<PAGE>
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 June 30, 1999
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)
<TABLE>
<S> <C>
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)
</TABLE>
(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 July 30, 1999, registrant had outstanding 69,229,702 shares of Common
Stock.
<PAGE>
PAGE 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
MERCANTILE BANKSHARES CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, December 31,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks .................................................................. $ 242,802 $ 254,994
Interest-bearing deposits in other banks ................................................. 150 100
Federal funds sold ....................................................................... 1,906 57,616
---------- ----------
Total cash and cash equivalents ...................................................... 244,858 312,710
---------- ----------
Investment securities:
U.S. Treasury and government agencies
Available-for-sale at fair value ...................................................... 1,786,004 1,863,195
States and political subdivisions
Held-to-maturity -- market value of $10,501 (1999) and $12,673 (1998).................. 10,453 12,436
Available-for-sale at fair value ...................................................... 1,353 1,405
Other investments
Held-to-maturity -- market value of $15,393 (1999) and $14,643 (1998).................. 15,393 14,643
Available-for-sale at fair value ...................................................... 15,738 15,862
---------- ----------
Total investment securities .......................................................... 1,828,941 1,907,541
---------- ----------
Loans .................................................................................... 5,363,310 5,220,890
Less: allowance for loan losses .......................................................... (114,333) (112,423)
---------- ----------
Loans, net ........................................................................... 5,248,977 5,108,467
---------- ----------
Bank premises and equipment, less accumulated depreciation of
$93,831 (1999) and $90,633 (1998)........................................................ 93,901 91,577
Other real estate owned, net ............................................................. 1,424 1,281
Excess cost over equity in affiliated banks, net ......................................... 48,398 50,314
Other assets ............................................................................. 148,471 137,673
---------- ----------
Total assets ......................................................................... $7,614,970 $7,609,563
========== ==========
LIABILITIES
Deposits:
Noninterest-bearing deposits ............................................................ $1,343,567 $1,388,378
Interest-bearing deposits ............................................................... 4,536,162 4,569,968
---------- ----------
Total deposits ....................................................................... 5,879,729 5,958,346
Short-term borrowings .................................................................... 606,314 511,945
Accrued expenses and other liabilities ................................................... 80,089 98,979
Long-term debt ........................................................................... 90,885 40,934
---------- ----------
Total liabilities .................................................................... 6,657,017 6,610,204
---------- ----------
STOCKHOLDERS' EQUITY
Preferred stock, no par value; authorized 2,000,000 shares; issued and outstanding -- None
Common stock, $2 par value; authorized 130,000,000 shares;
issued 69,344,351 shares in 1999 and 71,026,927 shares in 1998 .......................... 138,689 142,054
Capital surplus .......................................................................... 71,264 31,357
Retained earnings ........................................................................ 747,617 803,568
Accumulated other comprehensive income ................................................... 383 22,380
---------- ----------
Total stockholders' equity ........................................................... 957,953 999,359
---------- ----------
Total liabilities and stockholders' equity .......................................... $7,614,970 $7,609,563
========== ==========
</TABLE>
See notes to consolidated financial statements
<PAGE>
PAGE 3
MERCANTILE BANKSHARES CORPORATION
STATEMENT OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
FOR THE 6 MONTHS ENDED FOR THE 3 MONTHS ENDED
JUNE 30, JUNE 30,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998 1999 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans ................................ $ 219,716 $ 221,145 $ 110,651 $ 111,629
--------- --------- --------- ---------
Interest and dividends on investment securities:
Taxable interest income .................................. 51,496 47,821 25,590 24,142
Tax-exempt interest income ............................... 305 331 144 194
Dividends ................................................ 996 632 387 307
Other investment income .................................. 115 163 60 83
--------- --------- --------- ---------
52,912 48,947 26,181 24,726
--------- --------- --------- ---------
Other interest income ..................................... 516 4,446 302 2,546
--------- --------- --------- ---------
Total interest income ................................. 273,144 274,538 137,134 138,901
--------- --------- --------- ---------
INTEREST EXPENSE
Interest on deposits ...................................... 79,746 89,723 39,359 44,878
Interest on short-term borrowings ......................... 11,696 9,093 5,472 4,545
Interest on long-term debt ................................ 1,960 1,667 1,266 830
--------- --------- --------- ---------
Total interest expense ................................ 93,402 100,483 46,097 50,253
--------- --------- --------- ---------
NET INTEREST INCOME ....................................... 179,742 174,055 91,037 88,648
Provision for loan losses ................................. 3,043 5,626 1,648 3,138
--------- --------- --------- ---------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES ....... 176,699 168,429 89,389 85,510
--------- --------- --------- ---------
NONINTEREST INCOME
Trust division services ................................... 31,644 28,437 16,496 14,563
Service charges on deposit accounts ....................... 11,076 9,432 5,720 4,861
Other fees ................................................ 13,298 12,868 6,983 6,804
