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 September 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)
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 October 29, 1999, registrant had outstanding 68,928,958 shares of Common
Stock.
<PAGE>
PAGE 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
MERCANTILE BANKSHARES CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998
- ------------------------------------------------------------------------------------------ --------------- -------------
<S> <C> <C>
ASSETS
Cash and due from banks .................................................................. $ 247,510 $ 254,994
Interest-bearing deposits in other banks ................................................. 151 100
Federal funds sold ....................................................................... 322 57,616
---------- ----------
Total cash and cash equivalents ...................................................... 247,983 312,710
---------- ----------
Investment securities:
U.S. Treasury and government agencies
Available-for-sale at fair value ...................................................... 1,784,427 1,863,195
States and political subdivisions
Held-to-maturity -- market value of $10,392 (1999) and $12,673 (1998).................. 10,377 12,436
Available-for-sale at fair value ...................................................... 1,351 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 ...................................................... 14,490 15,862
---------- ----------
Total investment securities .......................................................... 1,826,038 1,907,541
---------- ----------
Loans .................................................................................... 5,502,468 5,220,890
Less: allowance for loan losses .......................................................... (116,463) (112,423)
---------- ----------
Loans, net ........................................................................... 5,386,005 5,108,467
---------- ----------
Bank premises and equipment, less accumulated depreciation of
$95,926 (1999) and $90,633 (1998)........................................................ 96,444 91,577
Other real estate owned, net ............................................................. 1,407 1,281
Excess cost over equity in affiliated banks, net ......................................... 47,440 50,314
Other assets ............................................................................. 152,846 137,673
---------- ----------
Total assets ......................................................................... $7,758,163 $7,609,563
========== ==========
LIABILITIES
Deposits:
Noninterest-bearing deposits ............................................................ $1,409,596 $1,388,378
Interest-bearing deposits ............................................................... 4,500,960 4,569,968
---------- ----------
Total deposits ....................................................................... 5,910,556 5,958,346
Short-term borrowings .................................................................... 703,939 511,945
Accrued expenses and other liabilities ................................................... 91,613 98,979
Long-term debt ........................................................................... 82,684 40,934
---------- ----------
Total liabilities .................................................................... 6,788,792 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 68,941,380 shares in 1999 and 71,026,927 shares in 1998 .......................... 137,883 142,054
Capital surplus .......................................................................... 57,516 31,357
Retained earnings ........................................................................ 771,896 803,568
Accumulated other comprehensive income ................................................... 2,076 22,380
---------- ----------
Total stockholders' equity ........................................................... 969,371 999,359
---------- ----------
Total liabilities and stockholders' equity .......................................... $7,758,163 $7,609,563
========== ==========
</TABLE>
See notes to consolidated financial statements
<PAGE>
PAGE 3
MERCANTILE BANKSHARES CORPORATION
STATEMENT OF CONSOLIDATED INCOME
<TABLE>
<CAPTION>
FOR THE 9 MONTHS ENDED FOR THE 3 MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) 1999 1998 1999 1998
- ----------------------------------------------------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans ................................ $ 333,886 $ 333,571 $ 114,170 $ 112,426
--------- --------- --------- ---------
Interest and dividends on investment securities:
Taxable interest income .................................. 76,977 72,945 25,481 25,124
Tax-exempt interest income ............................... 443 517 138 186
Dividends ................................................ 1,341 970 345 338
Other investment income .................................. 163 291 48 128
--------- --------- --------- ---------
78,924 74,723 26,012 25,776
--------- --------- --------- ---------
Other interest income ..................................... 636 7,578 120 3,132
--------- --------- --------- ---------
Total interest income ................................. 413,446 415,872 140,302 141,334
--------- --------- --------- ---------
INTEREST EXPENSE
Interest on deposits ...................................... 118,682 134,784 38,936 45,061
Interest on short-term borrowings ......................... 18,129 14,921 6,433 5,828
Interest on long-term debt ................................ 3,413 2,385 1,453 718
--------- --------- --------- ---------
Total interest expense ................................ 140,224 152,090 46,822 51,607
--------- --------- --------- ---------
NET INTEREST INCOME ....................................... 273,222 263,782 93,480 89,727
