1st Mariner Bancorp Reports First Quarter 2013 Results

BALTIMORE, May 14, 2013 /PRNewswire/ -- 1st Mariner Bancorp (OTCBB: FMAR), parent company of 1st Mariner Bank, reported a net loss of $2.3 million for the first quarter of 2013, compared to net income of $1.8 million for the first quarter of 2012. Included in the $2.3 million loss for the first quarter of 2013 were $4.0 million in charges related to the aggressive disposition of non-performing assets. During the quarter, the company disposed of over $14.4 million in non-performing assets which resulted in a significant improvement in asset quality.

Mark A. Keidel, 1st Mariner's Interim Chief Executive Officer, said, "During the 1st quarter of 2013, we took the opportunity to improve our balance sheet and asset quality by aggressively addressing our level of non-performing assets. We reduced our non-performing loans by 25% during the quarter and our ratio of non-performing assets to total assets improved to 3.2% as of March 31, 2013, down from 4.1% as of December 31, 2012 and 5.3% as of March 31, 2012. Going forward these reductions will reduce operating expenses, improve our net interest margin and avoid any potential cost of any future deterioration in value."

Mr. Keidel added, "We continue to experience very robust residential mortgage loan origination volume. During the quarter, we originated more than $720 million in residential mortgages which was a 56% increase over same quarter of 2012. Application volume totaled $759 million in the first quarter of 2013 compared to $677 million during the first quarter of 2012. This production volume resulted in more than $9.8 million to our non-interest income for the quarter. We continue to see a pick-up in application volumes for purchases of new and existing homes as well as steady refinance volume. Increases in expenses for the quarter were attributable to costs of disposal of non-performing assets and higher mortgage banking expenses."

Mr. Keidel continued, "We remain committed to improving operational efficiency, reducing non-performing assets, and improving our regulatory capital ratios."

Net interest income for the first quarter of 2013 was $7.1 million compared to $7.6 million in the first quarter of 2012. The decline was due to lower yields on loans in the first quarter of 2013 compared to first quarter of 2012, where the average yield was 4.98% and 5.47%, respectively. This decline in yield was partially offset by an increase in the volume of loans held for sale. Average loans held for sale increased to $370.9 million during the first quarter of 2013 compared to $177.6 million for the first quarter of 2012. The average rate paid on deposits also decreased during the quarter, with an average rate of 1.10% incurred in three months ended March 31, 2013 versus 1.36% for the three months ended March 31, 2012. This decrease was due to higher rate certificates of deposit maturing during the quarter and being replaced with lower rate products. The decrease in the interest rate was offset by an increase in the volume of deposits during the quarter ended March 31, 2013. Total interest bearing deposits were $1.09 billion as of March 31, 2013 compared to $909.9 million as of March 31, 2012. The increase in deposits was due to the need for added liquidity to support the high residential mortgage originations. Interest expense on borrowings averaged 2.99% during the quarter ended March 31, 2013 versus 2.22% during quarter ended March 31, 2012. This increase in 2013 was due to the early payoff of $25.0 million in Federal Home Loan Bank borrowings during the quarter which resulted in a prepayment penalty of $152 thousand.

Gross interest income was $11.1 million for the three months ended March 31, 2013 versus $11.6 million in the corresponding period of 2012. The average yield on earning assets decreased to 4.19% for the three months ended March 31, 2013 compared to 4.85% for the three months ended March 31, 2012. Total average earning assets were $1.1 billion and $952.2 million for the three months ended March 31, 2013 and 2012 respectively. The decrease was largely due to the asset mix being concentrated more in lower yield residential mortgages and less on higher yield commercial loans.

The provision for loan losses was $1.3 million for the three months ended March 31, 2013 versus $1.0 million for the three months ended March 31, 2012. Net charge-offs were $1.5 million for the three months ended March 31, 2013, an 18% increase from the $1.3 million for the three months ended March 31, 2012. Costs related to foreclosed properties, including write-downs due to declining appraised values, amounted to $2.7 million for the three months ended March 31, 2013 compared to $1.3 million for the three months ended March 31, 2012. Combined credit- related costs (provision for loan losses and costs of foreclosed properties) amounted to $4.0 million for the three months ended March 31, 2013 versus $2.8 million for the three months ended March 31, 2012. This increase in credit related costs was due to the aggressive disposal of non-performing assets in the first quarter of 2013. Total non-performing assets were $42.1 million as of March 31, 2013, which is a decrease of 33% from the $62.6 million as of March 31, 2012. As a percentage of total assets, the non-performing assets were 3.2% and 5.3% as of March 31, 2013 and 2012, respectively.

