Mercantile Bankshares Corp.'s profit rose 9.3 percent in the second quarter to $42.5 million, propelled by income generated from loans and its trust business, the Baltimore-based banking company said yesterday.
Mercantile made 62 cents in net income per diluted share in the second quarter that ended June 30, up 12.7 percent from the 55 cents per diluted share that it made in the corresponding period a year earlier.
The results beat Wall Street's estimates by a penny per share, according to Zacks Investment Research, which surveyed 13 analysts.
"In the past, they have had consistent, quality earnings; it doesn't look like this quarter is any exception," said Holly Clark, a bank analyst at Scott & Stringfellow, a Richmond, Va., brokerage and investment banking house.
Mercantile's net income rose 10.6 percent to $84.1 million in the first six months of the year, compared with $76 million in the corresponding period a year earlier. Net income per diluted share jumped 13 percent to $1.22, compared with $1.08 in the first half of 1999.
The company continued to beat competitors in a number of profitability benchmarks. It returned 2.12 percent on average assets in the quarter, up from 2.06 percent in the comparable period in 1999. In other words, Mercantile made $2.12 for every $100 in assets, beating the industry average of $1.35.
"It has been a very satisfactory six months," said H. Furlong Baldwin, chairman and chief executive of Mercantile, which is the largest independently owned banking company in Maryland. "We are finding the loan growth strong, and, equally as important, our margins have held up. Loan growth plus strong margins have fueled these earnings."
The net interest margin shows how much a bank makes on loans and investments after interest payments to depositors and creditors. Many bank margins are shrinking because institutions are paying higher prices for deposits.
Mercantile's net interest margin, however, grew to 5.32 percent in the quarter, compared with 5.15 percent in the corresponding period in 1999.
In the quarter, Mercantile's net interest income, or profit generated mainly from loans, rose 10.4 percent to $100.5 million. In the six-month period, net interest income was up 9.7 percent to $197.1 million. And loans grew 14.2 percent to $5.99 billion in the first half of the year.
Income from its trust division rose 5.3 percent in the quarter to $17.4 million. In the six months, it was up 8.2 percent to $34.2 million.
Mercantile's deposits rose 4.2 percent in the first half of the year to $6.1 billion, and assets were up 8.2 percent to $8.2 billion.
Clark expects Mercantile to make $2.46 per diluted share in the full year.
"Knowing how they operate and that they always stick to their knitting, I continue to look for good, strong earnings," she said.