Merchants Bancshares profits increase 9 percent for quarter

Merchants Bancshares, Inc. (Nasdaq: MBVT), the parent company of Merchants Bank, today announced net income of $2.91 million or diluted earnings per share of $0.48 for the quarter ended March 31, 2009. This compares with net income of $2.66 million or diluted earnings per share of $0.44 for the first quarter of 2008. Merchants previously announced the declaration of a dividend of 28 cents per share, payable May 14, 2009, to shareholders of record as of April 30, 2009.
The return on average assets was 0.87% for the first quarter of 2009, compared to 0.88% for the first quarter of 2008. The return on average equity was 14.50% for the first quarter of this year, compared to 13.83% for the same period in 2008.
"We were able to continue our strong performance into the first quarter of 2009, with earnings per share up 9%, compared to the same period in 2008, in spite of the continued challenging economic climate," said Michael R. Tuttle, Merchants' President and CEO. "We experienced solid growth in both loans and deposits during the quarter. Asset quality remained strong and capital levels continue to be well in excess of regulatory requirements."
Merchants' net interest income increased $2.70 million, or 28.0%, for the first quarter of 2009, compared to the same period in 2008. This increase was a result of strong growth in both loans and deposits, in addition to lowered funding costs during the quarter. Average interest earning assets for the quarter were $1.30 billion, compared to $1.14 billion for the first quarter of 2008. Merchants' net interest margin for the first quarter of 2009 was 3.85%, compared to 3.40% for the first quarter of 2008.
Merchants' quarterly average loans were $865.96 million, an increase of $128.35 million, or 17% over the first quarter of 2008, and were $40.57 million, or 5% higher on a linked quarter basis. Loans ended the first quarter of 2009 at $892.58 million, an increase of $45.45 million over December 31, 2008 ending balances of $847.13 million. The increase since December 31, 2008, is comprised of residential and commercial mortgages, and commercial loans. Merchants has hired additional lenders in its corporate banking group, which has led to increased loan production. Tuttle commented, "Our status as the last independent, statewide bank continues to have appeal to business owners and has helped us attract new commercial customers. The combination of lower interest rates and reduced competition in the residential area, coupled with the fact that we do not originate loans for sale, has provided us with a substantial pipeline of new retail customers."