$118 million in net income ...Nonrecurring gains affect Mercantile first quarter

Mercantile Bancorporation Inc. April 19 reported net income for its first quarter of $118 million, up 2.8 percent compared to the first quarter of 1998. Earnings per share in the quarter were 74 cents, down a penny from the 75-cents-per-share earnings in the same quarter last year.

A release from Mercantile said nonrecurring gains in the first quarter of 1998 affected the results. Factoring out the sale of nonstrategic assets last year, net income grew 20.9 percent for the quarter.

"These first-quarter results demonstrate robust growth in commercial lending, an improving net interest margin and success in our efforts to grow fee income," said Thomas H. Jacobsen, chairman, president and chief executive officer for Mercantile. "At the same time, we are holding the line on expenses, and are extremely pleased with the low level of net charge-offs.

Net interest income rose $1.5 million to $284.23 million, a 4.2 percent increase. Officials said the increase was attributable to 16 percent growth in average commercial loans, a more favorable balance sheet mix and a lower cost of funds.

Net interest margin for the first quarter was 3.61 percent, down from the 3.62 percent of 1998's first quarter. Net interest margin, however, is up from the immediate previous quarter when it stood at 3.56 percent.

Excluding the nonrecurring gains of the first quarter of 1998 and securities gains in both quarters, non-interest income increased by 8.4 percent. Mercantile's release said the growth came because of double-digit growth in securitization revenue, operating leases, official check fees, electronic tax processing and debit-card income.

St. Louis-based Mercantile now operates nearly 500 bank locations in six states.

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