YOUR BUSINESS AUTHORITY
Springfield, MO
Mercantile Bancorporation Inc. recently reported its performance for the second quarter of 1998. In the quarter ended June 30, Mercantile had net income of $95 million, or 70 cents per share, compared to $74.6 million, or 65 cents per share, in the second quarter of 1997.
In the first six months of the year, the bank holding company had net income of $198.9 million, up from $107.2 million for the first six months of 1997. Results for the first half of 1998 include the merger with Roosevelt Financial Group Inc., completed July 1, 1997. Because the transaction was treated as a purchase, prior period numbers have not been restated, according to a release from Mercantile.
"Strong commercial loan growth, coupled with favorable fee-income trends, contributed to Mercantile's success in the second quarter," said Thomas H. Jacobsen, chairman, president and chief executive officer of Mercantile Bancorporation Inc., in the release. "The company also benefited from superior credit quality and continuing progress in streamlining operations."
Year-to-date net interest income was $482.9 million. Net interest income for the second quarter was $242.6 million, a small increase from the first quarter and up from $215.6 million from the second quarter in 1997. Average loans for the quarter were $19.7 billion, up at a 5.1 percent annualized rate over the first quarter.
The net interest margin for the first half of 1998 was 3.49 percent, compared to 4.33 percent in the same period in 1997. Mercantile attributed the change to acquired mortgage assets and funding sources, a flat yield curve and the divestiture of selected credit-card portfolios.
The margin for the second quarter contracted by nine basis points to 3.45 percent, a reduction Mercantile said was due to mortgage refinancings and prepayments.
Noninterest income of $231.7 million for the first six months was reported by Mercantile, an increase of 31.6 percent over 1997.
The bank said productivity and efficiency were improved through consolidation of bank charters and centralization of backroom operations. Year-to-date expenses other than interest expenses were $398.2 million, or 2.56 percent of assets, compared to 3.03 percent in 1997.
The expense-to-asset ratio improved to 2.55 percent in the second quarter, totaling $201.4 million. Mercantile reported expenses related to addressing year 2000 concerns were $7.8 million so far this year, slightly below management's expectations.
In the second quarter, the company announced plans to merge with Financial Services Corporation of the Midwest, with headquarters in Rock Island, Ill.; First Financial Bancorporation, located in Iowa City, Iowa; and Bruno Stolze & Company Inc., a St. Louis discount brokerage firm.
Early in the third quarter, Mercantile completed the acquisitions of Firstbank of Illinois Co., with headquarters in Springfield, Ill.; and CBT Corporation, of Paducah, Ky.
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