Just a few years ago, John F. McGillicuddy's long career in banking appeared to be ending on a flat note.
During a 12-year reign as chief executive, Mr. McGillicuddy led Manufacturers Hanover Corp. through a period of major expansion. But he also steered it headlong into every crisis that came along, from Third World loans to commercial real estate.
By 1990, few believed the limping Hanover could survive the next decade. And Mr. McGillicuddy seemed destined to occupy no more than a footnote in the annals of banking.
Now, at age 61, he's suddenly basking in the limelight.
The merger of Hanover and Chemical Banking Corp. has turned out to be a clearcut success, confounding some naysayers. The new Chemical has instantly become a market leader in retail and small-business banking, while upgraded credit ratings are bringing in new corporate revenues.
What's more, capital ratios have been bosltered and expense savings related to the merger are ahead of plan.
The upshot: Chemical's future, and Mr. McGillicuddy's legacy, now appear secure.
Indeed, when Mr. McGillicuddy talks about retirement, you can almost hear the relief in his voice.
"I'll put my hat on, walk out the door, and leave behind an organization that is in extraordinarily good shape, with a very bright future," he said in a recent interview.
But the cigar-smoking dean of money-center banking may end up sticking around longer than expected under Chemical's well-publicized succession plan, according to people who have watched him over the years.
The merger agreement, which took effect last Jan. 1, calls for Mr. McGillicuddy to hand over the chief executive reins to Chemical's president and chief operating officer, Walter V. Shipley, at the end of next year. And Mr. McGillicuddy said in the interview that step would be carried out according to plan.
But it was also assumed he would relinquish the chairman's job; now there is growing speculation that he might not.
"At this point, a lot of people expect McGillicuddy to stay on," says one former Chemical banker.
If that should happen, he and other reason, Mr. Shipley could see some of his power diluted. The 57-year-old executive, who before the merger was Chemical's chairman and CEO, has already seen many of his Chemical associates pushed aside in favor of Hanover managers.
For his part, Mr. McGillicuddy is being coy about the future.
"The only thing that's absolutely certain is that Dec. 31, 1993, will be my last day as chief executive officer," he said, relighting a half-smoked cigar. "What happens thereafter, we really haven't discussed at any length. He [Mr. Shipley] and I will be talking about that."
Mr. McGillicuddy didn't rule out remaining as chairman, though he said that probably was "not necessary."
Preferred by Some Investors
But if Mr. McGillicuddy is coy, some investors aren't.
"There would be a lot of comfort in the investment community if he stayed [as chairman] through the merger process, which may go into 1994," said Darin Klemm, an equity analyst for the State of Wisconsin Investment Board.
Aside from reassuring investors, Mr. McGillicuddy also may also want to stay on to pave the way for longtime Hanover associates. He has always been a loyalist, and Hanover was famous for cultivating a comfortable climate for its good soldiers.
Presidency Up for Grabs
Regardless of whether Mr. McGillicuddy stays as chairman, a battle for the presidency would almost certainly ensue when Mr. Shipley becomes chief executive. Indeed, insiders are already handicapping the race, and they're giving great weight to Mr. McGillicuddy's influence.
The top candidate from the Chemical side of the merged family is William B. Harrison Jr., a vice chairman with responsibilities for the global, or wholesale, banking businesses.
His counterpart from the Hanover side is Edward D. Miller, a protege of Mr. McGillicuddy who is vice chairman in charge of the regional, or retail, banking businesses.
Points for Smooth Conversion
Insiders say Mr. Miller has more hands-on responsibility for the merger than any other executive. He has scored points for overseeing what to date has been a smooth conversion of back-office systems and is riding herd over a merging of the retail banking operations.
Mr. Miller is even viewed in some circles as a rival to Mr. Shipley. Some investors think Mr. Miller's experience in retail banking makes him a better candidate than Mr. Shipley because of Chemical's retail prominence.
Though 60% of the bank's profits now come from the so-called global bank, Mr. McGillicuddy said that the retail side has the greatest potential for growth.
"I think Ed Miller would be' more experienced and better qualified to run the bank," said Mr. Klemm. "But when push comes to shove, I think Mr. Shipley will be chief executive, and the question is, will Walter be as good a conductor of the band as John."
Mr. McGillicuddy tried to dispel the rumors about internecine rivalries, stressing the harmony between himself and Mr. Shipley. "We function as the office of the chairman, with Eddie and Bill as full participants," he said.
John R. Torell 3d, a former president of Manufacturers Hanover Trust, said the most compelling reason to believe that Mr. Shipley will be the next chief executive is that "John is a fellow whose word is his bond. If he says he's going to do something, he always makes good on his promise."
Mr. McGillicuddy and Mr. Shipley "have a terrific relationship," he said. "And it didn't just start when they got married. They've known each other for years."
Joined Manufacturers in 1958
A native of Harrison, N.Y., Mr. McGillicuddy attended Princeton University, where he was a three-letter man, playing on the football, baseball, and basketball teams. His office is decorated with sports memorabilia, including shelves of golf tournament trophies, that attest to his passion for sports.
After graduating from Princeton, he obtained a law degree from Harvard Law School, served in the Navy, and then joined Manufacturers Trust Co. in 1958. The bank merged with the Hanover Bank in 1961 to form Manufacturers Hanover Trust Co.
Mr. McGillicuddy grew up on the wholesale side of the business, working for several years as a corporate calling officer. It was in those days that he first met Mr. Shipley, who was a corporate lending officer at Chemical. The two remember dining together in the early 1960s at a steakhouse in Kansas City, where they were both attending a banking conference.
Mr. McGillicuddy ascended rapidly at Hanover, and was appointed vice chairman in 1970. He was elected president in 1971 and chief executive in April 1979.
From 1979 through 1990, he helped Hanover grow from a $47.5 billion-asset company to one with $61.5 billion of assets. At its peak in 1985, Hanover's assets had burgeoned to $76.5 billion.
The bank concurrently added many new business lines, including national mortgage banking, consumer finance, asset-based lending, leveraged buyout lending, Third World lending, and commercial real estate.
Analysts said Mr. McGillicuddy's thirst for expansion - which is still evident when he talks about the new Chemical's future - was largely to blame for the heavy weight of bad loans that burdened Hanover by the late 1980s. He was also criticized for Hanover's corporate culture, which was known to be cozy and paternalistic.
Today, with Chemical riding high, analysts give Mr. McGillicuddy credit for taking chances.
"I don't think anyone can criticize him for ever taking off his strategic thinking cap," said James McDermott, an analyst at Keefe, Bruyette & Woods Inc. "Maybe some of the strategies didn't work, but the merger decision is a culmination of good strategic thinking."
Mr. McGillicuddy accepts the blame for Hanover's problems.
"When you talk about LDC, I can't sit here and say I wasn't part of the process. I was," he said. "I look on my sin as not standing apart from the process and saying enough is enough."
But isn't the old empire builder tempted to stay on and lead Chemical through a new era of intraregional and interstate acquisitions?
"If I were 10 years younger, that would be one thing, but I'm not," he said. "Let's face it, as compared to where either one of our predecessor organizations was, Walt and I are very pleased that this organization is enjoying success."