Top management at Mercantile Safe-Deposit and Trust Co., Maryland's oldest and largest trust company with $6.5 billion in assets, has gazed hungrily upon the Washington banking market for a long time, anticipating the day when laws prohibiting interstate branch banking are changed.

Mercantile's goal -- to acquire a piece of the D.C. banking pie -- is more than just a remote possibility now.

"Washington, on the banking side, is one of the most competitive markets there is. We're just waiting for the banking laws to be changed so we can move into that market. We already have people searching for prime District banking locations," says Brian Topping, executive vice president and head of the trust division at Mercantile. His colleague, Senior Vice President James Hardesty, adds, "Washington is an unusual city. Despite the tremendous inherent wealth there, much of its money is domiciled elsewhere."

Both are excited about the opportunities interstate branch banking and services may someday provide. But industry experts say that while the laws are expected to be changed, any major overhaul of the restrictions on interstate branch banking is probably more than a year away.

In the meantime, Mercantile is studying the Baltimore-Washington banking market and pursuing expansion opportunities currently available under banking regulations.

Last month, Mercantile's $1.38 billion holding company, Mercantile Bankshares Corp., concluded affiliations with Forest Hill State Bank, located in Forest Hill, Md., and St. Michaels Bank of St. Michaels, Md. These moves added six banking locations to the Mercantile portfolio and brought to 13 the number of banks operating independently under the Mercantile umbrella.

"These are smaller banks in smaller communities," Topping explains. "We encourage them to have a local flavor. We are the only multibank holding company in the region to maintain autonomous banks in local communities."

Mercantile says it also is seeking to expand the operations and reach of its trust, or asset management, department. In recent years, Mercantile has expanded its investment services from U.S. stocks and bonds to include advice on and analysis of more speculative investments, such as options, foreign securities, precious metals and gems, oil and gas exploration, real estate, thoroughbred horses and timberland.

"We're right in the middle of a changing economy," Topping says. "We view Washington as an area that is underserviced in the realm of sophisticated financial management."

Relief, he says, "is just 35 miles up the highway."

According to Hardesty, Mercantile's "investment strategy is to recognize undervalued investments and adjust accordingly. With a broad range of 'products,' it's not hard to find something acceptable for all investors." He terms timberland "an excellent tax shelter. You can control the timing of profits, and it is a marvelous wealth-transferal mechanism."

The Mercantile approach to investments has yielded "several fairly significant account relationships" in Washington, Topping adds.

"Baltimore's financial community is much more developed than Washington's," Hardesty says. "But to remain competitive and good in this business environment helps our customers. Washington provides that competition."