Despite loss, operating results strengthen as assets, loans and
deposits rise BALTIMORE, May 1 /PRNewswire-FirstCall/ -- 1st
Mariner Bancorp (NASDAQ: FMAR), parent company of 1st Mariner Bank
and Mariner Finance, LLC, announced that its loss for the 1st
quarter of 2009 totaled $3.101 million (-$.48 per diluted share)
compared to a reported net loss for the quarter ended March 31,
2008, of $3.278 million (-$.52 per diluted share). The loss was
narrower than the fourth quarter of 2008 loss of $9.060 million.
The quarter was marked by significant improvements in non credit
related operating performance, continued growth in loans and
deposits, and higher loan and securities credit losses. 1st Mariner
reported its total assets ended March 31, 2009 at $1.380 billion,
an increase of 7% from March 31, 2008. 1st Mariner's performance
improved substantially in several areas. -- 1st Mariner's total
loans, including commercial, consumer and residential loans,
increased by 15% year over year, and deposits increased by 8%. --
Residential loan production was a record level of $513 million. --
Restructuring initiatives resulted in no increase in compensation
costs compared to 1st quarter 2008, despite the continued expansion
of Mariner Finance. -- Current quarter operating results excluding
the loan loss provision, write-downs or losses on sales of other
real estate owned, and Other Than Temporary Impairment charges on
securities improved to a profit of $2.612 million compared to a
loss of $1.247 million in the first quarter of 2008. "We see many
positive trends in the first quarter operating numbers, especially
strong mortgage banking originations and revenue that contributed
significantly to the improvement in our results," said Edwin F.
Hale, Sr., 1st Mariner's chairman and chief executive officer.
"This momentum is continuing as we move through the second
quarter." Mr. Hale said the company faced a stiff challenge in the
first quarter as the appraised value of its non performing real
estate loans and foreclosed residential real estate continued to
deteriorate, requiring the Bank to make additional loan loss
reserves and losses on other real estate owned. He likened the
situation in residential real estate to the losses on securities
necessitated by mark-to-market accounting rules. "Property
assessors are in a cycle of downward valuations which, in time, may
prove to be as excessively negative as they were excessively
optimistic during the real estate boom. Nonetheless, we have to
account for their pessimism as losses today." Yet, he notes that
foreclosed homes are selling at a faster pace than previously. Mr.
Hale said that the company remains focused on a return to
profitability and improvement in the company's capital levels. "The
progress we have made in core profitability will only be visible
when our credit costs subside, and we work diligently toward that
goal everyday. Alongside these efforts, we are pursuing additional
capital through the potential sale of assets as well as exploring
external sources of new equity. While we are under no regulatory
directive to raise our capital levels, we believe it is prudent in
light of the severity and uncertainty of the current market
conditions." Mr. Hale concluded, "We will strive to augment our
capital levels independent of Government support and position
ourselves to capitalize on what is certain to be a vastly changed
local banking marketplace in 2010." Mr. Hale noted that the
completion of the pending acquisition of Provident Bankshares Corp.
by M&T Bank Corp. will make First Mariner the largest locally
owned bank in Baltimore by the middle of 2009. Operating Summary
The reported loss for the first quarter of 2009 reflected
significant credit related losses largely associated with
residential real estate assets of approximately $6.5 million;
comprised of $4.4 million in the provision for loan losses, and
$2.1 million for the disposition or cost to maintain foreclosed
property. The first quarter loss also included non-cash charges for
Other Than Temporary Impairment (OTTI) on the company's two
remaining pooled preferred investment securities ($1.7 million).
