FIRST MARINER BANCORP 
By BALTIMORE, April 27, 2011 /PRNewswire/ -- 1st Mariner Bancorp (NASDAQ: FMAR), parent company of 1st Mariner Bank, reported a pre-tax loss of $7.3 million for the first quarter of 2011 compared to a pre-tax loss of $5.7 million for the first quarter of 2010. The Company reported an after tax loss of $7.3 million in 2011 versus $3.4 million in 2010. In the first quarter of 2010, the Company recorded a $2.3 million tax benefit while no tax benefit was recognized in first quarter of 2011.
Edwin F. Hale, Sr., 1st Mariner's Chairman and Chief Executive Officer, said, "During the first quarter of 2011, our credit related costs declined significantly. Our net charge offs declined 55% when compared to the first quarter of 2010. Additionally, our provision for loan losses declined 63% over the same time frame. We continue to work through this difficult economy and have made progress in dealing with our problem loans."
Hale added, "Over the past two years, achieving compliance with our regulatory capital orders and controlling credit costs have been our primary focal points. We have been working diligently on both fronts and continue to make progress."
Operating Summary
Net interest income for the first quarter of 2011 was down slightly ($97 thousand) compared to the first quarter of 2010. A higher net interest margin was offset by lower balances of earning assets. The net interest margin improved to 2.84% in the first quarter of 2011, compared to 2.70% in the first quarter of 2010. Reduced interest expense on borrowings and deposits contributed to the improvement in 2011 compared to 2010. Total average interest rates paid on deposits were 1.82% in the first quarter of 2011 compared to 2.20% in the first quarter of 2010.
Non-interest income decreased $2.7 million in the first quarter of 2011 to $3.1 million compared to $5.8 million for the first quarter of 2010. Gross mortgage banking revenue was $0.9 million for the first quarter of 2011 compared to $2.5 million in the first quarter of 2010. The decrease was due to lower home purchase and refinance volume and a decreased level of loans sold. Fee income on deposit accounts decreased as a result of the implementation of new regulations that lowered deposit account service charges beginning in July 2010. Total service fees on deposits decreased $300 thousand from $1.1 million in the first quarter of 2010 to $0.8 million in the first quarter of 2011. Other decreases in non-interest income were related to the gain in the fair value of liabilities carried at fair value recognized in the first quarter of 2010 of $0.8 million. The Company had no liabilities carried at fair value in 2011.
Non-interest expenses increased slightly with $16.4 million in the first quarter of 2011 and $16.3 million in the first quarter of 2010. Controllable expenses such as salaries and benefits, occupancy, and furniture, fixtures & equipment expenses collectively decreased $0.6 million in the first quarter of 2011. However, professional fees related to regulatory compliance and loan workouts increased $0.4 million in the first quarter of 2011 compared to the first quarter of 2010. Additionally, marketing expenses and consulting expenses increased $200 thousand and $130 thousand, respectively, in the first quarter of 2011 compared to the first quarter of 2010.
-- Total revenue for the three months ended March 31, 2011 was $9.9
million, which represents a 22% decrease over 2010's figure of $12.7
million; mainly due to decreases in non-interest income. Reduced fee
income resulted from the implementation of new regulations imposed on
financial institutions and lower mortgage volume was due to a slow real
estate and refinance market.
-- Net interest income decreased 1%, with $6.8 million recorded in the
first quarter of 2011 compared to $6.9 million in the first quarter of
2010. Interest income on earning assets declined $2.0 million, or 14%,
in the first quarter of 2011, compared to the first quarter of 2010. The
decline was due to a reduction in average loans outstanding. Offsetting
the decrease in interest income was a decrease in interest expense paid
on deposits and borrowings. Total interest expense on deposits and
borrowings was $5.4 million in the first quarter of 2011, compared to
$7.3 million in the first quarter of 2010. The decrease in interest
expense is primarily due to the reduction of debt and related interest
expense attributable to the Company's exchange for and elimination of
$21 million in trust preferred debt securities in the first and second
quarters, as well as lower costs of deposits and borrowed funds.
