FMAR Reports Third Quarter 2012 Results (10/31/12)

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Oct 31, 2012 at 9:45 AM

FMAR Reports Third Quarter 2012 Results (10/31/12)

BALTIMORE, Oct. 31, 2012 /PRNewswire/ -- 1st Mariner Bancorp (OTCBB: FMAR), parent company of 1st Mariner Bank, reported net income of $7.9 million for the third quarter of 2012, compared to a net loss of $7.9 million for the third quarter of 2011. For the nine months ended September 30, 2012, net income was $15.4 million compared to a loss of $26.3 million for the nine months ended September 30, 2011.

Mark A. Keidel, 1st Mariner's Chief Executive Officer, said, "Our positive momentum in earnings continued as we experienced improvements in operating results across all segments of operating performance measures. A record number of mortgage originations during the quarter and for the first nine months of 2012 drove a 110% increase in non-interest income in the third quarter of 2012. While mortgage led the way in operating performance improvement for the third quarter, we also experienced higher net interest income, lower charge offs and credit related expenses, and reduced operating expenses."

Mr. Keidel added, "Along with the improved financial performance, 1st Mariner successfully consolidated administrative units in its Canton headquarters in the third quarter which will reduce future occupancy costs and recently completed a successful conversion of its data processing platform that will enhance customer capabilities and improve back office efficiencies. These initiatives required extraordinary commitment and skill from our employees, and lay the groundwork for improved customer service and lower operating costs."

Mr. Keidel continued, "Our improved profitability has increased our regulatory capital ratios, but these ratios remain below the levels required by regulatory orders and we continue to work diligently to increase capital to levels required in our regulatory agreements."

Net interest income for the third quarter of 2012 was $8.1million compared to $7.1million in the third quarter of 2011. While the net interest margin decreased to 3.01% in the third quarter of 2012, compared to 3.13% in the third quarter of 2011, higher balances of mortgage loans held for sale resulted in higher net interest income. The decrease in net margin was due to a higher mix of residential mortgages held for sale. For the three months ended September 30, 2012, the average rate earned on residential mortgage warehouse loans was 3.54% and for the three months ended September 30, 2011, the rate was 4.88%. Other loan categories also saw their yields decrease too as the overall interest rate environment has remained low. The average interest rate earned on all loans was 5.24% for the three months ended September 30, 2012 compared to 5.48% for the three months ended September 30, 2011. The decrease in the yield on loans was partially offset by decreases in rates paid on deposits. Interest expense on deposits was $2.9 million for the three months ended September 30, 2012 compared to $3.6 million for the three months ended September 30, 2011. The average rate paid on deposits decreased to 1.17% for the three months ended September 30, 2012, down from 1.64% for the three months ended September 30, 2011. The largest decrease in the rates paid on deposits was in the certificate of deposit category. The average rate paid on certificates of deposit was 1.36% for the three months ended September 30, 2012, down from 1.96% for the three months ended September 30, 2011.

Gross interest income was $11.9 million for the three months ended September 30, 2012 versus $11.7 million in the same period of 2011. Although the average yield on earning assets decreased to 4.47% for the three months ended September 30, 2012 from 5.14% for the three months ended September 30, 2011, the growth in the volume of residential mortgage loans held for sale contributed to the overall increase in interest income for the three months ended September 30, 2012. Average residential mortgage loans held for sale were $320.9 million for the three months ended September 30, 2012 versus $73.3 million for the three months ended September 30, 2011. Total average earning assets were $1.1 billion and $897.3 million for the three months ended September 30, 2012 and 2011, respectively.

For the nine months ended September 30, 2012, net interest income was $22.9 million compared to $20.6 million for the nine months ended September 30, 2011. The net interest margin was 3.08% for the nine months ended September 30, 2012 versus 2.94% for the same period in 2011. The increase was due to the higher volume of residential mortgage loans held for sale and lower interest rates paid on deposits. The average interest rate paid on deposits was 1.27% for the nine months ended September 30, 2012 versus 1.74% for the nine months ended September 30, 2011. Interest expense on deposits was $8.9 million for the nine months ended September 30, 2012 compared to $12.2 million for the nine months ended September 30, 2011.

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