ITEM 1. BUSINESS
General
Mercantile Bankshares Corporation was incorporated under the laws of Maryland on May 27, 1969. It is a bank holding company registered under the Bank Holding Company Act of 1956. Mercantile Bankshares Corporation is referred to in this report as "Mercshares" or "Registrant."
Mercshares directly owns all of the outstanding stock of 21 Affiliated Banks and directly or indirectly owns all of the outstanding stock of certain other Affiliates. For purposes of segment reporting, two operating components have been identified. They are (1) the lead bank, Mercantile-Safe Deposit and Trust Company (including its Banking and Trust Divisions), and (2) twenty Community Banks. The entities making up each component are identified below, with headquarters locations.
For certain financial, personnel and office location information concerning the companies listed above, see pages 53 to 59 of the Registrant's Annual Report to Stockholders for the year ended December 31, 1998, 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. Acquisitions are normally subject to regulatory approval.
Operations
Mercantile-Safe Deposit and Trust Company and the Community 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. Mercantile-Safe Deposit and Trust Company 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, 1998, assets under the investment supervision of the Trust Division had an estimated value of $13.6 billion, assets held in its personal and corporate custody accounts had an estimated value of $25 billion and assets held in escrow accounts had an estimated value of $16.3 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.
Hopkins Plaza Agency, Inc. acts as agent in the sale of fixed rate
annuities, and MBC Leasing Corp. provides tax oriented and finance leases of equipment.
MBC Agency, Inc., provides, under group policies, credit life insurance in connection with extensions of credit by Affiliated Banks. Mercantile Life Insurance Company reinsures the insurance provided by MBC Agency, Inc.
MBC Realty, LLC owns and operates various properties used by MercantileSafe Deposit and Trust Company.
For segment reporting information, see the following portions of the Registrant's Annual Report to Stockholders for the year ended December 31, 1998, which information is incorporated by reference herein: Note 15 of Notes to Financial Statements on pages 43 and 44 of the Annual Report, and information under the caption "Segment Reporting" on page 12 of the Annual Report.
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, 1998, as follows:
Employees
At December 31, 1998, Mercshares and its Affiliates had approximately 924 officers and 1,880 other employees. Of these, Mercantile-Safe Deposit and Trust Company employed 417 officers and 584 other employees and the Community Banks had 506 officers and 1,270 other employees.
Competition
The banking business, in all of its phases, is highly competitive. Within their service areas, Mercantile-Safe Deposit and Trust Company and the Community 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. There is also competition for commercial and retail banking business from banks and financial institutions located outside our 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. Maryland, Virginia, Pennsylvania and numerous other states have "opted-in" to these provisions 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 continue to increase.
While Mercshares is the second largest bank holding company headquartered in Maryland, it is the largest independent bank holding company in the state.
Mercantile-Safe Deposit and Trust Company is the fourth largest commercial bank in Maryland. During 1998, Mercshares also competed with Maryland-based bank subsidiaries of the first, second, fourth and tenth 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, Mercantile-Safe Deposit and Trust Company believes it is one of the largest trust institutions in the southeastern United States. Mercantile-Safe Deposit and Trust Company 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 is a relatively small competitor in its area 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. and MBC Leasing Corp. commenced business in 1996 and are small competitors in their areas of activity.
The 20 Community Banks ranged in asset size from $43 million to $598 million, at December 31, 1998. They face competition in their own local service areas as well as from the larger competitors mentioned above.
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 various 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 limited in 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, subject to various exceptions.
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 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 and managerial 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 The Citizens National Bank, Baltimore Trust Company, Farmers & Merchants Bank - Eastern Shore, The First National Bank of St. Mary's, The National Bank of Fredericksburg and Marshall National Bank and Trust Company are Maryland banks, subject to the banking laws of Maryland and to regulation by the Commissioner of Financial Regulation of Maryland, who is required by statute to make at least one examination in each calendar year (or at 18-month intervals if the Commissioner determines that an examination is unnecessary in a particular 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, The Annapolis Banking and Trust Company, The Forest Hill State Bank and St. Michaels Bank are members of the Federal Reserve System, and are thereby subject to regulation by the Board of Governors of that System.
The Citizens National Bank, The First National Bank of St. Mary's, The National Bank of Fredericksburg and Marshall National Bank and Trust Company 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.
Farmers & Merchants Bank - Eastern Shore is a Virginia bank, subject to the banking laws of Virginia and to regulation by its State Corporation Commission, which is required by statute to make at least one examination in every three year period. 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.
Baltimore Trust Company 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 Commissioner of Financial Regulation of Maryland. In addition, MBC Agency, Inc., Mercantile Life Insurance Company and Hopkins Plaza Agency, Inc. are subject to licensing and regulation by state insurance authorities.
