1st Mariner Reports 2008 Results

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FT Vest US Equity Buffer ETF March	AMEX:FMAR	AMEX	Exchange Traded Fund

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Non-performing assets stabilize; Loans increase; Book Value ends quarter at $7.06 per share BALTIMORE, Feb. 13 /PRNewswire-FirstCall/ -- 1st Mariner Bancorp (NASDAQ: FMAR), parent company of 1st Mariner Bank and Mariner Finance, LLC, announced that its loss for the fourth quarter of 2008 totaled $9.060 million (-$1.40 per diluted share) compared to a reported net loss for the quarter ended December 31, 2007 of $2.718 million (-$.43 per diluted share). For the full year ended December 31, 2008, 1st Mariner reported a net loss totaling $15.087 million (-$2.36 per diluted share), compared to a net loss of $10.063 million (-$1.57 per diluted share) for the year ended December 31, 2007. 1st Mariner reported its total assets ended 2008 at $1.307 billion, an increase of 5% from year-end 2007. Edwin F. Hale, Sr., 1st Mariner's chairman and chief executive officer, called the results disappointing, but noted that the tumultuous financial markets are creating new opportunities for 1st Mariner. Mr. Hale noted the following: -- Despite widespread media reports of frozen credit markets, 1st Mariner's total loans, including commercial, consumer and residential, increased by 14 percent year over year. -- Residential loan production rose to record levels in January 2009. -- 1st Mariner is actively working with mortgage borrowers who are experiencing difficulties making payments. -- The proposed acquisitions of larger competitors by out-of-state banks will create opportunities for 1st Mariner. "There is positive news behind the ugly headlines," Mr. Hale said. "While many pundits assert that the credit markets are frozen, 1st Mariner continues to lend. Our mortgage loan originations increased 18% in 2008 and we experienced considerable growth in commercial loans and consumer loans. That momentum is continuing into 2009, as we closed $200 million in residential mortgage loans in January, the highest origination month in our history." Mr. Hale said 1st Mariner is continuing to work proactively with mortgage borrowers who are experiencing difficulties in keeping current with their loan payments, with the goal of reducing the necessity of foreclosures. "We are doing exactly what we believe a community bank should do," Mr. Hale continued. "We are working to keep credit flowing. We are making loans to customers who want to buy houses, refinance their homes, purchase appliances or expand their businesses." Mr. Hale acknowledged that the paramount goal for 1st Mariner in 2009 is to return to profitability by reducing levels of non-performing assets and controlling operating expenses while capitalizing on the dramatic changes occurring among large national and superregional banks. Mr. Hale cited the pending acquisition of Provident Bankshares Corp. by M&T Bank Corp. "1st Mariner will likely be the largest locally owned bank in Baltimore by the middle of 2009. With our focus on local decision making and control, we will be well positioned for future growth," Mr. Hale said. Mr. Hale concluded by saying, "While the Treasury Department and state and federal banking agencies are prudently addressing the challenges in the current operating environment, 1st Mariner will continue to move forward aggressively and independent of government action to strengthen and position the bank for the future." Operating Summary The reported loss for the fourth quarter of 2008 reflected significant credit related losses largely associated with residential real estate assets of approximately $8.5 million; comprised of $3.1 million in charges for the write-down, disposition or cost to maintain foreclosed property, $4.1 million in loan charge-offs, and a $1.3 million addition