Extension likely for 1st Mariner Bank to boost capital levels 

Baltimore bank falls $5 million short of regulators’ goal

Posted: 12:17 pm Wed, June 30, 2010
By Danielle Ulman
Daily Record Business Writer

Baltimore’s 1st Mariner Bank fell $5 million short of reaching the goal required of it by regulators, but the city’s largest locally owned bank is likely to get a new set of deadlines to come up with more money.

In an order issued last fall, the Federal Deposit Insurance Corp. and the Maryland Division of Financial Regulation told the bank to increase its capital levels by Wednesday.

The bank raised nearly $25 million, falling short of the $30 million requirement.

According to the order, failure to sufficiently improve the bank’s capital — a cushion against unexpected losses — will result in notice from the FDIC and Maryland banking regulators and require 1st Mariner to present a new plan to increase capital levels within 30 days. Regulators would then have to approve the plan and could make changes that the bank would have to implement.

Other measures could be taken to improve capital, including receiving a cash infusion from the parent company, First Mariner Bancorp, or a sale or merger with another bank.

“These deadlines are kind of squishy. More often than not I see banks slide by deadlines and then they get a new deadline or maybe two weeks, four weeks, six weeks later they get taken over,” Bert Ely, a banking consultant, said.

Executives at First Mariner said Wednesday they could not comment on their plans.

FDIC spokeswoman LaJuan Williams-Young would not say whether the agency had renegotiated the deadline with 1st Mariner, but said the FDIC could make any number of moves.

“They could extend the order; they could find that they’ve … met the request,” she said. “I just can’t say.”

Any changes made to the order in June would be posted on the FDIC’s website at the end of July, she said. But a review of 1st Mariner’s capital levels likely would not occur for at least a few weeks while the bank puts together its quarterly earnings report for the second quarter, which ended Wednesday.

First Mariner has been hit with quarterly losses for the last few years, although losses have narrowed in the last two quarters compared to results a year earlier.

“I think the key thing with them right now is how the second quarter turned out,” Ely said.

Bank executives have said 1st Mariner still needs to bring in between $7 million and $10 million to satisfy the FDIC’s order.

The bank had hoped to raise $20 million in a stock offering to shareholders and the public in the spring, but netted $10.9 million in that effort. First Mariner has made other moves to improve the bank’s capital levels, including the sale of its consumer finance business, Mariner Finance.

First Mariner Chairman and CEO Edwin F. Hale Sr. also gave the company a boost through a personal investment of $2 million in a complicated debt-for-equity swap deal.

“I would be willing to stick my neck out and say this sounds like an extension will be forthcoming because they’re obviously percolating out there,” Lewis Sosnowik, vice president of bank securities at Bethesda’s Koonce Securities, said.

“Why would they lower the boom on them here?” he said. “Whether they can raise the rest of the money may be questionable to some extent, and how many pints of blood do they have to give up to raise it.”