2014

1st Mariner Bancorp Reports 4th Quarter 2011 Results

BALTIMORE, Jan. 30, 2012 /PRNewswire/ -- 1st Mariner Bancorp (OTCBB: FMAR.OB), parent company of 1st Mariner Bank, reported a net loss of $3.9 million for the fourth quarter of 2011, compared to a net loss of $33.9 million for the fourth quarter of 2010. Included in the loss for the fourth quarter of 2010 was a charge to income tax expense of $29.9 million related to a valuation allowance being placed on the Company's deferred tax assets. For the year ended December 31, 2011, the Company reported a net loss of $30.2 million in 2011 versus $46.6 million in 2010.

Mark A. Keidel, 1st Mariner's President and Chief Operating Officer, said, "Our losses moderated in the fourth quarter as we continue to work through a difficult economy and struggling real estate market. We experienced improvements in several key areas of operating performance as our net interest margin increased, our levels of fee related income grew, and we reduced controllable operating expenses. Additionally, our credit related costs and levels of non-performing assets decreased in 2011 compared to 2010, and our level of nonperforming assets shrunk to its lowest level since the first quarter of 2010."

Operating Summary

Net interest income for the fourth quarter of 2011 was $7.6 million compared to $8.1 million in the fourth quarter of 2010. The net interest margin improved to 3.13% in the fourth quarter of 2011, compared to 3.02% in the fourth quarter of 2010. The improvement was due to lower rates paid on deposits. For the three months ended December 31, 2011, the average interest rate paid on deposits was 1.47%, and for the three months ended December 31, 2010, the rate was 1.89%. Gross interest income was $12.0 million for the three months ended December 31, 2011 versus $13.7 million in the same period of 2010. Lower levels of earning assets as well as lower rates earned on those assets were the cause of the decrease. Average earning assets were $954.2 million and $1.1 billion for the three months ended December 31, 2011 and 2010, respectively. Continued managed decreases in loan balances contributed to the overall decrease in average earning assets.

Net interest income was $28.2 million for the year ended December 31, 2011 and $29.8 million for the year ended December 31, 2010. The net interest margin increased to 3.03% for the year ended December 31, 2011 compared to 2.91% for the year ended December 31, 2010. Lower interest rates paid on deposits and borrowings led to the improved margin. The average interest rate paid on deposits was 1.68% and 2.03% for the years ended December 31, 2011 and 2010, respectively. The average interest rate paid on borrowings was 2.16% for the year ended December 31, 2011 compared to 2.58% paid in the year ended December 31, 2010. Gross interest income was $47.5 million for the year ended December 31, 2011 versus $55.2 million in the year ended December 31, 2010. Lower average loan balances during the year ended December 31, 2011 caused the decrease in total interest income. Total loans outstanding were $701.8 million and $811.7 million as of December 31, 2011 and 2010, respectively.

Elevated credit costs continue to impact overall earnings.  The provision for loan losses was $2.8 million and $14.3 million for the three and twelve months ended December 31, 2011, respectively. In contrast, these costs were $1.5 million and $17.8 million for the three and twelve months ended December 31, 2010. Net charge-offs were $3.1 million during the quarter ended December 31, 2011 versus $2.6 million in the fourth quarter of 2010. For the year ended December 31, 2011, net charge-offs were $14.6 million, versus $15.3 million in the prior year. Costs related to foreclosed properties, including write-downs due to declining appraised values, amounted to $1.2 million and $7.8 million for the three and twelve months ended December 31, 2011, respectively. Combined, these credit- related costs amounted to $4.0 million and $22.1 million for the quarter and year ended December 31, 2011, respectively.  

