UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 10-Q
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ----- to -----
Commission File Number 0-5127
------------------------------
MERCANTILE BANKSHARES CORPORATION
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 52-0898572
--------------------------- --------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2 Hopkins Plaza, Baltimore, Maryland 21201
---------------------------------------- ------------
(Address of principal executive offices) (Zip code)
(410) 237-5900
----------------------------------------------------
(Registrant's telephone number, including area code)
- ------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X . No .
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practical date.
As of April 30, 1997, registrant had outstanding 47,386,751 shares of Common
Stock.
PAGE 1
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
MERCANTILE BANKSHARES CORPORATION
<TABLE>
CONSOLIDATED BALANCE SHEETS
<CAPTION>
MARCH 31, December 31,
(Dollars in thousands, except per share data) 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks.......................................................... $ 242,917 $ 257,337
Interest-bearing deposits in other banks......................................... 100 100
Investment securities:
U.S. Treasury and government agencies
Available-for-sale at fair value........................................... 1,513,799 1,581,517
States and political subdivisions
Held-to-maturity--market value of $13,152 (1997) and $13,642 (1996)........ 13,172 13,551
Available-for-sale at fair value........................................... 30 36
Other investments
Held-to-maturity--market value of $13,269 (1997) and $12,734 (1996)........ 13,263 12,728
Available-for-sale at fair value........................................... 14,747 15,134
------------- -------------
Total investment securities.............................................. 1,555,011 1,622,966
------------- -------------
Federal funds sold............................................................... 61,870 27,942
Loans............................................................................ 4,691,702 4,582,712
Less: allowance for loan losses.................................................. (100,202) (97,718)
------------- -------------
Loans, net............................................................... 4,591,500 4,484,994
------------- -------------
Bank premises and equipment, less accumulated depreciation of
$79,751 (1997) and $83,383 (1996).............................................. 75,838 80,738
Other real estate owned, net..................................................... 3,040 3,316
Excess cost over equity in affiliated banks, net................................. 27,778 28,276
Other assets..................................................................... 133,965 137,012
------------- -------------
Total assets............................................................. $6,692,019 $6,642,681
============= =============
LIABILITIES
Deposits:
Noninterest-bearing deposits................................................. $1,091,785 $1,090,347
Interest-bearing deposits.................................................... 4,322,253 4,249,308
------------- -------------
Total deposits........................................................... 5,414,038 5,339,655
Short-term borrowings............................................................ 284,448 336,655
Accrued expenses and other liabilities........................................... 91,931 80,940
Long-term debt................................................................... 50,087 49,395
------------- -------------
Total liabilities........................................................ 5,840,504 5,806,645
------------- -------------
STOCKHOLDERS' EQUITY
Preferred stock, no par value; authorized 2,000,000 shares; issued and
outstanding--None
Common stock, $2 par value; authorized 67,000,000 shares;
issued 47,479,801 shares in 1997 and 47,435,322 shares in 1996................. 94,960 94,872
Capital surplus.................................................................. 99,330 97,154
Retained earnings................................................................ 660,885 641,212
Unrealized gains (losses) on securities, net of taxes............................ (3,660) 2,798
------------- -------------
Total stockholders' equity............................................... 851,515 836,036
------------- -------------
Total liabilities and stockholders' equity........................... $6,692,019 $6,642,681
============= =============
See notes to consolidated financial statements
</TABLE>
PAGE 2
MERCANTILE BANKSHARES CORPORATION
<TABLE>
STATEMENT OF CONSOLIDATED INCOME
<CAPTION>
For the 3 Months Ended
March 31,
(Dollars in thousands, except per share data) 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans........................... $102,424 $ 97,956
------------ ------------
Interest and dividends on investment securities:
Taxable interest income............................ 23,326 22,008
Tax-exempt interest income......................... 164 182
Dividends.......................................... 166 144
Other investment income............................ 121 146
------------ ------------
23,777 22,480
------------ ------------
Other interest income................................ 387 1,377
------------ ------------
Total interest income........................ 126,588 121,813
------------ ------------
INTEREST EXPENSE
Interest on deposits................................. 41,824 42,815
Interest on short-term borrowings.................... 3,709 3,603
Interest on long-term debt........................... 834 405
------------ ------------
