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First Mariner reports $2.28 million third-quarter loss

The Baltimore Sun

First Mariner Bancorp said yesterday it lost $2.28 million in the third quarter because of the weak housing market and an investment in Washington Mutual, the lender seized by regulators last month.

The loss of 36 cents a share is less than that of a year ago, when the Baltimore bank holding company lost $3.58 million, or 56 cents per share. The third-quarter loss, though, is more than four times the company's second quarter loss of $469,000.

"Nobody is happy with having to take a $2 million loss," but the core banking operations performed well, said Joseph Cicero, chief operating officer. Deposits, fee income, interest income and loans are up, while expenses are down from a year ago, he said.

First Mariner, which has 25 branches mostly in the Baltimore area, had invested in bonds issued by Washington Mutual, which was taken over by regulators last month and sold to JPMorgan Chase. First Mariner received 24 cents for each $1 of its investment in Washington Mutual, which translated to a $1.1 million pre-tax loss, Cicero said.

The company is still hurting from writing "Alt-A" loans, even though it got out of the business more than a year ago. Alt-A loans were made for consumers who didn't qualify for conventional mortgages but whose credit was better than that of subprime borrowers. The company wrote down about $2 million in Alt-A loans for the three months ended Sept. 30 that had declined in value.

The company's nonperforming assets in the quarter rose to $55.7 million, up from $36.4 million a year earlier. Nonperforming assets accounted for 4.36 percent of total assets. "In other words, $4 out of every $100 is not paying interest right now," which is high, said Gary Townsend, chief executive of Hill-Townsend Capital in Chevy Chase.

Loans at least 90 days past due rose to $11.64 million, or 1.24 percent of the total, from $7.79 million, or 0.91 percent of the total, a year ago. Total assets at the end of September reached $1.28 billion, compared with $1.25 billion a year earlier.

Shares of First Mariner rose a penny to close at $1.96 on the Nasdaq yesterday. The company's shares are down 65 percent since the beginning of the year.

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