For Joel B. Alvord, the 1990s got off to a rough start.

As Shawmut National Corp. racked up huge losses, Wall Street accused him of being slow to recognize the problems. Regulators questioned whether he was capable of fixing them. And employees complained that he was detached, uncaring, and arrogant.

In public at least, Shawmut's chairman and chief executive appeared untroubled by the many verbal arrowsfired his way.

But it's becoming increasingly apparent that those arrows found their mark. Since walking away from a merger with Bank of Boston Corp. earlier this year, Mr. Alvord has taken aggressive steps to restructure his company and reshape his image.

He's making progress on both fronts. Shawmut, with $22.6 billion in assets, is posting profits again and nonperforming assets are declining. Although nonperformers remain high at 10.7% of loans plus foreclosed real estate, the company is out of the danger zone.

Analysts are pleased with Shawmut's progress so far but say it is recovering more slowly than competitors. Second-quarter earnings of $8 million were lower than expected and included $12.6 million in special gains.

"The company has definitely shown a lot of progress, but I also think ... earnings have not been as high as one would like," says John Heffern, an analyst at Alex. Brown & Sons in Baltimore.

Still, falling reserves and loan-loss provisions are expected to give Shawmut a lot of earnings momentum through 1993. Analysts predict Shawmut will earn $127 million next year, up 51% from the $84 million they expect it to earn this year.

Many analysts now rate the stock a "buy" and say it could almost double in value over the next 15 months.

But fueling some of the optimism is the expectation that Mr. Alvord will sell the company within two years. Analysts say Mr. Alvord, 53, has grown weary dealing with Shawmut's problems during the past year.

"I think he'd like to clean up the bank and take it out at a good price," says Lawrence W. Cohn, an analyst at PaineWebber Inc. "He gets rich, shareholders get rich, and everyone remembers him fondly."

Commitment to Independence

Mr. Alvord said that he is committed to Shawmut's independence and that he wouldn't have been able to attract new executive talent if he wasn't.

"I'm a young guy," he says, adding: "My wife doesn't want me home yet."

A cleaned-up Shawmut would probably fetch at least $30 a share, or twice book value, they say. That's a price shareholders like Mr. Alvord, who including options owns 239,447 shares, haven't seen in three years. The company's stock was trading Friday afternoon at $14.50 a share.

Possible suitors include Chase Manhattan Corp., Bank of New York Co., and BankAmerica Corp., which would no doubt be attracted to Shawmut's 334 branches and its dominant consumer, small-business, and middle-market business.

Despite Shawmut's return to profitability, serious obstacles remain before it can again become a top-flight bank.

The New England economy remains sluggish and is not expected to recover anytime soon. Shawmut's biggest competitors, Bank of Boston Corp. and Fleet Financial Group Inc., are healthier and appear determined to steal some of the company's consumer and small-business customers.

Just last week, Bank of Boston announced that it would buy Society for Savings Bancorp, a $21.7 billion-asset thrift in Hartford, Conn., Mr. Alvord's backyard.

|We've Learned a Lot'

Mr. Alvord says he is isn't worried. "We have been in situations where we have been at a disadvantage or been the underdog before, and I can tell you that while we're humble and we've learned a lot, there is a very strong sense and desire to win," he says.

Humble pie is not something Mr. Alvord is used to eating.

A tall, athletic man, with a penchant for expensive suits, his career path had been meteoric until 1989.

He became president of Shawmut's predecessor, Hartford National Corp. at 39, and chief executive eight years later. He acquired Shawmut Corp. two years later in 1988, creating a $25 billion asset superregional.

Slow to React

But the recession hit Shawmut hard, and while competitors boosted provisions quickly, Mr. Alvord fought with regulators, delayed taking action, and insisted that things were not as bad as they seemed.

Those inside and outside the bank who watched him said it seemed he didn't understand the magnitude of his problems, or care.

Employees complained that he was self-absorbed to the point of being oblivious to their worries. Last year when there were fears that widespread layoffs would result from the expected merger with Bank of Boston, one worker said facetiously: "Gee, I saw Joel in the dining room, and he came over to me and said, |Don't worry about me, I'll be O.K.'"

Mr. Alvord is now making a concerted effort to become more endearing to Shawmut's rank and file. His written communications with employees are averaging once a week instead of once a quarter and his meetings with his 600 line and staff managers are up to about once a month from once a quarter.

To improve his relations with customers, he has hired a new media relations team that has structured a series of stump speeches emphasizing Shawmut's commitment to New England.

"I think he realized he wasn't warm and cuddly," said one insider, explaining the new strategy.

Push into Mutual Funds

Some of the other steps Mr. Alvord is taking include reorganizing Shawmut's small-business lending division and beginning a new push into mutual funds.

On the management front, he has hired David Eyles, a former vice chairman at Mellon Bank Corp. to oversee credit policy and Allen Sanborn, a former vice chairman at BankAmerica Corp. to oversee commercial lending. Mr. Eyles and Mr. Sanborn both command considerable respect on Wall Street.

Adding to the Franchise

Acquisitions in New England, and ultimately outside the region, are also part of Mr. Alvord's strategy.

While Shawmut is in no position to acquire a large bank anywhere, Mr. Alvord said that he is eager to bid on failed banks in Connecticut, Massachusetts, and Rhode Island and that there are likely to be 15 to 20 of those in the next few years.

Success here is particularly important, analysts say, because despite the earnings pressure, Mr. Alvord has intentionally kept an infrastructure to accommodate a much larger bank -- Shawmut was 36% larger before its problems hit. That means Shawmut's expenses even after accounting for bad asset costs, are high.

Mr. Alvord recognizes this, but says that despite the sluggish environment, he is confident he can expand Shawmut to around $35 billion in assets, or 50%, in the next five years.

"Clearly the corporation will grow," he said. "At one point we were $30 billion ... and I think we have the capacity to carry a much more sizeable book of business without drastically adding to the expense base."

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