Edwin F. Hale Sr., the Baltimore trucking magnate and developer, said Friday that he has retired as chief executive and chairman of First Mariner Bancorp — the banking company he built, only to scramble in the housing market collapse and recession to save it from failure.
In the end, he hopes his earlier-than-expected exit will help. Hale, who stepped down on Thursday, said he thinks it will be easier for the Baltimore company to raise capital without him at the helm. The 1st Mariner Bank parent struck a deal in April to get a desperately needed $36.4 million cash infusion from a New York firm if it can first drum up $123.6 million more from investors.
"We're at a critical point right now in the capital raise, and I think they're making some progress," said Hale, 65, who also owns the Baltimore Blast soccer team and heads the city's tourism board. "It's better for me to step down. I'm sure it's not a big surprise to anyone."
Hale had agreed to leave First Mariner — Baltimore's largest independent bank — as part of the April deal with Priam Capital, an investment firm that would take a partial ownership stake. But the companies said at the time that he would step down when the transaction closed, which has yet to happen. Hale said Friday that Priam is still on board.
With the bank's growing success, Hale built a sphere of influence in Baltimore's business community and watched his own fortunes balloon and ebb along with the bank's. Now he doubts that he'll ever run a sizable company again. He says his immediate plans are to hunt duck and geese, a pastime he enjoys, and he expects to stay busy with his real estate holdings, the Blast and other ventures.
First Mariner has lost about $120 million over the past four years, racking up 18 straight quarters in the red. Toxic mortgages, falling real estate values, commercial loans gone bad and a rough economy all contributed.
Banking analysts say Hale's management is also to blame for the bank's troubles. They think it's possible the company could have righted itself if he had left a few years earlier, and they don't know if First Mariner can be saved now.
"I am … amazed that the regulators have still not come in and taken over the bank," said Stuart Greenberg, a banking consultant. "I think they were hoping that this deal would go through."
Said Bert Ely, a banking analyst: "The hole is so deep there, I just don't see why anybody would buy it."
Priam had initially set a Sept. 1 deadline for First Mariner to raise the money and extended the timeline to Nov. 30 when that proved impossible. Neither company commented when that deadline came and went, and Priam could not be reached Friday.
First Mariner's troubles started when a Northern Virginia division got into "liar loans" — mortgages requiring little or no documentation of borrowers' finances — that it then sold to the Bear Stearns Cos.
Borrowers defaulted. Bear Stearns sent the loans back to First Mariner under a buyer's remorse clause. Those mortgages ultimately cost the bank about $60 million, Hale said, and more losses piled up as the recession hit. Regulators stepped in, demanding that the bank raise more capital.
Hale invested his own money and traveled around the region last year, asking teachers, retirees and other local residents to buy stock in the company. But every quarter, the bank kept bleeding. What he raised wasn't enough.
Stock that people purchased for more than $1 a share in early 2010 at Hale's personal request is now trading for pennies. First Mariner stock closed at 61/2 cents a share Friday, up from a record low of 5 cents a share Thursday.
The peak was just over $20 a share in October 2006.
Hale, as the company's largest shareholder by far, took a major financial hit from that reversal. He was also forced to sell the 1st Mariner Tower in Canton — one of his real estate holdings — in 2009, for less than he thought it was worth, to avoid foreclosure.
In February he was placed on one year of unsupervised probation after trying to fly out of Baltimore-Washington International Thurgood Marshall Airport with a loaded handgun in his briefcase, a revolver that he said he'd forgotten to leave at home.
All in all, a rotten few years — though he is by no means ruined. Hale, speaking by telephone from the Easton farm that is his main residence, said Friday that he figures he will eventually be "relieved" to be out of First Mariner.
"I've been fighting this since 2006, to get the capital," he said. "But I also feel that [First Mariner] has a fighting chance now. … I think it still can survive. I hope that all the employees are going to be able to remain in place."
Hale, whose salary was $522,000 this year, would have been due a payout of more than $1.5 million if he had been let go after a "change in control" at the company. He did not get a payout for retiring, the company said Friday.
Hale said regulators did not ask him to leave, but he knew he needed to go. Though First Mariner President Mark Keidel will step up as CEO on an interim basis and board member Michael R. Watson will become interim chairman, Hale believes Priam already knows who it wants to run the company.
His money is on Jack E. Steil and Robert D. Kunisch Jr., former Wilmington Trust officials that First Mariner announced Friday it had hired in July to advise the board. Both worked at Mercantile Bankshares Corp. before that Baltimore bank was bought by PNC Financial Services Group
"The private equity firms bring their own people in," Hale said. "I'm just stepping aside to make it easier for them to do this."
Hale grew up blue-collar in Highlandtown and Edgemere, remaking himself into a millionaire through trucking, shipping and real estate ventures. He is not the shy and retiring sort. Told Friday that an analyst suggested First Mariner might have improved by now if he'd left earlier, Hale shot back: "He can kiss my ---."
He blames employees who he said mischaracterized to him the terms under which First Mariner's "Alt-A" mortgages were sold to Bear Stearns. And he blames market forces.
"If I felt like there was any way you could stop the spiraling-down values of real estate, I would have been able to raise — even in this market, I would have been able to raise — capital," Hale said. "Because I've always been able to do it."
His style has won him admirers and enemies. A yearlong fight to acquire Glen Burnie Bancorp in the late 1990s — against management's wishes — was especially bitter. The Glen Burnie bank's executives accused him of illegally soliciting votes from shareholders, and they managed in the end to avoid a takeover.
A self-described outsider, Hale got into the banking business in that vein. In 1991, upset shareholders recruited Hale to take over Baltimore Bancorp just as the bank's real estate loans began going bad. Hale led the turnaround of the company's fortunes and three years later sold it to then-First Fidelity Bancorp.
Hale launched 1st Mariner Bank in 1995 as a homegrown financial institution. Local airwaves were full of television commercials featuring him at his office overlooking the Inner Harbor.
For most of its history, the company did well. Its asset levels soared. It bought the naming rights to the downtown arena. And it won customers as other locally owned institutions were gobbled up by out-of-town concerns.
Then the company branched out into exotic mortgages.
Greenberg, the banking consultant, saw Hale's tenure with First Mariner as a story of extremes.
"He rode it up," Greenberg said, "and he rode it down."
Baltimore Sun reporter Hanah Cho contributed to this article.
Hale's banking career
1991: Hale is recruited by upset shareholders to take over Baltimore Bancorp, the parent of the Bank of Baltimore.
1994: Baltimore Bancorp sold to then-First Fidelity Bancorp.
1995: Hale launches First Mariner Bancorp with $27 million in assets.
1996: First Mariner Bancorp becomes public. The company raises $15.6 million in initial public offering.
2006: Hale Properties completes construction of Canton Crossing development, and the 1st Mariner Tower becomes the signature focal point and the bank's headquarters.
2007: 1st Mariner Bank struggles with real estate market decline with a large amount of problem loans, particularly from its Virginia office, which closed that year.
September 2009: Federal banking regulators order 1st Mariner Bank to raise capital levels and deal with problem loans.
October 2009: Hale sells 1st Mariner Tower after the office building was placed under foreclosure proceedings.
June 2010: Bank misses key deadline for raising capital levels. Bank says it's working with regulators.
March 2011: Auditor raises doubt about the ability of First Mariner to remain in business.
April 2011: First Mariner announces $36.4 million investment from New York firm Priam Capital, contingent on $123.6 million more being raised from other investors. Hale to step down under the deal.
December 2011: Hale retires.