Investment securities gains and (losses) .................. 8 9 8
Other income .............................................. 1,648 1,377 873 700
--------- --------- --------- ---------
Total noninterest income .............................. 57,674 52,123 30,080 26,928
--------- --------- --------- ---------
NONINTEREST EXPENSES
Salaries .................................................. 54,851 53,086 28,162 26,811
Employee benefits ......................................... 13,871 12,406 6,446 5,978
Net occupancy expense of bank premises .................... 5,383 5,277 2,671 2,707
Furniture and equipment expenses .......................... 10,300 9,395 5,086 5,012
Communications and supplies ............................... 6,309 5,961 3,150 2,974
Amortization of excess cost over equity in affiliates ..... 1,916 1,594 958 921
Other expenses ............................................ 21,417 19,432 11,262 10,393
--------- --------- --------- ---------
Total noninterest expenses ............................ 114,047 107,151 57,735 54,796
--------- --------- --------- ---------
Income before income taxes ................................ 120,326 113,401 61,734 57,642
Applicable income taxes ................................... 44,236 41,322 22,834 21,082
--------- --------- --------- ---------
NET INCOME ................................................ $ 76,090 $ 72,079 $ 38,900 $ 36,560
========= ========= ========= =========
NET INCOME PER SHARE OF COMMON STOCK (NOTE 2):
Basic .................................................... $ 1.09 $ 1.00 $ .56 $ .51
========= ========= ========= =========
Diluted .................................................. $ 1.08 $ 1.00 $ .55 $ .50
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements
<PAGE>
PAGE 4
MERCANTILE BANKSHARES CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
FOR THE 6 MONTHS ENDED
JUNE 30,
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
(DOLLARS IN THOUSANDS) 1999 1998
- ----------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest and fees on loans ............................................... $ 218,418 $ 220,556
Interest and dividends on investment securities .......................... 52,711 48,692
Other interest income .................................................... 602 4,757
Noninterest income ....................................................... 57,733 51,543
Interest paid ............................................................ (93,148) (102,147)
Noninterest expenses paid ................................................ (126,014) (93,875)
Income taxes paid ........................................................ (40,417) (42,451)
---------- ----------
Net cash provided by operating activities ............................ 69,885 87,075
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investment securities held-to-maturity ....... 2,278 1,633
Proceeds from maturities of investment securities available-for-sale ..... 284,883 219,011
Proceeds from sales of investment securities available-for-sale .......... 8 804
Purchases of investment securities held-to-maturity ...................... (1,047) (1,092)
Purchases of investment securities available-for-sale .................... (242,691) (283,903)
Net (increase) decrease in customer loans ................................ (144,383) 32,919
Proceeds from sales of other real estate owned ........................... 728 748
Capital expenditures ..................................................... (6,669) (5,619)
Proceeds from sales of buildings ......................................... 321
----------
Net cash used in investing activities ................................ (106,893) (35,178)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in noninterest-bearing deposits .................. (44,811) 42,371
Net increase in checking plus interest and savings accounts .............. 24,931 51,526
Net decrease in certificates of deposit .................................. (58,737) (80,192)
Net increase in short-term borrowings .................................... 94,369 28,329
Proceeds from issuance of long-term debt ................................. 50,000
Repayment of long-term debt .............................................. (49) (65)
Proceeds from issuance of shares ......................................... 3,738 3,559
Repurchase of common shares .............................................. (68,244) (33,684)
Dividends paid ........................................................... (32,041) (30,193)
---------- ----------
Net cash used in financing activities ................................ (30,844) (18,349)
---------- ----------
Net increase (decrease) in cash and cash equivalents ..................... (67,852) 33,548
Cash and cash equivalents at beginning of period ......................... 312,710 413,786
Adjustment for acquired bank ............................................. 7,819
---------- ----------
Cash and cash equivalents at end of period ............................... $ 244,858 $ 455,153
========== ==========
</TABLE>
<TABLE>
<CAPTION>
FOR THE 6 MONTHS ENDED
JUNE 30,
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES
(DOLLARS IN THOUSANDS) 1999 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net income ...................................................................... $ 76,090 $ 72,079
--------- --------
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization .................................................. 4,345 4,177
Provision for loan losses ...................................................... 3,043 5,626
Amortization of excess cost over equity in affiliates .......................... 1,916 1,594
Investment securities (gains) and losses ....................................... (8) (9)
Write-downs of other real estate owned ......................................... 21 136
Gains on sales of other real estate owned ...................................... (62) (128)
Gains on sales of buildings .................................................... (59)
Increase in interest receivable ................................................ (1,413) (533)
(Increase) decrease in other receivables ....................................... 129 (384)
Increase in other assets ....................................................... (10,656) (1,284)
Increase (decrease) in interest payable ........................................ 254 (1,664)
Increase (decrease) in accrued expenses ........................................ (7,593) 8,653
Increase (decrease) in taxes payable ........................................... 3,819 (1,129)
---------- ---------
Total adjustments ........................................................... (6,205) 14,996
---------- ---------
