Mercantile earnings rise 14% in quarter More loans, reduction in expenses are cited

October 17, 1995|By BILL ATKINSON | BILL ATKINSON,SUN STAFF

Mercantile Bankshares Corp.'s earnings jumped 14 percent to $27.2 million in the third quarter, fueled by an increased number of loans and lower expenses.

The Baltimore-based banking company earned 58 cents a share for the quarter ended Sept. 30, up 18 percent from a year ago.

For the nine months, Mercantile earned $77.5 million, or $1.63 per share, compared with $67.6 million, or $1.40 per share a year ago.

"It has been another strong quarter for us," said H. Furlong Baldwin, Mercantile's chief executive.

"Our net interest margin continues to be strong by historic standards," he said. "The earnings per share reflect that."

Mercantile's stock closed up $1 at $28 a share.

Earnings were aided by the Federal Deposit Insurance Corp.'s reduction in bank insurance premiums, which reduced Mercantile's expenses by nearly $3 million and added nearly four cents per share to earnings in the quarter.

The company's net interest income -- income derived from loans -- grew 6 percent in the quarter to $72.2 million, and 10 percent for the first nine months of the year to $213.1 million.

Loans grew 8 percent to $4.1 billion in the quarter, and earning assets were up 3 percent to $5.7 billion.

In addition, loan quality remained strong as non-performing loans were reduced to 0.54 percent of total loans.

Merrill H. Ross, an analyst with Wheat First Butcher Singer, said Mercantile's loan growth and the quality of the portfolio were impressive.

"How can you complain?" she asked.

"It is a good story. It all comes together nicely," she said.

But there were "minuses" to the quarter, Ms. Ross said.

Total non-interest income -- defined as income derived from sources other than loans -- grew by 3 percent to $22.9 million in the quarter, but slipped 7 percent to $65.2 million for the nine-month period.

Several factors were listed as contributing to the decline, including a $3.1 million gain on the sale of assets during last year's first quarter, $1.8 million in losses on investment securities for the first three quarters of 1995, and a decrease in mortgage banking fees.

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