Total interest expense....................... 46,367 46,823
------------ ------------
NET INTEREST INCOME.................................. 80,221 74,990
Provision for loan losses............................ 3,413 3,399
------------ ------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES.. 76,808 71,591
------------ ------------
NONINTEREST INCOME
Trust division services.............................. 12,122 11,369
Service charges on deposit accounts.................. 4,079 3,888
Other fees........................................... 5,786 5,205
Investment securities gains and (losses)............. (1,211) 66
Other income......................................... 2,222 842
------------ ------------
Total noninterest income..................... 22,998 21,370
------------ ------------
NONINTEREST EXPENSES
Salaries............................................. 25,366 24,828
Employee benefits.................................... 5,900 6,543
Net occupancy expense of bank premises............... 2,612 3,055
Furniture and equipment expenses..................... 4,083 3,857
Communications and supplies.......................... 2,780 2,517
FDIC insurance premium expense....................... 142 73
Other expenses....................................... 8,497 7,580
------------ ------------
Total noninterest expenses................... 49,380 48,453
------------ ------------
Income before income taxes........................... 50,426 44,508
Applicable income taxes.............................. 18,412 16,775
------------ ------------
NET INCOME........................................... $ 32,014 $ 27,733
============ ============
NET INCOME PER SHARE OF COMMON STOCK(2).............. $.67 $.58
============ ============
See notes to consolidated financial statements
</TABLE>
PAGE 3
MERCANTILE BANKSHARES CORPORATION
<TABLE>
STATEMENT OF CONSOLIDATED CASH FLOWS
<CAPTION>
For the 3 Months Ended
Increase in cash and cash equivalents March 31,
(Dollars in thousands) 1997 1996
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest and fees on loans............................................................. $101,663 $ 97,611
Interest and dividends on investment securities........................................ 22,705 20,100
Other interest income.................................................................. 387 1,437
Noninterest income..................................................................... 22,716 18,336
Interest paid.......................................................................... (46,656) (48,271)
Noninterest expenses paid.............................................................. (42,019) (34,965)
Income taxes paid...................................................................... (2,177) (829)
------------ ------------
Net cash provided by operating activities...................................... 56,619 53,419
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investment securities held-to-maturity..................... 380
Proceeds from maturities of investment securities available-for-sale................... 159,858 156,941
Proceeds from sales of investment securities available-for-sale........................ 29,893 33,441
Purchases of investment securities held-to-maturity.................................... (535) (382)
Purchases of investment securities available-for-sale.................................. (132,956) (183,381)
Net increase in customer loans......................................................... (110,108) (18,154)
Proceeds from sales of other real estate owned......................................... 421 587
Capital expenditures................................................................... (2,351) (2,744)
Proceeds from sales of buildings....................................................... 6,610
------------ ------------
Net cash used in investing activities.......................................... (48,788) (13,692)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in noninterest-bearing deposits................................ 1,438 (34,838)
Net increase in checking plus interest and savings accounts............................ 21,908 16,071
Net increase in certificates of deposit................................................ 51,037 35,405
Net increase (decrease) in short-term borrowings....................................... (51,507) 10,722
Repayment of long-term debt............................................................ (8) (248)
Proceeds from issuance of shares....................................................... 1,684 1,305
Repurchase of common shares............................................................ (534) (14,593)
Dividends paid......................................................................... (12,341) (10,988)
------------ ------------
Net cash provided by financing activities...................................... 11,677 2,836
------------ ------------
Net increase in cash and cash equivalents.............................................. 19,508 42,563
Cash and cash equivalents at beginning of period....................................... 285,379 323,464
------------ ------------
Cash and cash equivalents at end of period............................................. $304,887 $366,027
============ ============
For the 3 Months Ended
Reconciliation of net income to net cash provided by operating activities March 31,
(Dollars in thousands) 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
Net income............................................................................. $32,014 $27,733
------------ ------------
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization........................................................ 2,023 1,978
Provision for loan losses............................................................ 3,413 3,399
