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FORM 10-K
United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from______________________to__________________
Commission file number 0-5127
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Mercantile Bankshares Corporation
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(Exact name of registrant as specified in its charter)
Maryland 52-0898572
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
Two Hopkins Plaza, P. O. Box 1477, Baltimore, Maryland 21203
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (410) 237-5900
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Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
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- ------------------------ -----------------------------------------
Securities registered pursuant to section 12(g) of the Act:
Common Stock ($2 par value)
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(Title of class)
Preferred Stock Purchase Rights
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(Title of class)
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
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Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
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At February 29, 1996, the aggregate market value of shares of Common
Stock held by non-affiliates of Registrant (including fiduciary accounts
administered by affiliates) was $1,241,690,400 based on the last sale price
on the Nasdaq Stock Market on February 29, 1996.
As of February 29, 1996, 47,769,418 shares of common stock were
outstanding.
Documents Incorporated by Reference: Parts I, II and IV - Portions of
------------------------------------
Registrant's Annual Report to Stockholders for year ended December 31, 1995,
as indicated, Part III - Definitive Proxy Statement of Registrant filed with
the Securities and Exchange Commission under Regulation 14A.
1
PART I
ITEM 1. BUSINESS
General
Mercantile Bankshares Corporation ("Mercshares") was incorporated under
the laws of Maryland on May 27, 1969. Mercshares is a bank holding company
registered under the Bank Holding Company Act of 1956 and, as of December 31,
1995, owned substantially all of the outstanding shares of capital stock of
twenty-one banks (the "Affiliated Banks"): The Annapolis Banking and Trust
Company ("Annapolis"), Baltimore Trust Company ("Baltimore Trust"), Bank of
Southern Maryland ("Southern"), Calvert Bank and Trust Company ("Calvert"),
The Chestertown Bank of Maryland ("Chestertown"), The Citizens National Bank
("Citizens"), County Banking & Trust Company ("County"), The Eastville Bank
("Eastville"), Farmers & Merchants Bank - Eastern Shore ("Farmers &
Merchants"), The Fidelity Bank ("Fidelity"), The First National Bank of St.
Mary's ("First National"), The Forest Hill State Bank ("Forest Hill"),
Fredericktown Bank & Trust Company ("Fredericktown"), Mercantile-Safe Deposit
and Trust Company ("Merc-Safe"), The National Bank of Fredericksburg
("Fredericksburg"), Peninsula Bank ("Peninsula"), The Peoples Bank of
Maryland ("Peoples"), Potomac Valley Bank ("Potomac"), St. Michaels Bank
("St. Michaels"), The Sparks State Bank ("Sparks Bank") and Westminster Bank
and Trust Company of Carroll County ("Westminster"). Mercshares also owns
all of the outstanding shares of Mercantile Mortgage Corporation, a mortgage
banking company, MBC Agency, Inc., an insurance agency, and MBC Realty, Inc.,
which owns and operates various properties used by Merc-Safe. Merc-Safe owns
all of the outstanding shares of Mercantile Pennsylvania Corporation, which
makes extensions of credit in Pennsylvania and Hopkins Plaza Agency, Inc.,
which acts as agent in the sale of fixed rate annuities. MBC Agency, Inc.,
owns all of the outstanding shares of Mercantile Life Insurance Company,
which is in the business of reinsuring credit insurance
2
made available through the Affiliated Banks. Mercantile Mortgage Corporation
owns all of the outstanding shares of Benchmark Appraisal Group, Inc. which
appraises real property in connection with loans made by Mercantile Mortgage
Corporation, certain of the Affiliated Banks, and others. The Affiliated
Banks, Mercantile Mortgage Corporation, MBC Agency, Inc., Mercantile Life
Insurance Company, MBC Realty, Inc., Mercantile Pennsylvania Corporation,
Hopkins Plaza Agency, Inc. and Benchmark Appraisal Group, Inc. are herein
referred to as "Affiliates." For information on the location and number of
offices of the Affiliated Banks and Mercantile Mortgage Corporation, at
December 31, 1995, see pages 46 to 51 of Registrant's Annual Report to
Stockholders for the year ended December 31, 1995, which information is
incorporated by reference herein.
Mercshares periodically reviews and considers possible acquisitions of
banks and corporations performing related activities and discusses such
possible acquisitions with managements of the subject companies, and such
acquisitions may be made from time to time. Such acquisitions are normally
subject to regulatory approval.
3
Operations
The Affiliated Banks are engaged in a general commercial and retail
banking business with normal banking services, including acceptance of
demand, savings and time deposits and the making of various types of loans.
Merc-Safe offers a full range of personal trust services, investment
management services and (for corporate and institutional customers),
investment advisory, financial and pension and profit sharing services. As
of December 31, 1995, assets under the investment supervision of Merc-Safe's
trust division had an estimated value of $10.5 billion, assets held in its
personal and corporate custody accounts had an estimated value of $16.0
billion and assets held in escrow accounts had an estimated value of $10
million.