The recorded impairment was made in conjunction with the early
adoption of new accounting standards governing the recognition of
OTTI and reflected the estimated credit related losses associated
with these securities. The adoption also resulted in reversal of
$1.9 million of previously recognized OTTI that was added to
retained earnings as a prior period adjustment. -- Total revenue
increased $2.573 million (+16%), primarily reflecting strength in
mortgage and finance company revenues. -- While average earning
assets grew by $105 million (+10%), a decline in the net interest
margin to 3.70% from 4.36% last year resulted in a decrease in net
interest income of $892 thousand (-7%). The lower margin resulted
from the increase in non-performing assets, and decreases in
non-interest bearing sources of funding. The company estimates the
quarterly interest costs on its non performing assets to be
approximately $900 thousand and negatively impacts the net interest
margin by over 30 basis points. -- The provision for loan losses
totaled $4.396 million compared to $3.823 million in the
corresponding quarter last year. Net charge-offs increased $2.854
million and included higher charge-offs of residential mortgage
loans, residential construction loans, and modestly higher consumer
finance charge-offs. Management increased the allowance for loan
losses to $15.515 million from $13.808 million (+12%) at March 31,
2008, totaling 1.58% of loans outstanding compared to 1.62% last
year. Non-performing assets increased to $65.137 million (4.72% of
total assets) from $40.234 million (3.12% of total assets) last
year. Non-performing assets totaled 4.42% of assets as of December
31, 2008. The increase compared to both periods is primarily
attributable to higher levels of non-performing residential
construction and development loans. Loans past due 90 days and
still accruing totaled $10.742 million as of March 31, 2009,
compared to $13.891 million at March 31, 2008, and $9.679 million
as of December 31, 2008. -- Non-interest income increased by $3.645
million primarily due to stronger results in mortgage banking and
finance company revenues. Mortgage banking revenue increased $3.3
million due to increased volume of loans sold and increased pricing
spreads. Sales on insurance products by Mariner Finance improved
$114 thousand while deposit service charges declined by $203
thousand. The Company recorded $1.716 million in non cash OTTI
losses on securities in the first quarter of 2009. Market
valuations on trading assets and liabilities improved by $1.8
million. -- Non-interest expenses increased by $2.014 million
(+11%). Losses recorded for the write-down or sales of foreclosed
properties increased by $1.478 million. Professional services grew
by $437 thousand primarily reflecting higher regulatory compliance
and loan workout costs. Excluding these items, operating expenses
were flat. Comparing balance sheet data as of March 31, 2009, to
March 31, 2008, total assets were $1.380 billion, compared to
$1.291 billion last year. Loans outstanding increased $127 million
(+15%). Commercial loans outstanding increased by $50 million
(+11%), while Mariner Finance receivables increased by $20 million
(+23%), and Bank consumer loans increased by $26 million (+23%).
Residential mortgage loans grew by $55 million, while residential
construction loans declined by approximately $17 million. Total
mortgage loans originated totaled $513 million for the first
quarter of 2009, compared to $415 million for the same period of
2008. Deposits totaled $1.022 billion (+8%) compared to $942
million at March 31, 2008. Certificates of deposit increased $199
million, reflecting continued shift out of money market accounts
that decreased by $82 million. Non-interest bearing checking
accounts decreased $18 million and NOW accounts declined $19
million. Stockholders' Equity declined by $17 million, which
decreased 1st Mariner's book value per share to $6.81 compared to
$9.55 as of March 31, 2008. Capital Ratios at the end of the
quarter for First Mariner Bank were as follows: Leverage Ratio =
6.2%; Tier 1 risk-based ratio = 7.3% Total Capital Ratio = 9.1%.
Capital levels increased somewhat from December 31, 2008 due to
additional capital infusions from First Mariner Bancorp. All
capital ratios exceed minimum requirement levels under current
regulatory definitions. First Mariner also announced that it had
entered into a regulatory order with the Federal Deposit Insurance
Corporation for alleged violations of consumer protection laws and
regulations relative to its fair lending and disclosure practices.