Other Banking Legislation
The 1994 Interstate Act made a number of major changes having a significant effect on the operations of banks. Although there were numerous provisions, the principal elements include those summarized below.
Bank holding companies that are adequately capitalized and managed are
permitted to acquire banks in any state. Adequately capitalized and managed banks are able to engage in interstate branching by merging banks in different states.
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 interstate merger involving affiliated banks). 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.
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 are 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. The 1994 Interstate Act has had a substantial impact on the manner in which the banking business in the United States is conducted.
The Riegle Community Development and Regulatory Improvement Act was also enacted in 1994. It contains a number of provisions affecting the operations of financial institutions. Among these provisions were those that, (1) established 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) removed certain impediments to the securitization of small business loans and leases in an effort to improve access to capital by small businesses, (3) reduced administrative requirements, previously imposed by regulations, of financial institutions to the extent consistent with safe and sound banking practices, (4) reduced and revised reporting requirements relating to money laundering, and (5) ameliorated certain provisions of Section 39 of the Federal Deposit Insurance Act relating to the establishment of regulatory requirements with respect to asset quality.
The "Economic Growth and Regulatory Paperwork Reduction Act of 1996" made numerous changes in Federal banking laws to recapitalize the Savings Association Insurance Fund ("SAIF"), provide regulatory burden relief, amend the Fair Credit Reporting Act, and limit lender liability for environmental cleanup. The recapitalization of SAIF required certain payments by banks to help pay interest on the bonds that funded the initial capitalization of SAIF and mandated regulatory actions to prevent the shifting of deposits from SAIF to the Bank
Insurance Fund ("BIF").
In addition, in the past few years, all of the Federal bank regulatory agencies have undertaken to clarify, modernize and expedite many of their regulations and procedures. In this regard, the Board of Governors of the Federal Reserve System has adopted numerous changes to its procedures with respect to (1) the acquisition of banks and non-banks, (2) changes in bank control, (3) commencement of non-banking activity de novo, (4) simplifying and expanding the regulatory list of permissible non-banking activities, (5) alleviating the tying rules, and (6) removing outmoded restrictions on bank holding company activity. It has also adopted significant changes designed to facilitate entry of holding companies into the securities business within the confines of the Glass-Steagall Act.
Recently a variety of proposals have been considered by Congress for changes in the regulation of financial institutions, some of which could substantially alter Glass-Steagall Act restrictions and permit further consolidation among the commercial banking and investment industries. Such proposals have been controversial and the outcome is unpredictable.
Year 2000 Issue
Mercshares is implementing a comprehensive program to prepare the systems of Mercshares and its Affiliates for year 2000 compliance. The year 2000 issue relates to systems designed to use two digits rather than four to define the applicable year. This flaw can cause system failures and disruptions, including inability to process transactions. For information concerning this matter, see the text under the captions "Year 2000 Issues" and "Cautionary Statement" on pages 23 and 24 of the Registrant's Annual Report to Stockholders for the year ended December 31, 1998, which information is incorporated by reference herein.
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.
ITEM 2.
ITEM 2. PROPERTIES
The main offices of Mercshares and Mercantile-Safe Deposit and Trust Company are located in a 21-story building at Hopkins Plaza in Baltimore owned by MBC Realty, LLC, a wholly owned subsidiary of Mercshares. At December 31, 1998, these offices occupied approximately 142,000 square feet (together with about 11,000 square feet leased in a nearby building). At December 31, 1998, Mercantile-Safe Deposit and Trust Company 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, LLC. Of the 18 banking and bank-related offices occupied by Mercantile-Safe Deposit and Trust Company, four are owned in fee, four are owned subject to ground leases and ten are leased with aggregate annual rentals of approximately $1,346,000, not including rentals for the main office and adjacent premises owned by MBC Realty, LLC.
Of the 161 banking offices of the Community Banks, 91 are owned in fee, 15 are owned subject to ground leases and 55 are leased, with aggregate annual rentals of approximately $3,558,000 as of December 31, 1998.
ITEM 3.
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.
ITEM 4.
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.
SPECIAL ITEM: EXECUTIVE OFFICERS OF THE REGISTRANT
The Executive Officers of Registrant are:
(1) Mr. Reid is an officer of Mercantile-Safe Deposit and Trust Company. He is included above as an executive officer because he participates in policy-making functions concerning Mercshares.
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 assumed the presidency of Mercshares in 1997. He has been Chairman of the Board and Chief Executive Officer of Mercantile-Safe Deposit and Trust Company since 1976.