-- Average earning assets were $948 million for the first quarter of 2011,
which was a 6% decrease over the first quarter 2010 balance of $1.01
billion. The decrease was due to a reduction in loans and investments.
-- Net charge-offs decreased 55% during the quarter, with $0.8 million in
the first quarter of 2011 compared to $1.8 million in the first quarter
of 2010. The provision for loan losses totaled $800 thousand for the
first quarter of 2011, a decrease of $1.4 million, or 63%, over the
provision of $2.2 million in the corresponding quarter last year. The
allowance for loans losses at the end of the first quarter of 2011 was
$14.1 million, an increase of 17% over the prior year's figure of $12.0
million. The allowance for loan losses as a percentage of total loans
was increased to 1.84% as of March 31, 2011, compared to 1.38% as of
March 31, 2010, an increase of 33%.
Comparing balance sheet data as of March 31, 2011 and 2010, total assets decreased 10% to $1.27 billion, from the prior year's $1.40 billion. The decrease is primarily attributable to a $104.9 million decrease in loans, a $22.6 million reduction in the deferred tax assets, and a $53.8 million reduction in cash.
-- Total loans outstanding decreased $104.9 million, or 12%, to $767.4
million as of March 31, 2011. Commercial loan maturities and refinances
primarily contributed to the decrease.
-- Net deferred tax assets decreased $22.6 million as a result of the
establishment of a valuation allowance in the fourth quarter of 2010.
While this allowance reduces the carrying value of the asset, it does
not necessarily preclude the Company from utilizing this asset in the
future.
-- Total deposits decreased 8.2% from $1.18 billion in 2010 to $1.09
billion as of March 31, 2011. Money market and NOW accounts decreased
$9.6 million, from $152.6 million as of March 31, 2010 to $143.0 million
as of March 31, 2011. Certificates of deposit were $775.2 million as of
March 31, 2011. This is a decrease of $89.9 million, or 10.4%, over the
$865.2 million as of March 31, 2010. The decrease in interest bearing
deposits was due to lower rates being offered on these deposit products
in 2011 versus 2010.
-- As of March 31, 2011, 1st Mariner Bank's capital ratios were as follows:
Total Risk Based Capital 7.9%; Tier 1 Risk Based Capital 6.6%; and Tier
1 Leverage 4.4%.
1st Mariner Bancorp is a bank holding company with total assets of $1.27 billion. Its wholly owned banking subsidiary, 1st Mariner Bank, with total assets of $1.32 billion, operates 22 full service bank branches in Baltimore, Anne Arundel, Harford, Howard, Talbot, and Carroll counties in Maryland, and the City of Baltimore. 1st Mariner Mortgage, a division of 1st Mariner Bank, operates retail offices in Central Maryland and the Eastern Shore of Maryland. 1st Mariner Mortgage also operates direct marketing mortgage operations in Baltimore. 1st Mariner Bancorp's common stock is traded on the NASDAQ Capital Market under the symbol "FMAR". 1st Mariner's Website address is www.1stMarinerBancorp.com, which includes comprehensive level investor information.
In addition to historical information, this press release contains forward-looking statements that involve risks and uncertainties, such as statements of the Company's plans and expectations regarding the Company's efforts to meet regulatory capital requirements established by the Federal Reserve and the FDIC, revenue growth, anticipated expenses, profitability of mortgage banking operations, and other unknown outcomes. The Company's actual results could differ materially from management's expectations. Factors that could contribute to those differences include, but are not limited to, the Company's ability to increase its capital levels and those of 1st Mariner Bank, volatility in the financial markets, changes in regulations applicable to the Company's business, its concentration in real estate lending, increased competition, changes in technology, particularly Internet banking, impact of interest rates, and the possibility of economic recession or slowdown (which could impact credit quality, adequacy of loan loss reserve and loan growth).Greater detail regarding these factors is provided in the forward looking statements and Risk Factors sections included in the reports filed by the Company with the SEC, including the Company's Annual Report on Form 10-K for the year ended December 31, 2010. Our forward-looking statements may also be subject to other risks and uncertainties, including those we may discuss elsewhere in this news release, or in our SEC filings, which are accessible on our web site and at the SEC's web site, www.sec.gov.
