First Mariner reports another profitable quarter

For the second quarter in a row, First Mariner Bancorp reported a profit, thanks to low interest rates, which have triggered a burst of mortgage lending.

The Baltimore-based parent of 1st Mariner Bank announced Thursday that it earned $5.7 million in the second quarter ended in June, compared with an $11 million loss a year ago. That builds on a $1.8 million profit posted in the first quarter.

Before this year, the last time the company saw a profit was in early 2007.

"Our improved operating results for the second quarter were driven by a robust mortgage banking environment, improved credit quality, and continued reductions in operating expenses," said CEO Mark A. Keidel. "The low interest rate environment and the addition of new mortgage production units have significantly increased loan production for home purchases and refinances. We experienced a record number of mortgage settlements during the quarter and for the first six months of 2012, with origination volume in excess of $1.0 billion."

Keidel added that the bank has made progress in improving asset quality. For instance, net recoveries of previously charged-off loans reached $428,000, compared with write-offs of $5.8 million a year ago.

Nonperforming loans fell to 4.64 percent of all assets in the quarter, compared with 5.71 percent the year before.

Banking consultant Bert Ely said that, like other banking companies, First Mariner is benefiting from a mortgage boom.

Ely added that the credit quality of the bank's assets has improved, reducing its credit-related expenses, such as costs associated with foreclosed properties.

"That's reflective of a recovering real estate market," Ely said. "Not that things are in great shape."

Keidel said the company remains committed to improving capital ratios, which are still below the level mandated by regulators.

Last year, a New York private equity firm agreed to provide capital to the struggling company, on condition that it first raise millions more from investors and that First Mariner's founder, Edwin F. Hale Sr., step down. He did so late last year.

"I'm glad they made some money, but it doesn't change the fundamentals of the company," said Stuart Greenberg, a banking analyst in Baltimore. "What is the future of First Mariner? ... It's a troubled bank. It has a capital deficiency and can't pay a dividend."

Total assets at the end of the quarter reached $1.22 billion, while deposits were $1.05 billion.

First Mariner's stock closed Thursday at 56 cents per share, up 3 pennies.

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