FMAR Bancorp Reports Fourth Quarter 2012 Results (1/31/13)
BALTIMORE, Jan. 31, 2013 /PRNewswire/ -- 1st Mariner Bancorp (OTC Bulletin Board: FMAR), parent company of 1st Mariner Bank, reported net income of $1.6 million for the fourth quarter of 2012, compared to a net loss of $4.0 million for the fourth quarter of 2011. For the year ended December 31, 2012, the Company reported net income of $17.0 million compared to a loss of $30.2 million for the year ended December 31, 2011.
Mark A. Keidel, 1st Mariner's Chief Executive Officer, said, "2012 was a year of significant accomplishments for 1st Mariner. Our overall financial results were substantially improved and reflect the year's robust mortgage banking activities, lower charges relating to problem assets as well as our operational efficiency initiatives. Importantly, we also increased our level of non CD deposits."
Mr. Keidel added, "During the year, we originated a record $2.5 billion in gross origination volume for residential mortgages which produced over $50.5 million in non-interest income. Additionally our net charge offs in 2012 decreased just under $10 million while our cost of foreclosed properties declined $1.3 million. Also during 2012, we continued to identify opportunities for improvements in operational performance. Among these improvements was the consolidation of over 46,000 square feet of office space as well as the successful conversion of our core data processing system."
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 in the future. We are in the process of evaluating the effectiveness of certain branches in our network and will consolidate three branches during 2013, as the needs of our customers are evolving and many are utilizing online, mobile and remote banking in lieu of physical branch locations. "
Net interest income for the fourth quarter of 2012 was $9.0 million compared to $7.6 million in the fourth quarter of 2011. The increase was due to higher balances of mortgage loans held for sale. The average balance of residential mortgage loans held for sale was $404.3 million for the fourth quarter of 2012 compared to $162.7 million for the fourth quarter of 2011. For the three months ended December 31, 2012, the average rate earned on residential mortgage warehouse loans was 3.85% and for the three months ended December 31, 2011, the rate was 3.92%. The average interest rate earned on all loans was 5.44% for the three months ended December 31, 2012 compared to 5.46% for the three months ended December 31, 2011. Interest expense on deposits was $3.1 million for the three months ended December 31, 2012 compared to $3.4 million for the three months ended December 31, 2011. The average rate paid on deposits decreased to 1.17% for the three months ended December 31, 2012, down from 1.47% for the three months ended December 31, 2011. This was due to higher rate certificates of deposit maturing during the year and being replaced with lower rate products.
Gross interest income was $13.0 million for the three months ended December 31, 2012 versus $12.0 million in the same period of 2011. The average yield on earning assets decreased to 4.61% for the three months ended December 31, 2012 compared to 4.96% for the three months ended December 31, 2011. Total average earning assets were $1.1 billion and $954.2 million for the three months ended December 31, 2012 and 2011, respectively. 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 December 31, 2012. However, this also caused the average rate on earning assets to decrease as the asset mix was concentrated more in lower yield residential mortgages and less on higher yield commercial loans.
For the year ended December 31, 2012, net interest income was $31.9 million compared to $28.2 million for the year ended December 31, 2011. The net interest margin was 3.10% for the year ended December 31, 2012 versus 3.03% 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 1.25% for the year ended December 31, 2012 versus 1.68% for the year ended December 31, 2011. Interest expense on deposits was $12.0 million for the year ended December 31, 2012 compared to $15.7 million for the year ended December 31, 2011.
Gross interest income was $47.7 million for the year ended December 31, 2012 versus $47.5 million in the same period of 2011. Total average earning assets were $1.0 billion and $929.8 million for the years ended December 31, 2012 and 2011, respectively. Average portfolio loans were $661.9 million for the year ended December 31, 2012 versus $753.3 million for the year ended December 31, 2011. Average residential mortgage loans held for sale were $277.0 million for the year ended December 31, 2012 compared to $89.8 million for the year ended December 31, 2011.
The provision for loan losses was $2.0 million for the three months ended December 31, 2012 versus $2.8 million for the three months ended December 31, 2011. Net charge-offs were $2.7 million for the three months ended December 31, 2012, a 13% decrease from the $3.1 million for the three months ended December 31, 2011. Costs related to foreclosed properties, including write-downs due to declining appraised values, amounted to $2.9 million for the three months ended December 31, 2012 compared to $1.2 million for the three months ended December 31, 2011. The increase was primarily due to a decline in appraised value on certain foreclosed properties. Combined credit- related costs (provision for loan losses and costs of foreclosed properties) amounted to $4.9 million for the three months ended December 31, 2012 versus $4.0 million for the three months ended December 31, 2011.
