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By EDWARD D. MURPHY, Staff Writer Tuesday, October 24, 2006

William J. Ryan, who led Peoples Heritage Bank through the tumultuous early 1990s and turned the bank into a regional leader under its current banner of TD Banknorth, is giving up day-to-day management of the bank to concentrate on new acquisitions.

Effective March 1, Ryan will turn over the title of chief executive officer to Bharat Masrani, who shifted from parent TD Bank in Canada to TD Banknorth as president just last month. Ryan will retain the title of chairman at least into 2010, Portland-based TD Banknorth announced Monday.

Ryan said the change in titles reflects his commitment in recent discussions with Wall Street stock analysts to look at succession planning at the bank.

"At 63 years old, I have to start thinking about these things," Ryan said.

The change will allow Ryan to focus on finding new regional banks for TD Banknorth to buy, which is how he helped it grow from a medium-sized state bank when it was known as Peoples Heritage to the largest New England-headquartered bank today.

Ryan said identifying banks that were possible acquisitions and establishing relationships with executives was easier when the bank was growing from its Maine roots into neighboring states. Now that TD Banknorth has spread into New York, New Jersey and Pennsylvania, he said, he needs to spend more time learning the banking dynamics in the mid-Atlantic region.

It requires a different focus, he said, from days when he could drive for a day or two, locate an attractive target and discuss buying the bank with its top executive over lunch.

"We do things by getting to know people and getting them to trust us," he said. "Instead of driving now, I do more flying and taking the train."

Ryan said TD Banknorth has become so big that it's too much to expect him to continue in the role as chief buyer while also managing the bank's daily operations.

"When we were a $2 billion bank (in assets) or a $10 billion bank, doing both jobs was easier to do," he said. But now that TD Banknorth has grown to $40 billion in assets, giving up the CEO role "makes good business sense," he said.

Masrani, 50, said he's comfortable taking over the day-to-day reins despite his short tenure in Portland because he has been on the TD Banknorth board since Toronto-based TD Bank acquired a majority stake in Banknorth in early 2005. Masrani had been with TD Bank for 19 years, managing operations in commercial and corporate banking and wealth management.

While there are differences between Canadian and American banking in regulations, corporate structure and competition, Masrani said his new role "is not going to be a total shock or surprise" because he has had a hand in developing TD Banknorth's strategy.

Both Masrani and Ryan said they don't anticipate any changes in direction that would result in layoffs or branch closings as a result in the new roles at the top.

James Ackor, who follows TD Banknorth for RBC Capital Markets, agreed with Ryan that the change makes sense.

"The reality of it is, that's a lot to ask of anybody," Ackor said of the dual roles of daily manager and expansion strategist.

"There's not a lot left to acquire in New England," he said, so Ryan will have to focus on new markets in the mid- Atlantic, taking him farther away from the company headquarters in downtown Portland.

Ackor said Ryan is respected for his management of the bank, but his real strength is in finding and consummating acquisitions.

The shuffling means "the Canadians get one of their guys to run the bank on a day-to-day basis" while Ryan focuses on what he's best at, Ackor said.

He added that he expects that next year, TD Banknorth may use the shift in corporate roles to streamline operations. TD Banknorth still operates on a state-by-state basis, he said, with individual management teams overseeing operations in Connecticut or Massachusetts, for example.

While that worked fine while TD Banknorth was operating in a handful of states, as it grows beyond New England Ackor said he expects to see management aligned along business lines, such as commercial banking, retail operations or real estate loans, for instance.

"In all likelihood there will be some streamlining of TD Banknorth and more centralization of command and control, which is more the Canadian model than the Banknorth model," he said.

Although job responsibilities may change as a result, Ackor said he doesn't foresee those changes resulting in any significant job losses in Maine.

Ryan joined then-named Peoples Heritage in 1989, a high-water mark year for New England banking and the regional economy. Almost immediately, the economy turned sour and over-investing by many banks in real estate ventures led to bad loans and losses. More than 100 New England banks either failed or merged during the next few years and Peoples Heritage was among those struggling to unload property acquired through foreclosure -- properties that were often worth far less on the open market than the money that had been lent to buy them.

Ryan led Peoples Heritage through the tough times, however, and soon started buying small community or regional banks to expand into Connecticut, Massachusetts, New Hampshire, Vermont and upstate New York. After buying a small Vermont bank called Banknorth, the Portland-based parent adopted the name as well.

In 2004, he led the negotiations that resulted in TD Bank buying a majority stake in Banknorth, which has provided the financial backing for continued growth. Because TD Bank had no U.S. operations, the acquisition meant no job losses or branch closings, the hallmarks of most other American bank mergers.

Last year, Ryan oversaw the purchase of Hudson United Bank, which gave TD Banknorth a bigger piece of the Connecticut market and provided an entry into the suburban New York, New Jersey and Philadelphia markets.