Mathai-Davis to lead Mercantile unit for wealthy

Appointment is expected to improve an area of `lackluster' performance

February 06, 2002|By William Patalon III | William Patalon III,SUN STAFF

Mercantile Bankshares Corp. named an investing-industry veteran yesterday to build up its wealthy client business, a move analysts said can only bolster what is already a strong banking company.

Wallace Mathai-Davis was appointed to the newly created position as chairman of Mercantile's investment and wealth management operations. Mathai-Davis, 57, also was elected to the boards of directors of both Mercantile Bankshares and Mercantile-Safe Deposit and Trust Co.

His appointment is effective immediately.

"We believe this is a very significant move, to hire a gentleman of this caliber," said Gerard S. Cassidy, a banking analyst at RBC Capital Markets in Portland, Maine.

Christopher Marinac, an analyst with SunTrust Robinson Humphrey in Atlanta, said: "Wallace [Mathai-Davis] could be the first of a wave of enhanced personnel talent inside of Mercantile - competitors should be on notice."

Before joining Mercantile, Mathai-Davis was second-in-command at Offitbank, one of the first banks to deal solely with wealthy clients - $10 million was required just to walk in the door. He'd been there 15 years, having spent most of his career on wealth-management issues, Mercantile said.

Bringing Mathai-Davis in to head Mercantile's Trust Division and related investment operations is the most significant decision made yet by President and Chief Executive Officer Edward J. Kelly III, 48, who joined the bank a year ago.

But it needed to be done, Kelly said. While the trust unit accounts for only about 9 percent of Mercantile's annual earnings per share, according to analysts, the unit's growth the past several years wasn't what Wall Street and Kelly wanted to see.

"It is not as if the performance has been bad, it has [just] been lackluster," Kelly said.

Mercantile's Trust Division had income from operations of $69.33 million in 2001, down slightly from the $69.85 million brought in the year before. Kelly reportedly wants to see a stronger and more consistent income stream - at a double-digit growth rate - from the trust division.

Mathai-Davis has the same expectations. At a time when bank customers at all income levels are pushing for more investment services and a personal touch, the wave of bank consolidations has fragmented the investment-management business, he said.

By combining Mercantile's strong brand name with new products and personal services for wealthy investors, Mathai-Davis said he's confident the bank's investment-management business can grow at the rate Kelly and Wall Street wants to see.

Mathai-Davis and his wife, Prema, have a son and twin daughters. The family will move from New York to Baltimore after the girls finish their senior year in high school this year. His son is a student at Johns Hopkins.

Staff writer Bill Atkinson contributed to this article.

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