Net cash provided by operating activities ....................................... $ 69,885 $87,075
========== =========
</TABLE>
See notes to consolidated financial statements
<PAGE>
PAGE 5
MERCANTILE BANKSHARES CORPORATION
STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
<TABLE>
<CAPTION>
Accu-
mulated
Other
Compre-
Common Capital Retained hensive
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Total Stock Surplus Earnings Income
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 ................................... $ 935,004 $143,749 $ 62,089 $ 717,978 $ 11,188
Net income ................................................... 72,079 72,079
Unrealized gains (losses) on securities available-for-sale,
net of reclassification adjustment, net of taxes ............ 1,245 1,245
---------
Comprehensive income ......................................... 73,324
---------
Cash dividends paid:
Common stock ($.42 per share) ............................... (30,193) (30,193)
Issuance of 63,474 shares for dividend reinvestment and stock
purchase plan ............................................... 2,156 127 2,029
Issuance of 11,571 shares for employee stock purchase dividend
reinvestment plan ........................................... 415 23 392
Issuance of 77,473 shares for employee stock option plan ..... 988 155 833
Purchase of 917,500 shares under stock repurchase plan ....... (33,684) (1,835) (31,849)
Issuance of 675,680 shares for bank acquisition .............. 23,055 1,351 21,704
Vested stock options ......................................... 1,027 1,027
--------- -------- --------- ---------- ---------
BALANCE, JUNE 30, 1998 ....................................... $ 972,092 $143,570 $ 56,225 $ 759,864 $ 12,433
========= ======== ========= ========== =========
BALANCE, DECEMBER 31, 1998 ................................... $ 999,359 $142,054 $ 31,357 $ 803,568 $ 22,380
Net income ................................................... 76,090 76,090
Unrealized gains (losses) on securities available-for-sale,
net of reclassification adjustment, net of taxes (Note 5) ... (21,997) (21,997)
---------
Comprehensive income ......................................... 54,093
---------
Cash dividends paid:
Common stock ($.46 per share) ............................... (32,041) (32,041)
Issuance of 58,891 shares for dividend reinvestment and stock
purchase plan ............................................... 2,033 118 1,915
Issuance of 12,401 shares for employee stock purchase dividend
reinvestment plan ........................................... 510 25 485
Issuance of 96,132 shares for employee stock option plan ..... 1,195 192 1,003
Purchase of 1,850,000 shares under stock repurchase plan ..... (68,244) (3,700) (64,544)
Vested stock options ......................................... 1,048 1,048
Transfer to capital surplus .................................. 100,000 (100,000)
--------- -------- --------- ---------- ---------
BALANCE, JUNE 30, 1999 ....................................... $ 957,953 $138,689 $ 71,264 $ 747,617 $ 383
========= ======== ========= ========== =========
</TABLE>
See notes to consolidated financial statements
<PAGE>
PAGE 6
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 conform to the 1999 presentation.
2) Year-to-date basic earnings per share amounts are based on the weighted
average number of common shares outstanding during the period of 69,880,196
shares for 1999 and 71,889,059 shares for 1998. Diluted earnings per share
amounts are based on the weighted average number of common shares outstanding
during the period adjusted for the effect of dilutive stock options. The
adjusted average shares for the six months ended June 30, 1999 and 1998 were
70,472,248 and 72,438,731, respectively.
3) Under the provisions of Statements of Financial Accounting Standards 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>
JUNE 30, December 31,
(DOLLARS IN THOUSANDS) 1999 1998
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Impaired loans with a valuation allowance ...................................... $ 3,277 $ 2,152
Impaired loans with no valuation allowance ..................................... 13,094 14,159
-------- --------
Total impaired loans .......................................................... $ 16,371 $ 16,311
======== ========
Allowance for loan losses applicable to impaired loans ......................... $ 1,965 $ 1,046
Allowance for loan losses applicable to other than impaired loans .............. 112,368 111,377
-------- --------
Total allowance for loan losses ............................................... $114,333 $112,423
======== ========
Year-to-date interest income on impaired loans recorded on the cash basis ...... $ 131 $ 690
======== ========
Year-to-date average recorded investment in impaired loans during the period ... $ 17,100 $ 21,400
======== ========
Quarter-to-date interest income on impaired loans recorded on the cash basis ... $ 85 $ 122
======== ========
Quarter-to-date average recorded investment in impaired loans during the period $ 16,900 $ 20,300
======== ========
</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 June 30, 1999, total unused lines of
credit approximated $2,931,185,000. In addition, letters of credit are issued
for the benefit of customers by affiliated banks. Outstanding letters of
credit were $155,123,000 at June 30, 1999.
<PAGE>
PAGE 7
5) The following table summarizes the related tax effect of unrealized gains
(losses) on securities available-for-sale, with the net amount included in
accumulated other comprehensive income, as shown in the Statement of Changes
in Consolidated Stockholders' Equity on Page 5.
<TABLE>
<CAPTION>
FOR THE 6 MONTHS ENDED JUNE 30,
1999
-------------------------------------------
Tax
Pretax (Expense) Net
(DOLLARS IN THOUSANDS) Amount Benefit Amount
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unrealized gains (losses) on securities available-
for-sale: ............................................
Unrealized holding gains (losses) arising during the
period ............................................... $(35,166) $13,174 $(21,992)
Reclassification adjustment for (gains) losses included
in net income ........................................ (8) 3 (5)
----------- ------- -----------
Total ................................................. $(35,174) $13,177 $(21,997)
========== ======= ==========
<CAPTION>
FOR THE 6 MONTHS ENDED JUNE 30,
1998
-------------------------------------
Tax
Pretax (Expense) Net
(DOLLARS IN THOUSANDS) Amount Benefit Amount
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unrealized gains (losses) on securities available-
for-sale: ............................................
