BOSTON -- Joel Alvord is in town and this time he's staying.

Shawmut National Corp.'s chairman and chief executive officer is so determined to improve his retail franchise and boost lending here, he bought an apartment only blocks from the bank's headquarters on Federal Street.

No longer does he pop in two or three times a week from his native Connecticut. Boston executives are seeing his face more than ever.

In part, Mr. Alvord is responding to heavy marketing campaigns this fall by local banks attempting to steal each other's deposits. He is also trying to breathe life into the bank's declining commercial loan portfolio.

But Mr. Alvord says his bank is ready to move into a new era of growth after five years of dealing with a mountain of problem assets that reached $1.7 billion in 1988.

Today, he continues to trim fat (he wants to cut the bank's efficiency ratio in the fourth quarter to 60% from 62%), but he concedes that he must also increase the $31 billion-asset bank's market share and asset size to remain competitive.

If he fails, he can forget about keeping the bank independent, analysts say. And his reputation as a banker seems to be on the line as well.

"He lost a lot of respect during the troubled years," says Donaldson, Lufkin & Jenrette banking analyst Thomas Brown. "He took a lot of heat from the board and regulators and investors.

I think he wants to show he can run this company and stick it in the face of his local competitors."

Mr. Alvord has got to move fast. The retail market in Boston is heady with competition. The patrician Bank of Boston, typically known for corporate banking and its operations in Latin America, has recently placed a new focus on local retail, with a big marketing push in home equity lending.

BayBanks Inc., continues to receive the most kudos from analysts for its ATM machines that dot the city and for its user-friendly telephone banking service.

And Providence, R.I.-based Fleet Financial Group has been revamping its entire retail system as part of its Fleet Focus restructuring plan.

Shawmut's $7.2 billion in Boston deposits lags behind some of the competition. Bank of Boston Corp. has $13.3 billion of deposits and BayBanks Inc. has $8 billion.

But Shawmut is ahead of Fleet, Which has $6 billion in Boston deposits.

Shawmut is New England's third-largest bank holding company, behind Fleet, with $48 billion in assets, and Bank of Boston, with $40.5 billion in assets. BayBanks runs well behind Shawmut, with $10.5 billion in assets.

Mr. Alvord sees new opportunities, particularly in Boston's suburbs inside the Interstate 495 beltway.

"A couple of years ago the New England economy was in pretty lousy shape and the bank was coming out of a tough period," he says. "We've got a lot of new folks in the company, a great management team, and now it's time to execute."

Mr. Alvord has already expanded the bank's profile in other parts of New England.

In recent months, he and his executives embarked on high profile marketing blitzes in Fairfield County, Conn., and in New Hampshire, where the bank recently bought New Dartmouth Bank. He plans to use the same strategy in Boston.

Also, Mr. Alvord has been expanding outside the bank's traditional business lines, which include money management, consumer finance, and servicing the insurance industry. In September, Shawmut acquired the assets of a bankruptcy noticing company in Oregon. The bank is also currently fighting for the right to sell insurance in Connecticut.

The new approach at Shawmut hit home last month, when Mr. Alvord fired three executives, two of whom had been brought in specifically to help the bank's revitalization.

The measure was intended to cut costs, since analysts had complained the bank was top heavy with senior management. But Mr. Alvord says that he replaced the fired executives with ones more able to take the bank in its new direction.

Bharat Bhatt, who came over from Mellon Bank Corp. two years ago to take the chief financial officer's job and was later named executive vice president in charge of mergers and acquisitions, was one of those fired.

He was well respected on Wall Street for possessing a keen eye for balance sheet bloat.

Mr. Bhatt reportedly got himself into trouble for insisting that Mr. Alvord sell the bank. Mr. Alvord denies it and Mr. Bhatt could not be reached for comment.

John Berger, the 18-year veteran who worked under Mr. Bhatt in mergers and acquisitions, got a pink slip too.

Allen Sanborn, president of the lead bank in Boston, Shawmut Bank N.A., was the third executive fired. He came to Shawmut two years ago from BankAmerica Corp., where he served as a credit officer and as vice chairman for commercial markets.

Mr. Sanborn was hired to generate commercial lending business, but he has been criticized for not producing.

Mr. Sanborn, 55, is not perceived as possessing the energy or the personality to attract new business in such a volatile market as Boston.

Some said he wasn't suited for Shawmut's aggressive new phase, which for him would have meant going out into the community to drum up business.

Other analysts said the criticism of Mr. 'Sanborn was unfair. These observers suspect Mr. Sanborn was pushed out because his views about the bank's future didn't match those of Mr. Alvord.

Mr. Alvord refused to discuss individual cases, but he explained the firings this way: "Obviously, in running any business, there is change. In the 1980s, this place was in a major growth and acquisition mode. In the early 1990s, it was in a rehabilitation and survival mode, very internally focused."

Now, as the bank reenters growth mode, "It takes different skills, different people at different junctures in the development of the corporation."

Replacing Mr. Bhatt as CFO is Susan Lester, brought in last May from First Bank System in Minneapolis, where she worked as executive' vice president and corporate controller.

John Huston, Shawmut's chief credit officer, and Niles Jensen, who heads the bank's insurance, trust, and correspondent banking businesses, will assume Mr. Sanborn's duties.

"What he (Alvord) is trying to do is build a team he is comfortable with that he thinks is capable of guiding the company into the future," says Keefe, Bruyette & Woods analyst Thomas Theurkauf.

Some analysts think the bank's revitalization isn't through.

"I wouldn't be surprised to see further management changes over the next several months," said Mr. Brown of DLJ.

Regardless of any more personnel changes, many analysts insist that the New England market remains too competitive for a bank of Shawmut's size.

Observers think Mr. Alvord will soon be looking for a partner.

A merger between Shawmut and $45.5 billion-asset Bank of New York Co., for example, is one possibility.

Mr. Alvord, 55, might be willing to take a position under Bank of New York chairman, chief executive, and president, J. Carter Bacot, analysts say. Mr. Bacot, who is now 65, could retire in the next year or two, leaving Mr. Alvord in charge of the bank.

Although the usual Bank of New York rumors involve Fleet, analysts say that its chairman, president and CEO, Terrence Murray, is less likely to play second fiddle, even temporarily.

Mr. Alvord laughs at the speculation surrounding his bank. But he does say that a major merger, such as one with BONY, is not entirely out of the question.

"We've done a merger of equals before.

"We'd entertain another, but we'd like to be more equal than others," he maintains.


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