The board of 1st Mariner Bancorp (FMAR) has withdrawn from a long delayed securities purchase agreement with a New York investment firm that would have injected badly needed capital into the Baltimore company.
Under the April 2011 agreement, Priam Capital Fund I would have invested roughly $36.4 million into the $1.3 billion-asset 1st Mariner. But 1st Mariner struggled to raise the additional $123.6 million from other investors as required by the agreement and earlier this year, it had warned investors it was in danger of failing if it didn't raise fresh capital.
Circumstances have changed for 1st Mariner since it entered the agreement and the board "believed it was in the best interest of the company to withdraw from the agreement at this time," Mark A. Keidel, 1st Mariner's chief executive, said in a news release Friday.
The company has improved its results, reporting three straight quarters of profits and earning $15.4 million for the first nine months of the year. For the same period last year it lost $26.3 million.
The company has focused on expanding its mortgage operations in the Washington, D.C., and Baltimore areas. In the third quarter, the company reported that noninterest income more than doubled from a year earlier because of an increase in mortgage originations. Revenue from mortgage banking increased 234%, to $15.4 million.
Still, 1st Mariner reported in its third-quarter results that its capital ratios, although improved, were still below regulatory requirements. At Sept. 30, 1st Mariner Bank's total-risk based capital ratio was 7.1% and its leverage capital ratio was 4.1%.
As part of the deal with Priam, Edwin F. Hale Sr. had stepped down in December as chief executive and chairman of 1st Mariner, a company he founded in 1995. Under the agreement, either party could terminate the deal at any time for any reason if it was not completed by Nov. 30, 2011.