Mercantile Bankshares earnings up 8% in 1992

January 26, 1993|By David Conn | David Conn,Staff Writer

Mercantile Bankshares Corp. did what has become routine for the Baltimore-based banking company: reported another quarter and another year of modestly higher profits.

Fourth-quarter earnings at Mercantile, parent of Mercantile-Safe Deposit & Trust Co., rose 12 percent, to $19.6 million, or 64 cents a share, compared with $17.5 million, or 58 cents a share, in the year-earlier quarter, the company said yesterday.

For the year, Mercantile earned $76.30 million, or $2.51 a share, up 8.1 percent from earnings of $70.56 million, or $2.34 a share in 1991.

"Everything seems in standard Mercantile fashion of consistently strong earnings," said analyst James Weber, of Johnston, Lemon & Co. in Washington. The return on average assets for 1992, a key measure of profitability, was 1.45 percent, compared with about 1 percent for the industry.

On Dec. 31, Mercantile had $5.46 billion in assets, up 5 percent from a year ago.

If there was one dark spot in the company's fourth-quarter performance, it was the sharp increase in charge-offs, or the amount by which the company reduced its loan-loss reserve to cover a drop in the value of some assets during the quarter.

Fourth-quarter charge-offs were $19.5 million, compared with $1.1 million in the third quarter and $3.1 million a year ago.

In the third quarter last year, Mercantile added an unusually high $33.3 million to its loan-loss reserves, part of it to cover a $25 million increase in nonperforming loans.

Mercantile President Edward Dunn acknowledged the bulk of that increase stemmed from a loan to Baltimore Orioles owner Eli S. Jacobs, who defaulted on a $21.3 million loan to Mercantile.

Despite meeting stock analysts' earnings estimates Mercantile's shares fell 75 cents, to close at $32.50, in trading on the New York Stock Exchange yesterday.

Mercantile Bankshares Corp.

. ..Ticker .. .. Yesterday's .. . Symbol .. .. Cls. .. .. Chg.

.. . MRBK . .. .. 32 1/2 .. - 3/4

Period ended

Dec. 31 ... .. 4th qtr. .. .. Year ago .. Chg.

Net Income ... $19,552 ... .. $17,496 ... +11.8%

Primary EPS .. . $0.64 .. .. .. $0.58 ... +10.3%

Annualized return

on avg. assets .. 1.46% . .. .. 1.37%

Add. to allowance

for loan losses $5,118 .. .. $5,656 . .. -9.5%

.. .. .. .. .. .. Year .. .. Year ago .. .. Chg.

Net Income ... .. $76,298 .. $70,562 ... .. +8.1%

Primary EPS .. .. . $2.51 .. . $2.34 ... .. +7.3%

Annualized

return on assets .. 1.45% .. . 1.41%

Add. to allowance

for loan losses . $45,346 .. $20,850 ... .. +117.5%

.. .. .. .. .. .. .. Balances as of .. .. .. .. .. .. .. 12/31/92 .. .. 12/31/91

Assets . .. .. .. .. $5,459,577 ... $5,216,802 .. +4.7%

Deposits .. .. .. .. $4,517,165 ... $4,273,896 .. +5.7%

Loans outst. . .. .. $3,489,474 ... $3,374,937 .. +3.4%

Loan loss

reserve ... .. .. .. .. $88,261 ... .. $65,932 .. +33.9%

Figures in thousands (except per share data.)

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