Mercantile Mortgage Corporation, through offices in Maryland and
Delaware, arranges for and services various types of mortgage loans as
principal and as agent primarily for non-affiliated institutional investors
and also for the Affiliated Banks. Benchmark Appraisal Group, Inc. appraises
real property in connection with loans made by Mercantile Mortgage
Corporation, certain of the Affiliated Banks, and others.
Mercantile Pennsylvania Corporation makes various commercial extensions
of credit in Pennsylvania.
Hopkins Plaza Agency, Inc. acts as agent in the sale of fixed rate
annuities.
MBC Agency, Inc., provides, under group policies, credit life insurance
in connection with extensions of credit by Affiliated Banks. Mercantile Life
Insurance Company, which is owned by MBC Agency, Inc., reinsures the insurance
provided by that Company.
4
Statistical Information
The statistical information required in this Item 1 is incorporated by
reference to the information appearing in Registrant's Annual Report to
Stockholders for the year ended December 31, 1995, as follows:
Disclosure Required by Guide 3 Reference to 1995 Annual Report
- ------------------------------ -------------------------------
(I) Distribution of Assets,
Liabilities and Stockholder
Equity; Interest Rates and
Interest Differential . . . . . Analysis of Interest Rates and
Interest Differentials (pages 8-9)
. . . . . Rate/Volume Analysis (page10)
. . . . . Non-performing Assets (pages 18-19)
(II) Investment Portfolio . . . . . Bond Investment Portfolio (page 13)
(III) Loan Portfolio . . . . . Year-End Loan Data (page 44)
. . . . . Loan Maturity Schedule (page 15)
. . . . . Asset/Liability Management
(pages 15-16)
. . . . . Non-performing Assets (pages 18-19)
(IV) Summary of Loan Loss
Experience . . . . . Allowance for Loan Losses (page 17)
and Credit Risk Analysis (page 16)
. . . . . Allocation of Allowance for Loan
Losses (page17)
(V) Deposits . . . . . Analysis of Interest Rates and
Interest Differentials (pages 8-9)
. . . . . Notes to Financial Statements,
Note 5- Deposits (page 31)
(VI) Return on Equity
and Assets . . . . . Return on Equity and Assets (page 43)
(VII) Short-Term Borrowings . . . . . Notes to Financial Statements, Note
6 (page 31)
5
Employees
At December 31, 1995, Mercshares and its Affiliates had approximately 1,813
officers and 1,997 other employees.
Competition
The banking business, in all of its phases, is highly competitive. Within
their service areas, the Affiliated Banks compete with commercial banks
(including local banks and branches or affiliates of other larger banks),
savings and loan associations and credit unions for loans and deposits, and
with insurance companies and other financial institutions for various types
of loans. The Affiliated Banks also face competition for commercial and
retail banking business from banks and financial institutions located outside
their service areas. The Riegle-Neal Interstate Banking and Branching
Efficiency Act of 1994 (the "1994 Interstate Act"), which became law
September 29, 1994, provided, among other things that, over time, bank
holding companies that are adequately capitalized and managed will be
permitted to acquire banks in any state, preempting essentially all state
laws prohibiting interstate bank acquisitions and mergers, subject to certain
state "opt-out" rights with respect to interstate mergers, as well as certain
state "opt-in" rights with respect to other vehicles for interstate branching
and with respect to acceleration of the interstate merger provisions of the
1994 Interstate Act. Maryland and Virginia, and various other states, have
"opted-in" and generally accelerated these provisions, initially on a
reciprocal basis, to the full extent permitted by the 1994 Interstate Act.
As a result of this and other provisions of the Interstate Act and related
state actions, competition may increase.
While Mercshares is the second largest bank holding company headquartered
in Maryland, it is the largest independent bank holding company in the state.
Its largest subsidiary, Merc-Safe, is the sixth largest commercial bank in
6
Maryland. Mercshares also competes with Maryland-based bank subsidiaries of
the first, third, sixth and eighth largest bank holding companies in the
United States as well as banking subsidiaries of other non-Maryland bank
holding companies. Measured in terms of assets under investment supervision,
Merc-Safe believes it is one of the largest trust institutions in the
southeastern United States. Merc-Safe competes for various classes of
fiduciary and investment advisory business with other banks and trust
companies, insurance companies, investment counseling firms, mutual funds and
others.
Mercantile Mortgage Corporation, Benchmark and Mercantile Pennsylvania
Corporation are relatively small competitors in their areas of activity. MBC
Agency, Inc., is limited to providing credit life, health and accident
insurance in connection with credit extended by the Affiliated Banks.
Hopkins Plaza Agency, Inc., commenced business in 1996 and is a small
competitor in its area of activity.