Non-interest income was $11.6 million for the three months ended March 31, 2013 which was an increase of 12% over the $10.4 million that was recorded in the same quarter of 2012. Increased revenue form mortgage banking activities was a factor with $9.8 million being earned in the first quarter of 2013 versus $8.9 million earned in the first quarter of 2012. For the three months ended March 31, 2013, gross mortgage loan production volume was $720.5 million compared to $461.3 million for the three months ended March 31, 2012. In addition to the increases from mortgage banking revenue, non-interest income increased due to the lack of other-than-temporary impairment ("OTTI") charges on investment securities in the quarter ended March 31, 2013. By contrast, the company incurred $460 thousand in OTTI during the quarter ended March 31, 2012. Those charges were primarily on the write down of trust preferred securities that were held in the bank's investment portfolio.

Non-interest expenses were $19.7 million for the three months ended March 31, 2013 compared to $15.3 million for the three months ended March 31, 2012. The increase in expenses was primarily due to the following: aggressive sale and disposal of foreclosed assets; increased marketing and postage expenses related large direct mailing campaigns for the residential mortgage origination activities; professional fees related to regulatory compliance and efforts related to increasing capital levels; increases in salaries due to higher mortgage origination volume; and higher insurance premiums paid to the FDIC. Costs related to foreclosed properties, including losses due aggressive sales and disposals, amounted to $2.7 million for the three months ended March 31, 2013 compared to $1.3 million for the three months ended March 31, 2012. Direct mailings that solicit refinancing and new purchase mortgages caused the increase in marketing and postage expenses. Marketing and postage expenses were $442 thousand and $1.1 million, respectively, in the quarter ended March 31, 2013. By comparison, the marketing and postage expenses were $188 thousand and $259 thousand, respectively, in the quarter ended March 31, 2012. Professional fees were $807 thousand for the quarter ended March 31, 2013 which was an increase of 116% over the $373 thousand that was recorded in the quarter ended March 31, 2012. The increase was due to regulatory compliance and capital raising efforts. Salaries and benefits were $6.9 million for the first quarter of 2013 versus $5.8 million in the first quarter of 2012. The increase was due to added staffing required to meet the higher mortgage origination volume. Amounts paid for FDIC insurance premiums remained high with $1.2 million incurred in the three months ended March 31, 2013 and $1.0 million incurred in the three months ended March 31, 2012. Additionally, corporate insurance expense increased as the renewal rates increased beginning in the third quarter of 2012. For the three months ended March 31, 2013 corporate insurance expense was $794 thousand compared to $473 thousand for the three months ended March 31, 2012.

Comparing balance sheet data as of March 31, 2013 and 2012, total assets increased 10% to $1.30 billion, from the prior year's $1.18 billion. The increase is due to a $152.5 million increase in cash and due from banks, a $48.9 million increase in loans held for sale, and a $33.5 million increase in available for sale investment securities. All of these increases resulted from the high level of mortgage banking activity, with the cash and investments being increased so there would be sufficient liquidity to fund the high volume of mortgage originations.

  • Average earning assets were $1.1 billion for the first quarter of 2013, which was a 12% increase over the first quarter 2011 balance of $952.2 million. The increase was due to higher average loans held for sale that resulted from the higher mortgage banking activity.
  • Total loans outstanding were $597.5 million as of March 31, 2013, down 12% from the $680.5 million reported in the prior year. This was due to loan maturities, loan sales, and reduced portfolio loan production.
  • Total loans held for sale were $237.4 million as of March 31, 2013, an increase of 26% over the $188.5 million held for sale as of March 31, 2012. The increase was due to the higher residential mortgage loan production volume in the first quarter of 2013 versus the first quarter of 2012.
  • The allowance for loan losses as of March 31, 2013 was $11.2 million, a decrease of 17% over the prior year's $13.5 million. The decrease was due to lower loan balances as of March 31, 2013 and lower charge off history. The allowance for loan losses as a percentage of total loans was 1.88% as of March 31, 2013, compared to 1.99% as of March 31, 2012. The allowance for loan losses as a percentage of non-performing assets improved to 26.6% as of March 31, 2013, up from 21.6% as of March 31, 2012.
  • Total deposits increased 17.7% from $1.01 billion as of March 31, 2012 to $1.19 billion as of March 31, 2013. Money market and NOW accounts increased $46.2 million, from $128.1 million as of March 31, 2012 to $174.3 million as of March 31, 2013. Savings accounts increased $5.0 million from $59.7 million as of March 31, 2012 to $64.7 million as of March 31, 2013. Certificates of deposit were $845.0 million as of March 31, 2013, representing an increase of $131.5 million, or 18.4%, from the $713.5 million as of March 31, 2012. Demand deposits decreased 3.2% from $111.9 million as of March 31, 2012 to $108.3 million as of March 31, 2013.
  • As of March 31, 2013, 1st Mariner Bank's capital ratios were as follows: Total Risk Based Capital 7.8%; Tier 1 Risk Based Capital 6.6%; and Leverage 3.6%. 

