1st Mariner Reports 1st Quarter 2010 Results

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.

SOURCE 1st Mariner Bancorp