Non-interest income was $7.7 million for the three months ended December 31, 2011, which is an increase of $2.0 million from the $5.7 million that was reported in the fourth quarter of 2010.  On a year-to- date basis, non-interest income was $23.2 million and $28.2 million for the year ended December 31, 2011 and 2010, respectively. The increase from the prior year was due to a non-recurring loss on the sale of assets recorded in 2010, as well as increased revenue from mortgage banking activities        

Non-interest expenses increased $800 thousand when comparing the quarter ended December 31, 2011 to the same quarter in 2010. Professional fees related to regulatory compliance, loan workouts, and efforts related to increasing capital levels increased $1.9 million during the quarter ended December 31, 2011 versus the quarter ended December 31, 2010. This increase was partially offset by decreases in salaries and benefits, occupancy, and furniture, fixtures and equipment expenses. Costs associated with foreclosed properties decreased $800 thousand in the quarter ended December 31, 2011. On a year-to-date basis, total non-interest expenses were $67.9 million for the year ended December 31, 2011, which is a slight increase from the $67.5 million recorded in the year ended December 31, 2010. As mentioned above, the increase was primarily attributable to increases in professional fees which increased $3.4 million. The increase in professional fees is related to higher loan workout costs, as well as professional services related to capital raising initiatives. Additionally, the Bank's FDIC insurance premiums increased $500 thousand in 2011. Total amounts paid for FDIC insurance premiums were $4.3 million in the year ended December 31, 2011 versus $3.8 million in the year ended December 31, 2010.

Comparing balance sheet data as of December 31, 2011 and 2010, total assets decreased 10% to $1.18 billion, from the prior year's $1.31 billion. The decrease is primarily attributable to a $109.9 million planned decrease in loans.

  • Average earning assets were $954.2 million for the fourth quarter of 2011, which was a 9.9% decrease over the fourth quarter 2010 balance of $1.06 billion. The decrease was due to a reduction in loans and decreases in the Bank's interest bearing deposits.

  • Total loans outstanding were $701.8 million as of December 31, 2011. This is a 14% decrease from the $811.7 million reported in prior year. This was due to loan maturities, loan sales, and reduced loan production.

  • Total loans held for sale increased $42.6 million, or 30%, to $182.9 million as of December 31, 2011. This was due to an increase in refinancing volume as mortgage interest rates have remained low.

  • The allowance for loan losses at the end of the fourth quarter of 2011 was $13.8 million, a decrease of 2% over the prior year's $14.1 million. The allowance for loan losses as a percentage of total loans was increased to 1.97% as of December 31, 2011, compared to 1.74% as of December 31, 2010.

  • Total deposits decreased 10% from $1.12 billion as of December 31, 2010 to $1.01 billion as of December 31, 2011. Money market and NOW accounts decreased $7.0 million, from $138.2 million as of December 31, 2010 to $131.1 million as of December 31, 2011. Savings accounts decreased $1.7 million from $56.7 million as of December 31, 2010 to $55.0 million as of December 31, 2011. Certificates of deposit were $728.4 million as of December 31, 2011, representing a decrease of $95.2 million, or 12%, from the $823.6 million as of December 31, 2010. The decrease in interest bearing deposits was primarily due to lower rates being offered on these deposit products in 2011 versus 2010.

  • As of December 31, 2011, 1st Mariner Bank's capital ratios were as follows: Total Risk Based Capital 5.5%; Tier 1 Risk Based Capital 4.2%; and Tier 1 Leverage 3.0%.  

1st Mariner Bancorp is a bank holding Company with total assets of $1.18 billion.  Its wholly owned banking subsidiary, 1st Mariner Bank, operates 21 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 also operates direct marketing mortgage operations in Baltimore.  1st Mariner Bancorp's common stock is quoted on the OTC Bulletin Board under the symbol "FMAR.OB".  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 and its Quarterly Report on Form 10-Q for the nine months ended September 30, 2011. 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 December 31,




2011

2010

$ Change

% Change


Summary of Earnings:







Net interest income

$       7,589

$       8,134

(545)

-7%



Provision for loan losses

2,750

1,500

1,250

83%



Noninterest income

7,721

5,653

2,068

37%



Noninterest expense

17,141

16,292

849

5%



Net loss before income taxes

(4,581)