Amortization of excess cost over equity in affiliates................................ 499 501
Investment securities (gains) and losses............................................. 1,211 (66)
Write-down of other real estate owned................................................ 82 29
Gains on sales of other real estate owned............................................ (38) (12)
Gains on sales of buildings.......................................................... (1,382)
Increase in interest receivable...................................................... (1,833) (2,665)
Increase in other receivables........................................................ (73) (2,956)
Decrease in other assets............................................................. 6,596 7,229
Decrease in interest payable......................................................... (289) (1,448)
Increase (decrease) in accrued expenses.............................................. (1,839) 3,751
Increase in taxes payable............................................................ 16,235 15,946
------------ ------------
Total adjustments.............................................................. 24,605 25,686
------------ ------------
Net cash provided by operating activities.............................................. $56,619 $53,419
============ ============
See notes to consolidated financial statements
</TABLE>
PAGE 4
MERCANTILE BANKSHARES CORPORATION
<TABLE>
STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY
<CAPTION>
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
Unrealized
Gains
(Losses) on
Securities,
Common Capital Retained Net of
(Dollars in thousands, except per share data) Stock Surplus Earnings Taxes
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1995................................ $96,545 $66,107 $620,391 $10,783
Net income................................................ 27,733
Cash dividends paid:
Common stock ($.23 per share)........................... (10,988)
Issuance of 39,502 shares for dividend
reinvestment and stock purchase plan.................... 79 914
Issuance of 6,422 shares for employee stock
purchase dividend reinvestment plan..................... 13 160
Issuance of 6,320 shares for employee stock option plan... 13 126
Purchase of 531,030 shares under stock repurchase plan.... (1,062) (13,531)
Vested stock options...................................... 2,106
Change in unrealized gains (losses) on securities......... (8,342)
------------ ----------- ----------- -----------
BALANCE, MARCH 31, 1996................................... $95,588 $55,882 $637,136 $ 2,441
============ =========== =========== ===========
BALANCE, DECEMBER 31, 1996................................ $94,872 $97,154 $641,212 $ 2,798
Net income................................................ 32,014
Cash dividends paid:
Common stock ($.26 per share)........................... (12,341)
Issuance of 30,112 shares for dividend
reinvestment and stock purchase plan.................... 60 913
Issuance of 5,697 shares for employee stock
purchase dividend reinvestment plan..................... 11 182
Issuance of 23,670 shares for employee stock option plan.. 47 471
Purchase of 15,000 shares under stock repurchase plan..... (30) (504)
Vested stock options...................................... 1,114
Change in unrealized gains (losses) on securities......... (6,458)
------------ ----------- ----------- -----------
BALANCE, MARCH 31, 1997................................... $94,960 $99,330 $660,885 $(3,660)
============ =========== =========== ===========
See notes to consolidated financial statements
</TABLE>
PAGE 5
MERCANTILE BANKSHARES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) The statements include the accounts of the Corporation and all of its
affiliates, with all significant intercompany transactions eliminated, and
in the opinion of management, include all adjustments necessary for a fair
presentation of the results for the interim period. All such adjustments
are of a normal recurring nature. In view of the changing conditions in the
national economy, the effect of actions taken by regulatory authorities and
normal seasonal factors, the results for the interim period are not
necessarily indicative of annual performance. Certain previously reported
amounts have been restated to comform to the 1997 presentation.
2) Year to date per share amounts are based on the weighted average number of
common shares outstanding during the period of 47,444,718 shares for 1997
and 47,955,616 shares for 1996.
3) Under the provisions of Statements of Financial Accounting Standards
("SFAS") No. 114 and 118, "Accounting by Creditors for Impairment of a
Loan," a loan is considered impaired, based upon current information and
events, if it is probable that the Corporation will not collect all
principal and interest payments according to the contractual terms of the
loan agreement. Generally, a loan is considered impaired once either
principal or interest payments become 90 days past due at the end of a
calendar quarter. A loan may be considered impaired sooner if, in
management's judgement, such action is warranted. The impairment of a
loan is measured based upon the present value of expected future cash
flows discounted at the loan's effective interest rate, or the fair
value of the collateral if the repayment is expected to be provided
predominantly by the underlying collateral. A majority of the
Corporation's impaired loans are measured by reference to the fair value
of the collateral. Interest income on impaired loans is recognized on the
cash basis. Information with respect to impaired loans and the related
valuation allowance (if the measure of the impaired loan is less than the
recorded investment) is shown below.