7
Supervision and Regulation
Mercshares
Mercshares, as a registered bank holding company, is subject to regulation
and examination by the Board of Governors of the Federal Reserve System under
the Bank Holding Company Act of 1956 (the "Act") and is required to file with
the Board of Governors quarterly and annual reports and such additional
information as the Board of Governors may require pursuant to the Act. With
certain exceptions, Mercshares is prohibited from acquiring direct or
indirect ownership or control of more than 5% of any class of the voting
shares of any company which is not a bank or bank holding company and from
engaging in any business other than that of banking or of managing or
controlling banks or of furnishing services to, or performing services for,
its Affiliated Banks. The Act and Regulations promulgated under the Act
require prior approval of the Board of Governors of the Federal Reserve
System of the acquisition by Mercshares of more than 5% of any class of the
voting shares of any additional bank.
Further, under Section 106 of the 1970 Amendments to the Act and the
Board's Regulations, bank subsidiaries of bank holding companies are
prohibited from engaging in certain tie-in arrangements with bank holding
companies and their non-bank subsidiaries in connection with any extension of
credit or provision of any property or services. In 1995, the Federal
Reserve Board reduced the tie-in arrangement restrictions in certain defined
discount pricing circumstances.
The Act, generally, restricts activities of all bank holding companies and
their subsidiaries to banking, and the business of managing and controlling
banks, and to other activities which are determined by the Board of Governors
8
of the Federal Reserve System to be so closely related to banking or managing
or controlling banks as to be a proper incident thereto. Mercshares is also
subject to certain restrictions with respect to engaging in the securities
business.
It is Federal Reserve Policy that a bank holding company should serve as
a source of financial strength for and commit resources to support each of
its subsidiary banks even in circumstances in which it might not do so (or
may not legally be required or financially able to do so) absent such a
policy.
Changes in control of Mercshares and its Affiliated Banks are regulated
under the Bank Holding Company Act of 1956, the Change in Bank Control Act of
1978 and various state laws.
Affiliated Banks
All Affiliated Banks, with the exception of Citizens, Baltimore Trust,
Eastville, Farmers & Merchants, First National and Fredericksburg are
Maryland banks, subject to the banking laws of Maryland and to regulation by
the Bank Commissioner of Maryland, who is required by statute to make at
least one examination in each calendar year. Their deposits are insured by,
and they are subject to certain provisions of Federal law and regulations and
examination by, the Federal Deposit Insurance Corporation.
In addition, Annapolis, Forest Hill and St. Michaels are members of the
Federal Reserve System, and are thereby subject to regulation by the Board of
Governors of that System.
Citizens, First National and Fredericksburg are national banks subject to
regulation and regular examination by the Comptroller of the Currency in
addition to regulation and examination by the Board of Governors of the
Federal Reserve System and the Federal Deposit Insurance Corporation, which
insures their deposits.
9
Eastville and Farmers & Merchants are Virginia banks, subject to the
banking laws of Virginia and to regulation by its State Corporation
Commission, which is required by statute to make at least two examinations in
every three year period. Their deposits are insured by, and they are subject
to certain provisions of Federal law and regulation and examination by, the
Federal Deposit Insurance Corporation.
Baltimore Trust is a Delaware bank, subject to the banking laws of
Delaware and to regulation by the Delaware State Bank Commissioner, who is
required by statute to make periodic examinations. Its deposits are insured
by, and it is subject to certain provisions of Federal law and regulation and
examination by the Federal Deposit Insurance Corporation.
Mercshares and its Affiliates are subject to the provisions of Section 23A
of the Federal Reserve Act which limit the amount of loans or extensions of
credit to, and investments in, Mercshares and its nonbanking Affiliates by
the Affiliated Banks, and Section 23B of the Federal Reserve Act which
requires that transactions between the Affiliated Banks and Mercshares and
its nonbanking Affiliates be on terms and under circumstances that are
substantially the same as with non-affiliates. Under the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989, there are
circumstances under which Affiliated Banks could be responsible to the
Federal Deposit Insurance Corporation for losses incurred by it with respect
to other Affiliated Banks.
Other Affiliates
As affiliates of Mercshares, the nonbanking Affiliates are subject to
examination by the Board of Governors of the Federal Reserve System and, as
affiliates of the Affiliated Banks, they are subject to examination by the
Federal Deposit Insurance Corporation and the Bank Commissioner of Maryland.
In addition, MBC Agency, Inc., Mercantile Life Insurance Company and Hopkins
10
Plaza Agency, Inc. are subject to licensing and regulation by state insurance
authorities.
Recent Banking Legislation
The 1994 Interstate Act made a number of major changes that will have a
significant effect on the operations of banks. Although there are numerous
provisions, the principal elements include those summarized below.
Commencing September 29, 1995, bank holding companies that are adequately
capitalized and managed are permitted to acquire banks in any state,
essentially preempting state laws prohibiting interstate bank acquisitions.
Commencing June 1, 1997, adequately capitalized and managed banks will be
able to engage in interstate branching by merging banks in different states.
