Mercantile Bankshares Corp., which lost a bid to acquire Riggs National Corp. of Washington, plans to keep adding branches and scouting for acquisitions in northern Virginia.
Edward J. Kelly 3d, the $14 billion-asset Baltimore company's chairman, chief executive, and president, told analysts during a conference call Tuesday that he is not concerned about competition from PNC Financial Services Group Inc. On Friday PNC announced plans to buy the troubled Riggs for $779 million in cash and stock.
"The market is very crowded as it is, and we have very strong competitors here," Mr. Kelly said. "We plan to continue to focus on what we can do to expand in the northern Virginia market."
He also responded to allegations a former employee made in a $240 million lawsuit that Mercantile had been considering a sale this year.
"We have no plans to sell. We are optimistic about the future," Mr. Kelly told analysts.
In the suit, filed Monday in Baltimore, John J. Pileggi says Mercantile wrongfully terminated his employment and damaged his reputation in the way it described his firing in March.
Mr. Pileggi, who had been Mercantile's chief executive of investment and wealth management, also says it was discussing a merger with a Baltimore financial services company (which he did not name) when he was fired, according to the Baltimore newspaper The Sun, which reported the lawsuit Tuesday.
Mercantile's investment bankers advised it that selling would be the best way to boost shareholder value, according to the suit.
Mr. Pileggi says his dismissal would have made him ineligible for severance payments, which could have been worth three times his annual salary, if Mercantile were sold.
When Mercantile fired Mr. Pileggi and another employee, senior vice president Michael Donnell in March, it said they had not disclosed to superiors that Mr. Donnell's mother would get a referral fee from a firm Mercantile hired to advise one of its registered hedge funds.
The suit is "without merit," Mr. Kelly said. "We plan to defend ourselves vigorously."
Second-quarter profits rose 13% from a year earlier, to $56 million, on higher loans and deposits and growth in investment and wealth management fees.
Earnings per share fell 1 cent, to 71 cents, a penny below the average estimate of analysts.