to the allowance for loan losses. The fourth quarter loss also included non-cash charges for Other Than Temporary Impairment (OTTI) on two investment securities ($4.6 million) and mark-to- market on liabilities ($.7 million) that are carried at fair value that totaled $5.3 million. -- Total revenue increased $1.116 million (7%) (Excluding non-cash charges for securities writedowns and losses on liabilities accounted for under fair value) compared to the 4th quarter of 2007, primarily reflecting strength in mortgage and finance company revenues. -- While average earning assets grew by $62 million, a decline in the net interest margin to 3.56% from 4.03% last year resulted in a decrease in net interest income of $669 thousand (-6%). The lower margin resulted from the increase in non-performing assets, and decreases in non-interest bearing sources of funding. -- The provision for loan losses totaled $5.357 million compared to $3.451 million in the corresponding quarter last year. Net charge-offs increased $1.481 million and included higher charge-offs of residential mortgage loans, residential construction loans, and modestly higher consumer finance charge-offs. Management increased the allowance for loan losses to $16.776 million from $12.789 million (+31%) at December 31, 2007, totaling 1.71% of loans outstanding compared to 1.50% last year. The increase in the allowance is primarily related to higher levels of specific reserves for non-performing loans and increased allowance coverage for residential real estate exposures. Non-performing assets increased to $57.757 million (4.42% of total assets) from $43.370 million (3.48% of total assets) last year. Non-performing loans totaled $55.702 million as of September 30, 2008. The increase is primarily attributable to higher levels of non-performing residential construction and development loans. -- Non-interest income increased by $1.574 million (excluding non-cash charges for securities writedowns and losses on liabilities accounted for under fair value) (+26%), primarily due to stronger results in mortgage banking and finance company revenues. Mortgage banking revenue increased $2.1 million due to increased pricing spreads on loans sold, and higher values derived from rate lock commitments in the company's mortgage loan pipeline. -- The Company recorded $4.632 million in losses on securities activities in the fourth quarter of 2008. The Company recorded OTTI charges totaling $4.6 million relating to two pooled Collateralized Debt Obligations comprised primarily of banks. The amortized cost of the securities totaled $6 million and the associated OTTI charged reduced their carrying value to $1.4 million. -- Non-interest expenses increased by $2.719 million (14%). Losses recorded for the write-down or sales of foreclosed properties increased by $1.556 million. Professional services and other non interest expenses grew by $1.163 primarily reflecting higher regulatory compliance and loan workout costs. Excluding these items, operating expenses were flat. Comparing balance sheet data as of December 31, 2008, to December 31, 2007, total assets were $1.307 billion, compared to $1.246 billion last year. Loans outstanding increased $123 million (+14%). Commercial loans outstanding increased by $38 million (+8%), while Mariner Finance receivables increased by $24 million (+30%), and Bank consumer loans increased by $24 million (+30%). Residential mortgage loans grew by $53 million, while residential construction loans declined by approximately $17 million. Total mortgage loans originated totaled $254 million for the fourth quarter of 2008, compared to $283 million for the same period of 2007. Mortgage application volume in the fourth quarter increased substantially and the company closed $200 million in the month of January 2009, alone. Deposits totaled $950 million (+5%) compared to $904 million