States may elect not to permit such merger generated branching by adopting
specific legislation before June 1, 1997 in which case out-of-state banks
generally will not be able to branch into such states, and banks
headquartered in such states generally will not be permitted to branch into
other states. In addition, states may elect to permit such branching earlier
by adopting specific legislation to that effect prior to June 1, 1997, which
must apply equally to all out-of-state banks and permit interstate merger
transactions with all out-of-state banks. States may also elect, by
legislation, to permit acquisitions of existing branches of banks by out-of-
state banks without the acquisition of the entire bank.
With respect to both interstate acquisitions and branching through
mergers, states may require that banks to be acquired have been in existence
for a period of time (not more than five years), may limit, on a non-
discriminatory basis, the percent of deposits within a state that may be held
by a bank, or bank holding company, and may adopt, on a non-discriminatory
basis, laws relating to the operations of a bank within the state. The
Federal Reserve Board may not permit an acquisition, and the responsible
federal agency may not permit a merger, that would result in the acquiring
institution controlling more than 10% of total insured deposits in the U. S.,
or 30% of a state's insured deposits (other than in connection with an
initial entry into a state or with an
11
interstate merger involving affiliated banks), although this 30% limit may be
increased or decreased by a state on a non-discriminatory basis. The
pertinent federal agencies must take into account the acquiring institution's
record under the Community Reinvestment Act and any applicable state
community reinvestment laws. States may impose filing requirements and may
continue to regulate intrastate branching in a non-discriminatory way,
examine banks and branches operated in that state, impose non-discriminatory
notification and reporting requirements, adopt laws relating to community
reinvestment, consumer protection and fair lending, and exercise taxing
authority.
The appropriate federal banking agency may also permit an adequately
capitalized and managed bank to open and operate an interstate branch de novo
in any state that has a law that applies equally to all banks and expressly
permits all out-of-state banks to open and operate such a branch, provided
the bank complies with state filing and community reinvestment requirements.
Commencing September 29, 1995, subsidiaries of the same bank holding
company may act as agents for one another in receiving deposits, closing and
servicing loans and accepting loan payments without being deemed branches,
but the new authority does not extend to originating or approving loans or
opening deposit accounts.
Generally, foreign banks will be allowed to engage in interstate banking
in the same way as domestic banks without establishing U. S. bank
subsidiaries.
There are many other provisions of the 1994 Interstate Act, such as
prohibitions against interstate branches being operated primarily to produce
deposits, requiring hearings on closing of certain branches, and requiring
separate evaluations and ratings of a bank's Community Reinvestment Act
performance in each state in which it operates, and separate evaluations for
each metropolitan area and for the remaining non-metropolitan area in which
the bank maintains a branch.
Although the 1994 Interstate Act, and regulations implementing its
provisions, become effective over a multi-year period so that the ultimate
impact cannot now be predicted, it is clear that it will have a substantial
impact on
12
the manner in which the banking business in the United States is conducted.
In this regard also, Maryland and Virginia, and various other states, have
adopted legislation accelerating implementation of the interstate merger
provisions of the 1994 Interstate Act and "opting-in" to its provisions with
respect to interstate de novo branching and interstate acquisition of
existing branches without acquisition of the whole institution. Generally
speaking, these "opt-in" provisions are initially on a reciprocal basis.
In addition, the Riegle Community Development and Regulatory Improvement
Act of 1994, which contains a number of provisions affecting the operations
of financial institutions, became law September 23, 1994. Among these
provisions are those that, (1) establish a Community Development Financial
Institutions Fund to promote economic revitalization and development in
communities considered to be financially underserved, through investment in
Community Development Financial Institutions, (2) add additional protections
to individuals entering into reverse mortgage transactions and "high cost"
mortgage transactions, (3) remove certain existing impediments to the
securitization of small business loans and leases in an effort to improve
access to capital by small businesses, (4) reduce or simplify administrative
requirements, previously imposed by regulations, of financial institutions to
the extent consistent with safe and sound banking practices, (5) reduce and
revise reporting requirements relating to money laundering, (6) improve
compliance with the National Flood Insurance Program by lenders and secondary
market purchasers in order to increase participation nationally by
individuals with mortgaged homes or businesses in special flood hazard areas
who have not purchased or maintained flood insurance coverage, and (7)
ameliorate certain provisions of Section 39 of the Federal Deposit Insurance
Act relating to the establishment of regulatory requirements with respect to
asset quality, among other things. Regulations and standards designed to
implement certain provisions of this law have been issued. The various
provisions of this Act should facilitate the operations of banks but their
overall impact cannot be predicted.
13
Effects of Monetary Policy
All commercial banking operations are affected by the Federal Reserve
System's conduct of monetary policy and its policies change from time to time
based on changing circumstances. A function of the Federal Reserve System is
to regulate the national supply of bank credit in order to achieve economic
results deemed appropriate by its Board of Governors, including efforts to
combat unemployment, recession or inflationary pressures. Among the
instruments of monetary policy used to implement these objectives are open
market operations in the purchase and sale of U.S. Government securities,
changes in the discount rate charged on bank borrowings and changes in
reserve requirements against bank deposits. These means are used in varying
combinations to influence the general level of interest rates and the general
availability of credit. More specifically, actions by the Board of Governors
of the Federal Reserve influence the levels of interest rates paid on
deposits and other bank funding sources and charged on bank loans as well as
the level of availability of bank funds with which loans and investments can
be made.
