efforts, he has seen Baltimore decline, with its high crime rate, dwindling population and distressed education system. "It is tough. We have got all the woes of an older urban city," he said.
The trend of local companies being bought by out-of-state concerns hasn't helped.
"Baltimore Symphony in the '80s raised $40 million. There were 12 local corporations who gave $300,000 or more," Baldwin said. "The only two of those companies left are Constellation Energy and the Mercantile. It is not just the ability to give money, it is the ability to raise money, to serve on these boards and make the symphonies, the art galleries and the Hopkins work."
Instead of seeing Baltimore as a hopeless case, Baldwin remains upbeat. He is pleased with the changes that Mayor Martin O'Malley's administration is making.
"I think it is a period of great optimism," Baldwin said. "Two appointments he made, which is the police commissioner [Edward T. Norris] and Carmen Russo [the school system's chief executive officer], are fabulous decisions. In the case of the police commissioner, he is bringing some real management to it. I would say the same thing about Carmen Russo. They are doing things that ought to be done. One is about the safety of the city and the other is about educating our children."
To think that Baldwin will fade away would be wrong. Baltimore means too much to him.
"I am not going anywhere," Baldwin said. "This interests me, and I would intend to stay very involved in the city. I do love this city. This city has been extraordinarily good to me and my family."