Provision for loan losses ................................. 5,937 8,475 2,894 2,849
--------- --------- --------- ---------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES ....... 267,285 255,307 90,586 86,878
--------- --------- --------- ---------
NONINTEREST INCOME
Trust division services ................................... 48,274 43,442 16,630 15,005
Service charges on deposit accounts ....................... 17,003 14,287 5,927 4,855
Other fees ................................................ 21,573 20,237 8,275 7,369
Investment securities gains and (losses) .................. 8 9
Other income .............................................. 2,386 2,054 738 677
--------- --------- --------- ---------
Total noninterest income .............................. 89,244 80,029 31,570 27,906
--------- --------- --------- ---------
NONINTEREST EXPENSES
Salaries .................................................. 82,848 79,591 27,997 26,505
Employee benefits ......................................... 20,052 19,162 6,181 6,756
Net occupancy expense of bank premises .................... 8,797 8,229 3,414 2,952
Furniture and equipment expenses .......................... 15,126 13,823 4,826 4,428
Communications and supplies ............................... 9,359 9,091 3,050 3,130
Amortization of excess cost over equity in affiliates ..... 2,917 2,516 1,001 922
Other expenses ............................................ 32,489 30,243 11,072 10,811
--------- --------- --------- ---------
Total noninterest expenses ............................ 171,588 162,655 57,541 55,504
--------- --------- --------- ---------
Income before income taxes ................................ 184,941 172,681 64,615 59,280
Applicable income taxes ................................... 68,032 63,338 23,796 22,016
--------- --------- --------- ---------
NET INCOME ................................................ $ 116,909 $ 109,343 $ 40,819 $ 37,264
========= ========= ========= =========
NET INCOME PER SHARE OF COMMON STOCK (NOTE 2):
Basic .................................................... $ 1.68 $ 1.52 $ .59 $ .52
========= ========= ========= =========
Diluted .................................................. $ 1.66 $ 1.51 $ .59 $ .52
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements
<PAGE>
PAGE 4
MERCANTILE BANKSHARES CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
<TABLE>
<CAPTION>
FOR THE 9 MONTHS ENDED
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS SEPTEMBER 30,
(DOLLARS IN THOUSANDS) 1999 1998
- ---------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Interest and fees on loans ................................................. $ 331,180 $ 333,651
Interest and dividends on investment securities ............................ 76,347 71,669
Other interest income ...................................................... 782 7,922
Noninterest income ......................................................... 88,755 79,029
Interest paid .............................................................. (139,613) (154,379)
Noninterest expenses paid .................................................. (175,110) (163,045)
Income taxes paid .......................................................... (59,314) (63,396)
---------- ----------
Net cash provided by operating activities .............................. 123,027 111,451
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investment securities held-to-maturity ......... 4,100 2,567
Proceeds from maturities of investment securities available-for-sale ....... 391,588 356,589
Proceeds from sales of investment securities available-for-sale ............ 8 804
Purchases of investment securities held-to-maturity ........................ (2,795) (1,092)
Purchases of investment securities available-for-sale ...................... (343,995) (495,111)
Net (increase) decrease in customer loans .................................. (284,776) 7,937
Proceeds from sales of other real estate owned ............................. 1,223 1,232
Capital expenditures ....................................................... (11,420) (10,275)
Proceeds from sales of buildings ........................................... 321
---------- ----------
Net cash provided by (used in) investing activities .................... (246,067) (137,028)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in noninterest-bearing deposits .................... 21,218 38,589
Net increase (decrease) in checking plus interest and savings accounts ..... 3,525 32,183
Net increase (decrease) in certificates of deposit ......................... (72,533) (73,024)
Net increase (decrease) in short-term borrowings ........................... 191,994 103,606
Proceeds from issuance of long-term debt ................................... 50,000
Repayment of long-term debt ................................................ (8,250) (9,073)
Proceeds from issuance of shares ........................................... 5,571 5,032
Repurchase of common shares ................................................ (84,631) (47,226)
Dividends paid ............................................................. (48,581) (45,793)
---------- ----------
Net cash provided by financing activities .............................. 58,313 4,294
---------- ----------
Net increase (decrease) in cash and cash equivalents ....................... (64,727) (21,283)
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 ................................. $ 247,983 $ 400,322
========== ==========
</TABLE>
<TABLE>
<CAPTION>
FOR THE 9 MONTHS ENDED
RECONCILIATION OF NET INCOME TO NET CASH PROVIDED BY OPERATING ACTIVITIES SEPTEMBER 30,
(DOLLARS IN THOUSANDS) 1999 1998
- --------------------------------------------------------------------------------- -------------- --------------
<S> <C> <C>
Net income ...................................................................... $116,909 $109,343
--------- ---------
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization .................................................. 6,553 6,341
