First Mariner Bancorp, under pressure from regulators to improve its financial soundness, announced it completed a deal with a former board member that will raise the Baltimore-based company's capital and reduce its debt.

John McDaniel, who had served as a director until last month, earlier this year had purchased at a discount $1 million worth of debt in the form of trust preferred securities. At the end of last month, McDaniel exchanged that debt for $100,000 worth of First Mariner stock, according to a document filed with the Securities and Exchange Commission.

This swap increases the company's capital by about $560,000 while canceling $1 million of debt, the company said. First Mariner earlier this year conducted a similar exchange with its chairman and chief executive, Edwin F. Hale Sr.