Mr. Reid was elected President and Chief Operating Officer of Mercantile-Safe Deposit and Trust Company in September, 1997. He joined Mercantile-Safe Deposit and Trust Company as a Senior Vice President in 1993 and served as an Executive Vice President from 1994 until September, 1997.
Mr. Steil was elected Chairman - Credit Policy of Mercantile-Safe Deposit and Trust Company in September, 1997. He had previously served Mercantile-Safe Deposit and Trust Company as an Executive Vice President since 1994, and as Senior Vice President from 1988 to 1994. In March, 1999, Mr. Steil was elected an Executive Vice President of Mercshares.
Mr. Yarbro has been General Counsel of Mercshares and Mercantile-Safe Deposit and Trust Company since April, 1996 and was elected Secretary of both companies in June, 1996. His prior employment was as a partner of Venable, Baetjer and Howard, LLP, where he practiced law for 29 years.
Mr. Troupe has been Chief Financial Officer of Mercshares and Mercantile- Safe Deposit and Trust Company, and Treasurer of Mercshares, since September, 1996. He was Vice President and Chief Financial Officer of IREX Corporation, a specialty mechanical insulation contractor and distributor, from May, 1993 to May, 1996. Prior thereto, Mr. Troupe was Vice Chairman of Meridian Bancorp, Inc.
Mr. Johnson has been Senior Vice President of Mercshares since 1989. He has been a Vice President of Mercantile-Safe Deposit and Trust Company since 1982.
Mr. Talbott has been a Senior Vice President of Mercshares since 1989. He has been a Vice President of Mercantile-Safe Deposit and Trust Company since 1977.
Hugh W. Mohler was an Executive Vice President of Mercshares and Mercantile-Safe Deposit and Trust Company from 1994 until February, 1999, when he relinquished these positions with eligibility for retirement. He is no longer an executive officer.
PART II
ITEM 5.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information required by this Item 5 is incorporated by reference to the
information appearing under the captions "Dividends" and "Recent Common Stock Prices" on page 23 of the Registrant's Annual Report to Stockholders for the year ended December 31, 1998.
The following information is given in response to Item 701 of Regulation S-K. In December, 1998, two directors of Mercshares received an aggregate of 850 shares of Mercshares common stock, at fair market value, in lieu of a cash retainer fee, under the Mercshares Retainer Stock Plan for Non Employee Directors. The shares issuable under the Plan have not been registered under the Securities Act of 1933 in reliance on Release 33-6188 (1980) and Release 33- 6281 (1981). The only potential Plan participants are outside directors, currently 16 in number. Mercshares common stock is actively traded on the Nasdaq National Market. The maximum number of shares (450,000) issuable over ten years under the Plan is less than 1% of the total shares outstanding.
ITEM 6.
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 49 of the Registrant's Annual Report to Stockholders for the year ended December 31, 1998.
ITEM 7.
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 and Analysis of Financial Condition and Results of Operations" on pages 6 to 24 of the Registrant's Annual Report to Stockholders for the year ended December 31, 1998.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this Item 8 and the auditors' report thereon are incorporated by reference to pages 25 to 48 of the Registrant's Annual Report to Stockholders for the year ended December 31, 1998.
ITEM 9.
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.
PART III
ITEM 10.
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.
ITEM 11.
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.
ITEM 12.
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.
ITEM 13.
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.
PART IV
ITEM 14.
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, 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 December 31, 1990, Commission File No. 0-5127, and Exhibit 3-A(12) listed below is incorporated by reference to Exhibit 3(i)(F) to Form S-4 of the Registrant, No. 333-43651. (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. (12) Articles of Amendment effective April 30, 1997.
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. Third Amendment, dated as of June 30, 1997, 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 Registrant, filed July 11, 1997, Exhibit 4-A, Commission File No. 0-5127).
E. 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).
(10) Material contracts
A. Mercantile Bankshares Corporation and Affiliates Annual
Incentive Compensation Plan, as amended through March 10, 1998 (Incorporated by reference to Registrant's Annual Report on From 10-K for the year ended December 31, 1997, 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), as amended by Agreement dated January 29, 1997 (Incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1996, Exhibit 10 C, Commission file No. 0-5127), as amended by Agreement dated January 28, 1999 (filed herewith).
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), as amended by Agreement dated February 1, 1997 (Incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1996, Exhibit 10 D, Commission File No. 0-5127).
E. 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 by amendment effective December 31, 1995 (Incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995, Exhibit 10 F, Commission File No. 0-5127).