Provision for loan losses ...................................................... 5,937 8,475
Amortization of excess cost over equity in affiliates .......................... 2,917 2,516
Investment securities (gains) and losses ....................................... (8) (9)
Write-downs of other real estate owned ......................................... 104 208
Gains on sales of other real estate owned ...................................... (152) (258)
Gains on sales of buildings .................................................... (59)
(Increase) decrease in interest receivable ..................................... (5,137) (2,630)
(Increase) decrease in other receivables ....................................... (329) (674)
(Increase) decrease in other assets ............................................ (10,849) (18,444)
Increase (decrease) in interest payable ........................................ 611 (2,289)
Increase (decrease) in accrued expenses ........................................ (2,247) 8,989
Increase (decrease) in taxes payable ........................................... 8,718 (58)
---------- ----------
Total adjustments ........................................................... 6,118 2,108
---------- ----------
Net cash provided by operating activities ....................................... $123,027 $111,451
========== ==========
</TABLE>
See notes to consolidated financial statements
<PAGE>
PAGE 5
MERCANTILE BANKSHARES CORPORATION
STATEMENT OF CHANGES IN CONSOLIDATED STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
Common
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Total Stock
- ------------------------------------------------------------------- ------------ ------------
<S> <C> <C>
BALANCE, DECEMBER 31, 1997 ........................................ $ 935,004 $143,749
Net income ........................................................ 109,343
Unrealized gains (losses) on securities available-for-sale, net
of reclassification adjustment, net of taxes ..................... 16,783
---------
Comprehensive income .............................................. 126,126
---------
Cash dividends paid:
Common stock ($.64 per share) .................................... (45,793)
Issuance of 102,086 shares for dividend reinvestment and
stock purchase plan .............................................. 3,193 204
Issuance of 19,057 shares for employee stock purchase
dividend reinvestment plan ....................................... 649 38
Issuance of 90,993 shares for employee stock option plan .......... 1,190 182
Purchase of 1,333,500 shares under stock repurchase plan .......... (47,226) (2,667)
Issuance of 675,680 shares for bank acquisition ................... 23,055 1,351
Vested stock options .............................................. 1,027
--------- --------
BALANCE, SEPTEMBER 30, 1998 ....................................... $ 997,225 $142,857
========= ========
BALANCE, DECEMBER 31, 1998 ........................................ $ 999,359 $142,054
Net income ........................................................ 116,909
Unrealized gains (losses) on securities available-for-sale, net
of reclassification adjustment, net of taxes (Note 5) ............ (20,304)
---------
Comprehensive income .............................................. 96,605
---------
Cash dividends paid:
Common stock ($.70 per share) .................................... (48,581)
Issuance of 94,924 shares for dividend reinvestment and
stock purchase plan .............................................. 3,097 190
Issuance of 19,904 shares for employee stock purchase
dividend reinvestment plan ....................................... 760 40
Issuance of 146,625 shares for employee stock option plan ......... 1,714 293
Purchase of 2,347,000 shares under stock repurchase plan .......... (84,631) (4,694)
Vested stock options .............................................. 1,048
--------- --------
Transfer to capital surplus .......................................
BALANCE, SEPTEMBER 30, 1999 ....................................... $ 969,371 $137,883
========= ========
<CAPTION>
Accu-
mulated
Other
Compre-
Capital Retained hensive
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) Surplus Earnings Income
- ------------------------------------------------------------------- ------------ ------------- ------------
<S> <C> <C> <C>
BALANCE, DECEMBER 31, 1997 ........................................ $ 62,089 $ 717,978 $ 11,188
Net income ........................................................ 109,343
Unrealized gains (losses) on securities available-for-sale, net
of reclassification adjustment, net of taxes ..................... 16,783
Comprehensive income ..............................................
Cash dividends paid:
Common stock ($.64 per share) .................................... (45,793)
Issuance of 102,086 shares for dividend reinvestment and
stock purchase plan .............................................. 2,989
Issuance of 19,057 shares for employee stock purchase
dividend reinvestment plan ....................................... 611
Issuance of 90,993 shares for employee stock option plan .......... 1,008
Purchase of 1,333,500 shares under stock repurchase plan .......... (44,559)
Issuance of 675,680 shares for bank acquisition ................... 21,704
Vested stock options .............................................. 1,027
---------- ----------- ----------
BALANCE, SEPTEMBER 30, 1998 ....................................... $ 44,869 $ 781,528 $ 27,971
========== =========== ==========
BALANCE, DECEMBER 31, 1998 ........................................ $ 31,357 $ 803,568 $ 22,380
Net income ........................................................ 116,909
Unrealized gains (losses) on securities available-for-sale, net
of reclassification adjustment, net of taxes (Note 5) ............ (20,304)
Comprehensive income ..............................................
