Louis Cestello is ready to start building.
The western Pennsylvania native in January was named head of Pittsburgh-based PNC Bank?s Greater Maryland division. He is the first PNC executive to take over operations of the late, Baltimore-headquartered Mercantile Bank, bought by PNC last year.
Now in his third month in the job, he said the integration of Mercantile and PNC is complete, and the bank is prepared to steer clients through a stormy economy.
“We want to build on the foundation that Mercantile had, not change what their foundation is,” he said. “There are always concerns [from clients], sometimes manufactured by competitors. But we kept the same client-facing people, and decisions here are made by local people.”
Cestello, like the bank itself, has a foot in both Pittsburgh and Baltimore. He said he commutes back to Pittsburgh and his family many weekends while they search for permanent housing in Charm City, and sees parallels in both areas as working-class towns growing into new forms of businesses.
“There?s a lot of similar strategies, a lot of similar business, and corresponding relationships,” he said. “A lot of PNC?s footprint is in cyclical towns that see good times, bad times. We know how to do business in that environment.”
PNC reported solid first-quarter earnings two weeks ago, with net income of $377 million, down from $459 million during the first quarter of 2007 but up from $178 million during the fourth quarter.
Cestello said as much as 60 percent of PNC?s earnings are fee-based, giving it protection from the current credit crunch that interest-driven banks don?t have. Jim Sinegal, a banks analyst with Chicago-based investment research firm Morningstar, said that difference has helped the bank ride out an industrywide credit downturn.
“I think about half their nonperforming assets last quarter were in that region, so they did pick up some bad residential loans from Mercantile,” Sinegal said. “But they did pick up some strong deposits there and they have a history of picking up troubled institutions, so I don?t think that was unexpected.”
“Things are going to remain volatile this year,” Cestello said. “We need to be there for our clients, talking to them. We?re not managing their business, they are, and we want to be a proactive business adviser, not a reactive one.”