<TABLE>
<CAPTION>
MARCH 31, December 31,
(Dollars in thousands) 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Impaired loans with a valuation allowance............................................ $ 2,389 $ 2,649
Impaired loans with no valuation allowance........................................... 15,981 13,128
------------- ------------
Total impaired loans............................................................... $ 18,370 $ 15,777
============= ============
Allowance for loan losses applicable to impaired loans............................... $ 1,112 $ 1,194
Allowance for loan losses applicable to other than impaired loans.................... 99,090 96,524
------------- ------------
Total allowance for loan losses.................................................... $ 100,202 $ 97,718
============= ============
Year-to-date interest income on impaired loans recorded on the cash basis............ $ 147 $ 672
============= ============
Year-to-date average recorded investment in impaired loans during the period......... $ 18,400 $ 19,300
============= ============
Quarter-to-date interest income on impaired loans recorded on the cash basis......... $ 147 $ 34
============= ============
Quarter-to-date average recorded investment in impaired loans during the period...... $ 18,400 $ 18,400
============= ============
</TABLE>
NOTE: Impaired loans do not include large groups of smaller balance
homogeneous loans that are evaluated collectively for impairment (e.g.
residential mortgages and consumer installment loans). The allowance for loan
losses related to these loans is included in the allowance for loan losses
applicable to other than impaired loans.
4) Various commitments to extend credit (lines of credit) are made in the
normal course of banking business. At March 31, 1997, total unused lines
of credit approximated $2,090,699,000. In addition, letters of credit are
issued for the benefit of customers by affiliated banks. Outstanding
letters of credit were $130,251,000 at March 31, 1997.
PAGE 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
MERCANTILE BANKSHARES CORPORATION
EARNINGS SUMMARY
Consolidated net income per share for the first quarter of 1997 was $.67,
an increase of 15.5% over the $.58 for the comparable period last year.
Consolidated net income was $32,014,000, an increase of 15.4% over the
$27,733,000 for the first quarter of 1996.
NET INTEREST INCOME AND NET INTEREST MARGIN
Net interest income for the three months ended March 31, 1997 was 7.0%
higher than the amount for the comparable period in 1996 due to an increase
of 4.5% in average earning assets and an increase of 3.1%, or 16 basis
points, in net interest margin on earning assets. Average loans increased
by 7.3% over the first quarter of 1996 to $4,607,200,000 for the first
quarter of 1997.
NONINTEREST INCOME
Total noninterest income for the quarter ended March 31, 1997 increased
7.6% to $22,998,000 from $21,370,000 for the first quarter of 1996. Factors
contributing to this increase include an increase in other income primarily
due to a gain of $1,175,000 on the sale of a bank owned building, an
increase in trust division revenues, and an increase in other fee income
from general bank services and products. These increases were partially
offset by securities losses of $1,211,000 during the first quarter of 1997
compared to securities gains of $66,000 in 1996.
NONINTEREST EXPENSES
Total noninterest expenses, excluding the provision for loan losses, for
the first quarter of 1997 increased 1.9% from the comparable period in 1996.
Increases in salaries, communications and supplies, furniture and equipment
expenses, and other expenses, were largely offset by lower expenses related
to employee benefits and net occupancy expense of bank premises.
ANALYSIS OF FINANCIAL CONDITION
Investment securities decreased 4.2% to $1,555,011,000 at March 31, 1997
from $1,622,966,000 at December 31, 1996. Total loans outstanding increased
2.4% to $4,691,702,000 at March 31, 1997 from $4,582,712,000 at December 31,
1996.
Total deposits increased 1.4% to $5,414,038,000 as of March 31, 1997 from
$5,339,655,000 at December 31, 1996. Interest-bearing deposits increased
1.7% to $4,322,253,000, or 79.8% of total deposits as of March 31, 1997
compared to $4,249,308,000, or 79.6% of total deposits at December 31, 1996.
The growth in interest-bearing deposit accounts is due primarily to an
increase in time deposits. Noninterest-bearing deposits increased slightly to
$1,091,785,000 as of March 31, 1997, compared to $1,090,347,000 at
December 31, 1996.