Cash dividends paid:
Common stock ($.70 per share) .................................... (48,581)
Issuance of 94,924 shares for dividend reinvestment and
stock purchase plan .............................................. 2,907
Issuance of 19,904 shares for employee stock purchase
dividend reinvestment plan ....................................... 720
Issuance of 146,625 shares for employee stock option plan ......... 1,421
Purchase of 2,347,000 shares under stock repurchase plan .......... (79,937)
Vested stock options .............................................. 1,048
Transfer to capital surplus ....................................... 100,000 (100,000)
---------- ----------- ----------
BALANCE, SEPTEMBER 30, 1999 ....................................... $ 57,516 $ 771,896 $ 2,076
========== =========== ==========
</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 69,641,812
shares for 1999 and 71,788,479 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 nine months ended September 30, 1999 and 1998
were 70,218,542 and 72,334,160, 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>
SEPTEMBER 30, December 31,
(DOLLARS IN THOUSANDS) 1999 1998
- ---------------------------------------------------------------------------------- --------------- -------------
<S> <C> <C>
Impaired loans with a valuation allowance ........................................ $ 5,850 $ 2,152
Impaired loans with no valuation allowance ....................................... 15,141 14,159
-------- --------
Total impaired loans ............................................................ $ 20,991 $ 16,311
======== ========
Allowance for loan losses applicable to impaired loans ........................... $ 2,580 $ 1,046
Allowance for loan losses applicable to other than impaired loans ................ 113,883 111,377
-------- --------
Total allowance for loan losses ................................................. $116,463 $112,423
======== ========
Year-to-date interest income on impaired loans recorded on the cash basis ........ $ 197 $ 690
======== ========
Year-to-date average recorded investment in impaired loans during the period ..... $ 17,485 $ 21,395
======== ========
Quarter-to-date interest income on impaired loans recorded on the cash basis ..... $ 66 $ 122
======== ========
Quarter-to-date average recorded investment in impaired loans during the period .. $ 18,239 $ 20,340
======== ========
</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 September 30, 1999, total unused lines
of credit approximated $2,957,100,000. In addition, letters of credit are
issued for the benefit of customers by affiliated banks. Outstanding letters
of credit were $162,233,000 at September 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 9 MONTHS ENDED SEPTEMBER 30,
1999 1998
--------------------------------------- ---------------------------------
Tax Tax
Pretax (Expense) Net Pretax (Expense) Net
(DOLLARS IN THOUSANDS) Amount Benefit Amount Amount Benefit Amount
- ------------------------------------------------------ ------------- ----------- ------------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Unrealized gains (losses) on securities available-
for-sale:
Unrealized holding gains (losses) arising during the
period .............................................. $ (32,594) $12,295 $ (20,299) $26,179 $ (9,391) $16,788
Reclassification adjustment for (gains) losses
included in net income .............................. (8) 3 (5) (9) 4 (5)
---------- ------- ---------- -------- -------- --------
Total ................................................ $ (32,602) $12,298 $ (20,304) $26,170 $ (9,387) $16,783
========= ======= ========= ======= ======== =======
</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 nine months
ended September 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 ................... $ 92,109 $ 92,109 $ 182,180 $ (1,067) $ 273,222
Provision for loan losses ............. (2,371) (2,371) (3,566) (5,937)
Noninterest income .................... 19,777 $ 47,733 67,510 29,736 (8,002) 89,244
Noninterest expenses .................. (54,703) (25,567) (80,270) (95,486) 4,168 (171,588)
Adjustments ........................... 11,697 (2,243) 9,454 (8,493) (961)
--------- --------- ---------- ---------- ---------- ----------
Income (loss) before income taxes ..... 66,509 19,923 86,432 104,371 (5,862) 184,941
Income tax (expense) benefit .......... (23,952) (7,969) (31,921) (37,949) 1,838 (68,032)
--------- --------- ---------- ---------- ---------- ----------
Net income (loss) ..................... $ 42,557 $ 11,954 $ 54,511 $ 66,422 $ (4,024) $ 116,909
========= ========= ========== ========== ========== ==========
