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Jack E. Steil, left, the chairman and chief executive officer of 1st Mariner Bank, and Robert D. Kunisch, Jr, its president and chief operating officer, sit in the boardroom at the bank's headquarters at Canton Crossing in Canton. (The Daily Record/Maximilian Franz)

1st Mariner says it has reasons to celebrate

It’s a time for anniversaries at 1st Mariner Bank as it celebrates both two decades of service to central Maryland and a year under new leadership.

But the bank almost didn’t make it to 20. A year ago, a group of local investors won a contentious bidding process for ownership of 1st Mariner, removing it from the shadow of bankruptcy and keeping it headquartered in the city.

Being able to stay local in Baltimore is a boon for the bank as it attempts to rebuild and provide the city with a strong local banking presence, Robert D. Kunisch, 1st Mariner’s president and COO, and Jack E. Steil, CEO and chairman, said in a sitdown with The Daily Record.

“Having spent our entire careers here and our lives here, as well as most of our management team and all of our people, it’s a city that’s very near and dear to us. We think every great city should have a local bank,” Kunisch said.

Kunisch believes the bank’s localized hierarchy will help it manage its dealings better, as it gives 1st Mariner’s staff a better understanding of the context for matters like real estate transactions.

“We think we know what works well in certain neighborhoods when we talk about real estate. We know commercially what’s going to make sense on 95 versus 295,” he said.

Retaining a localized leadership team also helps with customer recruitment. “I think people are disgruntled with some of the larger banks, looking for a local bank,” Kunisch added.

“It’s hard for a big bank to meet their loan committee firsthand, [but] most of our borrowers meet the loan committee, the decision makers, so it’s a real advantage. And I think borrowers are a little more comfortable seeing the face of the people that are approving their loans,” he explained.

Growing customers

In the first quarter of 2015, the bank added around 200 new customers per month. It also turned a profit of $503,000, an achievement its leaders didn’t expect until the third quarter of this year.

The profit, albeit small, provides a stark contrast to the bank’s recent history. In 2013, 1st Mariner lost $19.1 million as a result of rotten mortgages after the burst of the housing bubble five years prior, and parent company First Mariner Bancorp. filed for bankruptcy.

In the ensuing auction, local investors bidding from RKJS Bank placed the offer with the highest dollar amount, but doubts over the group’s ability to gain swift regulatory approval led 1st Mariner to select National Penn Bank as the winner.

“We left there at midnight after the auction believing we had lost, and knowing that we had the highest bid, it was a bitter pill to swallow,” Kunisch said.

RKJS challenged the sale, claiming that 1st Mariner hadn’t divulged that speed of regulatory approval would be considered. U.S. Bankruptcy Court Judge David E. Rice agreed and reopened the auction, leading RKJS to pledge an additional $3 million and National Penn to withdraw.

With a sale price of $18.7 million and promises to raise an additional $92 million for recapitalization, First Mariner thus stayed in Baltimore hands: Kunisch and Steil both have experience in the area, and Howard Feinglass, who runs RKJS lead investor Priam Capital, is from Baltimore as well.

‘Good Deeds’

A year later, coincident with the emphasis on localized service is a foray into community service: As part of the bank’s 20th anniversary commemoration, it is rolling out a “20 Good Deeds” initiative, a yearlong program designed to give back to the community.

The first “good deed,” for instance, allowed kids from the Kennedy Krieger Institute to meet 1st Mariner spokesperson and Baltimore Ravens’ quarterback Joe Flacco.

In the same vein of community interaction, around two dozen 1st Mariner employees volunteered in Baltimore City schools in April teaching financial literacy, an initiative the bank hopes to continue in the fall.

The bank’s broader plans moving forward include growing through expansion and eventually acquisitions.

First Mariner’s workforce has shrunk from about 450 last year to 400 now, which Kunisch said followed the bank’s downsizing. Future expansions would help to bolster that number, and new staffers would be coming from the neighborhoods hosting the new branches, which likely include Annapolis, Howard County and the Eastern Shore.

“What we would like to do is identify what we consider the key lenders in those marketplaces,” Steil said. “Rather than go out and just put a branch up, we’d rather find individuals that can drive the business and support them.”

FDIC order lifted

The potential for acquisitions received a boost last week as 1st Mariner announced that the federal cease-and-desist order under which it had been operating since 2009 had been lifted. The Federal Deposit Insurance Corp. had found the bank to be using “unsafe or unsound” practices, and the new leadership’s top priority was to gain regulatory approval.

Other banks were using the cease-and-desist order against 1st Mariner to win deals for themselves, and charitable organizations that wanted to support the Baltimore bank were unable to do so because of the order, Steil said.

The order also prevented the bank from making acquisitions, and although Kunisch expressed reservations about 1st Mariner’s ability to grow in this manner yet — ”I think we still have a lot of work to do operationally to get ready,” he said — he was optimistic now that now the bank has the ability to do so.

And as the bank enters its 20s, that kind of growth is to be expected. But for now, the bank’s leaders want to emphasize that they’re ready to fill the niche of Kunisch’s “every great city should have a local bank” declaration.

“The main thing is we’re healthy, well-capitalized and ready to do business,” Steil said.

About 1st Mariner

16 branches

400 employees

$830 million in assets

Headquartered in Canton

Leadership: Jack E. Steil (chairman and CEO), Robert D. Kunisch (president and COO)