1st Mariner Bank to be sold to investors
|By Jamie Smith Hopkins, The Baltimore Sun|
|McClatchy-Tribune Information Services|
A group of investors, many with local ties, have agreed to buy the
Officials stressed that 1st
Federal and state regulatory approval would be required for the sale. Banking consultants said Monday they expect regulators to consent because the deal appears to be the only way for the bank to avoid a takeover by the
Company officials called the agreement the best option they had. They expect the sale, if approved, will close in April.
"For four years, the bank has been under a regulatory order that it's been trying to satisfy, and we've reached the finish line," said
The investment group is led by
Now Priam is back, the biggest investor on a team that will act as the stalking-horse bidder for the bank in the parent company's bankruptcy process. Feinglass would become a member of a reconstitued board for the bank if the deal goes through but said he otherwise would have no role in managing the bank.
"The bottom line is I'm incredibly proud to be supporting an investment in my own hometown that I think has great prospects," he said Monday of a recapitalized 1st Mariner.
Without an infusion of capital, the bank's prospects weren't good.
Most recently, the bank's parent company was unable to pay millions of dollars in interest payments on trust preferred securities -- a bond-stock hybrid -- that were due in December.
Something had to give.
Feinglass said the bank's woes mainly stem from so-called "Alt-A" residential mortgages -- loans that don't qualify as prime but were seen as less risky than sub-prime -- that soured quickly in the housing bust. Huge write-downs in value caused the capitalization problems, he said.
He's confident that a revitalized 1st Mariner can be a major player in commercial lending to local businesses, the small and midsize firms that he says aren't served well by big banks.
Feinglass said he pursued the deal because 1st Mariner is the largest local bank in a sizable region, with just over
Feinglass, who graduated from
Steil would be chairman and CEO; Kunisch would be president and chief operating officer. Both also are in the investors' group planning to buy the bank. And they advised 1st Mariner from
Other local investors:
One of the other investors --
Steil, 1st Mariner's prospective CEO, said Monday that the additional capital will be critical for growth, allowing the bank to expand its commercial lending business. Kunisch, on tap for the No. 2 role, said 1st Mariner also should be able to win back local residents' savings and checking accounts once people feel confident in the bank again.
1st Mariner's potential and the state of the region's economy sealed the deal for investors, the two said.
"This bank, with strong capitalization levels, can be very competitive in the
Keidel, the bank's interim president, said "nothing changes" for bank customers, employees or vendors as a result of the parent company's bankruptcy.
"The most important thing is that the 1st
It's a different story for shareholders. Keidel said "the probability" is that they will be wiped out by the parent company's bankruptcy case.
The parent's obligations to creditors top
Shareholders were nearly wiped out already -- those who bought before times got tough. The stock has traded for around
Hale, First Mariner's founder, stepped down as chairman and CEO in 2011 but remains the company's largest shareholder with nearly 1.8 million shares. He said Monday that many local people own the stock, and he worries about the bankruptcy's effect on them.
"I would hope there was a better way, but this is what's happened, so I believe it is what it is," he added.
"I don't like to see banks fail," he said.
Ely said the bank will face business challenges under the new regime, particularly the tougher environment that higher interest rates -- compared with a year ago -- have created for mortgage refinancing and originations. But the investors surely wouldn't be ponying up
"It's a community bank, which I think offers a tremendous marketing opportunity for a bank in today's environment," he said.
Peak stock price:
Monday's closing stock price:
(c)2014 The Baltimore Sun
Visit The Baltimore Sun at www.baltimoresun.com
Distributed by MCT Information Services