Mercantile earnings rise 12% in quarter Lending and trust businesses lead way


July 16, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

Steady gains from the lending and trust businesses propelled Mercantile Bankshares Corp.'s earnings to $29.3 million in the second quarter, up 12 percent from a year ago, the company said yesterday.

Mercantile earned 61 cents a share in the quarter ended June 30, up 11 percent from the 55 cents earned in the second quarter of 1995.

The performance exceeded the expectation of analysts.

Denis Laplante, a banking analyst with Fox-Pitt, Kelton in New York, and John M. Kline, an analyst with Ryan, Beck & Co. in West Orange, N.J., said Mercantile's earnings exceeded their estimate of 59 cents share.

"The quality of the earnings seem pretty high," Laplante said.

For the first six months, Mercantile earned $57 million, or $1.19 a share, compared with earnings of $50.3 million, or $1.05 a share for the first half of 1995.

The company's shares rose 31.25 cents to $25.50 yesterday, a day when U.S. stocks were tumbling everywhere.

"We think they are inexpensively priced compared to a lot of other regionals out there, Kline said. "They've had a real good history of improving earnings and dividends. In a tumultuous market, it [Mercantile] appears to be a safe haven."

Kline said that in a survey the brokerage firm conducted in March Mercantile ranked No. 1 of 20 regional banks based on its return on assets (ROA) of 1.77 percent. The average for the group was 1.34 percent, he said. Mercantile's ROA was 1.84 percent for the first half of the year in 1996 and 1.80 percent for the June quarter.

Net interest income, or income primarily generated from lending, grew by 8 percent to $152.1 million over the first six months of the year. And average loans booked by the bank were up 8 percent to $4.3 billion.

The Baltimore-based banking company, with $6.4 billion in assets, said income from investments in securities, mortgage banking fees and trust operations was up 12 percent for the first half of the year over 1995.

PTC The company gained $74,000 on investment securities during the first six months of 1996 compared with a $1.8 million loss in 1995.

The quality of Mercantile's loan portfolio remained strong, with troubled assets falling 13 percent for the first half of 1996 to $25.9 million.

Pub Date: 7/16/96

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