Mercantile Bankshares Corp.'s board of directors voted yesterday to increase the company's quarterly cash dividend to 23 cents a share, up 15 percent over prior quarters this year.
H. Furlong Baldwin, Mercantile's chairman and chief executive, said the board voted for the three-cent increase because of the company's financial strength and the prospect for continued earnings growth.
"The earnings are strong and the capital continues to be strong, so it [the increase] is in order to share that with shareholders," Mr. Baldwin said.
The 23-cent dividend is payable Sept. 29 to stockholders of record as of the close of business Sept. 22.
John Heffern, senior bank analyst with NatWest Securities Corp, said the increase is "fairly consistent with the whole Mercantile culture."
"You don't get major or dramatic announcements, just 15 percent growth in the dividend and an ample capital base to show you there is little risk down the road."
Mercantile's stock, which has been climbing in recent weeks, closed at $27.375 a share, down 37.5 cents.
As with many banking companies, Mercantile's stock has benefited from the surge in mergers sweeping the industry. On Monday, the stock hit a high of $27.75 a share. Since June 12, its stock has climbed $5 per share.
"The stock has been doing very well for a company that professes its independence at every turn," Mr. Heffern said.
Mercantile's performance has been solid, too. The $5.9 billion-asset company earned $50.3 million for the first half of the year ended June 30, up 15 percent from a year ago. The company also returned a hefty 1.73 percent on assets, and net interest income grew by 12 percent to $140.9 million.