The monetary policies of bank regulatory and other authorities have
affected the operating results of commercial banks in the past and are
expected to continue to do so in the future. In view of changing conditions
in the national economy, in the money markets, and in the relationships of
international currencies, as well as the effect of legislation and of actions
by monetary and fiscal authorities, no prediction can be made as to possible
future changes in interest rates, deposit levels, loan demand, or the
business and earnings of the Affiliated Banks.
14
ITEM 2. PROPERTIES
The main offices of Merc-Safe and Mercshares are located in a 21-story
building at Hopkins Plaza in Baltimore owned by MBC Realty, Inc., a wholly
owned subsidiary of Mercshares. At December 31, 1995, approximately 134,000
square feet were occupied by Merc-Safe and Mercshares. At December 31, 1995,
Merc-Safe also occupied approximately 132,000 square feet of leased space in
a building located in Linthicum, Maryland, in which its operations and
certain other departments are located. This building is also owned by MBC
Realty, Inc. Of the 18 banking and bank-related offices occupied by
Merc-Safe, five are owned in fee, four are owned subject to ground leases and
nine are leased with aggregate annual rentals of approximately $755,000, not
including rentals for the main office and adjacent premises owned by MBC
Realty, Inc. Merc-Safe is the owner of an office building in Towson,
Maryland, which houses Merc-Safe's branch administrative offices and one of
its Baltimore County banking offices.
Of the 144 banking offices of the other Affiliated Banks, 80 are owned in
fee, nine are owned subject to ground leases and 55 are leased, with
aggregate annual rentals of approximately $3,054,000 as of December 31, 1995.
15
ITEM 3. LEGAL PROCEEDINGS
There was no matter which is required to be disclosed in this Item 3
pursuant to the instructions contained in the form for this report.
16
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the fiscal year
covered by this report to a vote of security holders which is required to be
disclosed pursuant to the instructions contained in the form for this report.
17
SPECIAL ITEM: EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers of Registrant are:
Name Position Age
H. Furlong Baldwin Chairman of the Board and 64
Chief Executive Officer
Edward K. Dunn, Jr. President and Director 60
Kenneth A. Bourne, Jr. Executive Vice President 53
and Treasurer
Hugh W. Mohler Executive Vice President 50
Jay M. Wilson Executive Vice President 49
Brian B. Topping Vice President 61
John A. O'Connor, Jr. Senior Vice President 64
and Secretary
Robert W. Johnson Senior Vice President 53
O. James Talbott, II Senior Vice President 52
No family relationships, as defined by the Rules and Regulations of the
Securities and Exchange Commission, exist among any of the Executive
Officers.
All officers are elected annually by the Board of Directors and hold
office at the pleasure of the Board.
Mr. Baldwin has been Chairman of the Board of Mercshares since 1984, and
has been its Chief Executive Officer since 1976. He has been Chairman of the
Board and Chief Executive Officer of Merc-Safe since 1976.
Mr. Dunn has been President of Mercshares since 1991. He has served as
President and Chief Operating Officer of Merc-Safe since July, 1995. He was
Chairman of the Executive Committee of Mercshares and of Merc-Safe from 1988
to 1991.
Mr. Bourne has been Executive Vice President of Mercshares since 1989 and
was elected Treasurer in February, 1994. He was a Senior Vice President of
Merc-Safe from 1981 until March, 1994 when he was elected an Executive Vice
President.
Mr. Mohler was elected an Executive Vice President of Mercshares in March,
1994. He was a Senior Vice President of Merc-Safe from March, 1994 until
September, 1994 when he was elected an Executive Vice President. He was
President and Chief Executive Officer of Peninsula from 1978 until February,
1994.
Mr. Wilson was elected an Executive Vice President of Mercshares and
18
Merc-Safe in September, 1994. He was a consultant to U. S. Can Corporation
from January, 1994 until September, 1994 and President and Chief Executive
Officer of Steeltin Can Corporation from 1978 until January, 1994. Mr.
Wilson served as a Director of Mercshares and Merc-Safe from 1989 until
September, 1994.
Mr. Topping has been Vice President of Mercshares since 1988. He has
served as a Vice Chairman of the Board of Merc-Safe since 1984.
Mr. O'Connor has been Secretary of Mercshares and Merc-Safe since 1971.
He was Vice President of Merc-Safe from 1971 to 1978 when be became Senior
Vice President. He was a Vice President of Mercshares from 1986 until 1989
when he became a Senior Vice President. He has been General Counsel for
Mercshares and Merc-Safe since 1970.
Mr. Johnson has been Senior Vice President of Mercshares since 1989. He
has been a Vice President of Merc-Safe since 1982.
