H. Furlong Baldwin, the dean of Baltimore banking and a behind-the-scenes mover-and-shaker in both the city's civic and business communities, will retire as both chairman of the board and director of Mercantile Bankshares Corp., effective Saturday.
Baldwin's departure signals the end of an era punctuated by almost unparalleled growth at Mercantile - and 24 straight years of increased cash dividends - that began when he became chief executive officer in 1976.
Succeeding Baldwin, 71, will be Edward J. "Ned" Kelly III, Mercantile's president and chief executive officer. The announcement was made yesterday evening after a special meeting of Mercantile's board of directors.
The retirement had been expected, but not quite this soon. It takes effect two years to the day after Kelly, Baldwin's hand-picked successor, joined Mercantile.
And Baldwin's departure leaves more than two years remaining on the three-year term as director, to which he was elected last April.
Reached at his office at the bank late yesterday, Baldwin declined comment on the announcement. However, in a written statement, Baldwin said that, "when Ned Kelly was elected as president and chief executive officer on March 1, 2001, he was not well-known within our community. We felt that my continued presence as a nonexecutive chairman could be of help in that regard.
"Over the past two years, Ned not only has provided outstanding leadership to Mercantile, but he also has become an integral part of the leadership of our community. Therefore, I felt that it was appropriate and logical for me to step aside now, having completed the transition."
Other bank executives were not available for comment late yesterday.
In the same statement, Kelly said that in Mercantile's string of "exceptional leaders ... none has had a more distinguished career than Baldwin. He is a true icon of the American banking industry, and his contributions to our community are too numerous to recount. We are grateful for his decades of service and will do our best to honor, and to build upon, his remarkable legacy."
Speculation about Baldwin's impending retirement surfaced in a report in The Sun about a growing rift between Mercantile's new guard, led by Kelly, and the bank's old guard, which still viewed Baldwin as the institution's leader and the man who had built it into a regional force.
That rift was reported last Thursday, and a source subsequently reiterated its existence.
However, Baldwin and other officials within the bank last week denied that there was a rift and said that the rapport between Kelly and Baldwin remained collegial. They dismissed as premature any talk of the chairman's departure.
Baldwin himself denied that he was exerting any influence over business decisions at the bank.
"I was going ... anyway after a certain period of time," Baldwin said in that interview last week. "I have been a nonexecutive chairman for two years. I am retired. I have a consulting fee. I have no authority. I don't know what to tell you."
A nonexecutive chairman or director of a company remains clear of its day-to-day operations, serving instead as a resource upon which the firm's CEO or board of directors can draw.
Before he turned Mercantile's reins over to Kelly, Baldwin had built the bank into a regional powerhouse to which securities analysts point as a model of conservative and consistent management that other community and quasi-regional banks should follow. Gerard S. Cassidy, who follows the locally based institution for Boston's Tucker Anthony Inc., regularly referred to Mercantile as the "Rock of Gibraltar" of local banks.
Baldwin built Mercantile into the largest independent bank in Maryland, dodging recessions and watching as other local institutions fell into dire financial straits or were gobbled up by out-of-state suitors in a the banking sector's takeover craze. Between 1976, when he became CEO, and 2001, when Kelly assumed that position, Baldwin saw Mercantile's net income increase every year - from $9 million to $175 million. The company's stock price grew from $1.36 per share in 1976 to a high of $44.69 in late 2000.
While he was building the bank, Baldwin was an ardent community patron, raising money for the Baltimore Symphony Orchestra, Walters Art Museum and Johns Hopkins Medicine. He was chairman of Johns Hopkins Medicine's trustees from 1989 to 1994, and was known to be active in behind-the-scenes endeavors powering civic and business initiatives.
In Kelly, Baldwin chose a successor who was the antithesis of the homegrown community banker. An accomplished New York investment banker, Kelly saw in Mercantile the chance to become a community mover and shaker himself, and to build a bank already constructed on a strong foundation.
Kelly's growth plans hinge upon bolstering the bank's stagnant wealth-management unit, and he has aggressively pursued that stated goal - along a different path from the one Baldwin followed.
Kelly has imported other top veterans of the wealth-management business, such as Offitbank architect Wallace Mathai-Davis, and has given those executives significant latitude to achieve his long-term growth goals. Under Mathai-Davis, and a mixture of new hires - from New York wealth-management veteran John J. Pileggi to Alex. Brown & Sons Inc. veteran Margaret Preston - the wealth management unit has made numerous acquisitions, created new products and services, and courted the high-dollar clientele needed to bring in millions in new assets.