FINANCIAL HIGHLIGHTS (UNAUDITED)
First Mariner Bancorp
(Dollars in thousands, except per share data)
For the three months ended March 31,
2011 2010
---- ----
Summary of
Earnings:
Net interest
income $6,804 $6,901
Provision for
loan losses 800 2,190
Noninterest
income 3,057 5,842
Noninterest
expense 16,370 16,289
Net loss before
income taxes (7,309) (5,736)
Income tax
expense/
(benefit) - (2,497)
Net loss from
continuing
operations (7,309) (3,239)
Net (loss)/income
from
discontinued
operations - (200)
Net loss (7,309) (3,439)
Profitability and
Productivity:
Net interest
margin 2.84% 2.70%
Net overhead
ratio 4.09% 3.01%
Efficiency ratio 166.01% 127.83%
Mortgage loan
production 188,940 195,846
Average deposits
per branch 47,190 53,764
Per Share Data:
Basic earnings
per share -
continuing
operations $(0.40) $(0.50)
Diluted earnings
per share -
continuing
operations $(0.40) $(0.50)
Basic earnings
per share -
discontinued
operations $- $(0.03)
Diluted earnings
per share -
discontinued
operations $- $(0.03)
Basic earnings
per share $(0.40) $(0.53)
Diluted earnings
per share $(0.40) $(0.53)
Book value per
share $(0.18) $4.55
Number of shares
outstanding 18,532,929 8,078,647
Average basic
number of shares 18,407,820 6,470,698
Average diluted
number of shares 18,407,820 6,470,698
Summary of
Financial
Condition:
At Period End:
Assets $1,265,980 $1,404,847
Investment
Securities 59,389 37,605
Loans 767,396 872,385
Deposits 1,085,375 1,182,818
Borrowings 170,049 172,772
Stockholders'
equity (3,348) 36,732
Average for the
period:
Assets $1,290,519 $1,376,185
Investment
Securities 33,721 38,530
Loans 795,697 885,719
Deposits 1,106,858 1,143,310
Borrowings 169,755 193,981
Stockholders'
equity 1,519 27,249
Capital Ratios:
First Mariner
Bank
Leverage 4.4% 5.7%
Tier 1 Capital to
risk weighted
assets 6.6% 7.9%
Total Capital to
risk weighted
assets 7.9% 9.2%
Asset Quality
Statistics and
Ratios:
Net Chargeoffs 818 1,826
Non-performing
assets 71,337 59,613
90 Days or more
delinquent loans 4,886 5,038
Annualized net
chargeoffs to
average loans 0.41% 0.82%
Non-performing
assets to total
assets 5.63% 4.24%
90 Days or more
delinquent loans
to total loans 0.64% 0.58%
Allowance for
loan losses to
total loans 1.84% 1.38%
For the three months ended March 31,
$Change % Change
------- --------
Summary of
Earnings:
Net interest income (97) -1%
Provision for loan
losses (1,390) -63%
Noninterest income (2,785) -48%
Noninterest expense 81 0%
Net loss before
income taxes (1,573) 27%
Income tax expense/
(benefit) 2,497 -100%
Net loss from
continuing
operations (4,070) 126%
Net (loss)/income
from discontinued
operations (200) 100%
Net loss (3,870) -113%
Profitability and
Productivity:
Net interest margin - 5%
Net overhead ratio - 36%
Efficiency ratio - 30%
Mortgage loan
production (6,906) -4%
Average deposits
per branch (6,574) -12%
Per Share Data:
Basic earnings per
share -continuing
operations 0.10 21%
Diluted earnings
per share -
continuing
operations 0.10 21%
Basic earnings per
share -
discontinued
operations 0.03 100%
Diluted earnings
per share -
discontinued
operations 0.03 100%
Basic earnings per
share 0.13 25%
Diluted earnings
per share 0.13 25%
Book value per
share (4.73) -104%
Number of shares
outstanding 10,454,282 129%
Average basic
number of shares 11,937,122 184%
Average diluted
number of shares 11,937,122 184%
Summary of
Financial
Condition:
At Period End:
Assets (138,867) -10%
Investment
Securities 21,784 58%
Loans (104,989) -12%
Deposits (97,443) -8%
Borrowings (2,723) -2%
Stockholders'
equity (40,080) -109%
