First Mariner Bankruptcy Erupts into Bidding War

By Sarah Todd April 14, 2014, 1:09 p.m. EDT 1 Min Read

M&A

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First Mariner in Baltimore to Sell Bank Through Bankruptcy Process

First Mariner Bancorp (FMAR) in Baltimore is planning a $100 million recapitalization of its bank led by a group of investors.

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Community banking

In Bankruptcy, AmWest May Be Blazing Trail for Others

Rarely is bankruptcy court a welcome detour, but more struggling banks may take it to overcome debtholders blocking their recapitalization efforts.

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January 5

The bankruptcy auction of Baltimore-based First Mariner Bank is getting lively.

First Mariner's holding company, First Mariner Bancorp (FMAR), filed for Chapter 11 bankruptcy in February as part of a $100 million recapitalization plan. The company planned to sell its bank in a bankruptcy auction to a group of investors including Priam Capital and Patriot Financial Partners. Now the investors, operating as the interim firm RKJS Bank, are in the midst of a bidding war with National Penn Bancshares (NPBC) in Allentown, Pa.

First Mariner Bancorp declared National Penn's $19.1 million offer the winning bid on Thursday, but RKJS Bank filed an objection Monday, arguing that the holding company had failed to follow court-approved bidding procedures and had conducted a "hopelessly tainted auction process." RKJS also argued that its $17.9 million bid for First Mariner actually exceeded that of National Penn, which came to a total value of $13.7 million after deductions.

A hearing on National Penns bid been scheduled for Monday morning, but U.S. Bankruptcy Court Judge David Rice agreed to push it back to 1 p.m.

Multi-bidder auctions are becoming more common as a growing number of lenders turn to bankruptcy as a means of saving themselves. The strategy of splitting troubled holding companies from their still-salvageable banking units has been employed by lenders including Metropolitan National Bank in Little Rock, Ark., and AmericanWest Bancorp in Spokane, Wash.

The $8.6 billion-asset National Penn has 118 branches in Pennsylvania and one branch in Maryland. The $1 billion-asset First Mariner has 17 branches in Maryland.

Sarah Todd

Deputy Editor, BankThink