FIRST MARINER BANCORP 
By BALTIMORE, May 4 /PRNewswire-FirstCall/ -- 1st Mariner Bancorp (Nasdaq: FMAR), parent company of 1st Mariner Bank, reported a net loss from continuing operations of $3.2 million, or $(0.50) per basic share for the first quarter of 2010, which is a 9% improvement over the loss from continuing operations of $3.6 million, or $(0.55) per basic share, for the first quarter of 2009.
Edwin F. Hale, Sr., 1st Mariner's chairman and chief executive officer, said, "We are making large strides and executed a number of strategic initiatives in the quarter. Most notably, we extinguished $20 million in debt securities in exchange for $2 million in common stock. The exchange gave the Company an economic gain of $13 million after taxes and added a significant amount to the Company's consolidated capital levels. The exchange was recorded as a direct increase to equity rather than 1st quarter income as in accordance with the accounting guidance.
"In addition, we have recently completed a $10.9 million rights and public offering which will further boost our capital levels," Mr. Hale said. "A large portion of the money came from local investors who are resolute in their belief that Baltimore needs a strong, hometown banking company. The offering closed on April 12, 2010, and therefore could not be included in the 1st quarter financial statements. The completion of this offering, the extinguishment of debt, and the sale of Mariner Finance completed in December of 2009, were key elements of our capital restoration plan. These events have increased Bank and consolidated capital ratios significantly and have taken us a long way toward meeting our capital goals for June 30, 2010."
Operating Summary
The net loss for the first quarter of 2010 was negatively impacted by a significant reduction in mortgage banking income which was partially due to the heavy snowstorms that affected the region during the quarter. Total mortgage banking income for the first quarter of 2010 was $2.5 million, which was a decrease of $2.3 million, or 48%, over the first quarter of 2009's $4.8 million.
Offsetting the decrease in mortgage banking revenue was an improvement in credit related costs. Credit related costs for the first quarter of 2010 were $3.9 million, which includes a $2.2 million provision for loan losses and $1.7 million in expenses related to foreclosed properties. This is a 29% improvement over the first quarter of 2009, when these costs totaled $5.5 million, with $3.4 million in the provision for loan losses and $2.1 million in expenses on foreclosed properties.
-- Total revenue for the 1st quarter 2010 was $12.7 million, a decrease of
$600 thousand over the 1st quarter of 2009's revenue of $13.3 million.
While net interest income increased by $1.0 million, total revenue was
offset by the $2.3 million decrease in mortgage banking revenue.
-- Net interest income increased $1.0 million in the 1st quarter of 2010
compared to the 1st quarter of 2009. The net interest margin for the
1st quarter of 2010 was 2.70%, an increase of 57 basis points from 2.13
% in the 1st quarter of 2009. This was the result of a lower cost of
funds and higher investment yields in 2010 when compared to 2009.
-- Average earning assets decreased by $77 million, or 7%, compared with
last year's 1st quarter, predominantly due to decreases in loans held
for sale, investments, and interest bearing deposits.
-- The provision for loan losses totaled $2.2 million for the 1st quarter
of 2010, a decrease of 36% over the provision of $3.4 million in the
corresponding quarter last year. Net charge-offs declined $3.8 million,
or 68%, to $1.8 million for the 1st quarter of 2010 from $5.7 million in
the 1st quarter of 2009. The allowance for loans losses at the end of
the first quarter of 2010 was $12.0 million, a decrease of 23% over the
prior year's figure of $15.5 million. The decrease was primarily
attributable to the removal of the allowance for loan losses that was
related to Mariner Finance's loan portfolio. The allowance for loan
losses as a percentage of total loans was 1.38% as of March 31, 2010,
compared to 1.58% as of March 31, 2009. When adjusting for the allowance
attributable to Mariner Finance, the allowance as a percentage of loans
as of March 31, 2009 was 1.25%. Non-performing assets decreased 8% when
compared to the first quarter of 2009, to $59.6 million in 2010 versus
$65.1 million in 2009.
-- Non-interest income for the first quarter of 2010 was $5.8 million, a
decrease of $1.6 million over the $7.4 million that was recorded in the
same quarter of 2009. This was primarily due a decrease in mortgage
banking revenue of $2.3 million which was offset by lower write-downs of
investment securities.
