First Mariner raises $10.9 million in stock offerings

Bank’s parent company needs money to improve stability, satisfy regulators

April 13, 2010|By Gus G. Sentementes, The Baltimore Sun

First Mariner Bancorp, the parent company of Baltimore's largest independent bank, said Tuesday it raised $10.9 million through recent stock sales in a bid to stabilize its finances while it operates under federal scrutiny.

The company, which runs 1st Mariner Bank, said it sold 9.5 million shares at $1.15 per share. It raised the money in two parts: a rights offering that netted $3.9 million in proceeds from 3.4 million shares and a common stock sale that netted $7 million for 6.1 million shares.

The bank planned to raise at least $10 million and as much as $20 million to improve its capital levels to satisfy banking regulators.

"It's very positive news," said Whitney Young, a senior research analyst with Raymond James in New York City. "As far as we can tell, they won't have a problem complying with regulators on time."

Last month, the bank's shareholders approved a deal that eliminated $20 million of debt in a complex exchange with Edwin F. Hale Sr., the bank's chairman and chief executive, for stock worth $2 million. Last year, the company sold a finance arm for $14 million to raise funds.

First Mariner said it must raise its capital levels to satisfy regulators by a June 30 deadline. Hale estimated the bank needs to raise another $5 million to $8 million by the end of June.

"We still have more to do, but we think it's attainable for sure," Hale said.

Hale said the bank sold shares mainly to local investors. The money the bank raised has put the company in a better position to raise more funds in the near future, Hale said.

Earlier in the year, First Mariner had faced delisting from the Nasdaq stock exchange, but it was able to raise its stock price and market value to satisfy the exchange's rules.

First Mariner isn't the only local bank with troubles. Bay National Corp. disclosed this month that it faced delisting from the Nasdaq exchange.

Bay National said it received a notice from Nasdaq indicating that the bank doesn't have stockholders' equity of at least $2.5 million required for continued listing on the exchange. Also, as of April 1, the bank does not meet alternative requirements — a market value of at least $35 million or at least $500,000 in net income from continuing operations.

The banking company reported it has 45 days from April 5 to improve its finances.

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