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1st Mariner Bank heads to auction

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The future of 1st Mariner, Baltimore's largest independent bank, could be decided this week.

A bankruptcy judge approved First Mariner Bancorp's request last month to sell its bank as part of the parent company's Chapter 11 bankruptcy filing. Bids for the Baltimore-based bank were due by 4 p.m. Monday.

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Aside from being sold off, the bank is not included in the bankruptcy, and bank deposits, loans, contracts and other business will not be affected.

The bank's parent filed for bankruptcy protection Feb. 10, capping its years-long struggle to get back on solid footing after residential loans soured during the housing bust.

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A group of investors led by New York investment firm Priam Capital has made the only publicly known bid, for just under $4.8 million.

"Our investors are focused on the bank and the opportunity," said Howard Feinglass, a Baltimore native who runs a New York investment firm and whose group plans to recapitalize the bank with $80 million to $100 million.

"The whole idea was to preserve this as a local bank," he said Monday. "Baltimore needs a local bank, and Baltimore is a local town, and outsiders will have a harder time."

If more than one bid comes in, the bank will be sold at auction Thursday at a location selected by the bank. The winning bidder would require court approval at a hearing April 14.

If no additional bidders emerged by Monday, the Priam group, the so-called "stalking-horse bidder," will be considered the successful bidder and no auction will be held, according to the court-approved procedures. In that case, First Mariner would request approval of the sale at a bankruptcy hearing set for Friday.

First Mariner declined comment on Monday.

An attorney for the bank, Lawrence J. Yumkas, said the bank would have no comment until after it notifies the bankruptcy court about whether an auction will be needed.

The quick nature of the planned auction has drawn objections from the bank's creditors and the U.S. trustee. Judge David E. Rice of the U.S. Bankruptcy Court had approved the timing, saying the bank "articulated good and sufficient reasons."

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The bank has operated under a federal regulatory order to raise its capital levels since 2009. In December, it was unable to make millions of dollars in interest payments on trust-preferred securities.

One creditor, Wilmington Trust, a trustee in two of the trust preferred securities, had objected to the sale.

It "will likely leave all creditors out of the money or, at best, provide fractional recoveries," the creditor said in a court filing.

Shares of First Mariner continue to trade, though shareholders are unlikely to get anything out of the bankruptcy. Its stock price closed unchanged Monday at 4 cents a share in over-the-counter trading.

lorraine.mirabella@baltsun.com


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