Total stockholders' equity increased 1.9% to $851,515,000 at March 31, 1997
from $836,036,000 at December 31, 1996. The increase from net income was
largely offset by dividends paid, the change in unrealized gains to
unrealized losses on investment securities, and, to a smaller extent, by
share repurchases. The continued strong capital position is evidenced by the
ratio of stockholders' equity to total assets of 12.72% at March 31, 1997
compared to 12.59% at December 31, 1996. For more details see the Statement
of Changes in Consolidated Stockholders' Equity on page 5.
ASSET QUALITY
Non-Performing Assets
Non-performing assets consist of non-accrual loans, renegotiated loans and
other real estate owned (i.e., real estate acquired in foreclosure or in lieu
of foreclosure). With respect to non-accrual loans, the Corporation's policy
is that, regardless of the value of the underlying collateral and/or
guarantees, no interest is accrued on the entire balance once either
principal or interest payments on any loan become 90 days past due at the
end of a calendar quarter. All accrued and uncollected interest on such
loans is eliminated from the income statement and is recognized only as
collected. A loan may be put on non-accrual status sooner than this standard
if, in management's judgement, such action is warranted. During the three
months ended March 31, 1997, non-performing assets increased $2,003,000 to
$25,776,000. Non-performing loans, one of the components of non-performing
assets, increased $2,279,000 while other real estate owned, the other
component, decreased $276,000.
PAGE 7
<TABLE>
<CAPTION>
Non-Performing Assets MARCH 31, December 31,
(Dollars in thousands) 1997 1996
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Non-accrual loans (1)................................................................... $22,736 $20,457
Renegotiated loans (1).................................................................. NONE NONE
Loans contractually past due 90 days or more and still accruing interest................ NONE NONE
------- -------
Total non-performing loans.......................................................... 22,736 20,457
Other real estate owned................................................................. 3,040 3,316
------- -------
Total non-performing assets......................................................... $25,776 $23,773
======= =======
</TABLE>
1) Total interest on these loans is not considered to be material in any of
the periods reported herein. Aggregate gross interest income of $533,000
and $1,982,000 for the first quarter of 1997 and the year 1996,
respectively, on non-accrual and renegotiated loans, would have been
recorded if these loans had been accruing on their original terms
throughout the period or since origination if held for part of the period.
The amount of interest income on the non-accrual and renegotiated loans
that was recorded totalled $154,000 and $875,000 for the first quarter
of 1997 and the year 1996, respectively.
NOTE: As of March 31, 1997, the Corporation was monitoring loans estimated
to aggregate $4,386,000 not currently classified as non-accrual or
renegotiated loans. These loans have characteristics which indicate they may
result in such classification in the future.
Provision and Allowance for Loan Losses
Each Mercantile Bankshares Corporation (MBC) affiliate is required to maintain
an adequate allowance for loan losses and their boards of directors, along
with MBC management, maintain a regular overview to assure that adequacy. On a
periodic basis, significant credit exposures, non-accrual loans, impaired
loans and other non-performing assets and various statistical measurements of
asset quality are examined to assure the adequacy of the allowance for loan
losses.
The following table presents a summary of the activity in the Allowance for
Loan Losses.
<TABLE>
<CAPTION>
For the 3 Months Ended
Allowance for Loan Losses March 31,
(Dollars in thousands) 1997 1996
- -----------------------------------------------------------------------------------------------------
<S> <C> <C>
Allowance balance--beginning.............................. $ 97,718 $ 91,398
Charge-offs:
Commercial, financial and agricultural.................. (448) (709)
Real estate--construction............................... (6)
Real estate--mortgage................................... (102) (62)
Consumer................................................ (968) (909)
------------ ------------
Totals................................................ (1,524) (1,680)
------------ ------------
Recoveries:
Commercial, financial and agricultural.................. 100 926
Real estate--construction............................... 4
Real estate--mortgage................................... 55 677
Consumer................................................ 440 273
------------ ------------
Totals................................................ 595 1,880
------------ ------------
Net (charge-offs)/recoveries.............................. (929) 200
Provision for loan losses................................. 3,413 3,399
------------ ------------
Allowance balance--ending................................. $ 100,202 $ 94,997
============ ============
Average loans outstanding during period................... $4,607,200 $4,295,000
============ ============
Net charge-offs/(recoveries) annualized--as a percentage
of average loans outstanding during period.............. .08% (0.2)%
============ ============
Allowance for loan losses at period end as a
percentage of average loans............................. 2.17% 2.21%
============ ============
Allowance for loan losses at period end as a percentage
of non-performing loans at period end....... 440.72% 392.34%
============ ============
</TABLE>
Charge-Offs
Intensive collection efforts continue after charge-off in order to maximize
the recovery of amounts previously charged off. Net charge-offs were
$929,000 for the first quarter of 1997 versus net recoveries of $200,000
during the first quarter of 1996. For further details of charge-offs and
recoveries see the preceding Allowance For Loan Losses table.
