Banking Analyst

In the latest sign of trouble, 1st Mariner Bank said Monday that it has been placed under more intense federal supervision as Baltimore's largest independent bank continues to struggle with soured real estate loans and its inability to raise cash. The Federal Deposit Insurance Corp. and Maryland Division of Financial Regulation issued a "cease and desist" order Friday, according to documents filed Monday with the Securities and Exchange Commission, requiring 1st Mariner to devise a plan to improve its capital, liquidity and earnings and deal with problem loans.

In the latest sign of trouble, 1st Mariner Bank said Monday that it has been placed under more intense federal supervision as Baltimore's largest independent bank continues to struggle with soured real estate loans and its inability to raise cash. The Federal Deposit Insurance Corp. and Maryland Division of Financial Regulation issued a "cease and desist" order Friday, according to documents filed Monday with the Securities and Exchange Commission, requiring 1st Mariner to devise a plan to improve its capital, liquidity and earnings and deal with problem loans.

NationsBank Corp. plans to spend $9 million over the next month to change the name on everything from its Maryland branches and automated telling machines to stationery and business cards.The company is dumping the NationsBank name for Bank of America, with which it merged nearly a year ago.By Aug. 30, 205 branches and 516 ATMs in Maryland will have been shorn of the NationsBank name for Bank of America as part of a sweeping conversion in the mid-Atlantic region.Included in the conversion are 111 branches and 318 ATMs in the Baltimore area.

Columbia Bancorp, whose emergence mirrored the growing wealth of Howard County, the place where it began two decades ago, has agreed to be sold to Fulton Financial Corp. of southern Pennsylvania for about $313 million in cash and stock. The sale, announced yesterday by the banks, means that Columbia Bank would no longer be largely locally owned by executives and directors who control about one-fourth of the stock. But Columbia founder John M. Bond Jr. would remain chairman and chief executive of the bank, which would become a Fulton subsidiary.

The immediate beneficiaries of the proposed merger between banking giants NCNB Corp. and C&S/Sovran Corp. could be their smaller rivals, who may capitalize on the initial confusion that usually comes with such combinations."

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."

Shares of Mercantile Bankshares Corp. continued their recent ascent yesterday, pushing to yet another high and chalking up a 10.8 percent gain for the week. Analysts attributed the strength in the shares of the state's largest independently owned banking company to investors who are seeking havens for their money. Mercantile rose 12.5 cents to $43.69 yesterday. The shares have risen 13.9 percent in December alone, and 36.8 percent since the year began. "What is driving it is the flight to quality that is permeating the marketplace," said Gerard Cassidy, a banking analyst at Tucker Anthony Capital Markets, a Boston-based brokerage firm.

H. Furlong Baldwin, chairman and chief executive of Mercantile Bankshares Corp., will run Maryland's largest independent banking company for another 14 months, after directors voted yesterday to extend his contract to Feb. 1, 2000.The directors also authorized Mercantile to buy back up to 3 million shares of its common stock, and approved a quarterly dividend of 22 cents per share, payable Dec. 31, to stockholders of record as of Dec. 22. The dividend matched the 22 cents paid to shareholders in September and June.

Mercantile Bankshares Corp.'s net income rose 4.7 percent in the first quarter, driven by its growing trust business and tight expense controls.The company made $37.2 million in the first quarter that ended March 31, compared with $35.5 million in the corresponding period a year earlier. Net income per share jumped 8.2 percent in the quarter to 53 cents per share, compared with 49 cents in the 1998 period."Another solid quarter for the Merc," said John J. Rezai, a banking analyst at Blaylock & Partners LP.Baltimore-based Mercantile, which is the state's largest independently owned banking company, met Wall Street expectations, according to 10 analysts surveyed by Zacks Investment Research.

State-chartered banks in Maryland suffered a 37 percent decline in net income during the third quarter as the cost of bad loans soared compared with a year ago.In all, the 78 state-chartered banks reported total income of $41.6 million for the three months ended Sept. 30, down from last year's earnings of $66.3 million, according to figures released this week by state regulators.Fueled in large part by souring real estate loans, the lenders' earnings suffered primarily from a collective addition of $42.5 million to reserves aimed at covering the future costs of problem loans.

The chief executive of Maryland's third-largest independent banking company says it will refocus on making money from traditional banking activities, a day after the company disclosed two top finance executives had departed amid problems with its unusually large bond portfolio. Hunter R. Hollar, president and CEO of Sandy Spring Bancorp, said the company will look to increase loans and deposits and generate income from fees, with "less emphasis on the investment portfolio," and is committed to remaining independent.