at December 31, 2007. Certificates of deposit increased $194 million, reflecting continued shift out of money market accounts that decreased by $101 million. Non-interest bearing checking accounts decreased $35 million. Stockholders' Equity declined by $19 million, which decreased 1st Mariner's book value per share to $7.06 compared to $10.17 as of December 31, 2007. Capital Ratios at the end of the quarter for the holding company were as follows: Leverage Ratio = 4.3%; Tier 1 risk-based ratio = 5.0%; Total Capital Ratio = 9.9%. All capital ratios exceed minimum requirement levels under current regulatory definitions. 1st Mariner Bancorp is a bank holding company with total assets of $1.307 billion. Its wholly owned banking subsidiary, 1st Mariner Bank, (total assets $1.230 billion) operates 25 full service bank branches in Baltimore, Anne Arundel, Harford, Howard, Talbot, and Carroll counties in Maryland, the City of Baltimore, and Shrewsbury, Pennsylvania. 1st Mariner Mortgage, a division of 1st Mariner Bank, operates retail offices in Central Maryland, the Eastern Shore of Maryland, and Massachusetts. 1st Mariner Mortgage also operates direct marketing mortgage operations in Baltimore City. Mariner Finance, LLC, (total assets $101 million) is a consumer finance subsidiary that currently operates branches in Maryland, Delaware, Virginia, New Jersey, and Tennessee. 1st Mariner Bancorp's common stock is traded on the Nasdaq National Market under the symbol "FMAR". 1st Mariner's Web site address is http://www.1stmarinerbancorp.com/, which includes comprehensive level investor information. In addition to historical information, this press release contains forward-looking statements that involve risks and uncertainties, such as statements of the Company's plans and expectations regarding efficiencies resulting from new programs and expansion activities, revenue growth, anticipated expenses, profitability of mortgage banking operations, and other unknown outcomes. The Company's actual results could differ materially from management's expectations. Factors that could contribute to those differences include, but are not limited to, changes in regulations applicable to the Company's business, successful implementation of the Company's branch expansion strategy, its concentration in real estate lending, increased competition, changes in technology, particularly Internet banking, impact of interest rates, possibility of economic recession or slowdown (which could impact credit quality, adequacy of loan loss reserve and loan growth) and control by and dependency on key personnel, particularly Edwin F. Hale, Sr., Chairman of the Board of Directors and CEO of the Company. FINANCIAL HIGHLIGHTS (UNAUDITED) First Mariner Bancorp (Dollars in thousands, except per share data) For the three months ended December 31, 2008 2007 $ Change % Change ---------------------------------------- Summary of Earnings: Net interest income $10,468 $11,137 (669) -6% Provision for loan losses 5,357 3,451 1,906 55% Noninterest income 2,345 5,933 (3,588) -60% Noninterest expense 22,821 20,102 2,719 14% Loss before income taxes (15,365) (6,483) (8,882) -137% Income tax benefit (6,305) (3,765) (2,540) 67% Net loss (9,060) (2,718) (6,342) -233% Profitability and Productivity: Return on average assets -2.78% -0.87% - -220% Return on average equity -63.75% -16.10% - 96% Net interest margin 3.56% 4.03% - -12% Net overhead ratio 4.92% 4.54% - 8% Efficiency ratio 130.82% 117.76% - 11% Mortgage loan production 254,345 282,786 (28,441) -10% Average deposits per branch 39,593 36,198 3,395 9% Per Share Data: Basic loss per share $(1.40) $(0.43) (0.97) -227% Diluted loss per share $(1.40) $(0.43) (0.97) -227% Book value per share $7.06 $10.17 (3.11) -31% Number of shares outstanding 6,452,631 6,351,611 101,020 2% Average basic number of shares 6,452,772 6,336,480 116,292 2% Average