The Bank has not admitted to the FDIC's allegations that it
discriminated against "protected class" borrowers on a limited
number of loans, but agreed to settle the dispute to avoid further
distraction and litigation expense. "1st Mariner has been a leading
supporter of the minority community," said Hector Torres, a
director of the Bank. "The bank's commitment to the market has
helped families purchase homes, cars, and establish lines of
credit. It has played a huge role in keeping credit flowing to
minority families, individuals and businesses. The company has been
recognized by local Hispanic consumer and business organizations
for its commitment to their banking needs." In its regulatory
action, the FDIC imposed a fine of $50,000. In anticipation of a
possible agreement with the FDIC, 1st Mariner reserved $950,000 in
the final quarter of 2008 to cover the amount required to be
reimbursed to affected borrowers, so the agreement will have
minimal impact on the bank's financial performance in 2009. 1st
Mariner Bancorp is a bank holding company with total assets of
$1.380 billion. Its wholly owned banking subsidiary, 1st Mariner
Bank, (total assets $1.265 billion) operates 25 full service bank
branches in Baltimore, Anne Arundel, Harford, Howard, Talbot, and
Carroll counties in Maryland, the City of Baltimore, and
Shrewsbury, Pennsylvania. 1st Mariner Mortgage, a division of 1st
Mariner Bank, operates retail offices in Central Maryland, the
Eastern Shore of Maryland, and Massachusetts. 1st Mariner Mortgage
also operates direct marketing mortgage operations in Baltimore
City. Mariner Finance, LLC, (total assets $101 million) is a
consumer finance subsidiary that currently operates branches in
Maryland, Delaware, Virginia, New Jersey, and Tennessee. 1st
Mariner Bancorp's common stock is traded on the Nasdaq National
Market under the symbol "FMAR". 1st Mariner's Web site address is
http://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) and
control by and dependency on key personnel, particularly Edwin F.
Hale, Sr., Chairman of the Board of Directors and CEO of the
Company. FINANCIAL HIGHLIGHTS (UNAUDITED) First Mariner Bancorp
(Dollars in thousands, except per share data) For the period ended
March 31, 2009 2008 $ Change % Change ---- ---- -------- --------
Summary of Earnings: Net interest income $11,078 $11,970 (892) -7%
Provision for loan losses 4,396 3,823 573 15% Noninterest income
8,273 4,628 3,645 79% Noninterest expense 20,495 18,481 2,014 11%
Income before income taxes (5,540) (5,706) 166 3% Income tax
benefit (2,439) (2,428) (11) 0% Net (loss) income (3,101) (3,278)
177 5% Profitability and Productivity: Return on average assets
-0.94% -1.07% - 12% Return on average equity -26.28% -19.74% - -33%
Net interest margin 3.70% 4.36% - -15% Net overhead ratio 3.17%
4.51% - -30% Efficiency ratio 97.28% 111.34% - -13% Mortgage loan
production 512,575 414,955 97,620 24% Average deposits per branch
40,872 36,238 4,634 13% Per Share Data: Basic earnings per share
$(0.48) $(0.52) 0.04 7% Diluted earnings per share $(0.48) $(0.52)
0.04 7% Book value per share $6.81 $9.55 (2.74) -29% Number of
shares outstanding 6,452,631 6,371,486 81,145 1% Average basic
number of shares 6,452,631 6,351,831 100,800 2% Average diluted
number of shares 6,452,631 6,351,831 100,800 2% Summary of
Financial Condition: At Period End: Assets $1,379,600 $1,290,568
89,032 7% Investment Securities 52,650 79,914 (27,264) -34% Loans
