To hear Charlie Cawley tell it, MBNA Corp.'s 15-year rise from nothing more than a bank spinoff housed in a small, derelict former A&P supermarket to the world's second largest credit card company didn't happen by design.
"We didn't have a grand plan," said Cawley, MBNA's president. "All we knew was we wanted to be the L. L. Bean of financial services companies."
But, as with L.L. Bean, the rustic clothier known for its customer ++ service, Wilmington, Del.-based MBNA's astronomical growth is no accident. Its success can be traced to shrewd marketing, a dedicated and well-compensated work force and a zealous -- even fanatical -- approach to gaining and keeping customers.
MBNA's success also stems from a series of innovations that have transformed the consumer finance industry, have been widely imitated by competitors and have earned MBNA a spot in the Fortune 500.
"Bankers are not notoriously creative people, so that worked as an advantage to us," Cawley said.
Its most recent innovation -- regionalizing operations -- is likely to have a significant impact on Baltimore's economy, when the company establishes the fifth in a series of regional headquarters this year.
By the end of the decade, Cawley estimates, the mid-Atlantic headquarters will create as many as 2,500 jobs for white-collar professionals. If the former Maryland Bank N.A.'s regional headquarters in Cleveland and Maine are any indication, its mid-Atlantic counterpart, to be headed by MBNA veteran and Baltimore native Frank Otenasek, could fill up to 500,000 square feet of office space.
By early next month, the company will likely decide to set up its local headquarters at a permanent location in Timonium or Hunt Valley, where it is considering buying an existing building or constructing a high-rise, MBNA executives acknowledge.
MBNA "will provide a terrific boost to the region," said Benjamin R. Civiletti, chairman of Baltimore law firm Venable, Baetjer & Howard and a former U.S. attorney general who sits on MBNA's board. "And it'll be nice to have an organization back here to expand in the environment of its origins."
Although MBNA was created in 1982, the company didn't create its own identity until January 1991, when then-troubled MNC Financial Inc. took the credit card company public, raising $955 million.
MBNA's results speak volumes. During the past five years, its net income has risen from $172.7 million to $474.5 million; managed loans -- the amount of credit card debt charged and not paid off by its customers -- have nearly tripled, to $38.6 billion; and total sales charged to MBNA cards has more than doubled to $48.6 billion at the end of last year.
Last year alone, MBNA added 9.3 million new customers, an industry record.
At the same time, MBNA has maintained its No. 1 ranking in earnings-per-share growth, return on average assets and return on equity for banks with $10 billion or more in total assets.
"They've defied the laws of economics," said David R. Martin, an analyst at Fitch Investors Service. "And I'm optimistic about their future, because they've maintained their pace of growth and credit quality, despite increased competition."
Along the way, MBNA has grown from 145 employees to more than 13,000 and become Delaware's second largest private employer. From its humble beginnings in a 19,000-square-foot former A&P grocery store, MBNA occupies roughly 2.3 million square feet of office space in that state alone, and more is on the way, as contractors scurry to add buildings to the company's palatial Wilmington offices.
Much of MBNA's growth is serendipitous. Plastic has become the payment method of choice for many Americans, and debt levels on the nation's 502 million credit cards in circulation are at an all-time high, according to statistics compiled by RAM Research Group of Frederick.
In all, Americans owed $460 billion in credit card balances to companies such as MBNA at the end of November, up from $407 billion a year ago, according to the American Bankers Association.
How reliant have people become on credit cards? Consider that overall revolving debt, excluding personal home mortgages, stands at $1.19 trillion.
"What has differentiated them from the competition is they're not afraid to spend money to make money," said Moshe A. Orenbuch, a Sanford C. Bernstein & Co. Inc. credit card industry analyst. "And they provide a high degree of customer service in an industry not known for that."
But MBNA has distinguished itself in other ways, too:
It was the first stand-alone credit card issuer to become a public company, in January 1991. Since then, competitors First USA Inc. and Advanta Corp. have followed suit.
The company was the first to install 24-hour customer-service lines.
It has perfected, analysts say, the marketing of "affinity cards," whereby MBNA acquires exclusive rights to sign up customers with affiliations to sports teams and professional organizations.