-- Non-interest expenses remained relatively flat overall, with $16.3
million in the first quarter of 2010 compared to $16.2 million in the
first quarter of 2009. The costs related to foreclosed properties
decreased $0.4 million, or 20%, in the first quarter of 2010 when
compared to 2009. This decrease was offset by a significant increase in
FDIC Insurance premiums of $0.67 million.
Comparing balance sheet data as of March 31, 2010 and 2009, total assets increased to $1.40 billion, 2% over the prior year's $1.38 billion.
-- Total loans outstanding decreased $108.1 million, or 11%, to $872.4
million as of March 31, 2010. The decrease is predominantly attributable
to the sale of the assets of Mariner Finance in 2009, which represents
$102.2 million of the decrease.
-- Total deposits grew to $1.18 billion as of March 31, 2010, an increase
of $161.0 million, or 16%, over March 31, 2009's deposits of $1.02
billion. An increase in Certificates of Deposit was the primary reason
for the overall increase in deposits. Total Certificates of Deposit were
$865.2 million as of March 31, 2010, an increase of $183.2 million, or
27%, over March 31 2009's balance of $682.0 million. Non-interest
bearing checking accounts decreased $11.9 million and savings accounts
increased $391 thousand.
-- Stockholders' Equity was $36.7 million as of March 31, 2010, resulting
in a basic book value per share of $4.55, a decrease of $2.26 compared
to the book value of $6.81 at March 31, 2009. As a result of the
extinguishment of $20 million in debt securities in exchange for $2
million in common stock, the Company recorded a post- tax gain to
stockholders' equity of $13 million. Capital Ratios in the 1st quarter
of 2010 for First Mariner Bank were as follows: Leverage Ratio = 5.7%;
Tier 1 risk-based ratio = 7.9% Total Capital Ratio = 9.2%. As noted
above, these ratios do not include the impact of the $10.9 million in
proceeds received on the equity offering concluded on April 12, 2010.
The March 31, 2010 capital ratios on a pro forma basis, including the
capital raise, would have been 6.5%, 9.1% and 10.3%.
1st Mariner Bancorp is a bank holding company with total assets of $1.405 billion. Its wholly owned banking subsidiary, 1st Mariner Bank, with total assets of $1.403 billion, operates 24 full service bank branches in Baltimore, Anne Arundel, Harford, Howard, Talbot, and Carroll counties in Maryland, the City of Baltimore, and Shrewsbury, Pennsylvania. The Bank has previously announced that it will close the Shrewsbury office in June of 2010. 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 County. 1st Mariner Bancorp's common stock is traded on the NASDAQ Global 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 efficiencies resulting from new programs and expansion activities, 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, changes in regulations applicable to the Company's business, successful implementation of the Company's branch expansion strategy, its concentration in real estate lending, increased competition, changes in technology, particularly Internet banking, impact of interest rates, possibility of economic recession or slowdown (which could impact credit quality, adequacy of loan loss reserve and loan growth), control by and dependency on key personnel, particularly Edwin F. Hale, Sr., Chairman of the Board of Directors and CEO of the Company, and the Risk Factors set forth in Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2009.