Mr. Talbott has been a Senior Vice President of Mercshares since 1989. He
has been a Vice President of Merc-Safe since 1977.
19
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The information required by this Item 5 is incorporated by reference to
the information appearing under the captions "Dividends" on page 20 and
"Recent Common Stock Prices" on page 21 of the Registrant's Annual Report to
Stockholders for the year ended December 31, 1995.
20
ITEM 6. SELECTED FINANCIAL DATA
The information required by this Item 6 is incorporated by reference
to the information appearing under the caption "Five Year Selected
Financial Data" on page 44 of the Registrant's Annual Report to
Stockholders for the year ended December 31, 1995.
21
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The information required by this Item 7 is incorporated by reference
to the information appearing under the caption "Management's Discussion"
on pages 6 to 21 of the Registrant's Annual Report to Stockholders for the
year ended December 31, 1995.
22
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item 8 and the auditor's report
thereon are incorporated by reference to pages 22 to 41 of the Registrant's
Annual Report to Stockholders for the year ended December 31, 1995.
23
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There was no matter which is required to be disclosed in this Item 9
pursuant to the instructions contained in the form for this report.
24
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this Item 10 with respect to the Executive
Officers of Registrant appears in Part I of this Report.
The remaining information required by this Item 10 is incorporated by
reference to the definitive proxy statement of Registrant filed with the
Securities and Exchange Commission under Regulation 14A.
25
ITEM 11. EXECUTIVE COMPENSATION
The information required by this Item 11 is incorporated by reference to
the definitive proxy statement of Registrant filed with the Securities and
Exchange Commission under Regulation 14A.
26
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this Item 12 is incorporated by reference to
the definitive proxy statement of Registrant filed with the Securities and
Exchange Commission under Regulation 14A.
27
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this Item 13, is incorporated by reference
to the definitive proxy statement of Registrant filed with the Securities
and Exchange Commission under Regulation 14A.
28
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report,
except as indicated.
(1) (2) The financial statements and schedules filed herewith or
incorporated by reference are listed in the accompanying Index to
Financial Statements.
(3) Exhibits filed herewith or incorporated by reference herein are set
forth in the following table prepared in accordance with Item 601 of
Regulation S-K.
Exhibit Table
(3) Charter and by-laws
A. Charter of the Registrant (Exhibits 3-A(1) through 3-A(5)
listed below are incorporated by reference to Exhibits 3-
A(1) through 3-A(5) to Form S-1 of the Registrant, No. 2-
39545, Exhibit 3-A(6) listed below is incorporated by
reference to Exhibit 3-A(6) of Form S-1 of the
Registrant, No. 2-41379, Exhibit 3-A(7) listed below is
incorporated by reference to Registrant's Annual Report
on Form 10-K for the year ended 1993, Exhibit 3-A(7),
Commission File No. 0-5127, Exhibit
3-A(8) listed below is incorporated by reference to
Registrant's Annual Report on Form 10-K for the year
ended 1993, Exhibit 3-A(8), Commission File No. 0-5127,
Exhibit 3-A(9) listed below is incorporated by reference to
Exhibit B attached to Exhibit 4-A of Form 8-K of
Registrant filed September 27, 1989, Commission File No.
0-5127, Exhibit 3-A(10) listed below is incorporated by
reference to Exhibit B attached to Exhibit 4-A of Form 8-K
of the Registrant filed January 9, 1990, Commission File
No. 0-5127, and Exhibit 3-A(11) listed below is incorporated
by reference to Exhibit 3-A(11) of the Annual Report on
Form 10-K for the year ended
29
December 31, 1990, Commission File No. 0-5127).
(1) Articles of Incorporation effective May 27, 1969.
(2) Articles of Amendment effective June 6, 1969.
(3) Articles Supplementary effective August 28, 1970.
(4) Articles of Amendment effective December 14, 1970.
(5) Articles Supplementary effective May 10, 1971.
(6) Articles Supplementary effective July 30, 1971.
(7) Articles of Amendment effective May 8, 1986.
(8) Articles of Amendment effective April 27, 1988.
(9) Articles Supplementary effective September 13, 1989.
(10) Articles Supplementary effective January 3, 1990.
(11) Articles of Amendment effective April 26, 1990.
B. By-Laws of the Registrant, as amended to date (filed
herewith).
(4) Instruments defining the rights of security holders, including
indentures, Charter and by-laws: See Item 14(a)(3) above.
A. Rights Agreement dated as of September 12, 1989 between
Registrant and the Rights Agent, including Form of Rights
Certificate and Articles Supplementary (Incorporated by
reference to Form 8-K of the Registrant filed September
27, 1989, Exhibit 4-A, Commission File No. 0-5127).
B. First Amendment, dated as of December 31, 1989, to Rights
Agreement dated as of September 12, 1989 between
Registrant and the Rights Agent, including amended Form
of Rights Certificate and amended Form of Articles
Supplementary (Incorporated by reference to Form 8-K of
the Registrant filed January 9, 1990, Exhibit 4-A,
Commission File No. 0-5127).