Unrealized holding gains (losses) arising during the
period ............................................... $2,021 $ (771) $1,250
Reclassification adjustment for (gains) losses included
in net income ........................................ (9) 4 (5)
-------- ------ --------
Total ................................................. $2,012 $ (767) $1,245
======= ====== =======
</TABLE>
6) Under the provisions of Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information,
Mercantile Bankshares Corporation has two reportable segments -- its twenty
Community Banks and Mercantile - Safe Deposit & Trust Company (MSD&T) which
consists of the Banking Division and the Trust Division.
The following tables present selected segment information for the six months
ended June 30, 1999 and 1998. The components in the "Other" column consist of
amounts for the nonbank affiliates and intercompany eliminations. Certain
expense amounts have been reclassified from internal financial reporting in
order to provide for full cost absorption. These reclassifications are shown
in the "Adjustments" line.
<TABLE>
<CAPTION>
1999 MSD&T MSD&T Total Community
(DOLLARS IN THOUSANDS) Banking Trust MSD&T Banks Other Total
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest income ................... $ 60,657 $ 60,657 $ 119,714 $ (629) $ 179,742
Provision for loan losses ............. (977) (977) (2,066) (3,043)
Noninterest income .................... 12,449 $ 31,451 43,900 18,769 (4,995) 57,674
Noninterest expenses .................. (37,136) (16,953) (54,089) (62,555) 2,597 (114,047)
Adjustments ........................... 8,554 (1,486) 7,068 (6,218) (850)
--------- --------- ---------- ---------- ---------- ----------
Income (loss) before income taxes ..... 43,547 13,012 56,559 67,644 (3,877) 120,326
Income tax (expense) benefit .......... (15,674) (5,205) (20,879) (24,610) 1,253 (44,236)
--------- --------- ---------- ---------- ---------- ----------
Net income (loss) ..................... $ 27,873 $ 7,807 $ 35,680 $ 43,034 $ (2,624) $ 76,090
========= ========= ========== ========== ========== ==========
Average assets ........................ $2,787,500 $4,852,200 $ (108,900) $7,530,800
Average equity ........................ 331,100 588,200 46,900 966,200
1998 MSD&T MSD&T Total Community
(DOLLARS IN THOUSANDS) Banking Trust MSD&T Banks Other Total
- ------------------------------------------------------------------------------------------------------------------------
Net interest income ................... $ 58,605 $ 58,605 $ 114,898 $ 552 $ 174,055
Provision for loan losses ............. (1,854) (1,854) (2,972) (800) (5,626)
Noninterest income .................... 12,131 $ 28,181 40,312 16,693 (4,882) 52,123
Noninterest expenses .................. (33,837) (15,789) (49,626) (60,784) 3,259 (107,151)
Adjustments ........................... 6,749 (1,127) 5,622 (5,122) (500)
--------- --------- ---------- ---------- ---------- -----------
Income (loss) before income taxes ..... 41,794 11,265 53,059 62,713 (2,371) 113,401
Income tax (expense) benefit .......... (15,079) (4,506) (19,585) (22,576) 839 (41,322)
--------- --------- ---------- ---------- ---------- ----------
Net income (loss) ..................... $ 26,715 $ 6,759 $ 33,474 $ 40,137 $ (1,532) $ 72,079
========= ========= ========== ========== ========== ==========
Average assets ........................ $2,689,500 $4,560,900 $ (126,500) $7,123,900
Average equity ........................ 312,100 552,100 89,800 954,000
</TABLE>
<PAGE>
PAGE 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
MERCANTILE BANKSHARES CORPORATION
EARNINGS SUMMARY
Basic net income per share for the six months ended June 30, 1999 was
$1.09, an increase of 9.0% over the $1.00 for the comparable period last year.
Diluted net income per share was $1.08 for the first half of 1999 and $1.00 for
the same period in 1998, representing an 8.0% increase. Net income was
$76,090,000 for the first six months of 1999, an increase of 5.6% over the
$72,079,000 for the comparable period in 1998.
Basic net income per share for the second quarter of 1999 was $.56, an
increase of 9.8% over the $.51 for the comparable period last year. Diluted net
income per share was $.55 for the second quarter of 1999 and $.50 for the same
period in 1998, which represented a 10.0% increase. Net income was $38,900,000
for the three months ended June 30, 1999, an increase of 6.4% over the
$36,560,000 for the comparable period in 1998.
Return on average assets was 2.04% for the first half of 1999 and for the
first half of 1998. Return on average equity increased to 15.88% for the first
six months of 1999 compared to 15.24% for the same period in 1998. Return on
average tangible equity, which excludes amortization expense and balances
related to goodwill in the calculation, was 17.16% for the first half of 1999
and 16.31% for the comparable period in 1998.
Return on average assets was 2.06% for the second quarter of 1999 and
2.04% for the second quarter of 1998. Return on average equity increased to
16.13% for the three months ended June 30, 1999, compared to 15.18% for the
same period in 1998. Return on average tangible equity was 17.41% for the
second quarter of 1999 and 16.41% for the comparable period in 1998.
