Mercantile raises dividend for 23rd straight year

Banking company also replaces expiring anti-takeover plan

banking

June 09, 1999|By Bill Atkinson | Bill Atkinson,SUN STAFF

Mercantile Bankshares Corp. said yesterday that it is boosting its quarterly dividend 9 percent, and adopting a new anti-takeover plan.

Directors of the state's largest independently owned banking company, which has $7.6 billion in assets, voted to raise the dividend by 2 cents to 24 cents a share payable June 30 to stockholders of record June 18.

The increase marks the 23rd consecutive year of dividend increases at the Baltimore-based banking company.

"We are having another strong year and it seems appropriate that the shareholders should benefit from that," said H. Furlong Baldwin, Mercantile's chairman and chief executive officer.

The increase comes in the wake of a solid first quarter for Mercantile in which net income rose 4.7 percent to $37.2 million, and net income per share jumped 8.2 percent to 53 cents per share.

Mercantile's stock closed yesterday at $36, down 25 cents.

Analysts said that the increase reflects Mercantile's strength and consistent performance.

Mercantile "just keeps on ticking along," said Harold R. Schroeder, a banking analyst at Keefe Bruyette & Woods Inc.

"There is something to be said about stability these days."

Mercantile is flush with capital so it can "afford to increase the dividend," said David M. West, a banking analyst at Richmond, Va.-based Davenport & Co.

"This is looking to be a real solid year for them. Their numbers are extremely good."

Mercantile has had an anti-takeover plan since 1989. It expires Sept. 29, when the new 10-year plan takes effect.

The "stockholder protection rights plan" can be triggered when an investor buys 10 percent or more of Mercantile's outstanding stock. When that happens, all stockholders, except the investor who has acquired the 10 percent stake, are given rights to buy additional shares.

West said Mercantile's rights plan is standard for the industry.

"It would mostly be invoked in a hostile situation, which is very, very unusual in the banking," West said.

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