Mercantile sees net income rise 15.9% Trust business helps boost third quarter

October 16, 1997|By Bill Atkinson | Bill Atkinson,SUN STAFF

Mercantile Bankshares Corp.'s net income rose nearly 16 percent in the third quarter, led by large gains from its trust business and increases in lending, the company said yesterday.

Mercantile, which is based in Baltimore and is Maryland's largest independently owned banking company, reported net income of $34.8 million for the third quarter ended Sept. 30, up 15.9 percent, compared with $30 million for the same period a year earlier.

Net income per share rose 11.6 percent to 48 cents, compared with 43 cents in the 1996 period, beating analysts' estimates by a penny.

"They were strong earnings," said Angelina Billon, a banking analyst with Johnston, Lemon & Co., a Washington-based brokerage firm. "They had improvements across the board. Some areas improved better than others."

Mercantile's shares yesterday closed at $33.875, down 62.5 cents.

Net income for the first nine months of the year grew 14.1 percent to $99.3 million, or $1.39 per share, up from $87 million, or $1.22 per share for the same period a year earlier.

The third-quarter results include the acquisitions of two community banks, Newark, Md.-based Home Bank, and Farmers Bank of Mardela Springs.

Mercantile continued to build its war chest of capital, and Billon sees the bank putting it to use by buying other banks.

"I think additional acquisitions are probably imminent," she said.

The quarter was marked by strong growth in lending and fees generated by products and services. The company also held firm on expenses.

Net interest income, generated primarily from loans and fees on loans, was up 8.5 percent to $85.6 million in the quarter, compared with $78.9 million a year earlier. It rose 8.1 percent to $249.8 million the first nine months of the year.

Mercantile returned 1.98 percent on average assets in the quarter, up from 1.84 percent. The ratio means the company earned $1.98 for every $100 in assets.

"Management tells me they are continuing to see a good base of customers enter their doors who say they want a relationship-oriented bank," said John Rezai, an analyst in Baltimore with Blaylock & Partners L.P.

Loans grew to $4.9 billion, up 10.4 percent as of Sept. 30, deposits increased 5.9 percent to $5.6 billion, and assets rose 8 percent to $7.1 billion.

Total noninterest income, which includes income from trust operations, mortgage banking fees and service charges on deposit accounts, jumped 14.1 percent to $26.1 million in the quarter. It was led by a 21.8 percent gain from its trust division, which took in $13.5 million in income, up from $11.1 million the same time a year earlier.

While income was up, so were expenses, but by just 5.6 percent to $156 million for the first three quarters.

Pub Date: 10/16/97

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