(4,005)

(576)

14%



Income tax expense/(benefit)

(606)

29,879

(30,485)

-102%



Net loss

(3,975)

(33,884)

29,909

88%









Profitability and Productivity:







Net interest margin

3.13%

3.02%

-

4%



Net overhead ratio

3.14%

3.42%

-

-8%



Efficiency ratio

111.96%

126.99%

-

-12%



Mortgage loan production

407,580

426,263

(18,683)

-4%



Average deposits per branch

46,125

50,995

(4,870)

-10%









Per Share Data:







Basic earnings per share

$        (0.21)

$       (1.88)

1.67

89%



Diluted earnings per share

$        (0.21)

$       (1.88)

1.67

89%



Book value per share

$        (1.35)

$         0.21

(1.55)

-749%



Number of shares outstanding

18,860,482

18,050,117

810,365

4%



Average basic number of shares

18,860,482

18,018,671

841,811

5%



Average diluted number of shares

18,860,482

18,018,671

841,811

5%









Summary of Financial Condition:







At Period End:







Assets

$ 1,179,017

$1,309,637

(130,620)

-10%



Investment Securities

22,682

27,826

(5,144)

-18%



Loans

701,752

811,687

(109,935)

-14%



Deposits

1,014,759

1,121,889

(107,130)

-10%



Borrowings

173,748

170,355

3,393

2%



Stockholders' equity

(25,412)

3,746

(29,158)

-778%










Average for the period:







Assets

$ 1,188,326

$1,344,643

(156,317)

-12%



Investment Securities

21,771

24,595

(2,824)

-11%



Loans

724,837

821,458

(96,621)

-12%



Deposits

1,028,485

1,130,280

(101,794)

-9%



Borrowings

168,898

170,537

(1,640)

-1%



Stockholders' equity

(23,580)

39,769

(63,350)

-159%









Capital Ratios: First Mariner Bank







Leverage

3.0%

4.7%

-

-36%



Tier 1 Capital to risk weighted assets

4.2%

6.8%

-

-38%



Total Capital to risk weighted assets

5.5%

8.0%

-

-31%









Asset Quality Statistics and Ratios:







Net Chargeoffs

3,061

2,561

500

20%



Non-performing assets

62,030

71,744

(9,714)

-14%



90 Days or more delinquent loans

6,316

2,978

3,338

112%



Annualized net chargeoffs to average loans

1.68%

1.24%

-

35%



Non-performing assets to total assets

5.26%

5.48%

-

-4%



90 Days or more delinquent loans to total loans

0.90%

0.37%

-

145%



Allowance for loan losses to total loans

1.97%

1.74%

-

13%











FINANCIAL HIGHLIGHTS (UNAUDITED)

First Mariner Bancorp






(Dollars in thousands, except per share data)








For the year ended December 31,




2011

2010

$ Change

% Change


Summary of Earnings:







Net interest income

$     28,182

$      29,838

$        (1,656)

-6%



Provision for loan losses

14,330

17,790

(3,460)

-19%



Noninterest income

23,248

28,192

(4,944)

-18%



Noninterest expense

67,950

67,498

452

1%



Net loss before income taxes

(30,850)

(27,258)

(3,592)

13%



Income tax expense/(benefit)

(606)

19,131

(19,737)

-103%



Net loss from continuing operations

(30,244)

(46,389)

16,145

-35%



Net (loss)/income from discontinued operations

-

(200)

200

-100%



Net loss

(30,244)

(46,589)

16,345

-35%









Profitability and Productivity:







Net interest margin

3.03%

2.91%

-

4%



Net overhead ratio

3.70%

2.96%

-

25%



Efficiency ratio

132.12%

118.27%

-

12%



Mortgage loan production

1,098,513

1,318,887

(220,374)

-17%



Average deposits per branch

46,125

48,778

(2,652)