diluted number of shares 6,452,772 6,336,480 116,292 2% Summary of Financial Condition: At Period End: Assets $1,307,013 $1,246,822 60,191 5% Investment Securities 52,232 81,948 (29,716) -36% Loans 978,696 854,920 123,776 14% Deposits 950,233 904,953 45,280 5% Borrowings and repurchase agreements 220,996 192,639 28,357 15% Stockholders' equity 45,531 64,570 (19,039) -29% Average for the period: Assets $1,291,317 $1,236,838 54,479 4% Investment Securities 59,373 83,981 (24,608) -29% Loans 953,076 849,960 103,116 12% Deposits 944,584 901,341 43,243 5% Borrowings and repurchase agreements 287,580 261,368 26,212 10% Stockholders' equity 56,383 66,989 (10,606) -16% Capital Ratios: Leverage 4.3% 6.9% - -37% Tier 1 Capital to risk weighted assets 5.0% 8.2% - -39% Total Capital to risk weighted assets 9.9% 14.2% - -30% Asset Quality Statistics and Ratios: Net Chargeoffs 4,049 2,568 1,481 58% Non-performing assets 57,757 43,370 14,387 33% 90 Days or more delinquent loans 9,679 3,019 6,660 221% Annualized net chargeoffs to average loans 1.70% 1.20% - 42% Non-performing assets to total assets 4.42% 3.48% - 27% 90 Days or more delinquent loans to total loans 0.99% 0.35% - 180% Allowance for loan losses to total loans 1.71% 1.50% - 15% FINANCIAL HIGHLIGHTS (UNAUDITED) First Mariner Bancorp (Dollars in thousands, except per share data) For the year ended December 31, 2008 2007 $ Change % Change ---------------------------------------- Summary of Earnings: Net interest income $46,047 $44,680 1,367 3% Provision for loan losses 14,782 8,915 5,867 66% Noninterest income 21,004 24,100 (3,096) -13% Noninterest expense 79,868 78,238 1,630 2% Loss before income taxes (27,599) (18,373) (9,226) -50% Income tax benefit (12,512) (8,310) (4,202) 51% Net loss (15,087) (10,063) (5,024) -50% Profitability and Productivity: Return on average assets -1.19% -0.81% - -46% Return on average equity -24.37% -13.83% - -76% Net interest margin 4.11% 4.07% - 1% Net overhead ratio 4.20% 4.43% - -5% Efficiency ratio 110.27% 115.33% - -4% Mortgage loan production 1,327,128 1,123,409 203,719 18% Average deposits per branch 39,593 36,198 3,395 9% Per Share Data: Basic loss per share $(2.36) $(1.57) (0.79) -50% Diluted loss per share $(2.36) $(1.57) (0.79) -50% Book value per share $7.06 $10.17 (3.11) -31% Number of shares outstanding 6,452,631 6,351,611 101,020 2% Average basic number of shares 6,390,046 6,396,142 (6,096) 0% Average diluted number of shares 6,390,046 6,396,142 (6,096) 0% Summary of Financial Condition: At Period End: Assets $1,307,013 $1,246,822 60,191 5% Trading and available for sale securities 52,232 81,948 (29,716) -36% Loans 978,696 854,920 123,776 14% Deposits 950,233 904,953 45,280 5% Borrowings 220,996 192,639 28,357 15% Stockholders' equity 45,531 64,570 (19,039) -29% Average for the period: Assets $1,273,157 $1,244,084 29,073 2% Trading and available for sale securities 75,501 99,122 (23,621) -24% Loans 905,634 847,151 58,483 7% Deposits 935,112 901,798 33,314 4% Borrowings 273,942 260,154 13,788 5% Stockholders' equity 61,916 72,772 (10,856) -15% Capital Ratios: Leverage 4.3% 6.9% - -37% Tier 1 Capital to risk weighted assets 5.0% 8.2% - -39% Total Capital to risk weighted assets 9.9% 14.2% - -30% Asset Quality Statistics and Ratios: Net Chargeoffs 11,072 8,525 2,547 30% Non-performing assets 57,757 43,370 14,387 33% 90 Days or more delinquent loans 9,679 3,019 6,660 221% Annualized net chargeoffs to average loans 1.22% 1.01% - 21% Non-performing assets to total assets 4.42% 3.48% - 27% 90 Days or more delinquent loans to total loans 0.99% 0.35% - 180% Allowance for loan losses to total loans 1.71% 1.50% - 15% CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) First Mariner Bancorp (Dollars in thousands) As of December 31, 2008 2007 $ Change % Change ---------------------------------------- Assets: Cash and due from banks $21,045 $39,089 (18,044) -46% Interest-bearing deposits 46,294 52,232 (5,938) -11% Available-for-sale investment securities, at fair value 39,666 44,998 (5,332) -12% Trading Securities 12,566 36,950 (24,384) -66% Loans held for sale 60,203 80,920 (20,717) -26% Loans receivable 978,696 854,920 123,776 14% Allowance for loan losses (16,776) (12,789) (3,987) 31% ----------------------------- Loans, net 961,920 842,131 119,789 14% Other real estate owned 18,994 18,981 13 0% Restricted stock investments, at cost 7,066 5,983 1,083 18% Property and equipment 49,964 52,215 (2,251) -4% Accrued interest receivable 6,335 7,181 (846) -12% Deferred income taxes 24,581 12,428 12,153 98% Bank owned life insurance 36,436 34,931 1,505 4% Prepaid expenses and other assets 21,943 18,783 3,160 17% ----------------------------- Total Assets $1,307,013 $1,246,822 60,191 5% ================================ Liabilities and Stockholders' Equity: Liabilities: Deposits $950,233 $904,953 45,280 5% Borrowings 220,996 192,639 28,357 15% Junior subordinated deferrable interest debentures 73,724 73,724 - 0% Accrued expenses and other liabilities 16,529 10,936 5,593 51% ----------------------------- Total Liabilities 1,261,482 1,182,252 79,230 7% Stockholders' Equity Common Stock 323 318 5 2% Additional paid-in- capital 56,741 56,458 283 1% Retained earnings (5,485) 9,603 (15,088) -157% Accumulated other comprehensive loss (6,048) (1,809) (4,239) 234% ----------------------------- Total Stockholders Equity 45,531 64,570 (19,039) -29% ----------------------------- Total Liabilities and Stockholders' Equity $1,307,013 $1,246,822 60,191 5% ================================ CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) First Mariner Bancorp (Dollars in thousands) For the three For the year months ended ended December 31, December 31, 2008 2007 2008 2007 ----------------------------------- Interest Income: Investments and interest-bearing deposits $1,067 $2,141 $6,026 $9,146 Loans 19,276 19,928 78,017 79,369 ----------------------------------- Total Interest Income 20,343 22,069 84,043 88,515 Interest Expense: Deposits 6,371 6,864 24,584 27,772 Borrowings and repurchase agreements 3,504 4,068 13,412 16,063 ----------------------------------- Total Interest Expense 9,875 10,932 37,996 43,835 ----------------------------------- Net Interest Income Before Provision for Loan Losses 10,468 11,137 46,047 44,680 Provision for Loan Losses 5,357 3,451 14,782 8,915 ----------------------------------- Net Interest Income After Provision for Loan Losses 5,111 7,686 31,265 35,765 Noninterest Income: Service fees on deposits 1,561 1,743 6,346 6,482 ATM Fees 779 835 3,188 3,219 Gains on sales of mortgage loans 3,044 951 6,730 4,430 Other mortgage banking revenue 690 706 3,180 2,716 (Losses) gains on sales of investment securities, net (4,632) - (5,377) 943 Commissions on sales of nondeposit investment products 120 206 816 1,049 Commissions on sales of other insurance products 1,002 815 3,231 2,822 Income from bank owned life insurance 374 374 1,505 1,439 (Loss) on trading assets and liabilities (741) (211) (814) (702) Other 148 514 2,199 1,702 ----------------------------------- Total Noninterest Income 2,345 5,933 21,004 24,100 Noninterest Expense: Salaries and employee benefits 8,906 9,008 37,274 36,260 Occupancy 2,891 2,540 11,144 9,848 Furniture, fixtures and equipment 977 919 3,876 3,602 Advertising 200 204 922 1,219 Data Processing 548 522 2,149 1,941 Professional services 723 374 1,905 1,552 Costs of other real estate owned 3,071 1,515 5,801 4,477 Valuation and secondary marketing reserves 93 413 355 3,934 Other 5,412 4,607 16,442 15,405 ----------------------------------- Total Noninterest Expense 22,821 20,102 79,868 78,238 Loss Before Income Taxes (15,365) (6,483) (27,599) (18,373) Income Tax Benefit (6,305) (3,765) (12,512) (8,310) ----------------------------------- Net Income $(9,060) $(2,718) $(15,087) $(10,063) ==================================== CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (UNAUDITED) First Mariner Bancorp (Dollars in thousands) For the three months ended December 31, 2008 2007 Average Yield/ Average Yield/ Balance Rate Balance Rate ------------------------------------ Assets: Loans Commercial Loans and LOC $76,056 5.63% $69,062 7.26% Comm/Res Construction 113,357 5.75% 128,571 7.84% Commercial Mortgages 314,363 6.83% 283,076 7.40% Residential Constr - Cons 76,180 4.84% 88,112 7.73% Residential Mortgages 134,116 5.82% 81,533 5.82% Consumer 239,004 12.42% 199,606 13.51% ------- ------- Total Loans 953,076 7.70% 849,960 8.81% Loans held for sale 42,444 5.69% 61,338 6.24% Trading and available for sale securities, at fair value 59,373 6.38% 83,981 5.39% Interest bearing deposits 81,266 0.50% 80,053 4.60% Restricted stock investments, at cost 7,137 1.00% 5,983 5.98% ----- ----- Total earning assets 1,143,296 7.00% 1,081,315 8.04% Allowance for loan losses (15,546) (11,766) Cash and other non earning assets 163,567 167,289 ------- ------- Total Assets $1,291,317 $1,236,838 ========== ========== Liabilities and Stockholders' Equity: Interest bearing deposits NOW deposits 6,549 0.92% 10,094 0.19% Savings deposits 51,867 0.34% 52,797 0.31% Money market deposits 171,407 1.23% 278,136 2.91% Time deposits 597,860 3.86% 411,653 4.59% ------- ------- Total interest bearing deposits 827,683 3.07% 752,680 3.58% Borrowings 287,580 4.85% 261,368 6.17% ------- ------- Total interest bearing liabilities 1,115,263 3.53% 1,014,048 4.26% Noninterest bearing demand deposits 116,901 148,661 Other liabilities 2,770 7,140 Stockholders' Equity 56,383 66,989 ------ ------ Total Liabilities and Stockholders' Equity $1,291,317 $1,236,838 ========== ========== Net Interest Spread 3.47% 3.78% Net Interest Margin 3.56% 4.03% CONSOLIDATED AVERAGE BALANCES, YIELDS AND RATES (UNAUDITED) First Mariner Bancorp (Dollars in thousands) For the year ended December 31, 2008 2007 Average Yield/ Average Yield/ Balance Rate Balance Rate ------------------------------------ Assets: Loans Commercial Loans and LOC $75,790 5.95% $72,231 7.68% Comm/Res Construction 117,539 6.23% 134,521 7.90% Commercial Mortgages 298,864 7.40% 292,612 7.40% Residential Constr - Cons 87,831 6.28% 91,472 8.27% Residential Mortgages 103,978 5.93% 67,927 4.86% Consumer 221,632 13.07% 188,388 13.51% ------- ------- Total Loans 905,634 8.23% 847,151 8.75% Loans held for sale 59,925 5.77% 77,580 6.81% Trading and available for sale securities, at fair value 75,501 5.94% 99,122 5.42% Interest bearing deposits 72,701 1.79% 68,694 4.97% Restricted stock investments, at cost 6,422 3.69% 6,122 5.91% ----- ----- Total earning assets 1,120,183 7.50% 1,098,669 8.02% Allowance for loan losses (13,906) (12,025) Cash and other non earning assets 166,880 157,440 ------- ------- Total Assets $1,273,157 $1,244,084 ========== ========== Liabilities and Stockholders' Equity: Interest bearing deposits NOW deposits 13,249 0.58% 9,858 0.21% Savings deposits 54,918 0.33% 56,935 0.31% Money market deposits 210,003 1.47% 287,837 3.52% Time deposits 525,700 4.04% 384,157 4.54% ------- ------- Total interest bearing deposits 803,870 3.06% 738,787 3.76% Borrowings 273,942 4.91% 260,154 6.17% ------- ------- Total interest bearing liabilities 1,077,812 3.54% 998,941 4.39% Noninterest bearing demand deposits 131,242 163,011 Other liabilities 2,187 9,360 Stockholders' Equity 61,916 72,772 ------ ------ Total Liabilities and Stockholders' Equity $1,273,157 $1,244,084 ========== ========== Net Interest Spread 3.96% 3.63% Net Interest Margin 4.11% 4.07% DATASOURCE: 1st Mariner Bancorp CONTACT: Mark A. Keidel, SVP/CFO of 1st Mariner Bancorp, +1-410-558-4281 Web Site: http://www.1stmarinerbancorp.com/

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FMAR FT Vest US Equity Buffer ETF March