The provision for loan losses was $2.6 million for the year ended December 31, 2012 compared to $14.3 million for the year ended December 31, 2011. Net charge offs for the year ended December 31, 2012 were $4.9 million, a significant decrease from the $14.6 million incurred during the year ended December 31, 2011. Costs related to foreclosed properties, including write-downs due to declining appraised values, amounted to $6.5 million for the year ended December 31, 2012 versus $7.8 million recorded for the year ended December 31, 2011. Combined credit- related costs amounted to $9.1 million for the year ended December 31, 2012 compared to $22.1 million for the year ended December 31, 2011. As of December 31, 2012, the non-performing assets were $57.4 million, a 7% improvement over the $62.0 million of non-performing assets as of December 31, 2011.
Non-interest income was $16.9 million for the three months ended December 31, 2012. This is a 119% increase over the $7.7 million that was reported in the fourth quarter of 2011. Gross revenue from the mortgage banking activities was the reason for the increase, with $15.1 million recorded in the quarter ended December 31, 2012 versus $5.7 million in the quarter ended December 31, 2011. For the three months ended December 31, 2012, gross mortgage loan production volume was $742 million compared to $408 million for the three months ended December 31, 2011.
For the year ended December 31, 2012, non-interest income was $56.4 million, which is a $33.2 million improvement over the $23.2 million recorded in the year ended December 31, 2011. Increased gross mortgage banking revenue was the primary reason for the increase. For the year ended December 31, 2012, the gross revenue from mortgage banking activities was $50.6 million, a significant increase over the $13.6 million that was recorded in the year ended December 31, 2011. Mortgage loan production volume was $2.5 billion for the year ended December 31, 2012 versus $1.1 billion for the year ended December 31, 2011. In addition to the higher volume, the company experienced increased spreads on loans sold.
Non-interest expenses were $21.9 million for the three months ended December 31, 2012 compared to $17.1 million for the three months ended December 31, 2011. There were reductions in occupancy expense due to office consolidation and the sublet of remaining office space. Occupancy expenses were $2.1 million for the three months ended December 31, 2012 compared to $2.2 million for the three months ended December 31, 2011. Professional fees related to regulatory compliance, loan workouts, and efforts related to increasing capital levels were $2.2 million for the three months ended December 31, 2012 versus $2.8 million for the three months ended December 31, 2011. Costs related to foreclosed properties, including write-downs due to declining appraised values, amounted to $2.9 million for the three months ended December 31, 2012 compared to $1.2 million for the three months ended December 31, 2011. Amounts paid for FDIC insurance premiums remained high with $1.1 million incurred in the three months ended December 31, 2012 and $895 thousand incurred in the three months ended December 31, 2011. Corporate insurance expense increased as the renewal rates increased beginning in the third quarter. For the three months ended December 31, 2012 corporate insurance expense was $852 thousand compared to $526 thousand for the three months ended December 31, 2011.
For the year ended December 31, 2012, non-interest expenses were $68.6 million versus $68.0 million for the year ended December 31, 2011. Costs related to foreclosed properties, including write-downs due to declining appraised values, amounted to $6.5 million for the year ended December 31, 2012 versus $7.8 million recorded for the year ended December 31, 2011. FDIC insurance premiums remained high with $4.3 million incurred in the years ended December 31, 2012 and 2011. Corporate insurance increased during the quarter as the renewal premiums became effective in August. Corporate insurance expense was $2.4 million for the year ended December 31, 2012 compared to $1.6 million for the year ended December 31, 2011.
Comparing balance sheet data as of December 31, 2012 and 2011, total assets increased 17% to $1.38 billion, from the prior year's $1.18 billion. The increase is due to a $222.6 million increase in loans held for sale that resulted from the high level of mortgage banking activity.
Average earning assets were $1.1 billion for the fourth quarter of 2012, which was a 17% increase over the fourth quarter 2011 balance of $954.2 million. The increase was due to higher average loans held for sale that resulted from the higher mortgage banking activity.
Total loans outstanding were $610.4 million as of December 31, 2012, down 13% from the $701.8 million reported in the prior year. This was due to loan maturities, loan sales, and reduced portfolio loan production.
Total loans held for sale were $405.6 million as of December 31, 2012, an increase of 122% over the $183.0 million held for sale as of December 31, 2011. The increase was due to the high mortgage division production achieved during the year ended December 31, 2102. For the year ended December 31, 2012, gross mortgage loan production volume was $2.5 billion.
The allowance for loan losses as of December 31, 2012 was $11.4 million, a decrease of 17% over the prior year's $13.8 million. The decrease was due to lower loan balances as of December 31, 2012 and lower charge offs during the year. The allowance for loan losses as a percentage of total loans was 1.87% as of December 31, 2012, compared to 1.97% as of December 31, 2011.
