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Mercantile-Safe Deposit and Trust Company

Baltimore, MD · Cert 20347

FDIC

Q2 2007

$8.6BAssets
$5.6BLoans
$4.8BDeposits
$885.0MEquity
Loan mix
66%RE $2.8B34%C&I $1.5B0%Consumer $0.0BQ2 2006Q2 2007
Deposit mix
72%Interest-bearing $3.4B28%Noninterest $1.4BQ2 2006Q2 2007

NIM

6.13%Q2 ’055.98%Q2 ’066.32%Q2 ’07-19%-8%

Non-interest income vs. expense

4.03%Q2 ’053.56%Q2 ’062.89%Q2 ’07-39%-40%

Executive Summary

  • Earnings: ROA of 1.68%, up 23 bps year over year; NIM at 3.36%.
  • Asset quality: problem loans at 0.00% of loans (0 bps YoY), with net charge-offs at 0.17%.
  • Funding: loans stand at 116.99% of deposits as of Q2 2007.

Financial Results

Return on Assets (quarter, annualized)

1.68%+23 bps YoY

Net Interest Margin (quarter, annualized)

3.36%-27 bps YoY

Efficiency Ratio (quarter, annualized)

50.90%-562 bps YoY

Tier 1 Leverage Ratio

n/a

Discrete quarter, annualized.

MetricQ2 2006Q3 2006Q4 2006Q1 2007Q2 2007YoY ΔTrend
Earnings
Return on Assets1.45%1.60%1.45%1.19%1.68%+23 bps
Return on Equity14.18%15.26%13.60%11.53%16.47%+228 bps
Net Interest Margin3.63%3.66%3.84%3.36%3.36%-27 bps
Efficiency Ratio56.52%59.64%63.10%64.52%50.90%-562 bps
Non-Interest Burden0.96%1.26%1.60%1.38%0.58%-38 bps
Growth
Asset Growth (YoY)8.76%11.62%13.50%15.47%12.72%+396 bps
Loan Growth (YoY)5.72%9.98%13.23%13.71%8.67%+295 bps
Deposit Growth (YoY)7.25%9.79%7.70%-6.17%-11.71%-1,896 bps
Asset Quality
Nonperforming Loans / Loans0.00%0.00%0.00%0.00%0.00%0 bps
Net Charge-Offs / Loans-0.08%0.02%-0.02%0.20%0.17%+24 bps
Allowance / Loans1.44%1.41%1.37%1.33%1.28%-16 bps
Allowance Coverage of NPLsn/an/an/an/an/an/an/a
Capital
Tier 1 Leverage Ration/an/an/an/an/an/an/a
Total Risk-Based Capital10.92%11.72%11.42%10.68%10.93%+1 bps
Equity / Assets10.25%10.71%10.61%10.08%10.34%+9 bps
Liquidity & Funding
Loans / Deposits95.06%96.47%100.06%105.55%116.99%+2,194 bps
Liquid Assets / Assets1.10%1.61%1.94%2.13%2.35%+124 bps
CRE / Total Capitaln/an/an/an/an/an/an/a