1st Mariner Bancorp is a bank holding company with total assets of $1.38 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, the Eastern Shore of Maryland, and portions of Northern Virginia. 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". 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, 2012. 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,




2013

2012

$ Change

% Change


Summary of Earnings:







Net interest income

$       7,145

$       7,566

(421)

-6%



Provision for loan losses

1,300

1,000

300

30%



Noninterest income

11,607

10,379

1,228

12%



Noninterest expense

19,722

15,330

4,392

29%



Net income/(loss) before income taxes

(2,270)

1,615

(3,885)

241%



Income tax expense/(benefit)

-

(205)

205

100%



Net income/(loss)

(2,270)

1,820

(4,090)

225%









Profitability and Productivity:







Net interest margin

2.67%

3.14%

-

-15%



Net overhead ratio

2.51%

1.71%

-

47%



Efficiency ratio

105.17%

85.43%

-

-23%



Mortgage loan production

720,472

461,317

259,155

56%



Average deposits per branch

56,775

46,056

10,719

23%









Per Share Data:







Basic earnings per share 

$        (0.12)

$        0.10

(0.22)

225%



Diluted earnings per share

$        (0.12)

$        0.10

(0.22)

225%



Book value per share

$        (0.59)

$       (1.22)

0.63

52%



Number of shares outstanding

18,860,482

18,860,482

-

0%



Average basic number of shares

18,860,482

18,860,482

-

0%



Average diluted number of shares

18,860,482

18,860,482

-

0%









Summary of Financial Condition:







At Period End:







Assets

$ 1,301,640

$1,179,191

122,449

10%



Investment Securities

56,372

22,841

33,531

147%



Loans

597,529

680,498

(82,969)

-12%



Deposits

1,192,283

1,013,241

179,042

18%



Borrowings

102,115

173,449

(71,334)

-41%



Stockholders' equity

(11,122)

(22,975)

11,853

52%










Average for the period:







Assets

$ 1,311,974

$1,177,179

134,795

11%



Investment Securities

54,887

22,733

32,154

141%



Loans

609,849

697,432

(87,583)

-13%



Deposits

1,195,266

1,012,716

182,550

18%



Borrowings

140,653

175,045

(34,392)

-20%



Stockholders' equity

(8,021)

(24,558)

16,537

-67%









Capital Ratios at period end: First Mariner Bank







Leverage

3.6%

3.1%

-

16%



Tier 1 Capital to risk weighted assets

6.6%

4.4%

-

50%



Total Capital to risk weighted assets

7.8%

5.7%

-

37%









Asset Quality Statistics and Ratios:







Net charge offs

1,509

1,280

229

18%



Non-performing assets

42,124

62,581

(20,457)

-33%



Loans past due 90 days or more and accruing

554

5,006

(4,452)

-89%



Annualized net chargeoffs to average loans

1.00%

0.74%

-

35%



Non-performing assets to total assets

3.24%

5.31%

-

-39%



90 Days or more delinquent loans to total loans

0.09%

0.74%

-

-87%



Allowance for loan losses to total loans

1.88%

1.99%

-

-5%









 

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)




First Mariner Bancorp





(Dollars in thousands)







As of March 31,





2013

2012

 $ Change 

% Change

Assets:






Cash and due from banks

$273,745

$121,294

152,451

126%


Interest-bearing deposits 

28,964

42,259

(13,295)

-31%


Available-for-sale investment securities, at fair value

56,372

22,841

33,531

147%


Loans held for sale

237,379

188,462

48,917

26%


Loans receivable

597,529

680,498

(82,969)

-12%


Allowance for loan losses

(11,225)

(13,521)

2,296

-17%


Loans, net

586,304

666,977

(80,673)

-12%


Real estate acquired through foreclosure

10,654

25,531

(14,877)

-58%


Restricted stock investments, at cost

3,517

7,085

(3,568)

-50%


Premises and equipment, net

37,174

37,637

(463)

-1%


Accrued interest receivable

3,392

3,861

(469)

-12%


Bank owned life insurance

38,859

37,771

1,088

3%


Prepaid expenses and other assets

25,280

25,473

(193)

-1%

Total Assets

$ 1,301,640

$1,179,191

122,449

10%







Liabilities and Stockholders' Equity:





Liabilities:






Deposits

$ 1,192,283

$1,013,241

179,042

18%


Borrowings

50,047

121,381

(71,334)