NET INTEREST INCOME AND NET INTEREST MARGIN
Net interest income on a fully taxable equivalent basis was $182,076,000
for the six months ended June 30, 1999. This was 3.0% higher than the amount
for the comparable period in 1998 due to an increase of 5.6% in average earning
assets. Average loans increased by 6.1% over the first half of 1998 to
$5,262,300,000 for the first half of 1999. Average securities were
$1,861,300,000 for the first six months of 1999, a 13.1% increase over the
$1,646,300,000 for the comparable period in 1998. For the first six months of
1999, federal funds sold and securities purchased under resale agreements
decreased $140,700,000 or 86.3% from the amounts for the first six months of
1998. Net interest margin on earning assets declined to 5.14% for the first
half of 1999, as compared to 5.27% for the same period in 1998. See the
Analysis of Interest Rates and Interest Differentials on page 12 for further
details.
Net interest income on a fully taxable equivalent basis was $92,197,000
for the three months ended June 30, 1999. This was 2.4% higher than the amount
for the comparable period in 1998 due to an increase of 5.1% in average earning
assets. Average loans increased by 6.4% over the second quarter of 1998 to
$5,295,800,000. Average securities were $1,853,100,000 for the quarter ended
June 30, 1999, an 11.6% increase over the $1,659,900,000 for the comparable
period in 1998. For the three months ended June 30, 1999, federal funds sold
and securities purchased under resale agreements decreased $160,600,000 or
86.3% from the amounts for the second quarter of 1998. Net interest margin on
earning assets declined to 5.15% for the second quarter of 1999, as compared to
5.29% for the same period in 1998.
NONINTEREST INCOME
For the first six months of 1999, total noninterest income increased 10.6%
to $57,674,000 from $52,123,000 for the first half of 1998. Factors
contributing to this increase include an increase in trust division revenues of
$3,207,000 or 11.3% and an increase in service charges on deposit accounts of
$1,644,000 or 17.4%.
Total noninterest income for the quarter ended June 30, 1999 increased
11.7% to $30,080,000 from $26,928,000 for the second quarter of 1998. Factors
contributing to this increase include an increase in trust division revenues of
$1,933,000 or 13.3% and an increase in service charges on deposit accounts of
$859,000 or 17.7%.
NONINTEREST EXPENSES
For the first half of 1999, total noninterest expenses increased 6.4% to
$114,047,000 from $107,151,000 for the comparable period in 1998. The increase
in noninterest expenses included an increase in salaries of $1,765,000 or 3.3%
over the amounts for the first six months of 1998 and an increase in employee
benefits of $1,465,000 or 11.8%. Furniture and equipment expenses increased
$905,000 or 9.6% over the amounts for the first half of 1998 and other expenses
increased $1,985,000 or 10.2%.
<PAGE>
PAGE 9
Total noninterest expenses for the second quarter of 1999 increased 5.4%
to $57,735,000 from $54,796,000 for the comparable period in 1998. The increase
in noninterest expenses included an increase in salaries of $1,351,000 or 5.0%
over the amounts for the second quarter of 1998 and an increase in employee
benefits of $468,000 or 7.8%. Other expenses increased $869,000 or 8.4% over
the amounts for the second quarter of 1998.
ANALYSIS OF FINANCIAL CONDITION
Investment securities decreased 4.1% to $1,828,941,000 at June 30, 1999
from $1,907,541,000 at December 31, 1998. Total loans at June 30, 1999 were
$5,363,310,000, an increase of 2.7% from the $5,220,890,000 at December 31,
1998. Total earning assets increased slightly to $7,194,307,000 at June 30,
1999 from $7,186,147,000 at December 31, 1998.
Total deposits decreased 1.3% to $5,879,729,000 as of June 30, 1999 from
$5,958,346,000 at December 31, 1998. Interest-bearing deposits were
$4,536,162,000 as of June 30, 1999, reflecting a less than 1.0% decrease from
the $4,569,968,000 at December 31, 1998. Interest-bearing deposits represented
77.1% of total deposits at June 30, 1999 and 76.7% of total deposits at
December 31, 1998. Noninterest-bearing deposits decreased 3.2% to
$1,343,567,000 as of June 30, 1999, compared to $1,388,378,000 at December 31,
1998.
Short-term borrowings, which mainly consist of federal funds purchased,
securities sold under repurchase agreements and commercial paper, increased
18.4% to $606,314,000 at June 30, 1999 from $511,945,000 at December 31, 1998.
Long-term debt increased $49,951,000 to $90,885,000 at June 30, 1999 from
$40,934,000 at December 31, 1998. The increase reflects the issuance of
$35,000,000 in 6.72% senior notes and $15,000,000 in 6.80% senior notes during
the second quarter of 1999, offset by amortization of principal on pre-existing
debt. The proceeds of the new notes are to be used for general corporate
purposes.
Total stockholders' equity decreased 4.1% to $957,953,000 at June 30, 1999
from $999,359,000 at December 31, 1998. The increase from net income was more
than offset by dividends paid and by share repurchases. However, despite the
decrease in stockholders' equity, the Corporation continued to maintain a
strong capital position, evidenced by the ratio of stockholders' equity to
total assets of 12.58% at June 30, 1999 and 13.13% at December 31, 1998. 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 six months ended June 30, 1999,
non-performing assets increased $798,000 to $23,382,000. Non-performing loans
and other real estate owned, components of non-performing assets, increased
$655,000 and $143,000, respectively.
<TABLE>
<CAPTION>
NON-PERFORMING ASSETS JUNE 30, December 31,
(DOLLARS IN THOUSANDS) 1999 1998
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
Non-accrual loans (1) ................................................... $21,958 $21,303
Renegotiated loans (1) ..................................................