-5%









Per Share Data:







Basic earnings per share - continuing operations

$        (1.62)

$         (3.14)

1.52

-48%



Diluted earnings per share - continuing operations

$        (1.62)

$         (3.14)

1.52

-48%



Basic earnings per share - discontinued operations

$               -

$         (0.01)

0.01

-100%



Diluted earnings per share - discontinued operations

$               -

$         (0.01)

0.01

-100%



Basic earnings per share

$        (1.62)

$         (3.15)

1.54

-49%



Diluted earnings per share

$        (1.62)

$         (3.15)

1.54

-49%



Book value per share

$        (1.35)

$           0.21

(1.55)

-749%



Number of shares outstanding

18,860,482

18,050,117

810,365

4%



Average basic number of shares

18,694,125

14,775,646

3,918,479

27%



Average diluted number of shares

18,694,125

14,775,646

3,918,479

27%









Summary of Financial Condition:







At Period End:







Assets

$ 1,179,017

$  1,309,637

(130,620)

-10%



Investment Securities

22,682

27,826

(5,144)

-18%



Loans

701,752

811,687

(109,935)

-14%



Deposits

1,014,759

1,121,889

(107,130)

-10%



Borrowings

173,748

170,355

3,393

2%



Stockholders' equity

(25,412)

3,746

(29,158)

-778%










Average for the period:







Assets

$ 1,209,548

$  1,358,592

(149,044)

-11%



Investment Securities

42,333

27,705

14,628

53%



Loans

753,299

852,986

(99,687)

-12%



Deposits

1,037,726

1,134,109

(96,383)

-8%



Borrowings

169,496

176,786

(7,290)

-4%



Stockholders' equity

(10,950)

38,834

(49,783)

-128%









Capital Ratios: First Mariner Bank







Leverage

3.0%

4.7%

-

-36%



Tier 1 Capital to risk weighted assets

4.2%

6.8%

-

-38%



Total Capital to risk weighted assets

5.5%

8.0%

-

-31%









Asset Quality Statistics and Ratios:







Net Chargeoffs

14,644

15,314

(670)

-4%



Non-performing assets

62,030

71,744

(9,714)

-14%



90 Days or more delinquent loans

6,316

2,978

3,338

112%



Annualized net chargeoffs to average loans

2.60%

1.80%

-

45%



Non-performing assets to total assets

5.26%

5.48%

-

-4%



90 Days or more delinquent loans to total loans

0.90%

0.37%

-

145%



Allowance for loan losses to total loans

1.97%

1.74%

-

13%











CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)

First Mariner Bancorp






(Dollars in thousands)








As of December 31,




2011

2010

$ Change

% Change


Assets:







Cash and due from banks

$104,204

$169,557

(65,353)

-39%



Interest-bearing deposits

44,585

48,404

(3,819)

-8%



Available-for-sale investment securities, at fair value

22,682

27,826

(5,144)

-18%



Loans held for sale

182,992

140,343

42,649

30%



Loans receivable

701,752

811,687

(109,935)

-14%



Allowance for loan losses

(13,801)

(14,115)

314

-2%



Loans, net

687,951

797,572

(109,621)

-14%



Real estate acquired through foreclosure

25,235

21,185

4,050

19%



Restricted stock investments, at cost

7,085

7,095

(10)

0%



Premises and equipment, net

38,278

41,068

(2,790)

-7%



Accrued interest receivable

4,025

3,844

181

5%



Income taxes recoverable

595

600

(5)

-1%



Bank owned life insurance

37,478

36,188

1,290

4%



Prepaid expenses and other assets

23,907

15,955

7,952

50%


Total Assets

$ 1,179,017

$1,309,637

(130,620)

-10%









Liabilities and Stockholders' Equity:






Liabilities:







Deposits

$ 1,014,759

$1,121,889

(107,130)