Average assets ........................ $2,782,797 $4,900,687 $ (123,005) $7,560,479
Average equity ........................ 333,488 592,190 42,423 968,101
1998 MSD&T MSD&T Total Community
(DOLLARS IN THOUSANDS) Banking Trust MSD&T Banks Other Total
- -------------------------------------- --------- --------- ---------- ---------- ---------- ----------
Net interest income ................... $ 88,508 $ 88,508 $ 174,484 $ 790 $ 263,782
Provision for loan losses ............. (2,485) (2,485) (5,990) (8,475)
Noninterest income .................... 17,867 $ 42,969 60,836 26,335 (7,142) 80,029
Noninterest expenses .................. (50,511) (23,741) (74,252) (92,836) 4,433 (162,655)
Adjustments ........................... 9,955 (1,770) 8,185 (7,675) (510)
--------- --------- ---------- ---------- ---------- ----------
Income (loss) before income taxes ..... 63,334 17,458 80,792 94,318 (2,429) 172,681
Income tax (expense) benefit .......... (22,851) (6,983) (29,834) (34,017) 513 (63,338)
--------- --------- ---------- ---------- ---------- ----------
Net income (loss) ..................... $ 40,483 $ 10,475 $ 50,958 $ 60,301 $ (1,916) $ 109,343
========= ========= ========== ========== ========== ==========
Average assets ........................ $2,722,641 $4,628,215 $ (153,186) $7,197,670
Average equity ........................ 314,473 557,708 89,051 961,232
</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 nine months ended September 30, 1999
was $1.68, an increase of 10.5% over the $1.52 for the comparable period last
year. Diluted net income per share was $1.66 for the first three quarters of
1999 and $1.51 for the same period in 1998, representing a 9.9% increase. Net
income was $116,909,000 for the first nine months of 1999, an increase of 6.9%
over the $109,343,000 for the comparable period in 1998.
Basic and diluted net income per share for the third quarter of 1999 was
$.59. This represented a 13.5% increase over the $.52 reported for basic and
diluted net income per share for the same period last year. Net income was
$40,819,000 for the three months ended September 30, 1999, an increase of 9.5%
over the $37,264,000 for the comparable period in 1998.
Return on average assets was 2.07% for the first three quarters of 1999
and 2.03% for the first three quarters of 1998. Return on average equity
increased to 16.15% for the first nine months of 1999 compared to 15.21% for
the same period in 1998. Return on average tangible equity, which excludes
amortization expense and balances related to goodwill in the calculation, was
17.43% for the first three quarters of 1999 and 16.32% for the comparable
period in 1998.
Return on average assets was 2.13% for the third quarter of 1999 and 2.01%
for the third quarter of 1998. Return on average equity increased to 16.66% for
the three months ended September 30, 1999, compared to 15.15% for the same
period in 1998. Return on average tangible equity was 17.96% for the third
quarter of 1999 and 16.35% for the comparable period in 1998.
NET INTEREST INCOME AND NET INTEREST MARGIN
Net interest income on a fully taxable equivalent basis was $276,711,000
for the nine months ended September 30, 1999. This was 3.3% higher than the
amount for the comparable period in 1998 due to an increase of 4.9% in average
earning assets. Average loans increased by 6.5% over the first three quarters
of 1998 to $5,301,433,000 for the first three quarters of 1999. Average
securities were $1,854,041,000 for the first nine months of 1999, a 10.6%
increase over the $1,675,789,000 for the comparable period in 1998. For the
first nine months of 1999, average federal funds sold and securities purchased
under resale agreements decreased $167,238,000 or 90.5% from the amounts for
the first nine months of 1998. Net interest margin on average earning assets
declined to 5.16% for the first three quarters of 1999, as compared to 5.24%
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 $94,635,000
for the three months ended September 30, 1999. This was 3.9% higher than the
amount for the comparable period in 1998 due to an increase of 3.7% in average
earning assets and a slight increase in net interest margin on average earning
assets. Average loans increased by 7.4% over the third quarter of 1998 to
$5,378,343,000. Average securities were $1,839,771,000 for the quarter ended
September 30, 1999, a 6.1% increase over the $1,733,730,000 for the comparable
period in 1998. For the three months ended September 30, 1999, average federal
funds sold and securities purchased under resale agreements decreased
$219,460,000 or 96.4% from the amounts for the third quarter of 1998.