F. 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).
G. Executive Severance Agreement dated as of December 31, 1989 between Mercantile Bankshares Corporation and Mercantile-Safe Deposit and Trust Company, and H. Furlong Baldwin (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), as amended by Agreement dated January 29, 1997 (Incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1996, Exhibit 10 J, Commission File No. 0-5127).
H. Mercantile Bankshares Corporation Omnibus Stock Plan (Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for the period ended September 30, 1997, Exhibit 10 K, Commission File No. 0-5127).
I. 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).
J. Mercantile Bankshares Corporation and Participating Affiliates Supplemental Cash Balance Executive Retirement Plan, dated April 27, 1994, effective January 1, 1994 (Incorporated by reference to Registrant's Annual Report on Form 10-K for year ended December 31, 1994, Exhibit 10 R, Commission File No. 0-5127).
K. 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).
L. Mercantile Bankshares Corporation Option Agreement with each of H. Furlong Baldwin (dated August 22, 1995 for 80,000 options) and Hugh W. Mohler (dated August 22, 1995 for 30,000 options) the Net Operating Income of each being that of Mercantile-Safe Deposit and Trust Company, (Incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995, Exhibit 10 Q, Commission File No. 0-5127).
M. Mercantile Bankshares Corporation Retainer Stock Plan For Non-Employee Directors dated March 12, 1996 (Incorporated by reference to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995, Exhibit 10 R, Commission File No. 0-5127).
N. Supplemental Cash Balance Plan and Thrift Agreement, dated April 12, 1996, between Mercantile Bankshares Corporation and Alan D. Yarbro (Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 1996, Exhibit 10 S, Commission File No. 0-5127).
O. Executive Severance Agreement, dated as of April 24, 1996, between Mercantile Bankshares Corporation and Alan D. Yarbro
(Incorporated by reference to Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 1996, Exhibit 10 T, Commission File No. 0-5127).
P. Mercantile Bankshares Corporation Option Agreement with Alan D. Yarbro, dated April 26, 1996 (Incorporated by reference to Registrant's Quarterly Report for the period ended June 30, 1996, Exhibit 10 U, Commission File No. 0-5127).
Q. Agreement dated February 24, 1999 among Mercantile Bankshares Corporation, Mercantile-Safe Deposit and Trust Company and Hugh W. Mohler (filed herewith).
R. Mercantile Bankshares Corporation Option Agreement with J. Marshall Reid, dated August 21, 1995 (filed herewith).
S. Mercantile Bankshares Corporation Option Agreement with Jack E. Steil, dated August 21, 1995 (filed herewith).
(13) Annual Report to security holders for the year ended December 31, 1998 (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 9, 1999 (filed herewith)
(b) No reports on Form 8-K were filed during the last quarter of the period covered by this Report.
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 25 of the Registrant's Annual Report to Stockholders for the year ended December 31, 1998.
Consolidated Financial Statements and related notes are incorporated by reference to the Registrant's Annual Report to Stockholders for the year ended December 31, 1998, and may be found on the pages of said Report as indicated in parentheses:
Consolidated Balance Sheets, December 31, 1998 and 1997 (page 26) Statement of Consolidated Income for the years ended December 31, 1998, 1997 and 1996 (page 27) Statement of Consolidated Cash Flows for the years ended December 31, 1998, 1997 and 1996 (pages 28 and 29) Statement of Changes in Consolidated Stockholders' Equity for the years ended December 31, 1998, 1997 and 1996 (page 30) Notes to Consolidated Financial Statements (pages 31 to 48)
Supplementary Data:
Quarterly Results of Operations are incorporated by reference to the information appearing under the caption "Quarterly Results of Operations" on page 45 of the Registrant's Annual Report to Stockholders for the fiscal year ended December 31, 1998.
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.
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 25, 1999 --------------------------------------- H. Furlong Baldwin, Chairman of the Board, President 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 25, 1999 - ------------------------------------ H. Furlong Baldwin, Chairman of the Board, President and Chief Executive Officer
Principal Financial Officer
/S/ Terry L. Troupe March 25, 1999 - ------------------------------------ Terry L. Troupe Chief Financial Officer
Principal Accounting Officer
/S/ Jerry F. Graham March 25, 1999 - ------------------------------------ Jerry F. Graham Vice President and Controller
A majority of the Board of Directors: Cynthia A. Archer, H. Furlong Baldwin, Thomas M. Bancroft, Jr., Richard O. Berndt, William R. Brody, George L. Bunting, Jr., B. Larry Jenkins, Mary Junck, Robert A. Kinsley, William J. McCarthy, Morton B. Plant, Christian H. Poindexter, Donald J. Shepard.
By: /S/ H. Furlong Baldwin March 25, 1999 -------------------------------- H. Furlong Baldwin For Himself and as Attorney-in-Fact