-10%



Borrowings

121,680

118,287

3,393

3%



Junior subordinated deferrable interest debentures

52,068

52,068

-

0%



Accrued expenses and other liabilities

15,922

13,647

2,275

17%


Total Liabilities

1,204,429

1,305,891

(101,462)

-8%









Stockholders' Equity







Common Stock

939

902

37

4%



Additional paid-in-capital

80,125

79,667

458

1%



Retained earnings

(103,454)

(73,210)

(30,244)

41%



Accumulated other comprehensive loss

(3,022)

(3,613)

591

-16%


Total Stockholders Equity

(25,412)

3,746

(29,158)

-778%


Total Liabilities and Stockholders' Equity

$ 1,179,017

$1,309,637

(130,620)

-10%











CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

First Mariner Bancorp






(Dollars in thousands)

For the three months

For the year




ended December 31,

ended December 31,




2011

2010

2011

2010


Interest Income:







Loans

$     11,635

$     13,295

$    45,502

$      52,826



Investments and interest-bearing deposits

354

450

2,005

2,395


Total Interest Income

11,989

13,745

47,507

55,221









Interest Expense:







Deposits

3,446

4,869

15,663

20,826



Borrowings

954

742

3,662

4,557


Total Interest Expense

4,400

5,611

19,325

25,383









Net Interest Income Before Provision for Loan Losses

7,589

8,134

28,182

29,838









Provision for Loan Losses

2,750

1,500

14,330

17,790









Net Interest Income After Provision for Loan Losses

4,839

6,634

13,852

12,048









Noninterest Income:







Total other-than-temporary impairment ("OTTI") charges

(21)

804

(348)

(445)



   Less: Portion included in other comprehensive income

1

(804)

(490)

(804)



Net OTTI charges on securities available for sale

(20)

-

(838)

(1,249)



Mortgage banking revenue

5,654

3,451

13,596

16,950



ATM Fees

732

759

3,046

3,038



Service fees on deposits

751

835

2,945

3,944



Gain on financial instruments carried at fair value

-

-

-

1,661



Gain / (loss) on sale of securities

(23)

-

758

54



Gain on extinguishment of debt

-

958

-

958



Gain / (loss) on sale of assets

-

(1,049)

-

(1,049)



Commissions on sales of nondeposit investment products

90

115

437

496



Income from bank owned life insurance

307

349

1,291

1,415



Other

230

235

2,013

1,974


Total Noninterest Income

7,721

5,653

23,248

28,192









Noninterest Expense:







Salaries and employee benefits

5,515

5,796

23,520

25,205



Occupancy

2,219

2,382

8,627

9,245



Furniture, fixtures and equipment

378

534

1,735

2,334



Professional services

2,756

925

6,498

3,074



Advertising

193

213

663

633



Data processing

392

452

1,629

1,795



ATM servicing expenses

211

211

866

866



Costs of other real estate owned

1,154

1,973

7,789

8,366



FDIC insurance premiums

895

874

4,285

3,801



Service and maintenance

615

561

2,487

2,317



Other

2,813

2,371

9,851

9,862


Total Noninterest Expense

17,141

16,292

67,950

67,498









Net loss before discontinued operations and income taxes

(4,581)

(4,005)

(30,850)

(27,258)


Income tax expense/(benefit) - continuing operations

(606)

29,879

(606)

19,131


Net loss from continuing operations

(3,975)

(33,884)

(30,244)

(46,389)


(Loss)/Income from discontinued operations

-

-

-

(200)









Net Loss

$      (3,975)

$    (33,884)

$   (30,244)

$     (46,589)











CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (UNAUDITED)

First Mariner Bancorp






(Dollars in thousands)








For the three months ended December 31,




2011

2010




Average

Yield/

Average

Yield/




Balance

Rate

Balance

Rate


Assets:







Loans







Commercial Loans and LOC

$     58,314

5.16%

$       72,869

5.47%



Commercial Mortgages

333,153

5.98%

364,361

6.11%



Commercial Construction

54,327

5.75%

58,005

5.32%



Consumer Residential Construction

18,857

3.38%

32,261

5.06%



Residential Mortgages

122,786

5.56%

142,979

5.59%



Consumer

137,400

4.40%

150,984

4.58%



Total Loans

724,837

5.46%

821,458

5.59%










Loans held for sale

162,695

3.92%

157,749

4.19%



Trading and available for sale securities, at fair value

21,771

5.04%

24,595

5.61%



Interest bearing deposits

37,905

0.85%

48,056

0.87%



Restricted stock investments, at cost

7,006

0.00%

7,230

0.00%










Total earning assets

954,214

4.96%

1,059,087

5.13%










Allowance for loan losses

(15,039)


(14,911)




Cash and other non earning assets

249,151


300,466










Total Assets

1,188,326


$  1,344,643










Liabilities and Stockholders' Equity:







Interest bearing deposits







NOW deposits

5,674

0.98%

7,238

0.34%



Savings deposits

55,900

0.19%

56,782

0.20%



Money market deposits

124,132

0.52%

131,896

0.60%



Time deposits

742,756

1.73%

827,766

2.22%



Total interest bearing deposits

928,462

1.47%

1,023,682

1.89%










Borrowings

168,898

2.24%

170,537

1.73%










Total interest bearing liabilities

1,097,360

1.59%

1,194,220

1.86%










Noninterest bearing demand deposits

100,024


106,598




Other liabilities

14,523


4,056




Stockholders' Equity

(23,580)


39,769










Total Liabilities and Stockholders' Equity

$ 1,188,326


$  1,344,643










Net Interest Spread


3.37%


3.26%









Net Interest Margin


3.13%


3.02%











CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (UNAUDITED)

First Mariner Bancorp






(Dollars in thousands)








For the year ended December 31,




2011

2010




Average

Yield/

Average

Yield/




Balance

Rate

Balance

Rate


Assets:







Loans







Commercial Loans and LOC

$     63,433

5.36%

$       76,738

5.21%



Commercial Mortgages

337,955

6.14%

351,001

6.24%



Commercial Construction

55,698

5.69%

76,663

5.26%



Consumer Residential Construction

22,851

4.57%

40,650

5.36%



Residential Mortgages

130,885

5.30%

155,438

5.62%



Consumer

142,477

4.49%

152,497

4.64%



Total Loans

753,299

5.53%

852,986

5.62%










Loans held for sale

89,812

4.24%

108,634

4.52%



Trading and available for sale securities, at fair value

42,333

3.70%

27,705

6.92%



Interest bearing deposits

37,328

1.17%

27,912

1.71%



Restricted stock investments, at cost

7,036

0.00%

7,662

0.00%










Total earning assets

929,808

5.11%

1,024,900

5.39%










Allowance for loan losses

(14,657)


(13,051)




Cash and other non earning assets

294,397


346,743










Total Assets

$ 1,209,548


$  1,358,592










Liabilities and Stockholders' Equity:







Interest bearing deposits







NOW deposits

6,182

0.28%

7,405

0.63%



Savings deposits

57,450

0.19%

56,271

0.27%



Money market deposits

127,584

0.56%

140,067

0.62%



Time deposits

743,309

1.99%

823,248

2.40%



Total interest bearing deposits

934,525

1.68%

1,026,991

2.03%










Borrowings

169,496

2.16%

176,786

2.58%










Total interest bearing liabilities

1,104,021

1.75%

1,203,777

2.11%










Noninterest bearing demand deposits

103,201


107,119




Other liabilities

13,276


8,863




Stockholders' Equity

(10,950)


38,834










Total Liabilities and Stockholders' Equity

$ 1,209,548


$  1,358,592










Net Interest Spread


3.36%


3.28%









Net Interest Margin


3.03%


2.91%











SOURCE 1st Mariner Bancorp



RELATED LINKS
http://www.1stMarinerBank.com

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