Average for the
period:
Assets (85,666) -6%
Investment
Securities (4,809) -12%
Loans (90,022) -10%
Deposits (36,452) -3%
Borrowings (24,226) -12%
Stockholders'
equity (25,730) -94%
Capital Ratios:
First Mariner Bank
Leverage - -23%
Tier 1 Capital to
risk weighted
assets - -16%
Total Capital to
risk weighted
assets - -14%
Asset Quality
Statistics and
Ratios:
Net Chargeoffs (1,008) -55%
Non-performing
assets 11,724 20%
90 Days or more
delinquent loans (152) -3%
Annualized net
chargeoffs to
average loans - -50%
Non-performing
assets to total
assets - 33%
90 Days or more
delinquent loans
to total loans - 10%
Allowance for loan
losses to total
loans - 34%
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
First Mariner Bancorp
(Dollars in thousands)
As of March 31,
2011 2010
---- ----
Assets:
Cash and due from banks $233,914 $287,711
Interest-bearing deposits 39,437 8,154
Available-for-sale investment
securities, at fair value 59,389 27,382
Trading Securities - 10,223
Loans held for sale 47,354 55,360
Loans receivable 767,396 872,385
Allowance for loan losses (14,097) (12,003)
------- -------
Loans, net 753,299 860,382
Real estate acquired through
foreclosure 28,317 19,915
Restricted stock investments,
at cost 7,095 7,934
Premises and equipment, net 40,360 43,556
Accrued interest receivable 3,886 4,734
Income taxes recoverable - 1,461
Deferred income taxes -Net of
allowance - 22,586
Bank owned life insurance 36,522 35,126
Prepaid expenses and other
assets 16,407 20,323
------ ------
Total Assets $1,265,980 $1,404,847
========== ==========
Liabilities and Stockholders'
Equity:
Liabilities:
Deposits $1,085,375 $1,182,818
Borrowings 117,981 119,672
Junior subordinated deferrable
interest debentures 52,068 53,100
Accrued expenses and other
liabilities 13,904 12,525
------ ------
Total Liabilities 1,269,328 1,368,115
Stockholders' Equity
Common Stock 923 404
Additional paid-in-capital 79,753 69,313
Retained earnings (80,519) (30,060)
Accumulated other comprehensive
loss (3,505) (2,925)
------ ------
Total Stockholders Equity (3,348) 36,732
------ ------
Total Liabilities and
Stockholders' Equity $1,265,980 $1,404,847
========== ==========
As of March 31,
$Change % Change
------- --------
Assets:
Cash and due from banks (53,797) -19%
Interest-bearing deposits 31,283 384%
Available-for-sale investment
securities, at fair value 32,007 117%
Trading Securities (10,223) -100%
Loans held for sale (8,006) -14%
Loans receivable (104,989) -12%
Allowance for loan losses (2,094) 17%
------
Loans, net (107,083) -12%
Real estate acquired through
foreclosure 8,402 42%
Restricted stock investments,
at cost (839) -11%
Premises and equipment, net (3,196) -7%
Accrued interest receivable (848) -18%
Income taxes recoverable (1,461) -100%
Deferred income taxes -Net of
allowance (22,586) -100%
Bank owned life insurance 1,396 4%
Prepaid expenses and other
assets (3,916) -19%
------
Total Assets (138,867) -10%
========
Liabilities and Stockholders'
Equity:
Liabilities:
Deposits (97,443) -8%
Borrowings (1,691) -1%
Junior subordinated deferrable
interest debentures (1,032) -2%
Accrued expenses and other
liabilities 1,379 11%
-----
Total Liabilities (98,787) -7%
Stockholders' Equity
Common Stock 519 128%
Additional paid-in-capital 10,440 15%
Retained earnings (50,459) 168%
Accumulated other comprehensive
loss (580) 20%
----
Total Stockholders Equity (40,080) -109%
-------
Total Liabilities and
Stockholders' Equity (138,867) -10%
========
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
First Mariner Bancorp
(Dollars in thousands) For the three months