Loans contractually past due 90 days or more and still accruing
interest............................................................
------- -------
Total non-performing loans .......................................... 21,958 21,303
Other real estate owned ................................................. 1,424 1,281
------- -------
Total non-performing assets ......................................... $23,382 $22,584
======= =======
</TABLE>
<PAGE>
PAGE 10
(1) Total interest on non-performing loans is not considered to be material in
any of the periods reported herein. Aggregate gross interest income of
$1,186,000 and $2,225,000 for the first six months of 1999 and the year
1998, 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 $194,000 and $796,000 for the first six months of 1999 and
the year 1998, respectively.
NOTE: The Corporation was monitoring loans estimated to aggregate $2,766,000 at
June 30, 1999 and $3,906,000 at December 31, 1998, not classified as
non-accrual or renegotiated loans. These loans had characteristics which
indicated they might result in such classification in the future.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses has been established through provisions for
loan losses charged against income. Loans deemed to be uncollectible are
charged against the allowance for loan losses and any subsequent recoveries are
credited to the allowance. Intensive collection efforts continue after
charge-off in order to maximize the recovery amounts previously charged off.
Charge-offs, net of recoveries, were $1,133,000 for the first six months of
1999 and $1,407,000 for the same period in 1998.
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, 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 6 MONTHS ENDED FOR THE 3 MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------ -----------------------------
ALLOWANCE FOR LOAN LOSSES
(DOLLARS IN THOUSANDS) 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Allowance balance -- beginning .................................. $ 112,423 $ 106,097 $ 113,562 $ 107,044
Allowance of acquired bank ...................................... 1,130 1,130
Charge-offs:
Commercial, financial and agricultural ......................... (946) (1,626) (673) (351)
Real estate -- construction .................................... (21) (21)
Real estate -- mortgage ........................................ (276) (539) (181) (325)
Consumer ....................................................... (1,327) (1,436) (536) (703)
---------- ---------- ---------- ---------
Total ........................................................ (2,570) (3,601) (1,411) (1,379)
---------- ---------- ---------- ---------
Recoveries:
Commercial, financial and agricultural ......................... 758 834 211 602
Real estate -- construction .................................... 4 175 1 74
Real estate -- mortgage ........................................ 103 448 23 401
Consumer ....................................................... 572 737 299 436
---------- ---------- ---------- ---------
Total ........................................................ 1,437 2,194 534 1,513
---------- ---------- ---------- ---------
Net (charge-offs)/recoveries .................................... (1,133) (1,407) (877) 134
Provision for loan losses ....................................... 3,043 5,626 1,648 3,138
---------- ---------- ---------- ---------
Allowance balance -- ending ..................................... $ 114,333 $ 111,446 $ 114,333 $ 111,446
========== ========== ========== =========
Average loans outstanding during period ......................... $5,262,300 $4,958,400 $5,295,800 $4,978,000
========== ========== ========== ==========
Net charge-offs/(recoveries) -- annualized as a percentage of
average loans outstanding during period ........................ .04% .06% .07% (.01)%
========== ========== ========== ==========
Allowance for loan losses at period end as a percentage of
average loans .................................................. 2.17% 2.25% 2.16% 2.24%
========== ========== ========== ==========
Allowance for loan losses at period end as a percentage of
non-performing loans at period end ............................. 520.69% 398.32%
========== ==========
</TABLE>
<PAGE>
PAGE 11
YEAR 2000 ISSUES
The information that follows is a "Year 2000 Readiness Disclosure" for
purposes of the Year 2000 Information and Readiness Disclosure Act. The Year
2000 issues relate to systems designed to use two digits rather than four to
define the applicable year. This flaw can cause system failures and
disruptions, including inability to process transactions.
The Corporation began assessing these issues during 1995. The process
basically incorporates an assessment of need, implementation of software
modifications or installation of new software, testing of software and
interfaces thereto and development of contingency plans.
This report focuses primarily on information technology, our
computer-based systems and applications. Non-information technology issues,
which involve embedded technology such as microcontrollers affecting
performance of machinery and equipment, are believed to have been assessed and
resolved.
As to information technology, the assessment, implementation and testing
phases have been completed. A major part of this project was concluded in 1997,
when 18 of 21 banking affiliates converted to a new integrated Year 2000
compliant banking and general ledger software system. Two more affiliates were
converted during the third quarter of 1998 and the one remaining affiliate is
operating on separate Year 2000 compliant computer-based systems and software.
The Trust accounting software was upgraded to Year 2000 compliant software in
October 1998. Compliance certification testing for the mission critical Banking
and Trust systems was completed in 1998. Of the remaining systems, 99% of the
effort is accomplished. Achievement of fully integrated systems and vendor
testing was completed in the first half of 1999.
The Corporation has continued formal communications with important
vendors, customers and other third parties regarding their Year 2000 readiness.
Vendors are requested to represent that their products and services will be
compliant and appropriately tested.
Contingency plans have been developed to mitigate the effects of business
interruptions which could occur in the case of system failures, power outages,
shutdowns in telephone service or other problems. These plans identify, assess
and prioritize core business functions and their supporting systems, minimum
levels of acceptable service, and alternatives for restoring business
activities, including manual processing of transactions. The plans incorporate
measures to meet unusual cash withdrawal requirements. The Corporation is also
engaged in public awareness efforts designed to educate customers on Year 2000
readiness, with emphasis on bank safety and soundness and protections afforded
by FDIC insurance. Contingency planning and system monitoring will be a
continuous process throughout 1999.
