Priam Capital to Invest $36.4 Million in Saving First Mariner Bancorp

Ed Hale, Chairman and CEO of 1st Mariner Bank, to Step Down

The chairman and CEO of 1^st Mariner Bancorp, Baltimore’s largest independently owned bank, announced last week he will be stepping down.

Edwin F. Hale Sr., who founded 1^st Mariner Bank in 1995, agreed to relinquish his position as part of a deal to secure $160 million of desperately-needed funds for the company.

Priam Capital Fund, a private New York investment firm, agreed to provide $36.4 million for the struggling bank if 1^st Mariner can raise the remaining $123.6 million through other investors.

Priam can walk away from the agreement if the bank fails to raise $70.3 million by July 18, or the full amount by Sept. 1.

If successful, this deal could potentially bring financial stability to a bank that has all but collapsed under the weight of the recent economic crisis.

Bad commercial and real estate loans issued by 1^st Mariner Bank, along with plummeting stock prices, resulted in a net loss of $46.6 million last year and $22.3 million the year before.

In September 2009, federal and state regulators ordered 1^st Mariner to deal with problem loans and to raise capital to meet federal regulatory-mandated levels.

In response, the bank sold its consumer finance unit and raised $10.9 million through public campaigns. Hale also invested $2 million of his own money in the rescue plan.

In spite of erasing over $20 million in debt, 1^st Mariner was unable to fulfill the capital requirements, so Priam stepped in to rescue the institution.

“We see a unique opportunity to invest in 1^st Mariner, which, following the recapitalization, will play an instrumental role in the ability of the Baltimore metropolitan area to continue to develop and prosper,” Howard Feinglass, senior partner of Priam and Baltimore-native, said in a statement.

“Following the recapitalization, 1^st Mariner will have one of the highest capital ratios of any Maryland bank, allowing it to continue to serve the community.”

Under the conditions of the agreement, Priam will also obtain ownership of nearly 25 percent of the company. Shareholders will be offered $15 million in stock at 50 cents per share.

Though Hale is preparing to relinquish his leadership at the company, he will remain the company’s largest shareholder and is considering an offer to keep his seat on the board until the annual meeting in 2012.

“It’s fantastic hearing that the local bank is taking measures to save itself” say’s local business Keane Unclaimed Property – unclaimed property reporting company.

Hale will likely remain a fixture in the community. He owns the Baltimore Blast soccer team, owns exclusive naming rights to the downtown arena, and chairs the Tourism and Convention Board.

Priam will appoint a successor or successors to the positions of Chairman and CEO before the transaction is finalized Oct. 16.