The $1.2 billion-asset First Mariner said in its earnings release Friday that it had negative stockholder equity at the end of the second quarter of $13.4 million, compared to negative equity of $3.3 million at March 31. Its First Mariner Bank unit was undercapitalized at June 30, with a total risk-based capital ratio of 6.9% and a leverage ratio of 3.8%.
In April the investment group Priam Capital Fund I LP agreed to inject $36.4 million into First Mariner on the condition that the bank finds an accompanying $123.6 million and replaces its founder and longtime chief executive, Edwin F. Hale Sr.
So far First Mariner has been unable to raise the additional capital and, for now, Hale remains at the helm. In a press release Friday, Hale said that the company is continuing its efforts "to increase our capital levels to achieve compliance with regulatory requirements."
The $11 million loss in the quarter was 29% greater than its loss in last year's second quarter. Among the reasons for the wider loss this year were an increase in chargeoffs and a continued decline in earning assets.
First Mariner's shares were trading at 50 cents midday Friday, down more than 13% from Thursday's closing price.
Adding to its list of troubles, the company is in danger of having its stock delisted.
In May, Nasdaq Stock Market notified the company that it did not comply with the listing rule that calls for companies to have stockholder equity of at least $2.5 million. The company sought an exception to continue listing on Nasdaq, but on July 15 the market notified First Mariner that it rejected the request. On July 21, the company requested an appeal hearing, which will delay the delisting.
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