First Mariner Weighed Down by Loan Sales in 1Q

The cost of shedding troubled loans weighed on First Mariner Bancorp (FMAR) in the first quarter.

The $1.3 billion-asset parent of First Mariner Bank in Baltimore lost $2.3 million in the three months that ended March 31 after earning $1.8 million a year earlier.

Noninterest expense increased nearly 29% from a year earlier, to $19.7 million, primarily because of charges incurred by the company as part of a push to clean up its balance sheet.

"We took the opportunity to improve our balance sheet and asset quality by aggressively addressing our level of non-performing assets," Mark Keidel, First Mariner's interim chief executive, said in a press release. "We remain committed to improving operational efficiency, reducing nonperforming assets and improving our regulatory capital ratios."

The efficiency ratio deteriorated 19.7 percentage points year over year, to 105.2%.

Net interest income fell 6% from the first quarter of 2012, to $7.1 million. The net interest margin compressed 47 basis points year over year, to 2.67%, because of lower yields.

Noninterest income rose 12% year over year, to $11.6 million, primarily because of fees from mortgage banking.

First Mariner's loan portfolio shrank 12% from a year earlier, to $586.3 million. Chargeoffs rose 18% year over year, to $1.5 million.

In April, the Federal Deposit Insurance Corp. freed First Mariner from an April 2009 cease-and-desist order requiring the bank to comply with fair-lending practices.

First Mariner remains under an order from September 2009 that requires the company to raise its Tier 1 leverage ratio to 7.5% and attain a total risk-based capital ratio of 11%.

At March 31, the bank's Tier 1 ratio was 3.6% and its total risk-based capital ratio was 7.8%, according to First Mariner's latest quarterly filing with the Securities and Exchange Commission.