NONINTEREST INCOME
For the first nine months of 1999, total noninterest income increased
11.5% to $89,244,000 from $80,029,000 for the first three quarters of 1998.
Factors contributing to this increase include an increase in trust division
revenues of $4,832,000 or 11.1% and an increase in service charges on deposit
accounts of $2,716,000 or 19.0% over the comparable amounts for 1998.
Total noninterest income for the quarter ended September 30, 1999,
increased 13.1% to $31,570,000 from $27,906,000 for the third quarter of 1998.
Factors contributing to this increase include an increase in trust division
revenues of $1,625,000 or 10.8% and an increase in service charges on deposit
accounts of $1,072,000 or 22.1% over the same amounts for the third quarter of
last year.
NONINTEREST EXPENSES
For the first three quarters of 1999, total noninterest expenses increased
5.5% to $171,588,000 from $162,655,000 for the comparable period in 1998. The
increase in noninterest expenses included an increase in salaries of $3,257,000
or 4.1% over the amounts for the first nine months of 1998 and an increase in
employee benefits of $890,000 or 4.6%. Additionally,
<PAGE>
PAGE 9
furniture and equipment expenses increased $1,303,000 or 9.4% over the amounts
for the first three quarters of 1998 and other expenses increased $2,246,000 or
7.4%.
Total noninterest expenses for the third quarter of 1999 increased 3.7% to
$57,541,000 from $55,504,000 for the comparable period in 1998. The increase in
noninterest expenses included an increase in salaries of $1,492,000 or 5.6%
over the amounts for the third quarter of 1998, an increase in net occupancy
expense of bank premises of $462,000 or 15.7%, and an increase in furniture and
equipment expenses of $398,000 or 9.0%. These increases were partially offset
by a decrease in employee benefits of $575,000 or 8.5%. The decrease reflects
expenses incurred during the third quarter of 1998 relating to enhancements
made to the employee cash balance pension plan.
ANALYSIS OF FINANCIAL CONDITION
Investment securities decreased 4.3% to $1,826,038,000 at September 30,
1999 from $1,907,541,000 at December 31, 1998. Total loans at September 30,
1999 were $5,502,468,000, an increase of 5.4% from the $5,220,890,000 at
December 31, 1998. Total earning assets increased 2.0% to $7,328,979,000 at
September 30, 1999 from $7,186,147,000 at December 31, 1998.
Total deposits decreased less than 1.0% to $5,910,556,000 as of September
30, 1999 from $5,958,346,000 at December 31, 1998. Interest-bearing deposits
were $4,500,960,000 as of September 30, 1999, reflecting a 1.5% decrease from
the $4,569,968,000 at December 31, 1998. Interest-bearing deposits represented
76.2% of total deposits at September 30, 1999 and 76.7% of total deposits at
December 31, 1998. Noninterest-bearing deposits increased 1.5% to
$1,409,596,000 as of September 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
37.5% to $703,939,000 at September 30, 1999 from $511,945,000 at December 31,
1998. Long-term debt increased $41,750,000 to $82,684,000 at September 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 repayment of $8,250,000 in principal on
pre-existing debt. The proceeds of the new notes are to be used for general
corporate purposes.
Total stockholders' equity decreased 3.0% to $969,371,000 at September 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 12.49% at September 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 nine months ended September 30, 1999,
non-performing assets increased $5,297,000 to $27,881,000. Non-performing loans
and other real estate owned, components of non-performing assets, increased
$5,171,000 and $126,000, respectively.
<TABLE>
<CAPTION>
NON-PERFORMING ASSETS SEPTEMBER 30, December 31,
(DOLLARS IN THOUSANDS) 1999 1998
- ------------------------------------------------------------------------- --------------- -------------
<S> <C> <C>
Non-accrual loans (1) ................................................... $26,474 $21,303
Renegotiated loans (1) ..................................................
Loans contractually past due 90 days or more and still accruing interest
------- -------
Total non-performing loans .......................................... 26,474 21,303
Other real estate owned ................................................. 1,407 1,281
------- -------
Total non-performing assets ......................................... $27,881 $22,584
======= =======
</TABLE>
(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
$1,748,000 and $2,225,000 for the first nine 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
<PAGE>
PAGE 10
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 $507,000 and $796,000 for the first nine months of
1999 and the year 1998, respectively.
