Mercantile chief decries lack of trust, leadership He talks frankly to shareholders

April 29, 1993|By David Conn | David Conn,Staff Writer

H. Furlong Baldwin, the longtime chairman of Mercantile Bankshares Corp., bemoaned the decline of Baltimore's corporate leadership and the loss of trust in the business world in an unusually frank talk to the company's shareholders yesterday.

Mr. Baldwin, 61, who has been Mercantile's chief executive since 1976 and chairman for nine years, recapped a 1992 "that could best be called an acceptable year for us" at the company's annual stockholders meeting, held in the Mercantile Building downtown.

The company's 1992 profits of $76.3 million were 8 percent higher than the prior year. Mercantile reported this month a 9 percent increase in first-quarter profits, earning $20.5 million in the period ended March 31.

The company, which is the 82nd-largest banking company in the nation, had the sixth-highest return on assets in the country, according to Mr. Baldwin, and the highest capital-to-assets ratio. Return on equity ranked 59th, largely because of Mercantile's conservatively high level of capital, which is the cushion of money that financial institutions must keep reserved to protect against possible losses. Mercantile is parent of Mercantile-Safe Deposit and Trust Co. and 18 other community-based banks.

By way of touting what Mr. Baldwin referred to as Mercantile's "integrity" and "fundamental values," he mourned the general decline of trust he sees in the business world today.

"Sadly, we live in a remarkable world where, increasingly, one's word is no longer one's bond," he said, "where only suckers pay their bills, where one declares personal bankruptcy again and again and again, where there are rigged markets, where there is insider trading, and where blatant conflicts of interest are ignored."

Although Mercantile managed to avoid the commercial real estate problems that nearly sank several other Baltimore banking companies in the late 1980s, Mr. Baldwin said, the slow pace of the economic recovery has hindered Mercantile's efforts to grow.

"1993 continues to be grudgingly hard work," he said, because loan losses remain high and loan demand is weak. "All of America is suffering from the binge of the '80s."

That binge helped rob Baltimore of many of the corporate lights that financed the city's cultural institutions, Mr. Baldwin said. Only four of the 10 companies that gave more than $300,000 to the Baltimore Symphony Orchestra's $40 million capital campaign in 1986, for example, are still independent or healthy enough to give similar amounts, he maintained.

"How will this vacuum be filled?" he asked.

Mercantile, able to avoid the excesses of the '80s, did not quite achieve the earnings needed to afford Mr. Baldwin and his fellow top officers the full benefits of the company's compensation plan. Heearned more than $717,000 in salary and other compensation last year, more than 20 percent higher than in 1991.

But because Mercantile failed to meet its internal earnings per share goal in 1992 for the second year in a row, Mr. Baldwin and four other senior executives in February were required to forfeit stock appreciation rights potentially worth more than $700,000 at the end of 1992. The company fell 11 cents short of its targeted earnings of $2.62 a share.

One factor in the earnings dip was the default on a $21.3 million loan by Baltimore Orioles owner Eli S. Jacobs.

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