Total deposits increased 14.9% from $1.01 billion as of December 31, 2011 to $1.19 billion as of December 31, 2012. Money market and NOW accounts increased $27.3 million, from $131.1 million as of December 31, 2011 to $158.4 million as of December 31, 2012. Savings accounts increased $5.7 million from $55.0 million as of December 31, 2011 to $60.7 million as of December 31, 2012. Certificates of deposit were $857.7 million as of December 31, 2012, representing an increase of $129.3 million, or 15.1%, from the $728.4 million as of December 31, 2011.
As of December 31, 2012, 1st Mariner Bank's capital ratios were as follows: Total Risk Based Capital 7.3%; Tier 1 Risk Based Capital 6.0%; and Leverage 3.9%.
1st Mariner Bancorp is a bank holding company with total assets of $1.38 billion. Its wholly owned banking subsidiary, 1st Mariner Bank, operates 21 full service bank branches in Baltimore, Anne Arundel, Harford, Howard, Talbot, and Carroll counties in Maryland, and the City of Baltimore. 1st Mariner Mortgage, a division of 1st Mariner Bank, operates retail offices in Central Maryland, the Eastern Shore of Maryland, and portions of Northern Virginia. 1st Mariner also operates direct marketing mortgage operations in Baltimore. 1st Mariner Bancorp's common stock is quoted on the OTC Bulletin Board under the symbol "FMAR". 1st Mariner's Website address is 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 the Company's efforts to meet regulatory capital requirements established by the Federal Reserve and the FDIC, 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, the Company's ability to increase its capital levels and those of 1st Mariner Bank, volatility in the financial markets, changes in regulations applicable to the Company's business, its concentration in real estate lending, increased competition, changes in technology, particularly Internet banking, impact of interest rates, and the possibility of economic recession or slowdown (which could impact credit quality, adequacy of loan loss reserve and loan growth).Greater detail regarding these factors is provided in the forward looking statements and Risk Factors sections included in the reports filed by the Company with the SEC, including the Company's Annual Report on Form 10-K for the year ended December 31, 2011 and the Company's Quarterly Reports on Form 10-Q for the nine months ended September 30, 2012 the six months ended June 30,2012, and the three months ended March 31, 2012. Our forward-looking statements may also be subject to other risks and uncertainties, including those we may discuss elsewhere in this news release, or in our SEC filings, which are accessible on our web site and at the SEC's web site, www.sec.gov.
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BALTIMORE, Jan. 31, 2013 /PRNewswire/ -- 1st Mariner Bancorp (OTC Bulletin Board: FMAR), parent company of 1st Mariner Bank, reported net income of $1.6 million for the fourth quarter of 2012, compared to a net loss of $4.0 million for the fourth quarter of 2011. For the year ended December 31, 2012, the Company reported net income of $17.0 million compared to a loss of $30.2 million for the year ended December 31, 2011.
Mark A. Keidel, 1st Mariner's Chief Executive Officer, said, "2012 was a year of significant accomplishments for 1st Mariner. Our overall financial results were substantially improved and reflect the year's robust mortgage banking activities, lower charges relating to problem assets as well as our operational efficiency initiatives. Importantly, we also increased our level of non CD deposits."
Mr. Keidel added, "During the year, we originated a record $2.5 billion in gross origination volume for residential mortgages which produced over $50.5 million in non-interest income. Additionally our net charge offs in 2012 decreased just under $10 million while our cost of foreclosed properties declined $1.3 million. Also during 2012, we continued to identify opportunities for improvements in operational performance. Among these improvements was the consolidation of over 46,000 square feet of office space as well as the successful conversion of our core data processing system."
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 in the future. We are in the process of evaluating the effectiveness of certain branches in our network and will consolidate three branches during 2013, as the needs of our customers are evolving and many are utilizing online, mobile and remote banking in lieu of physical branch locations. "
Net interest income for the fourth quarter of 2012 was $9.0 million compared to $7.6 million in the fourth quarter of 2011. The increase was due to higher balances of mortgage loans held for sale. The average balance of residential mortgage loans held for sale was $404.3 million for the fourth quarter of 2012 compared to $162.7 million for the fourth quarter of 2011. For the three months ended December 31, 2012, the average rate earned on residential mortgage warehouse loans was 3.85% and for the three months ended December 31, 2011, the rate was 3.92%. The average interest rate earned on all loans was 5.44% for the three months ended December 31, 2012 compared to 5.46% for the three months ended December 31, 2011. Interest expense on deposits was $3.1 million for the three months ended December 31, 2012 compared to $3.4 million for the three months ended December 31, 2011. The average rate paid on deposits decreased to 1.17% for the three months ended December 31, 2012, down from 1.47% for the three months ended December 31, 2011. This was due to higher rate certificates of deposit maturing during the year and being replaced with lower rate products.