NOTE: The Corporation was monitoring loans estimated to aggregate $1,748,000 at
September 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.
ALLOWANCE AND PROVISION FOR LOAN LOSSES
The allowance for loan losses has been established through provisions for
loan losses charged against income. The provision for loan losses for the first
three quarters of 1999 was $5,937,000 as compared to $8,475,000 for the same
period last year. For the third quarter of 1999, the provision for loan losses
was $2,894,000 as compared to $2,849,000 for the third quarter of 1998.
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
$1,897,000 for the first nine months of 1999 and $2,300,000 for the comparable
period in 1998. Net charge-offs for the third quarter of 1999 were $764,000 as
compared to $893,000 for the same period last year.
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 9 MONTHS ENDED FOR THE 3 MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
ALLOWANCE FOR LOAN LOSSES
(DOLLARS IN THOUSANDS) 1999 1998 1999 1998
- ---------------------------------------------------------------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Allowance balance -- beginning ....................................... $ 112,423 $ 106,097 $ 114,333 $ 111,446
Allowance of acquired bank ........................................... 1,130
Charge-offs:
Commercial, financial and agricultural .............................. (1,168) (1,972) (222) (346)
Real estate -- construction ......................................... (21)
Real estate -- mortgage ............................................. (837) (825) (561) (286)
Consumer ............................................................ (2,001) (2,278) (674) (842)
---------- ---------- ---------- ----------
Total ............................................................. (4,027) (5,075) (1,457) (1,474)
---------- ---------- ---------- ----------
Recoveries:
Commercial, financial and agricultural .............................. 1,047 960 289 126
Real estate -- construction ......................................... 22 175 18
Real estate -- mortgage ............................................. 182 601 79 153
Consumer ............................................................ 879 1,039 307 302
---------- ---------- ---------- ----------
Total ............................................................. 2,130 2,775 693 581
---------- ---------- ---------- ----------
Net charge-offs ...................................................... (1,897) (2,300) (764) (893)
Provision for loan losses ............................................ 5,937 8,475 2,894 2,849
---------- ---------- ---------- ----------
Allowance balance -- ending .......................................... $ 116,463 $ 113,402 $ 116,463 $ 113,402
========== ========== ========== ==========
Average loans outstanding during period .............................. $5,301,433 $4,975,689 $5,378,343 $5,009,698
========== ========== ========== ==========
Net charge-offs (annualized) as a percentage of average loans
outstanding during period ........................................... .05% .06% .06% .07%
========== ========== ========== ==========
Allowance for loan losses at period end as a percentage of average
loans ............................................................... 2.20% 2.28% 2.17% 2.26%
========== ========== ========== ==========
Allowance for loan losses at period end as a percentage of
non-performing loans at period end .................................. 439.91% 451.51%
========== ==========
</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. Testing of remaining systems is also
complete. 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 (including electronic fund transfers and other transactions) involves
interdependence among banks, other financial institutions and governmental
bodies 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 nine 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 ....................................... $1,956,221 $124,782 8.53% $1,764,435 $120,230 9.11%
Real estate ...................................... 2,694,712 170,755 8.47 2,564,301 173,361 9.04
Consumer ......................................... 650,500 41,428 8.51 646,953 43,410 8.97
---------- -------- ---------- --------
Total loans .................................... 5,301,433 336,965 8.50 4,975,689 337,001 9.06
---------- -------- ---------- --------
Federal funds sold ................................. 17,642 632 4.79 173,984 7,110 5.46
Securities purchased under resale agreements ....... 10,896 464 5.69
Securities**:
Taxable securities
U.S. Treasury securities ........................ 1,803,020 76,311 5.66 1,620,027 72,161 5.96
U.S. Agency securities .......................... 15,163 666 5.87 18,374 784 5.70
Other stocks and bonds .......................... 23,585 1,624 9.21 23,075 1,565 9.07
Tax-exempt securities ............................
