A nice little $6 billion bank can prosper, too, Baldwin says Slow growth to continue, Mercantile chairman assures shareholders

April 25, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

Mercantile Bankshares Corp. Chairman H. Furlong Baldwin told shareholders yesterday that well-run niche banks can prosper in a world of mega-banking corporations that use low prices to lure consumers.

"Size is not important," Mr. Baldwin told shareholders at the company's annual meeting in Baltimore.

"Economies of scale is not a factor. We have no confusion about what we stand for nor about what business we are in."

The $6.4 billion-asset Mercantile has prospered as a business lender despite intense competition in Baltimore at a time when most of its traditional competitors have been acquired by very large bank holding companies.

Mercantile was ranked by US Banker magazine this month as the fourth best performing bank in the nation out of 100 largest institutions.

The magazine also ranked Mercantile No. 1 in capital strength and No. 7 in efficiency.

Mr. Baldwin said Mercantile will continue growing at a slow and steady pace, and he and other executives feel little pressure to change the strategy.

"We do not want to force asset growth simply to leverage our capital," he said. "We see no present opportunities to increase our assets by any great level."

Assets were up 8 percent in the first quarter from a year ago, and net loans grew just 6 percent to $4.2 billion in the quarter, according to the quarterly report.

David West, an analyst with Davenport & Co. in Richmond, Va., said the slow-growth strategy certainly isn't unusual for Mercantile.

"They have always been a bank that has put a premium on asset quality," he said. "As much as anything, that [slow growth] is dictated by the current economic outlook. "Good quality loans are not easy to find, and, when you do find them, it is usually a tough competitive situation."

Mr. Baldwin said in an interview after the meeting that Mercantile is "always in the hunt for acquisitions," but no deals are in the works.

As he was wrapping up the shareholder meeting, Mr. Baldwin told shareholders that the company will maintain its discipline and not depart from what has been a successful course.

"Lead us not into temptation," Mr. Baldwin said.

After that comment, a shareholder told Mr. Baldwin: "I'd like to say, Amen, and thank you for your last statement."

Pub Date: 4/25/96

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