PAGE 8
MERCANTILE BANKSHARES CORPORATION
<TABLE>
ANALYSIS OF INTEREST RATES AND INTEREST DIFFERENTIALS
The following table presents the distribution of the average consolidated
balance sheets, interest income/expense and annualized yields earned and rates
paid through the first three months of the year.
<CAPTION>
1997 1996
-------------------------------------- --------------------------------
Average Income*/ Yield*/ Average Income*/ Yield*/
(Dollars in thousands) Balance Expense Rate Balance Expense Rate
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earning assets
Loans:
Commercial....................................... $1,523,400 $ 34,567 9.20% $1,413,100 $ 33,340 9.49%
Real estate...................................... 2,440,600 54,444 9.05 2,252,600 50,793 9.07
Consumer**....................................... 643,200 14,408 9.08 629,300 14,737 9.42
----------- ----------- ----------- ----------
Total loans.................................. 4,607,200 103,419 9.10 4,295,000 98,870 9.26
----------- ----------- ----------- ----------
Federal funds sold................................. 29,900 385 5.22 90,000 1,165 5.21
Securities purchased under resale agreements....... 13,500 210 6.28
Securities***:
Taxable securities
U.S. Treasury securities....................... 1,553,900 23,116 6.03 1,524,300 21,726 5.73
U.S. Agency securities......................... 15,300 210 5.58 21,100 282 5.37
Other stocks and bonds......................... 22,500 321 5.80 16,600 318 7.69
Tax-exempt securities
States and political subdivisions.............. 13,400 258 7.83 15,300 287 7.54
----------- ----------- ----------- ----------
Total securities............................. 1,605,100 23,905 6.04 1,577,300 22,613 5.77
----------- ----------- ----------- ----------
Interest-bearing deposits in other banks........... 100 2 6.91 300 2 2.47
----------- ----------- ----------- ----------
Total earning assets......................... 6,242,300 127,711 8.30 5,976,100 122,860 8.27
----------- ----------
Cash and due from banks.............................. 184,600 200,700
Bank premises and equipment, net..................... 81,000 78,800
Other assets......................................... 156,200 149,500
Less: allowance for loan losses...................... (98,500) (93,400)
----------- -----------
Total assets................................. $6,565,600 $6,311,700
=========== ===========
Interest-bearing liabilities
Deposits:
Savings deposits................................. $2,188,400 13,981 2.59 $2,213,400 14,566 2.65
Time deposits.................................... 2,080,900 27,843 5.43 1,999,500 28,249 5.68
----------- ----------- ----------- ----------
Total interest-bearing deposits.............. 4,269,300 41,824 3.97 4,212,900 42,815 4.09
Short-term borrowings.............................. 318,000 3,709 4.73 291,000 3,603 4.98
Long-term debt..................................... 49,600 834 6.81 25,500 405 6.39
----------- ----------- ----------- ----------
Total interest-bearing funds................. 4,636,900 46,367 4.06 4,529,400 46,823 4.16
----------- ----------
Noninterest-bearing deposits......................... 990,900 913,900
Other liabilities and accrued expenses............... 85,500 77,400
----------- -----------
Total liabilities............................ 5,713,300 5,520,700
Stockholders' equity................................. 852,300 791,000
----------- -----------
Total liabilities and stockholders' equity... $6,565,600 $6,311,700
=========== ===========
Net interest income.................................. $ 81,344 $ 76,037
======== ========
Net interest rate spread............................. 4.24% 4.11%
Effect of noninterest-bearing funds.................. 1.04 1.01
-------- -------
Net interest margin on earning assets................ 5.28% 5.12%
======== =======
Taxable-equivalent adjustment included in:
Loan income...................................... $ 995 $ 914
Investment securities income..................... 128 133
----------- ----------
Total........................................ $ 1,123 $ 1,047
=========== ==========
*Presented on a tax equivalent basis using the statutory federal corporate
income tax rate of 35%.
