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1st Mariner Bancorp cuts loss nearly in half, to $3.5M

Still struggling to meet capital levels mandated by an agreement with bank regulators, 1st Mariner Bancorp, parent company of 1st Mariner Bank, on Monday reported a net loss for the fourth quarter of 2010.

The Baltimore-based company had a pre-tax net loss of $3.5 million for the final quarter of the year, compared with a loss of $6.5 million for the fourth quarter of 2009. For the year, 1st Mariner reported a pre-tax net loss of $26.8 million, compared with a loss of $24.1 million in 2009.

But, the company said a net charge to its income tax expenses of $29.9 million actually caused it to report an after-tax net loss of $33.4 million for the quarter, compared with an after tax loss of $3.8 million for the corresponding quarter in 2009.

According to 1st Mariner, capital levels, while considered “adequate,” again failed to increase to levels required by bank regulators.

“The capital raising effort seems to have ground to a halt,” said Bert Ely, a Virginia-based banking consultant. “You have to wonder how long regulators will let it go on.”

In the fourth quarter, the bank had a Tier 1 leverage capital ratio of 4.8 percent and a total risk-based capital ratio of 8.1 percent. The levels were actually down from the corresponding quarter of 2009, when it had a Tier 1 leverage capital ratio of 6.2 percent and a total risk-based capital ratio of 9.1 percent.
“We continue to work diligently to increase our capital ratios with the intent of satisfying the requirements set forth in our agreement signed with our regulators.” Edwin F. Hale Sr., 1st Mariner’s chairman and CEO, said in a prepared statement. “As we continue our efforts to increase capital, we consult regularly with our regulators and have kept them fully informed of the status of our progress.”

The company entered into a 2009 agreement for a cease-and-desist order with the FDIC and the Maryland Division of Financial Regulation to increase its capitalization, improve earnings, reduce nonperforming loans, strengthen management policies and practices, and reduce reliance on non-core funding. The order required the bank to adopt a plan to achieve and maintain a Tier 1 leverage capital ratio of at least 7.5 percent and a total risk-based capital ratio of at least 11 percent by June 30, 2010. The company has not met the order’s requirements since it came out.

Ely said the lack of capital raised and the bank’s inability to meet the terms of the agreement raised concerns about the potential of regulators closing the bank, or that it might be sold.

“There are serious questions about the viability of the bank,” Ely said. “It’s really on borrowed time, in my opinion.”

The company did report some improvements to its problem loans, including a 68 percent decline in the amount of loans more than 90 days delinquent. The amount of net loans charged off as a loss dipped 24 percent to $2.06 million for the quarter, compared with $2.7 in the fourth quarter of 2009. But the amount of nonperforming assets did jump 26 percent to $72.2 million in the quarter compared with $57.7 million in 2009.

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