A Year 2000 committee has been established to monitor progress in
addressing all aspects of the Year 2000 plan. Formal reports are made to the
Audit Committee of our lead bank affiliate and to the Board of Directors of the
Corporation at their respective quarterly meetings. Progress is also being
monitored by internal and external audit reviews. Management believes that it
is on an appropriate schedule with its Year 2000 plan.
Since the inception of this project, the Corporation has incurred
incremental external costs of $9.3 million which it has identified as Year 2000
related. Management does not anticipate that material additional incremental
costs will be incurred in the completion of its Year 2000 plan.
CAUTIONARY STATEMENT
This report contains forward-looking statements within the meaning of and
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. A forward-looking statement encompasses any estimate,
prediction, opinion or statement of belief contained in this report, and the
underlying management assumptions. Concerning Year 2000 issues, our
expectations stated in this report on matters such as the degree of progress
and compliance to be achieved at various times are based on assessments and
assumptions that involve many unpredictable factors including the readiness,
compliance, representations and performance of third parties. Therefore, these
statements should be read with caution. For example, the daily conduct of a
banking business involves interdependence among banks, other financial
institutions and governmental bodies (such as the Federal Reserve System) which
will require mutual readiness for Year 2000, with potentially serious
consequences if readiness is not achieved. In such an environment, while
contingency plans can be effective to some degree, there may not be viable
alternatives if systems are not compliant or if failure occurs. In such a case,
the adverse effects on the Corporation may be material to an unpredictable
extent.
<PAGE>
PAGE 12
MERCANTILE BANKSHARES CORPORATION
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 six months of the year.
<TABLE>
<CAPTION>
1999 1998
---------------------------------- -----------------------------------
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 ....................................... $1,926,900 $ 81,134 8.49% $1,763,700 $ 79,884 9.13%
Real estate ...................................... 2,678,700 112,802 8.49 2,547,800 114,713 9.08
Consumer ......................................... 656,700 27,823 8.54 646,900 28,860 9.00
---------- -------- ---------- --------
Total loans .................................... 5,262,300 221,759 8.50 4,958,400 223,457 9.09
---------- -------- ---------- --------
Federal funds sold ................................. 22,400 514 4.63 146,600 3,979 5.47
Securities purchased under resale agreements ....... 16,500 464 5.69
Securities**:
Taxable securities
U.S. Treasury securities ........................ 1,809,200 51,040 5.69 1,592,000 47,273 5.99
U.S. Agency securities .......................... 15,500 456 5.93 17,700 548 6.25
Other stocks and bonds .......................... 23,900 1,202 10.14 22,800 992 8.75
Tax-exempt securities
States and political subdivisions ............... 12,700 505 8.01 13,800 547 7.99
---------- -------- ---------- --------
Total securities ............................... 1,861,300 53,203 5.76 1,646,300 49,360 6.05
---------- -------- ---------- --------
Interest-bearing deposits in other banks ........... 100 2 4.13 100 3 5.39
---------- -------- ---------- --------
Total earning assets ........................... 7,146,100 275,478 7.77 6,767,900 277,263 8.26
-------- --------
Cash and due from banks ............................. 222,100 210,500
Bank premises and equipment, net .................... 93,100 84,200
Other assets ........................................ 183,300 169,600
Less: allowance for loan losses ..................... (113,800) (108,300)
---------- ----------
Total assets ................................... $7,530,800 $7,123,900
========== ==========
Interest-bearing liabilities
Deposits:
Savings deposits ................................. $2,365,000 24,193 2.06 $2,233,700 28,533 2.58
Time deposits .................................... 2,208,400 55,553 5.07 2,239,700 61,190 5.51
---------- -------- ---------- --------
Total interest-bearing deposits ................ 4,573,400 79,746 3.52 4,473,400 89,723 4.04
Short-term borrowings ............................ 536,600 11,696 4.40 377,200 9,093 4.86
Long-term debt ................................... 58,100 1,960 6.81 50,000 1,667 6.72
---------- -------- ---------- --------
Total interest-bearing funds ................... 5,168,100 93,402 3.64 4,900,600 100,483 4.13
-------- --------
Noninterest-bearing deposits ........................ 1,299,600 1,176,000
Other liabilities and accrued expenses .............. 96,900 93,300
---------- ----------
Total liabilities .............................. 6,564,600 6,169,900
Stockholders' equity ................................ 966,200 954,000
---------- ----------
Total liabilities and stockholders' equity ..... $7,530,800 $7,123,900
========== ==========
Net interest income ................................. $182,076 $176,780
======== ========
Net interest rate spread ............................ 4.13% 4.13%
Effect of noninterest-bearing funds ................. 1.01 1.14
----- ----
Net interest margin on earning assets ............... 5.14% 5.27%
===== ====
Taxable-equivalent adjustment included in:
Loan income ...................................... $ 2,043 $ 2,312
Investment securities income ..................... 291 413
-------- --------
Total .......................................... $ 2,334 $ 2,725
======== ========
</TABLE>
* Presented on a tax equivalent basis using the statutory federal corporate
income tax rate of 35%.