980,470 853,214 127,256 15% Deposits 1,021,807 942,184 79,623 8%
Borrowings and repurchase agreements 225,006 197,405 27,601 14%
Stockholders' equity 43,921 60,829 (16,908) -28% Average for the
period: Assets 1,346,388 1,236,183 110,205 9% Investment Securities
51,466 81,634 (30,168) -37% Loans 980,800 849,040 131,760 16%
Deposits 991,861 901,481 90,380 10% Borrowings 299,173 264,146
35,027 13% Stockholders' equity 47,981 66,784 (18,803) -28% Capital
Ratios: First Mariner Bank Leverage 6.2% 7.1% - -13% Tier 1 Capital
to risk weighted assets 7.3% 8.7% - -16% Total Capital to risk
weighted assets 9.1% 10.6% - -14% Asset Quality Statistics and
Ratios: Net Chargeoffs 5,658 2,804 2,854 102% Non-performing assets
65,137 40,234 24,903 62% 90 Days or more delinquent loans 10,742
13,891 (3,149) -23% Annualized net chargeoffs to average loans
2.35% 1.33% - 77% Non-performing assets to total assets 4.72% 3.12%
- 51% 90 Days or more delinquent loans to total loans 1.10% 1.63% -
-33% Allowance for loan losses to total loans 1.58% 1.62% - -2%
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) First
Mariner Bancorp (Dollars in thousands) For the period ended March
31, 2009 2008 $ Change % Change ---- ---- -------- -------- Assets:
Cash and due from banks $100,905 $31,514 69,391 220%
Interest-bearing deposits 7,068 81,665 (74,597) -91% Trading
securities, at fair value 12,378 36,327 (23,949) -66%
Available-for-sale investment securities, at fair value 40,272
43,587 (3,315) -8% Loans held for sale 85,298 97,278 (11,980) -12%
Loans receivable 980,470 853,214 127,256 15% Allowance for loan
losses (15,515) (13,808) (1,707) 12% ------- ------- ------ Loans,
net 964,955 839,406 125,549 15% Other real estate owned 22,403
19,882 2,521 13% Restricted stock investments, at cost 7,619 5,941
1,678 28% Property and equipment, net 48,750 51,269 (2,519) -5%
Accrued interest receivable 6,400 7,184 (784) -11% Deferred income
taxes 23,562 12,793 10,769 84% Bank Owned Life Insurance 35,251
35,302 (51) 0% Prepaid expenses and other assets 24,739 28,420
(3,681) -13% ------ ------ ------ Total Assets $1,379,600
$1,290,568 89,032 7% ========== ========== ====== Liabilities and
Stockholders' Equity: Liabilities: Deposits $1,021,807 $942,184
79,623 8% Borrowings 161,510 132,838 28,672 22% Borrowings carried
at fair value 63,496 64,567 (1,071) -2% Junior subordinated
deferrable interest debentures 73,724 73,724 - 0% Accrued expenses
and other liabilities 15,142 16,426 (1,284) -8% ------ ------
------ Total Liabilities 1,335,679 1,229,739 105,940 9%
Stockholders' Equity Common Stock 323 319 4 1% Additional paid-in
capital 56,753 56,569 184 0% Retained earnings (7,438) 6,325
(13,763) -218% Accumulated other comprehensive (loss) income
(5,717) (2,384) (3,333) 140% ------ ------ ------ Total
Stockholders' Equity 43,921 60,829 (16,908) -28% ------ ------
------- Total Liabilities and Stockholders' Equity $1,379,600
$1,290,568 89,032 7% ========== ========== ====== CONSOLIDATED
STATEMENTS OF OPERATIONS (UNAUDITED) First Mariner Bancorp (Dollars
in thousands) For the period ended March 31, 2009 2008 $ Change %
Change ---- ---- -------- -------- Interest Income: Investment
securities and other earning assets $800 $1,723 (923) -54% Loans
19,639 20,001 (362) -2% ------ ------ ---- Total Interest Income
20,439 21,724 (1,285) -6% Interest Expense: Deposits 6,418 6,156
262 4% Borrowed funds and other 2,943 3,598 (655) -18% ----- -----