-59%


Junior subordinated deferrable interest debentures

52,068

52,068

-

0%


Accrued expenses and other liabilities

18,364

15,476

2,888

19%

Total Liabilities

1,312,762

1,202,166

110,596

9%







Stockholders' Equity






Common Stock

939

939

-

0%


Additional paid-in-capital

79,892

80,019

(127)

0%


Retained Deficit

(89,607)

(101,634)

12,027

12%


Accumulated other comprehensive loss

(2,346)

(2,299)

(47)

-2%

Total Stockholders' Equity

(11,122)

(22,975)

11,853

52%

Total Liabilities and Stockholders' Equity

$ 1,301,640

$1,179,191

122,449

10%













 

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)



First Mariner Bancorp




(Dollars in thousands)

For the three months




ended March 31,




2013

2012


Interest Income:





Loans

$     10,793

$     11,283



Investments and interest-bearing deposits

340

336


Total Interest Income

11,133

11,619







Interest Expense:





Deposits

2,953

3,088



Borrowings

1,035

965


Total Interest Expense

3,988

4,053







Net Interest Income Before Provision for Loan Losses

7,145

7,566







Provision for Loan Losses

1,300

1,000







Net Interest Income After Provision for Loan Losses

5,845

6,566







Noninterest Income:





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

-

38



    Less: Portion included in other comprehensive income

-

(498)



Net OTTI charges on securities available for sale

-

(460)



Mortgage banking revenue

9,789

8,950



ATM Fees

516

718



Service fees on deposits

626

680



Gain on sale of securities available for sale

31

-



Gain / (loss) on sale of assets

-

(93)



Commissions on sales of nondeposit investment products

45

62



Income from bank owned life insurance

259

293



Other

341

229


Total Noninterest Income

11,607

10,379







Noninterest Expense:





Salaries and employee benefits

6,880

5,779



Occupancy

2,290

2,222



Furniture, fixtures and equipment

389

362



Professional services

807

373



Advertising and marketing

442

188



Data processing

203

432



ATM servicing expenses

105

226



Costs of other real estate owned

2,685

1,274



FDIC insurance premiums 

1,210

1,048



Service and maintenance

716

591



Corporate insurance

794

473



Consulting fees

412

608



Postage

1,051

259



Other

1,738

1,495


Total Noninterest Expense

19,722

15,330







Net income/(loss) before income taxes

(2,270)

1,615


Income tax expense/(benefit)

-

(205)







Net (loss)/income

$      (2,270)

$       1,820







 

CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (UNAUDITED)



First Mariner Bancorp





(Dollars in thousands)







For the three months ended March 31,



2013

2012



Average  

Yield/

Average  

Yield/



Balance  

Rate

Balance  

Rate

Assets:






Loans






Commercial Loans and LOC

$     46,645

5.22%

$       54,424

5.17%


Commercial Mortgages

263,491

5.22%

319,617

5.80%


Commercial Construction

49,697

5.41%

55,194

5.77%


Consumer Residential Construction

19,177

4.56%

16,074

4.57%


Residential Mortgages

113,309

4.60%

121,490

5.88%


Consumer

117,530

4.56%

130,633

4.40%


Total Loans

609,849

4.98%

697,432

5.47%








Loans held for sale

370,995

3.47%

177,561

3.78%


Trading and available for sale securities, at fair value

54,887

1.89%

22,733

4.91%


Interest bearing deposits

22,069

1.46%

47,289

0.49%


Restricted stock investments, at cost

5,343

0.00%

7,163

0.00%








Total earning assets

1,063,143

4.19%

952,178

4.85%








Allowance for loan losses

(11,807)


(14,056)



Cash and other non earning assets

290,638


239,057








Total Assets

$ 1,341,974


$  1,177,179








Liabilities and Stockholders' Equity:






Interest bearing deposits






NOW deposits

4,603

0.01%

5,732

0.98%


Savings deposits

62,133

0.17%

57,069

0.19%


Money market deposits

160,822

0.60%

127,233

0.51%


Time deposits

861,371

1.27%

719,952

1.61%


Total interest bearing deposits

1,088,929

1.10%

909,986

1.36%








Borrowings

140,653

2.99%

175,045

2.22%








Total interest bearing liabilities

1,229,582

1.32%

1,085,031

1.50%








Noninterest bearing demand deposits

106,337


102,730



Other liabilities

14,076


13,976



Stockholders' Equity

(8,021)


(24,558)








Total Liabilities and Stockholders' Equity

$ 1,341,974


$  1,177,179








Net Interest Spread


2.87%


3.35%







Net Interest Margin


2.67%


3.14%

 

SOURCE 1st Mariner Bancorp



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

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