C. Second Amendment, dated as of September 30, 1993, to
Rights Agreement dated as of September 12, 1989 between
Registrant and the Rights Agent, including amended Form
of Rights Certificate (Incorporated by reference to Form
8-K of the Registrant filed September 30, 1993, Exhibit
4-A, Commission File No. 0-5127).
D. Amendment No. 1 to Registrant's Registration Statement on
Form 8-B, amending description of securities previously
filed (Incorporated by reference to Form 8 filed December
20, 1991, Commission File No. 0-5127).
30
(10) Material contracts - Each material contract listed herein is
filed as a management contract or compensatory plan or
arrangement, with the exception of Exhibits 10 B and 10 G.
A. Mercantile Bankshares Corporation and Affiliates Annual
Incentive Compensation Plan, as amended through March 14,
1995 (Incorporated by reference to Registrant's Annual
Report on Form 10-K for the year ended December 31, 1994,
Exhibit 10 A, Commission File No. 0-5127).
B. Dividend Reinvestment and Stock Purchase Plan of
Mercantile Bankshares Corporation (Incorporated by
reference to the Plan text included in the Form S-3
Registration No. 33-44376.)
C. Executive Employment Agreement dated March 24, 1982,
between Mercantile Bankshares Corporation, Mercantile-
Safe Deposit and Trust Company and H. Furlong Baldwin, as
amended by Agreements dated March 13, 1984 and December
13, 1988 (Incorporated by reference to Registrant's
Annual Report on Form 10-K for the year ended December
31, 1989, Exhibit 10 D, Commission File No. 0-5127).
D. Deferred Compensation Agreement, including supplemental
pension and thrift plan arrangements, dated September 30,
1982, between Mercantile-Safe Deposit and Trust Company
and H. Furlong Baldwin, as amended by Agreements dated as
of October 24, 1983, March 13, 1984, January 1, 1987,
December 8, 1987 and January 1, 1989 (Incorporated by
reference to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1989, Exhibit 10 E,
Commission File No. 0-5127).
E. Deferred Compensation Agreement, including supplemental
pension and thrift plan arrangements, dated September 30,
1982, between Mercantile-Safe Deposit and Trust Company
and Douglas W. Dodge, as amended by Agreements dated as
of October 24, 1983, March 13, 1984, January 1, 1987,
December 8, 1987 and January 1, 1989
31
(Incorporated by reference to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1989,
Exhibit 10 F, Commission File No. 0-5127), as amended by
Agreement dated June 13, 1995 (filed herewith).
F. Mercantile Bankshares Corporation and Participating
Affiliates Unfunded Deferred Compensation Plan for
Directors, as amended through January 1, 1984
(Incorporated by reference to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1989,
Exhibit 10 G, Commission File No. 0-5127), as amended and
restated effective December 31, 1995 (filed herewith).
G. Mercantile Bankshares Corporation Employee Stock Purchase
Dividend Reinvestment Plan dated February 13, 1995
(Incorporated by reference to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1994,
Exhibit 10 I, Commission File No. 0-5127).
H. Deferred Compensation Agreement, including supplemental
pension and thrift plan arrangements, dated September 30,
1982 between Mercantile-Safe Deposit and Trust Company
and Brian B. Topping, as amended by Agreements dated as
of October 24, 1983, March 13, 1984, January 1, 1987,
December 8, 1987, and January 1, 1989 (Incorporated by
reference to Registrant's Annual Report on Form 10-K for
the year ended December 31, 1989, Exhibit
10 N, Commission File No. 0-5127).
I. Executive Employment Agreement dated March 13, 1984
between Mercantile Bankshares Corporation, Mercantile-
Safe Deposit and Trust Company and Brian B. Topping as
restated September 13, 1988 and amended December 13, 1988
(Incorporated by reference to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1993,
Exhibit 10 L, Commission File No. 0-5127).
J. Executive Employment Agreement dated December 13, 1988
between
32
Mercantile Bankshares Corporation, Mercantile-Safe
Deposit and Trust Company and Edward K. Dunn, Jr.
(Incorporated by reference to Registrant's Annual Report
on Form 10-K for year ended December 31, 1993, Exhibit 10
M, Commission File No.
0-5127).
K. Executive Severance Agreements dated as of December 31,
1989 between Mercantile Bankshares Corporation and
Mercantile-Safe Deposit and Trust Company, and each of H.
Furlong Baldwin, Edward K. Dunn, Jr., Brian B. Topping,
and John A. O'Connor, Jr. (Incorporated by reference to
Registrant's Annual Report on Form 10-K for the year
ended December 31, 1989, Exhibit 10 Q, Commission File
No. 0-5127).
L. Mercantile Bankshares Corporation Omnibus Stock Plan
(Incorporated by reference to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1990,
Exhibit 10 O, Commission File No. 0-5127).
M. Supplemental Pension Agreement dated January 10, 1992
between Mercantile Bankshares Corporation, Mercantile-
Safe Deposit and Trust Company and Edward K. Dunn, Jr.
