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First Mariner founder Edwin Hale ready to look for new challenges

First Mariner Bancorp CEO Edwin F. Hale Sr. isn’t happy that he will be leaving the company he founded, but he said Wednesday he plans to keep his hand in development and Baltimore’s business community.

Hale, 64, will step down as chairman and CEO as part of a private equity firm’s deal to invest $34.6 million in the parent company of 1st Mariner Bank, Baltimore’s largest independently owned bank. Hale, a local businessman who built First Mariner into a major regional competitor for banking business, struggled in recent years to raise money to meet regulators’ capital requirements. But having to walk away from the company he founded in 1995 will not be easy, even after realizing his fate several months ago.

“I’ve gotten used to the idea. I don’t like it,” Hale said in an interview. “There’s never a deal that I’m aware of where they don’t bring their own management. I’ve known that for about six months.”

New York-based Priam Capital Fund I LP and First Mariner announced the deal late Tuesday. The private investment firm will inject the money in return for an ownership stake of nearly 25 percent, and the deal is contingent on an additional $123.6 million of capital raised from other sources.

When the deal is complete, First Mariner will offer $15 million in common stock to current shareholders at 50 cents per share, the same price to be paid by Priam.

Hale will step down when the deal is done.

First Mariner officials first heard about Priam at the end of last year, but didn’t make contact with firm officials until three or four months ago, said Hale and First Mariner Chief Operating Officer Mark A. Keidel.

Priam’s managing partner, Howard P. Feinglass, is a native of Baltimore. His father, Leonard Feinglass, was founder of the Great Cookie Co., a retailer and manufacturer of cookie and pastry dough in Baltimore. Feinglass had previously been a senior member of the investment team at Eagle Rock Diversified Fund LP, a hedge fund firm, and a principal of Odyssey Investment Partners LLC, an investment firm in New York. Feinglass was also a trustee of Baltimore’s Gilman School.

Hale said he hadn’t heard of Feinglass or Priam Capital before working with the firm, and that Feinglass’ Baltimore roots didn’t factor into agreeing to the investment.

Feinglass could not be reached for comment. But in the statement announcing the deal, he said investing in First Mariner will allow the company to have one of the highest capital ratios of any Maryland bank, and its success will help the Baltimore area develop and prosper.

Hale said he will still have an interest in the company while being one of the largest stockholders, and plans to occupy his time with building the retail complex at Canton Crossing, around First Mariner’s headquarters building, and developing properties in Canton and elsewhere. He also said he plans to retain ownership of the Baltimore Blast indoor soccer team and his spot as chairman of the city’s tourism agency, Visit Baltimore.

Priam Capital offered Hale a spot on its board of directors until 2012, a position that Hale said he is still considering and won’t decide on until “the dust settles here.”

But continuing as CEO until the deal is done won’t be easy, he said.

“If you’re CEO, you have to keep your head up and go about business every day,” he said. “Everybody else gets down in the mouth. So I’m trying to keep spirits and keep this deal moving forward.”

But that may still prove to be difficult, said banking consultant Bert Ely, of Ely and Co. Inc. Since investors had not stepped up to give First Mariner the cash it needed before, Ely said he’s skeptical that even with $34.6 million from Priam, the company will be able to find $123 million more.

“I’m not sure that the bank could deliver the return to investors that they’re looking for,” Ely said. “Against the background that the bank has made previous assertions to raise capital and they haven’t.”

Ely also said that unless First Mariner made significant money in the first quarter of 2011, the company will still have to face regulators and a deadline for fixing its already weakened financial state.

Investors seemed to like the deal, though. First Mariner’s shares gained 5 cents, or 7.3 percent, Wednesday to close at 74 cents.

First Mariner lost $46.6 million last year and $22.3 million the year before. Federal and state regulators placed First Mariner under more intense supervision in September 2009, requiring the bank to raise its capital levels and deal with problematic loans. The company said in a regulatory filing last month that it was still short almost $38 million of the capital it needed.

But until that $160 million is a reality for First Mariner, regulators will still press the company, Ely said.

“I suspect the regulators are running out of patience,” he said.

Hale, a former trucking company owner, is no stranger to bank troubles. He turned around Baltimore Bancorp and sold it to First Fidelity Bancorp Inc. in 1994 for $346 million. Banking was a particularly fond interest, but Hale said he doesn’t know if he’ll venture into banking again anytime soon.

Hale said he won’t retire and will continue learning new industries.

“What I’ll miss is competing with the big, out-of-town banks,” Hale said. “I really enjoyed doing that. It was a tremendous amount of success from 1995 to 2006. We were on a course during that period of time; we set that platform for the bank and the franchise. We were making a lot of loans in the community, we participated in charities, did a lot of volunteer work. It was a wonderful time to see it grow.”

First Mariner has $1.3 billion in assets, and employs 700 workers at 24 branches and the First Mariner Tower.