---- Total Interest Expense 9,361 9,754 (393) -4% ----- ----- ----
Net Interest Income 11,078 11,970 (892) -7% Provision for Loan
Losses 4,396 3,823 573 15% ----- ----- --- Net Interest Income
After Provision for Loan Losses 6,682 8,147 (1,465) -18%
Noninterest Income: Service fees on deposits 1,332 1,535 (203) -13%
ATM Fees 714 777 (63) -8% Gains on sales of mortgage loans 3,614
654 2,960 453% Other mortgage banking revenue 1,296 977 319 33%
Gains on sales of investment securities, net (1,716) - (1,716)
-100% Losses value of trading assets and trading liabilities 768
(1,020) 1,788 175% Commissions on sales of nondeposit investment
products 136 240 (104) -43% Commissions on sales of other insurance
products 734 620 114 18% Income from bank owned life insurance 336
371 (35) -9% Other 1,059 474 585 123% ----- --- --- Total
Noninterest Income 8,273 4,628 3,645 79% Noninterest Expense:
Salaries and employee benefits 9,207 9,204 3 0% Occupancy 2,947
2,631 316 12% Furniture, fixtures and equipment 979 983 (4) 0%
Advertising 258 430 (172) -40% Data Processing 513 548 (35) -6%
Professional services 858 421 437 104% Writedowns and costs of
other real estate owned 2,114 636 1,478 232% Other 3,619 3,628 (9)
0% ----- ----- -- Total Noninterest Expense 20,495 18,481 2,014 11%
(Loss) Income Before Income Taxes (5,540) (5,706) 166 3% Income Tax
(benefit) Expense (2,439) (2,428) (11) 0% ------ ------ --- Net
(loss) Income $(3,101) $(3,278) 177 5% ======= ======= ===
CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (UNAUDITED) First
Mariner Bancorp (Dollars in thousands) For the period ended March
31, 2009 2008 ---- ---- Average Yield/ Average Yield/ Balance Rate
Balance Rate ------- ---- ------- ---- Assets: Loans Commercial
Loans and LOC $88,429 5.23% $65,194 6.92% Comm/Res Construction
105,008 5.31% 124,975 7.27% Commercial Mortgages 325,014 6.80%
275,525 7.74% Residential Constr - Cons 67,175 4.85% 90,371 7.65%
Residential Mortgages 140,559 5.83% 88,651 6.36% Consumer 254,615
11.94% 204,324 13.38% ------- ------- Total Loans 980,800 7.57%
849,040 8.81% Loans held for sale 84,868 5.19% 82,453 5.64%
Available for sale securities, at fair value 51,466 6.15% 81,634
5.62% Interest bearing deposits 60,725 0.14% 61,490 3.18%
Restricted stock investments, at cost 7,373 0.00% 5,983 5.90% -----
----- Total earning assets 1,185,232 6.91% 1,080,600 7.99%
Allowance for loan losses (17,255) (11,933) Cash and other non
earning assets 178,411 167,516 ------- ------- Total Assets
$1,346,388 $1,236,183 ========== ========== Liabilities and
Stockholders' Equity Interest-bearing deposits NOW deposits 6,453
0.70% 15,861 0.32% Savings deposits 52,920 0.31% 53,398 0.32% Money
market deposits 160,088 0.88% 254,887 1.94% Time deposits 659,427
3.72% 439,219 4.46% ------- ------- Total interest- bearing
deposits 878,888 2.96% 763,365 3.24% Borrowings 299,173 4.00%
264,146 5.48% ------- ------- Total interest- bearing liabilities
1,178,061 3.22% 1,027,511 3.82% Noninterest-bearing demand deposits
112,973 138,116 Other liabilities 7,373 3,772 Stockholders Equity
47,981 66,784 ------ ------ Total Liabilities and Stockholders'
Equity $1,346,388 $1,236,183 ========== ========== Net Interest
Spread 3.69% 4.17% Net Interest Margin 3.70% 4.36% DATASOURCE: 1st
Mariner Bancorp CONTACT: Mark A. Keidel, SVP/CFO of 1st Mariner
Bancorp, +1-410-558-4281 Web Site:
http://www.1stmarinerbancorp.com/
Copyright