States and political subdivisions ............... 12,273 733 7.99 14,313 855 7.99
---------- -------- ---------- --------
Total securities ............................... 1,854,041 79,334 5.72 1,675,789 75,365 6.01
---------- -------- ---------- --------
Interest-bearing deposits in other banks ........... 131 4 3.97 100 4 5.28
---------- -------- ---------- --------
Total earning assets ........................... 7,173,247 416,935 7.77 6,836,458 419,944 8.21
-------- --------
Cash and due from banks ............................. 223,160 212,506
Bank premises and equipment, net .................... 93,868 85,028
Other assets ........................................ 184,561 173,381
Less: allowance for loan losses ..................... (114,357) (109,703)
---------- ----------
Total assets ................................... $7,560,479 $7,197,670
========== ==========
Interest-bearing liabilities
Deposits:
Savings deposits ................................. $2,373,128 36,334 2.04 $2,249,552 43,109 2.56
Time deposits .................................... 2,191,948 82,348 5.02 2,236,324 91,675 5.48
---------- -------- ---------- --------
Total interest-bearing deposits ................ 4,565,076 118,682 3.48 4,485,876 134,784 4.02
Short-term borrowings ............................ 545,352 18,129 4.44 412,465 14,921 4.84
Long-term debt ................................... 66,844 3,413 6.83 47,442 2,385 6.72
---------- -------- ---------- --------
Total interest-bearing funds ................... 5,177,272 140,224 3.62 4,945,783 152,090 4.11
-------- --------
Noninterest-bearing deposits ........................ 1,320,379 1,197,942
Other liabilities and accrued expenses .............. 94,727 92,713
---------- ----------
Total liabilities .............................. 6,592,378 6,236,438
Stockholders' equity ................................ 968,101 961,232
---------- ----------
Total liabilities and stockholders' equity ..... $7,560,479 $7,197,670
========== ==========
Net interest income ................................. $276,711 $267,854
======== ========
Net interest rate spread ............................ 4.15% 4.10%
Effect of noninterest-bearing funds ................. 1.01 1.14
----- ----
Net interest margin on earning assets ............... 5.16% 5.24%
===== ====
Taxable-equivalent adjustment included in:
Loan income ...................................... $ 3,079 $ 3,430
Investment securities income ..................... 410 642
-------- --------
Total .......................................... $ 3,489 $ 4,072
======== ========
</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 September 30, 1999.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The 2000 Annual Meeting of Stockholders of the registrant is expected to be
held on April 26, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits --
Exhibit 27 -- Financial Data Schedule
(b) No Forms 8-K filed.
<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
November 10, 1999 Principal Executive Officer
/s/ H. Furlong Baldwin
----------------------------------------
By: H. Furlong Baldwin
Chairman of the Board and
Chief Executive Officer
November 10, 1999 Principal Financial Officer
/s/ Terry L. Troupe
----------------------------------------
By: Terry L. Troupe
Chief Financial Officer
November 10, 1999 Chief Accounting Officer
/s/ Diana E. Nelson
----------------------------------------
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 SEPTEMBER 30, 1999, FROM THE INCOME STATEMENT FOR THE PERIOD ENDED
SEPTEMBER 30, 1999 AND FROM MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS FOR THE PERIOD ENDED SEPTEMBER 30, 1999 AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 247,510
<INT-BEARING-DEPOSITS> 151
<FED-FUNDS-SOLD> 322
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,800,268
<INVESTMENTS-CARRYING> 25,770
<INVESTMENTS-MARKET> 25,785
<LOANS> 5,502,468
<ALLOWANCE> 116,463
<TOTAL-ASSETS> 7,758,163
<DEPOSITS> 5,910,556
<SHORT-TERM> 703,939
<LIABILITIES-OTHER> 91,613
<LONG-TERM> 82,684
0
0
<COMMON> 137,883
<OTHER-SE> 831,488
<TOTAL-LIABILITIES-AND-EQUITY> 7,758,163
<INTEREST-LOAN> 333,886
<INTEREST-INVEST> 78,924
<INTEREST-OTHER> 636
<INTEREST-TOTAL> 413,446
<INTEREST-DEPOSIT> 113,682
<INTEREST-EXPENSE> 140,224
<INTEREST-INCOME-NET> 273,222
<LOAN-LOSSES> 5,937
<SECURITIES-GAINS> 8
<EXPENSE-OTHER> 171,588
<INCOME-PRETAX> 184,941
<INCOME-PRE-EXTRAORDINARY> 184,941
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 116,090
<EPS-BASIC> 1.68
<EPS-DILUTED> 1.66
<YIELD-ACTUAL> 5.16
<LOANS-NON> 26,474
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,748
<ALLOWANCE-OPEN> 112,423
<CHARGE-OFFS> 4,027
<RECOVERIES> 2,130
<ALLOWANCE-CLOSE> 116,463
<ALLOWANCE-DOMESTIC> 116,463
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
