The directors and management of St. Louis-based Mercantile Bancorp. faced a volley of questions Wednesday from shareholders who seemed anxious for a sale.

Douglas M. Kratz, an investor from Rock Island, Ill., told directors at the annual meeting that time was running out to either improve performance or sell. "I don't think the large shareholders are going to have a lot of patience," he said.

Michael Zuk Jr., a Kansas City, Mo., investor who said he owns 5,000 shares, asked chairman and chief executive officer Thomas H. Jacobsen if he would let shareholders vote on a takeover offer. This point has been a sore subject with some investors, who say they believe Mr. Jacobsen has warded off potential buyers in the past.

Other investors asked Mr. Jacobsen if he had missed the chance to sell.

Mr. Jacobsen denied that the $35.6 billion-asset company had sidestepped "any opportunities." The strategy, he said, is to increase revenues and cut costs.

Last year Mercantile announced a plan to eliminate 1,300 jobs, or 11% of its work force. The company has reorganized into three major business lines-personal investment and commercial and retail banking-and is concentrating on cross-selling.

"It's a fundamental and dramatic shift of how we're going to operate," Mr. Jacobsen said. "In a consolidating industry we always want to deal from a position of strength."

Mercantile's annual meeting was one of the few so far this spring to be dominated by questions about a sale. The sparring over Mercantile's future was anticipated, because the company has been touted in recent months as one of the likeliest takeover targets in the industry. Mercantile is considered attractive because of its lower-Midwest market position and its lagging stock price.

Bank One Corp. of Chicago, Firstar Corp. of Milwaukee, and National City Corp. of Cleveland are often cited as the likeliest buyers.

Mercantile itself has been an active buyer over the past 10 years. Its assets totaled only $7.6 billion in 1990.

Mr. Jacobsen told shareholders Wednesday that this rapid acquisition pace led the company to its most recent strategy of focusing on existing businesses. "The Street will really price your stock on internal revenue growth," he said.

This is not the first time Mercantile has had to answer questions about selling, chief financial officer John W. McClure said in an interview. "We've had that question asked for years as the consolidation in the industry continues, and our answer is always the same: We work in the best interest of the shareholders."

He also noted the company's inside ownership-stock held by executives and directors-is 13%, which he said was an incentive to work in the shareholders' best interest.

In an interview, Mr. Jacobsen said he would not rule out selling his company. "You look at all your opportunities," he said, "and deal from a position of strength."

Mr. Jacobsen said he had anticipated the pointed questions from shareholders. However, he said the company compares favorably with competitors in stock performance.

But some investors questioned the company's earnings performance. In results reported Monday, Mercantile's first-quarter earnings per share of 74 cents beat analysts' earnings projections by a penny. Several shareholders at Wednesday's annual meeting complained that the company has not produced robust revenue growth for the past two years.

Mercantile's decade-long shopping spree may be to blame for the shareholder discontent. Many of the company's current investors came on board as a result of acquisitions, which Mercantile paid for with its shares.

"Perhaps more so than most companies, (Mercantile's) shareholders appreciate the benefits of selling out," said Anthony Polini, an analyst with Advest Group. "They have less patience than others."

"If you took a shareholder vote, I think the overwhelming majority would say sell the company, and they would express dissatisfaction with current management," Mr. Polini said.

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