**Includes home equity lines of credit which were previously classified as
real estate loans.
***Balances reported at amortized cost; excludes pretax unrealized gains
(losses) on securities available-for-sale.
</TABLE>
PAGE 9
RECENT FASB PRONOUNCEMENTS
Statement of Financial Accounting Standards (SFAS) No. 128,
Earnings Per Share, was issued in February 1997. This Statement
specifies the computation, presentation, and disclosure
requirements for earnings per share (EPS). This Statement's
objective is to simplify the computation of earnings per share
and to make the U.S. standard for computing earnings per share
more compatible with the EPS standards of other countries.
This Statement is effective for financial statements for both
interim and annual periods ending after December 15, 1997.
Earlier application is not permitted. After the effective date,
all prior period EPS data presented shall be restated to conform
with the provisions of this Statement. This Statement is not
expected to have a material effect on the computation,
presentation or disclosure of EPS for Mercantile Bankshares
Corporation.
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits--
Exhibit 27--Financial Data Schedule
(b) No Forms 8-K filed.
PAGE 10
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MERCANTILE BANKSHARES CORPORATION
Principal Executive Officer
May 14, 1997 /s/ H. Furlong Baldwin
By: H. Furlong Baldwin
Chairman of the Board and
Chief Executive Officer
Principal Financial Officer
May 14, 1997 /s/ Terry L. Troupe
By: Terry L. Troupe
Chief Financial Officer
Principal Accounting Officer
May 14, 1997 /s/ Jerry F. Graham
By: Jerry F. Graham
Vice President and Controller
PAGE 11
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF MARCH 31, 1997, FROM THE INCOME STATEMENT FOR THE THREE MONTHS
ENDED MARCH 31, 1997 AND FROM MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 1997, AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 242,917,000
<INT-BEARING-DEPOSITS> 100,000
<FED-FUNDS-SOLD> 61,870,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,528,576,000
<INVESTMENTS-CARRYING> 26,435,000
<INVESTMENTS-MARKET> 26,421,000
<LOANS> 4,691,702,000
<ALLOWANCE> 100,202,000
<TOTAL-ASSETS> 6,692,019,000
<DEPOSITS> 5,414,038,000
<SHORT-TERM> 284,448,000
<LIABILITIES-OTHER> 91,931,000
<LONG-TERM> 50,087,000
0
0
<COMMON> 94,960,000
<OTHER-SE> 756,555,000
<TOTAL-LIABILITIES-AND-EQUITY> 6,692,019,000
<INTEREST-LOAN> 102,424,000
<INTEREST-INVEST> 23,777,000
<INTEREST-OTHER> 387,000
<INTEREST-TOTAL> 126,588,000
<INTEREST-DEPOSIT> 41,824,000
<INTEREST-EXPENSE> 46,367,000
<INTEREST-INCOME-NET> 80,221,000
<LOAN-LOSSES> 3,413,000
<SECURITIES-GAINS> (1,211,000)
<EXPENSE-OTHER> 49,380,000
<INCOME-PRETAX> 50,426,000
<INCOME-PRE-EXTRAORDINARY> 50,426,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 32,014,000
<EPS-PRIMARY> .67
<EPS-DILUTED> .67
<YIELD-ACTUAL> 5.28
<LOANS-NON> 22,736,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 4,386,000
<ALLOWANCE-OPEN> 97,718,000
<CHARGE-OFFS> 1,524,000
<RECOVERIES> 595,000
<ALLOWANCE-CLOSE> 100,202,000
<ALLOWANCE-DOMESTIC> 100,202,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