FINANCIAL HIGHLIGHTS (UNAUDITED)
First Mariner Bancorp
(Dollars in thousands, except per share data)
For the three months ended March 31,
2010 2009 $Change % Change
---- ---- ------- --------
Summary of Earnings:
Net interest income $6,901 $5,881 1,020 17%
Provision for loan
losses 2,190 3,400 (1,210) -36%
Noninterest income 5,842 7,413 (1,571) -21%
Noninterest expense 16,289 16,179 110 1%
Net loss before income
taxes (5,736) (6,285) 549 -9%
Income tax benefit (2,497) (2,733) 236 -9%
Net loss from
continuing operations (3,239) (3,552) 313 -9%
Income from
discontinued
operations (200) 451 651 100%
Net loss (3,439) (3,101) (338) -11%
Profitability and
Productivity:
Return on average
assets -1.01% -0.91% - -12%
Return on average
equity -51.18% -25.92% - -97%
Net interest margin 2.70% 2.13% - 27%
Net overhead ratio 3.04% 2.06% - 47%
Efficiency ratio 126.61% 107.79% - 17%
Mortgage loan
production 195,846 512,575 (316,729) -62%
Average deposits per
branch 51,427 42,575 8,852 21%
Per Share Data:
Basic earnings per
share -continuing
operations $(0.50) $(0.55) 0.05 9%
Diluted earnings per
share -continuing
operations $(0.50) $(0.55) 0.05 9%
Basic earnings per
share -discontinued
operations $(0.03) $0.07
Diluted earnings per
share -discontinued
operations $(0.03) $0.07
Book value per share $4.55 $6.81 (2.26) -33%
Number of shares
outstanding 8,078,647 6,452,775 1,625,872 25%
Average basic number
of shares 6,470,698 6,452,631 18,067 0%
Average diluted number
of shares 6,470,698 6,453,631 17,067 0%
Summary of Financial
Condition:
At Period End:
Assets $1,404,847 $1,379,691 25,156 2%
Investment Securities 37,605 52,650 (15,045) -29%
Loans 872,385 980,470 (108,085) -11%
Deposits 1,182,818 1,021,807 161,011 16%
Borrowings and
repurchase agreements 119,672 225,007 (105,335) -47%
Stockholders' equity 36,732 43,921 (7,189) -16%
Average for the
period:
Assets $1,376,185 $1,370,466 5,719 0%
Investment Securities 38,530 51,466 (12,936) -25%
Loans 885,719 882,398 3,321 0%
Deposits 1,143,310 991,836 151,474 15%
Borrowings and
repurchase agreements 193,981 220,232 (26,251) -12%
Stockholders' equity 27,249 47,982 (20,733) -43%
Capital Ratios: First
Mariner Bank
Leverage 5.7% 6.2% - -8%
Tier 1 Capital to risk
weighted assets 7.9% 7.9% - 0%
Total Capital to risk
weighted assets 9.2% 9.1% - 1%
Asset Quality
Statistics and
Ratios:
Net Chargeoffs 1,826 5,658 (3,832) -68%
Non-performing assets 59,613 65,137 (5,524) -8%
90 Days or more
delinquent loans 5,038 10,742 (5,704) -53%
Annualized net
chargeoffs to average
loans 0.84% 2.60% - -68%
Non-performing assets
to total assets 4.24% 4.72% - -10%
90 Days or more
delinquent loans to
total loans 0.58% 1.10% - -48%
Allowance for loan
losses to total loans 1.38% 1.58% - -13%
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
First Mariner Bancorp
For the three
(Dollars in thousands) months
ended March 31,
2010 2009
---- ----
Interest Income:
Loans $13,444 $13,701
Investments and interest-bearing deposits 761 799
--- ---
Total Interest Income 14,205 14,500
Interest Expense:
Deposits 5,610 6,418
Borrowings 1,694 2,201
----- -----
Total Interest Expense 7,304 8,619
----- -----
Net Interest Income Before Provision for Loan
Losses 6,901 5,881
Provision for Loan Losses 2,190 3,400
----- -----
Net Interest Income After Provision for Loan
Losses 4,711 2,481
Noninterest Income:
Service fees on deposits 1,060 1,324
ATM Fees 735 714
Gains on sales of mortgage loans 2,050 3,614
Other mortgage banking revenue 457 1,183
(Loss)/gain on sales of investment securities,
net (123) (1,716)
Commissions on sales of nondeposit investment
products 145 136
Income from bank owned life insurance 353 336
Income (loss) on trading assets and
liabilities 847 768
Other 318 1,054
--- -----
Total Noninterest Income 5,842 7,413
Noninterest Expense:
Salaries and employee benefits 6,596 6,449
Occupancy 2,371 2,320
Furniture, fixtures and equipment 612 835
Advertising 178 258
Data Processing 402 513
Professional services 720 795
Costs of other real estate owned 1,685 2,114
Valuation and secondary marketing reserves - -
FDIC Insurance 934 272
