First Mariner CEO Edwin Hale gets ready for his next act

Over his career, First Mariner Bancorp CEO Edwin F. Hale Sr. could be seen as the quintessential Baltimore success story who managed to do the improbable and start his own bank with little more than grit, street smarts and two years of community college.

Hale started his career as businessman at the Port of Baltimore, building what became Hale Intermodal Trucking Co. In addition to heading First Mariner, Hale owns the Baltimore Blast professional indoor soccer team and has been chairman of Visit Baltimore, the city’s convention and tourism agency, since 2006.

“I’m about as local as it gets,” Hale told reporters and editors at The Daily Record this week.

Now, at 64, Hale the serial entrepreneur faces the prospect of finding his next thing.

1st Mariner Bank was hit hard by the recession and bad mortgages that still haunt its bottom line. The bank he started continues to see quarterly losses: in April it reported a pretax loss of $7.3 million for the first quarter of 2011, compared with a pretax loss of $5.7 million for the first quarter of 2010. The parent company also reported declines in revenue, deposits and total assets.

With each quarterly loss, First Mariner gets further from capital levels mandated by regulators in a 2009 cease-and-desist order with the Federal Deposit Insurance Corp. and the Maryland Division of Financial Regulation. The bank and the holding company were to have met the capital level requirements last June.

Hale has infused his own money into the bank and has campaigned tirelessly for more investment, but those efforts have fallen short. All the while, First Mariner has operated under the implicit threat that regulators could swoop in and take it over at any time.

Then, in April, a deal was announced that could pump enough cash into the bank to not only fulfill regulators’ requirements but make First Mariner one of the most highly capitalized banks in the area. The caveat — Hale would have to part ways with the bank he had put 16 years of his life into building up.

New York-based investment firm Priam Capital Fund I LP has agreed to invest $36.4 million in First Mariner Bancorp, contingent on the holding company raising a total of $160 million in a private placement.

A bad week

The deal, made public April 19, will give the bank a new lease on life and position it to once again be a formidable presence in the area. But it comes with a steep price for Hale — he will have to step down as CEO and chairman if it goes through.

“It’s not exactly the ending that I thought, but it will keep the company going being a large community bank, which I think is definitely necessary around here,” he said. “It’s not the path I chose when I started in 1995, but you have to deal with the consequences and the facts as they are, and that’s what I’ve done.”

Hale said the deal and the likelihood of his departure were known to him since January. He said that at first he kept his own counsel and did not discuss the situation with anyone, but he has over time come to realize that it is how it has to be for the bank to continue.

“Where I’m from, Sparrows Point, you get used to things,” Hale said. “It is what it is. I can sugar-coat it any way you want, but did I like it when I first heard about it? No, but you sort of get used to it and you just move on. That’s the way it is for me and I’ll deal with whatever happens when it does happen.”

Life after the bank

Hale said he was been wrestling with what to do if the deal, which is contingent on the bank meeting capital raising deadlines, goes through and he is replaced by a management team picked by Priam.

“I am going to be asked to stay on in some form, and I’m still going to be a very large stockholder, if not the largest individual stockholder there,” Hale said. “But am I going to have an operational role in it? Probably not.”

Hale did rule out going into politics after leaving First Mariner, joking that his tendency to speak his mind did not lend itself to a career in that arena. “I can’t put a sock on it,” he said.

Hale has been the public face of the bank, starring in its commercials and pitching First Mariner as an alternative to big out-of-town banks. As a result, he said, people often give him a piece of their mind, good or bad.

“People say to me, ‘We hope you make it, we hope you stay and we hope that there will be a community bank here,” Hale said. “But, I do have detractors who say, ‘You’re an [——-]’ and things like that. It’s all part of being a public person.”

But, overwhelmingly, he said, he hears from people concerned about the disappearance of banks with roots in the community.

Hale said one of the big advantages to having a strong community bank presence, especially in a city like Baltimore, is that the loan officers all know everyone and can make decisions using intangibles that would not be factors in decisions otherwise.

“They’re called character loans,” Hale said. “There’s not so much in character loans with large banks. That is a key component to this.”

According to the FDIC’s most recent data, banks headquartered outside of Maryland, including Bank of America and Wells Fargo, have about 73 percent of the state market share. 1st Mariner holds 0.99 percent of the market share, first in the Baltimore area, with only Sandy Spring Bank and Columbia Bank holding larger percentages.

“I believe that what could happen is that you’re going to have relatively few banks to call where you actually know somebody,” he said.

The desire to offer banking services to the community through an institution familiar with the area was one of the reasons Hale said he got into banking. It was a perceived snub, albeit by a local bank, that got Hale into the business initially.

“I got into banking because the blue bloods turned me down for a loan, and I attacked them and I won,” Hale said. “And, I fired them for what they did to me. I didn’t like it.”

Wresting control

That was around 1991, when Hale was enmeshed in a fight for control of the Bank of Baltimore. Hale and a group of likeminded shareholders were able to oust and replace the bank’s management and board members. Hale eventually sold the Bank of Baltimore to First Fidelity.

Bitten by the banking bug, Hale started 1st Mariner in 1995 with the goal of making it a force in community banking. The bank, which traces its roots to the Garibaldi Federal Savings and Loan Association, chartered in 1920, did rise rapidly. In 2011, 1st Mariner has $1.2 billion in assets with 592 employees and 24 branches throughout the Baltimore region.

Faced with the prospect of walking away from the bank he created, Hale said his desire to stay in the industry has not diminished.

“I would very much like to stay in banking,” he said. “In fact, I’d very much like to stay with 1st Mariner — I started it.”

Hale said starting a bank in the current regulatory environment might make be too difficult.

“If given another opportunity I’d look at it,” Hale said. “But, the regulatory situation now is the most difficult I’ve ever seen to operate in. Their oversight is so suffocating that being an entrepreneur like I am it’s very difficult to operate.”

Soccer and the arena

Whatever happens at the bank, Hale said he plans to keep the Blast and remain active in the community, especially with tourism and convention promotion. As chairman of Visit Baltimore, he supports expanding the city’s convention center and for building an arena to replace the aging First Mariner Arena, where the Blast plays.

He also praised Whiting-Turner Contracting Co. CEO Willard Hackerman for his $500 million pledge to build an arena and 500-room hotel without using public funds.

“Without him doing this, I don’t know how it would be accomplished,” he said. “I really don’t.”

Hale said he also plans to remain active in real estate development. He said he has approval to build 504 apartments on property he owns.

And, on Tuesday, Hale announced that 31 acres of his Canton Crossing development had been sold to BCP Investors LLC for an undisclosed amount. The developers hope to break ground there next year on a 275,000-square-foot retail plaza.