ended March 31,
2011 2010
---- ----
Interest Income:
Loans $11,698 $13,444
Investments and interest-bearing
deposits 490 761
--- ---
Total Interest Income 12,188 14,205
Interest Expense:
Deposits 4,503 5,610
Borrowings 881 1,694
--- -----
Total Interest Expense 5,384 7,304
----- -----
Net Interest Income Before Provision
for Loan Losses 6,804 6,901
Provision for Loan Losses 800 2,190
--- -----
Net Interest Income After Provision
for Loan Losses 6,004 4,711
Noninterest Income:
Total other-than-temporary
impairment ("OTTI") charges - (130)
Less: Portion included in other
comprehensive income - 7
--- ---
Net OTTI charges on securities
available for sale - (123)
Mortgage banking revenue 930 2,507
ATM Fees 771 735
Service fees on deposits 735 1,060
Gain on financial instruments
carried at fair value - 847
Commissions on sales of nondeposit
investment products 118 145
Income from bank owned life
insurance 335 353
Other 168 318
--- ---
Total Noninterest Income 3,057 5,842
Noninterest Expense:
Salaries and employee benefits 6,270 6,596
Occupancy 2,176 2,371
Furniture, fixtures and equipment 485 612
Professional services 1,164 720
Advertising 136 178
Data processing 455 402
ATM servicing expenses 208 204
Costs of other real estate owned 1,759 1,685
FDIC insurance premiums 973 934
Service and maintenance 652 683
Other 2,092 1,904
----- -----
Total Noninterest Expense 16,370 16,289
Net loss before discontinued
operations and income taxes (7,309) (5,736)
Income tax expense/(benefit) -
continuing operations - (2,497)
--- ------
Net loss from continuing operations (7,309) (3,239)
------ ------
(Loss)/Income from discontinued
operations - (200)
--- ----
Net Loss $(7,309) $(3,439)
======= =======
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (UNAUDITED)
First Mariner Bancorp
(Dollars in thousands)
For the three months ended March 31,
2011 2010
Average Yield/ Average Yield/
Balance Rate Balance Rate
------- ---- ------- ----
Assets:
Loans
Commercial Loans and LOC $69,555 5.20% $78,854 5.24%
Commercial Construction 57,187 5.50% 98,345 5.43%
Commercial Mortgages 351,292 6.26% 338,198 6.27%
Consumer Residential
Construction 28,700 5.19% 47,323 6.78%
Residential Mortgages 140,688 5.04% 169,068 5.56%
Consumer 148,275 4.46% 153,931 4.64%
------- -------
Total Loans 795,697 5.52% 885,719 5.70%
Loans held for sale 68,315 4.26% 68,593 4.96%
Trading and available for
sale securities, at fair
value 33,721 4.28% 38,530 6.84%
Interest bearing deposits 43,612 1.18% 9,170 4.46%
Restricted stock
investments, at cost 7,095 0.00% 7,934 0.00%
----- -----
Total earning assets 948,440 5.15% 1,009,946 5.63%
Allowance for loan losses (14,356) (11,994)
Cash and other non earning
assets 356,435 378,233
------- -------
Total Assets $1,290,519 $1,376,185
========== ==========
Liabilities and
Stockholders' Equity:
Interest bearing deposits
NOW deposits 6,615 0.57% 7,604 0.76%
Savings deposits 57,892 0.19% 53,689 0.29%
Money market deposits 132,242 0.56% 150,074 0.67%
Time deposits 806,224 2.16% 823,684 2.61%
------- -------
Total interest bearing
deposits 1,002,973 1.82% 1,035,051 2.20%
Borrowings 169,755 2.11% 193,981 3.54%
------- -------
Total interest bearing
liabilities 1,172,728 1.86% 1,229,032 2.41%
Noninterest bearing demand
deposits 103,885 108,259
Other liabilities 12,387 11,645
Stockholders' Equity 1,519 27,249
----- ------
Total Liabilities and
Stockholders' Equity $1,290,519 $1,376,185
========== ==========
Net Interest Spread 3.29% 3.22%
Net Interest Margin 2.84% 2.70%
SOURCE 1st Mariner Bancorp