** Balances reported at amortized cost; excludes pretax unrealized gains
(losses) on securities available-for-sale.
<PAGE>
PAGE 13
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information responsive to this Item as of December 31, 1998 appears under
the caption "Asset/Liability and Liquidity Management" on pages 18-21 of the
registrant's 1998 Annual Report to Stockholders, filed as Exhibit 13 to
registrant's Annual Report on Form 10-K for the year ended December 31, 1998.
There was no material change in such information as of June 30, 1999.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Matters voted upon and voted at the Annual Meeting of Stockholders held
April 28, 1999.
Results of voting for Election of Directors:
<TABLE>
<CAPTION>
DIRECTORS FOR WITHHELD
- --------------------------------- ------------ ------------
<S> <C> <C>
Cynthia A. Archer 58,201,594 545,961
H. Furlong Baldwin 58,236,164 511,391
Thomas M. Bancroft, Jr. 58,208,837 538,718
Richard O. Berndt 57,484,648 1,262,907
William R. Brody, M.D. 58,111,031 636,524
George L. Bunting, Jr. 58,145,364 602,191
Martin L. Grass 52,449,709 6,297,846
Freeman A. Hrabowski, III 58,097,380 650,175
Mary Junck 58,165,788 581,767
Robert A. Kinsley 58,254,699 492,856
William J. McCarthy 57,961,366 786,189
Morris W. Offit 52,160,075 6,587,480
Morton B. Plant 58,229,218 518,337
Christian H. Poindexter 58,093,402 654,153
Donald J. Shepard 58,284,951 462,604
</TABLE>
Results of voting on Approval of the 1999 Omnibus Stock Plan:
<TABLE>
<CAPTION>
FOR AGAINST ABSTAINED
- ------------------- ----------- ----------
<S> <C> <C>
54,068,207 3,640,883 1,038,465
</TABLE>
Results of voting on Ratification of Appointment of Auditors
(PricewaterhouseCoopers LLP):
<TABLE>
<CAPTION>
FOR AGAINST ABSTAINED
- ------------------- --------- ----------
<S> <C> <C>
57,993,307 416,449 337,799
</TABLE>
There were no broker non-votes on these matters.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits --
Exhibit 27 -- Financial Data Schedule
(b) Form 8-K filed, dated June 11, 1999, Item 5. Other Events.
<PAGE>
PAGE 14
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
August 11, 1999 Principal Executive Officer
/s/ H. Furlong Baldwin
----------------------------------------
By: H. Furlong Baldwin
Chairman of the Board and
Chief Executive Officer
August 11, 1999 Principal Financial Officer
/s/ Terry L. Troupe
----------------------------------------
By: Terry L. Troupe
Chief Financial Officer
August 11, 1999 Chief Accounting Officer
/s/ Diana E. Nelson
----------------------------------------
By: Diana E. Nelson
Controller and Chief Accounting Officer
<PAGE>
PAGE 14
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
August 11, 1999 Principal Executive Officer
----------------------------------------
By: H. Furlong Baldwin
Chairman of the Board and
Chief Executive Officer
August 11, 1999 Principal Financial Officer
----------------------------------------
By: Terry L. Troupe
Chief Financial Officer
August 11, 1999 Chief Accounting Officer
----------------------------------------
By: Diana E. Nelson
Controller and Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AS OF JUNE 30, 1999, FROM THE INCOME STATEMENT FOR THE PERIOD ENDED JUNE
30, 1999 AND FROM MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS FOR THE PERIOD ENDED JUNE 30, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 242,802,000
<INT-BEARING-DEPOSITS> 150,000
<FED-FUNDS-SOLD> 1,906,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,803,095,000
<INVESTMENTS-CARRYING> 25,846,000
<INVESTMENTS-MARKET> 25,894,000
<LOANS> 5,363,310,000
<ALLOWANCE> 114,333,000
<TOTAL-ASSETS> 7,614,970,000
<DEPOSITS> 5,879,729,000
<SHORT-TERM> 606,314,000
<LIABILITIES-OTHER> 80,089,000
<LONG-TERM> 90,885,000
0
0
<COMMON> 138,689,000
<OTHER-SE> 819,264,000
<TOTAL-LIABILITIES-AND-EQUITY> 7,614,970,000
<INTEREST-LOAN> 219,716,000
<INTEREST-INVEST> 52,912,000
<INTEREST-OTHER> 516,000
<INTEREST-TOTAL> 273,144,000
<INTEREST-DEPOSIT> 79,746,000
<INTEREST-EXPENSE> 93,402,000
<INTEREST-INCOME-NET> 179,742,000
<LOAN-LOSSES> 3,043,000
<SECURITIES-GAINS> 8,000
<EXPENSE-OTHER> 114,047,000
<INCOME-PRETAX> 120,326,000
<INCOME-PRE-EXTRAORDINARY> 120,326,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 76,090,000
<EPS-BASIC> 1.09
<EPS-DILUTED> 1.08
<YIELD-ACTUAL> 5.14
<LOANS-NON> 21,958,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,766,000
<ALLOWANCE-OPEN> 112,423,000
<CHARGE-OFFS> 2,570,000
<RECOVERIES> 1,437,000
<ALLOWANCE-CLOSE> 114,333,000
<ALLOWANCE-DOMESTIC> 114,333,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
