The New York-based investment firm looking to turn around troubled First Mariner Bancorp said Thursday it has no plans to walk away from the deal even after the local company missed a second deadline to raise more than $123 million.
Priam Capital Fund I LP agreed in April to pump $36.4 million into the Baltimore-based parent of 1st Mariner Bank — if it could raise an additional $123.6 million. Priam is allowed to terminate the deal if certain goals aren’t met.
Howard Feinglass, the Baltimore native who is Priam’s managing partner, said in an interview on Thursday that the deal had not been terminated. He said he was limited by Securities and Exchange Commission regulations about what he could comment on, but that Priam intended to stick with First Mariner.
“We are in the process of negotiating an amendment to extend our agreement to invest in the bank,” Feinglass said. “We remain fully committed to investing in First Mariner.”
First Mariner was to have raised $70.6 million by July 18, but didn’t meet that deadline. The company was to have raised the entire $123.6 million by Thursday. The deadlines were voluntary, as is a third to have the deal closed by Oct. 16.
Thursday also marked the first day that First Mariner traded on the Over The Counter Bulletin Board stock market. The company’s stock was delisted from the Nasdaq stock market on Wednesday after its appeal was denied. The stock was delisted for failing to trade at more than $1 per share.
In heavier than normal trading Thursday, First Mariner’s shares plummeted 33 percent, or 14 cents, to close at 28 cents.
First Mariner has been beset with problems over its capital, the money it needs to have on hand to cover potential bad loans. It has been operating under a cease-and-desist order from federal and state regulators since 2009. The bank was to have raised its Tier 1 leverage and total risk-based capital ratios to 6.5 percent and 10 percent, respectively, by March 31, 2010, and 7.5 percent and 11 percent, respectively, by June 30, 2010.
The Tier 1 capital ratio is a bank’s core equity capital compared to its total assets; the total risk-based capital ratio is the requirement that banks keep a minimum ratio of estimated total capital to estimated risk-weighted assets. The bank has not hit those levels and has slipped further behind as it has been operating in the red. First Mariner posted an $11 million dollar loss for the quarter ending June 30, which dropped its capital levels even more.
Under the deal with Priam, the bank would end up with $160 million in new capital and a new management structure. As part of the agreement, First Mariner founder Edwin F. Hale Sr. agreed to step down. Hale can elect to stay on as a member of the board of directors. Priam has said it will bring on a new chairman of the board, a new CEO and a new president to run First Mariner.