Mercantile profit rose in quarter

January 20, 1995|By Timothy J. Mullaney | Timothy J. Mullaney,Sun Staff Writer

Mercantile Bankshares Corp. said yesterday that its fourth-quarter profit rose 6.5 percent, as the Baltimore-based parent of Mercantile Safe Deposit & Trust Co. bucked the trend of bigger banks toward stagnating or lower earnings.

David Borowy, investor relations officer, said Mercantile usually benefits from rising interest rates, partly because a fairly high 19 percent of its deposits are in non-interest-bearing checking accounts. Thus, when interest rates on loans rise, Mercantile's interest payouts on deposits don't rise as quickly.

Mercantile earned $22.9 million during the last three months of 1994, up from $21.5 million in the same quarter of 1993. Its return on assets rose to an annual rate of $1.55 per $100 of assets, up from $1.48 in 1993's fourth quarter but down from $1.64 between July and September 1994.

The 48-cents-a-share profit fell short of analysts' expectations. The average estimate of four analysts who follow Mercantile was 51 cents a share, according to Nelson Publications Inc.

Mercantile's stock closed yesterday at $19.875 a share, down 25 cents for the day.

Mr. Borowy would not say whether Mercantile believes it can keep profits rising during 1995, when Nelson Publications says analysts expect Mercantile's profits to rise to $2.13 a share from 1994's total of $1.88.

"I'm an after-the-fact numbers person," he said. "I'm a little uncomfortable getting into forecasting."

Unlike NationsBank Corp., the owner of the former Maryland National Bank, and First Fidelity Bancorp., which bought the Bank of Baltimore last year, Mercantile actually increased the spread between the average interest rate it paid for deposits and the average rate it charged for loans in the fourth quarter.

Most banks saw their "net interest margin" shrink during the fourth quarter, compared with the three months from July to September. The reason is that short-term interest rates have been rising faster than long-term rates, which for banks means that the cost of deposits is rising faster than the income from loans to customers.

Mercantile

Bankshares Corp.

Baltimore .. .. .. .. .. Ticker .. .. .. Yesterday's

.. .. .. ... .. .. .. .. Symbol .. .. .. Cls. .. .. .. Chg.

.. .. .. .. .. ... .. .. MRBK ... ... .. 19 7/8 .. ... .. - 1/4

Period ended

12/31 .. .. .. .. .. .. 4th qtr. .. .. .. Year ago .. .. Chg.

Net Income ... .. .. .. $22,859 ... .. .. $21,457 ... .. +6.5%

Primary EPS .. .. .. .. $0.48 ... ... ... $0.44 .. .. .. +9.1%

Annualized return

on assets ... .. .. ... 1.55% .. .. .. .. 1.48%

Add. to allowance

for loan losses ... ... 2,471 .. .. .. .. 3,207 .. .. .. -22.9%

.. .. .. .. .. .. .. .. 12 mos. .. .. .. Year ago .. .. .. Chg.

Net Income .. .. ... .. $90,441 .. .. .. $83,468 ... .. .. +8.4%

Primary EPS .. .. .. .. $1.88 ... ... .. $1.73 .. .. .. .. +8.7%

Annualized

return on assets ... .. 1.56% .. ... ... 1.48%

Add. to allowance

for loan losses ... ... 7,056 .. ... ... 12,969 .. .. .. .. -45.6%

Balances as of

... ... ... ... ... ... 12/31/94 ... ... ... 12/31/93

Assets ... .. ... .. .. $5,938,225 .. .. ... $5,789,620 .. .. +2.6%

Deposits .. .. .. .. .. $4,765,398 .. .. ... $4,787,243 .. .. -0.4%

Loans outst. .. ... ... $3,846,838 .. .. ... $3,628,780 .. .. +6.0%

Loan loss

reserve .. .. .. ... .. 91,257 .. .. ... ... 92,567 .. .. ... -1.4%

Figures in thousands (except per share data.)

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.