Other 2,791 2,623
----- -----
Total Noninterest Expense 16,289 16,179
Net Loss Before Discontinued Operations and
Income Taxes (5,736) (6,285)
Income Tax Benefit - Continuing Operations (2,497) (2,733)
------ ------
Net Loss from Continuing Operations (3,239) (3,552)
------ ------
(Loss) Income from discontinued operations (200) 451
---- ---
Net Loss $(3,439) $(3,101)
======= =======
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
First Mariner Bancorp
(Dollars in thousands)
As of March 31,
2010 2009 $Change % Change
---- ---- ------- --------
Assets:
Cash and due from banks $287,711 $100,905 186,806 185%
Interest-bearing
deposits 8,154 7,068 1,086 15%
Available-for-sale
investment securities,
at fair value 27,382 40,272 (12,890) -32%
Trading Securities 10,223 12,378 (2,155) -17%
Loans held for sale 55,360 85,298 (29,938) -35%
Loans receivable 872,385 980,470 (108,085) -11%
Allowance for loan losses (12,003) (15,515) 3,512 -23%
------- ------- -----
Loans, net 860,382 964,955 (104,573) -11%
Other real estate owned 19,915 22,403 (2,488) -11%
Restricted stock
investments, at cost 7,934 7,619 315 4%
Property and equipment 43,556 48,750 (5,194) -11%
Accrued interest
receivable 4,734 6,400 (1,666) -26%
Income Taxes Receivable 1,461 4,304 (2,843) -66%
Deferred income taxes 22,586 24,554 (1,968) -8%
Bank owned life insurance 35,126 35,252 (126) 0%
Prepaid expenses and
other assets 20,323 19,533 790 4%
------ ------ ---
Total Assets $1,404,847 $1,379,691 25,156 2%
========== ========== ======
Liabilities and
Stockholders' Equity:
Liabilities:
Deposits $1,182,818 $1,021,807 161,011 16%
Borrowings 119,672 225,007 (105,335) -47%
Junior subordinated
deferrable interest
debentures 53,100 73,724 (20,624) -28%
Accrued expenses and
other liabilities 12,525 15,232 (2,707) -18%
------ ------ ------
Total Liabilities 1,368,115 1,335,770 32,345 2%
Stockholders' Equity
Common Stock 404 323 81 25%
Additional paid-in-
capital 69,313 56,753 12,560 22%
Retained earnings (30,060) (7,438) (22,622) 304%
Accumulated other
comprehensive loss (2,925) (5,717) 2,792 -49%
------ ------ -----
Total Stockholders Equity 36,732 43,921 (7,189) -16%
------ ------ ------
Total Liabilities and
Stockholders' Equity $1,404,847 $1,379,691 25,156 2%
========== ========== ======
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (UNAUDITED)
First Mariner Bancorp
(Dollars in thousands)
For the three months ended March
31,
2010 2009
Average Yield/ Average Yield/
Balance Rate Balance Rate
------- ---- ------- ----
Assets:
Loans
Commercial Loans and LOC $78,854 5.24% $92,429 5.00%
Comm/Res Construction 98,345 5.43% 105,008 5.31%
Commercial Mortgages 338,198 6.27% 325,014 6.80%
Residential Constr - Cons 47,323 6.78% 67,175 4.85%
Residential Mortgages 169,068 5.56% 140,820 5.82%
Consumer 153,931 4.64% 151,952 4.27%
------- -------
Total Loans 885,719 5.70% 882,398 5.69%
Loans held for sale 68,593 4.96% 84,868 5.19%
Trading and available for sale
securities, at fair value 38,530 6.84% 51,466 6.02%
Interest bearing deposits 9,170 4.46% 60,567 0.16%
Restricted stock investments, at
cost 7,934 0.01% 7,373 0.00%
----- -----
Total earning assets 1,009,946 5.63% 1,086,672 5.32%
Allowance for loan losses (11,994) (12,651)
Cash and other non earning assets 378,233 296,445
------- -------
Total Assets $1,376,185 $1,370,466
========== ==========
Liabilities and Stockholders'
Equity:
Interest bearing deposits
NOW deposits 7,604 0.76% 6,453 0.70%
Savings deposits 53,689 0.29% 52,896 0.34%
Money market deposits 150,074 0.67% 160,088 0.88%
Time deposits 823,684 2.61% 659,426 3.70%
------- -------
Total interest bearing deposits 1,035,051 2.20% 878,863 2.96%
Borrowings 193,981 3.54% 220,232 3.93%
------- -------
Total interest bearing liabilities 1,229,032 2.41% 1,099,095 3.16%
Noninterest bearing demand deposits 108,259 112,973
Other liabilities 11,645 110,416
Stockholders' Equity 27,249 47,982
------ ------
Total Liabilities and Stockholders'
Equity $1,376,185 $1,370,466
========== ==========
Net Interest Spread 3.22% 2.16%
Net Interest Margin 2.70% 2.13%
SOURCE 1st Mariner Bancorp