At a banking conference in North Carolina late last year, bankers from across this country and Canada were bemoaning the sorry state of their industry: Low interest rates were squeezing profit margins, problem loans were on the rise and the North American economy was down for the count with no rebound in sight. Baltimore banker Edwin F. Hale Sr., one of the scheduled speakers, had arrived at the conference with no such complaints. He had already known that this area's community banks were performing well.

Mercantile Bankshares Corp. has revamped its 14 mutual funds as part of a broader plan to expand its investment and wealth-management business. The funds, which began in 1989, were tailored and marketed to institutional investors, such as employee-benefit plans and charitable organizations. Consumers could buy into the funds with a minimum $25,000 investment. Consumers can now buy into Mercantile's three money market funds, five bond funds, and six equity funds with a minimum investment of $1,000, a common threshold for funds.

Sandy Spring Bancorp, the parent company of Sandy Spring Bank, reported yesterday record net income for its first quarter, an achievement that underscores the bank's strength, an analyst said. "It was a very strong quarter for the company," said Adam C. Barkstrom, an analyst who follows the company for Legg Mason Inc., in Richmond, Va. "The company continues to have very solid growth." For the first quarter ending March 31, the Olney-based Sandy Spring reported record net income of $6.6 million, a 24 percent increase from the $5.3 million it earned in the same quarter last year.

Allfirst Financial Inc. faces many challenges as it tries to recover from the trading scandal that ran up nearly $700 million in losses, but it has few good options, industry experts say. The bank is too small to go it alone, but lacks the money to make the large acquisition needed to give it extra muscle and expand into new markets. Selling out isn't a much better alternative, since the trading debacle has diminished Allfirst's worth. That could force Allfirst to remain independent at a time when its credibility is low and after a stretch where it has delivered consistently mediocre performance.

While Allied Irish Banks PLC continued to insist yesterday that Allfirst Financial Inc. is key to its future, the continuing trading scandal may force the parent company to sell its Baltimore-based affiliate to mollify its investors, industry experts said. "I've said for a long time that they should have sold this," said Seamus Murphy, a banking analyst for Merrion Stockbrokers in Dublin, Ireland. Murphy isn't alone in his sentiment. Scott Rankin, a banking analyst with Davy Stockbrokers in Dublin, said he was heartened by AIB's disclosure yesterday that the foreign exchange losses originally pegged at $750 million were only $691.

Mercantile Bankshares Corp. has revamped its 14 mutual funds as part of a broader plan to expand its investment and wealth-management business. The funds, which began in 1989, were tailored and marketed to institutional investors, such as employee-benefit plans and charitable organizations. Consumers could buy into the funds with a minimum $25,000 investment. Consumers can now buy into Mercantile's three money market funds, five bond funds, and six equity funds with a minimum investment of $1,000, a common threshold for funds.

Shares of Alex. Brown Inc.'s stock jumped 7.9 percent yesterday on speculation that it is in merger talks with Bankers Trust New York Corp., the nation's seventh largest banking company.The Baltimore-based brokerage and investment banking firm's stock ended the day up $3.25 a share to close at $44.625. Wednesday the stock closed at $41.375 a share, a low for the year.A. B. "Buzzy" Krongard, Alex. Brown's chairman and chief executive, and Mayo A. Shattuck III, president and chief operating officer, were said to be traveling and could not be reached for comment.

Despite a staggering $750 million currency trading loss and a lackluster performance in recent years, Allfirst Financial Inc. will not likely be sold by its parent, Allied Irish Banks PLC, analysts said yesterday. The Allfirst franchise gives the Dublin-based banking company a U.S. presence too valuable to give up, and its performance has picked up despite a number of disappointing years, said analysts. "I think ... they [AIB] are committed," John Tyce, a banking analyst at SG Securities in London, said yesterday after Allied Irish revealed the huge currency loss.

Mercantile Bankshares Corp., Maryland's largest independently owned banking company, reported yesterday that fourth-quarter profit rose 12 percent, to $45.7 million, as a result of growth in lending and its trust business. Net income per diluted share in the three months that ended Dec. 31 rose 8.5 percent, to 64 cents, from the 59 cents reported for the fourth quarter of 1999. For the entire year, Baltimore-based Mercantile earned $175.2 million, 11.1 percent more than its 1999 profit of $157.