(Incorporated by reference to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1991,
Exhibit 10 P, Commission File No. 0-5127).
N. Supplemental Pension Agreement, dated February 10, 1995,
between Mercantile Bankshares Corporation and Mercantile-
Safe Deposit and Trust Company, Peninsula Bank and Hugh
W. Mohler (Incorporated by reference to Registrant's
Annual Report on Form 10-K for the year ended December
31, 1994, Exhibit 10 Q, Commission File No. 0-5127).
O. Mercantile Bankshares Corporation and Participating
Affiliates Supplemental Cash Balance Executive Retirement
Plan, dated April 27, 1994, effective January 1, 1994
(Incorporated by
33
reference to Registrant's Annual Report of Form 10-K for
year ended December 31, 1994, Exhibit 10 R, Commission
File No. 0-5127).
P. Mercantile Bankshares Corporation and Participating
Affiliates Supplemental 401(k) Executive Retirement Plan,
dated December 13, 1994, effective January 1, 1995
(Incorporated by reference to Registrant's Annual Report
on Form 10-K for the year ended December 31, 1994,
Exhibit 10 S, Commission File No. 0-5127).
Q. Mercantile Bankshares Corporation Option Agreement with
each of H. Furlong Baldwin (dated August 22, 1995 for
80,000 options), Edward K. Dunn, Jr. (dated August 17,
1995 for 45,000 options), Brian B. Topping (dated August
23, 1995 for 35,000 options), Hugh W. Mohler (dated
August 22, 1995 for 30,000 options) and Jay M. Wilson
(dated August 18, 1995 for 30,000 options) the Net
Operating Income of each being that of Mercantile-Safe
Deposit and Trust Company, (filed herewith).
R. Mercantile Bankshares Corporation Retainer Stock Plan For
Non-Employee Directors dated March 12, 1996 (filed
herewith).
(13) Annual Report to security holders for the year ended December
31, 1995 (filed herewith).
(21) Subsidiaries of the Registrant
Information as to subsidiaries of the Registrant (filed
herewith)
(23) Consent
Consent of Certified Public Accountants (filed herewith)
(24) Power of Attorney
Power of Attorney dated March 12, 1996 (filed herewith)
(b) No reports on Form 8-K were filed during the last quarter of
the period covered by this Report.
34
INDEX TO FINANCIAL STATEMENTS
The Report of Independent Certified Public Accountants as pertaining to the
Consolidated Financial Statements of Mercantile Bankshares Corporation
and Affiliates and related notes is incorporated by reference to page 41
of the Registrant's Annual Report to Stockholders for the year ended
December 31, 1995.
Consolidated Financial Statements and related notes are incorporated by
reference to the Registrant's Annual Report to Stockholders for the year
ended December 31, 1995, and may be found on the pages of said Report as
indicated in parentheses:
Consolidated Balance Sheets, December 31, 1995 and 1994 (page 22)
Statement of Consolidated Income for the years ended December
31, 1995, 1994 and 1993 (page 23)
Statement of Consolidated Cash Flows for the years ended
December 31, 1995, 1994 and 1993 (pages 24 and 25)
Statement of Changes in Consolidated Stockholders' Equity for
the years ended December 31, 1995, 1994 and 1993 (page 26)
Notes to Consolidated Financial Statements (pages 27 to 40)
Supplementary Data:
Quarterly Results of Operations are incorporated by reference to the
information appearing under the caption "Quarterly Results of
Operations" on page 37 of the Registrant's Annual Report to
Stockholders for the fiscal year ended December 31, 1995.
Financial Statement Schedules are omitted because of the absence of the
conditions under which they are required or because the
information called for is included in the Consolidated Financial
Statements or notes thereto.
35
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities
and 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
By: /S/ H. Furlong Baldwin March 28, 1996
H. Furlong Baldwin, Chairman of the
Board and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated:
Principal Executive Officer
/S/ H. Furlong Baldwin March 28, 1996
H. Furlong Baldwin, Chairman of the
Board and Chief Executive Officer
Principal Financial Officer
/S/ Kenneth A. Bourne, Jr. March 28, 1996
Kenneth A. Bourne, Jr.
Executive Vice President and Treasurer
Principal Accounting Officer
/S/ Jerry F. Graham March 28, 1996
Jerry F. Graham
Vice President and Controller
A majority of the Board of Directors: William J. McCarthy, Richard O.
Berndt, Thomas M. Bancroft, Jr., B. Larry Jenkins, Bishop L. Robinson,
Donald J. Shepard, Martin L. Grass, Calman J. Zamoiski, Jr., James A.
Block, Brian B. Topping, George L. Bunting, Jr., Morris W. Offit, William
C. Richardson, Robert D. Kunisch, Christian H. Poindexter.
By: /S/ H. Furlong Baldwin March 28, 1996
H. Furlong Baldwin
For Himself and as Attorney-in-Fact
36