Edward J. Kelly 3rd did just that. He joined Mercantile Bankshares Corp., effective the first of this month. Kelly told the Baltimore Sun that part of the reason was that J.P. Morgan had become too large after its merger with Chase Manhattan.
But maybe Kelly also sees greater opportunity, and he certainly will have the opportunity to do his own thing.
"Ned" belongs to the famous Kelly family of Phildelphia, whose most celebrated member was Princess Grace. Aside from Kelly's superb social connections, he was a shaker even at Morgan. He played a leading role in Morgan's merger with Chase, and was a lead advisor to the giant, but ill-fated acquisition of Philadelphia's CoreStates Financial Corp. by Charlotte's First Union Corp.
Now, what's this powerhouse going to do with little Mercantile, which has been an extremely well-run but conservative organization?
H. Furlong Baldwin, who had been president and CEO for 25 years, had run the company with an iron fist. The 69-year-old "Baldy," who will stay on as chairman for at least three more years, kept expenses to a minimum. The company's return on assets was a startling 2.11% in 2000. But it was also over-capitalized, with average equity at 12.7% of assets.
Now, in walks Kelly. All he has to do is continue Baldwin's basic policies and add a little sexiness to the mix. Kelly told the Baltimore Sun that one of his goals is to make Wall Street more aware of Mercantile's story.
The company has been trading at about 15 times earnings, a bit better than the average bank. If Kelly leverages its equity a smidgen more and exudes some sense that Mercantile will grow, investors might respond enthusiastically.
But maybe arch-wheeler-dealer Kelly has more up his sleeve. Will he turn the stodgy Mercantile into an aggressive acquirer, or will his primary aim be to sell it for a big fortune? Kelly indicated in his interview with the Baltimore Sun that he is more likely to do the former. He said he wants to build the company through "sensible" acquisitions. "There is huge opportunity within 100 miles of Baltimore, maybe 150 miles max," he said.
Mercantile, like the old J.P. Morgan, caters to Baltimore's old-money set. Kelly's perfectly cut out for leading such an institution. He was born in Philadelphia, schooled at the exclusive Germantown Academy, received his undergraduate degree from Princeton University and went to the University of Virginia Law School. He was an attorney for most of his career, and clerked for Supreme Court Justice William J. Brennan. He worked at Davis, Polk & Wardell, becoming a partner in 1988. He was recruited from Davis Polk by J.P. Morgan to become its general counsel and secretary, and quickly moved up the ranks.
Now Kelly's in Baltimore. Let's see what magic he can perform.
