One of the two banks competing to buy First Mariner Bank in a bankruptcy auction has withdrawn its offer.
National Penn Bancshares (NPBC) in Allentown, Pa., dropped out of the auction Tuesday afternoon after U.S. Bankruptcy Court Judge David Rice agreed to reopen bidding for First Mariner. National Penn's withdrawal clears the way for RKJS Bank to buy the Baltimore bank.
"We remain disciplined in our approach to mergers and acquisitions, while focused on continuing to build long term shareholder value," Scott Fainor, National Penn's president and chief executive, said in a press release Tuesday. "We are well-positioned to participate in the consolidation of the industry and will continue to evaluate opportunities consistent with our strategic objectives."
RKJS, an interim entity formed by a group of investors, reached an agreement with First Mariner's parent company in February to buy the bank in a bankruptcy auction and inject $100 million in capital. The plan hit a major snag when National Penn's entry into the auction ignited a bidding war.
First Mariner Bancorp (FMAR) selected National Penn's $19.1 million offer as the winning bid last week. RKJS filed an objection Monday, arguing that the holding company had held a "hopelessly tainted auction process," while asking the court to reopen the auction. RKJS had also claimed that its $17.9 million offer was actually higher than National Penn's offer, which totaled $13.7 million after deductions.
First Mariner Bancorp accepted the Pennsylvania lender's offer despite its lower value because of regulatory concerns, according to the Baltimore Business Journal. The company reportedly believed National Penn would have an easier time securing regulatory approval for the deal.
A First Mariner representative declined to comment, adding that the company would likely issue official statement Tuesday afternoon.