Gross interest income was $13.0 million for the three months ended December 31, 2012 versus $12.0 million in the same period of 2011. The average yield on earning assets decreased to 4.61% for the three months ended December 31, 2012 compared to 4.96% for the three months ended December 31, 2011. Total average earning assets were $1.1 billion and $954.2 million for the three months ended December 31, 2012 and 2011, respectively. 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 December 31, 2012. However, this also caused the average rate on earning assets to decrease as the asset mix was concentrated more in lower yield residential mortgages and less on higher yield commercial loans.
For the year ended December 31, 2012, net interest income was $31.9 million compared to $28.2 million for the year ended December 31, 2011. The net interest margin was 3.10% for the year ended December 31, 2012 versus 3.03% 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 1.25% for the year ended December 31, 2012 versus 1.68% for the year ended December 31, 2011. Interest expense on deposits was $12.0 million for the year ended December 31, 2012 compared to $15.7 million for the year ended December 31, 2011.
Gross interest income was $47.7 million for the year ended December 31, 2012 versus $47.5 million in the same period of 2011. Total average earning assets were $1.0 billion and $929.8 million for the years ended December 31, 2012 and 2011, respectively. Average portfolio loans were $661.9 million for the year ended December 31, 2012 versus $753.3 million for the year ended December 31, 2011. Average residential mortgage loans held for sale were $277.0 million for the year ended December 31, 2012 compared to $89.8 million for the year ended December 31, 2011.
The provision for loan losses was $2.0 million for the three months ended December 31, 2012 versus $2.8 million for the three months ended December 31, 2011. Net charge-offs were $2.7 million for the three months ended December 31, 2012, a 13% decrease from the $3.1 million for the three months ended December 31, 2011. Costs related to foreclosed properties, including write-downs due to declining appraised values, amounted to $2.9 million for the three months ended December 31, 2012 compared to $1.2 million for the three months ended December 31, 2011. The increase was primarily due to a decline in appraised value on certain foreclosed properties. Combined credit- related costs (provision for loan losses and costs of foreclosed properties) amounted to $4.9 million for the three months ended December 31, 2012 versus $4.0 million for the three months ended December 31, 2011.
The provision for loan losses was $2.6 million for the year ended December 31, 2012 compared to $14.3 million for the year ended December 31, 2011. Net charge offs for the year ended December 31, 2012 were $4.9 million, a significant decrease from the $14.6 million incurred during the year ended December 31, 2011. Costs related to foreclosed properties, including write-downs due to declining appraised values, amounted to $6.5 million for the year ended December 31, 2012 versus $7.8 million recorded for the year ended December 31, 2011. Combined credit- related costs amounted to $9.1 million for the year ended December 31, 2012 compared to $22.1 million for the year ended December 31, 2011. As of December 31, 2012, the non-performing assets were $57.4 million, a 7% improvement over the $62.0 million of non-performing assets as of December 31, 2011.
Non-interest income was $16.9 million for the three months ended December 31, 2012. This is a 119% increase over the $7.7 million that was reported in the fourth quarter of 2011. Gross revenue from the mortgage banking activities was the reason for the increase, with $15.1 million recorded in the quarter ended December 31, 2012 versus $5.7 million in the quarter ended December 31, 2011. For the three months ended December 31, 2012, gross mortgage loan production volume was $742 million compared to $408 million for the three months ended December 31, 2011.
For the year ended December 31, 2012, non-interest income was $56.4 million, which is a $33.2 million improvement over the $23.2 million recorded in the year ended December 31, 2011. Increased gross mortgage banking revenue was the primary reason for the increase. For the year ended December 31, 2012, the gross revenue from mortgage banking activities was $50.6 million, a significant increase over the $13.6 million that was recorded in the year ended December 31, 2011. Mortgage loan production volume was $2.5 billion for the year ended December 31, 2012 versus $1.1 billion for the year ended December 31, 2011. In addition to the higher volume, the company experienced increased spreads on loans sold.
Non-interest expenses were $21.9 million for the three months ended December 31, 2012 compared to $17.1 million for the three months ended December 31, 2011. There were reductions in occupancy expense due to office consolidation and the sublet of remaining office space. Occupancy expenses were $2.1 million for the three months ended December 31, 2012 compared to $2.2 million for the three months ended December 31, 2011. Professional fees related to regulatory compliance, loan workouts, and efforts related to increasing capital levels were $2.2 million for the three months ended December 31, 2012 versus $2.8 million for the three months ended December 31, 2011. Costs related to foreclosed properties, including write-downs due to declining appraised values, amounted to $2.9 million for the three months ended December 31, 2012 compared to $1.2 million for the three months ended December 31, 2011. Amounts paid for FDIC insurance premiums remained high with $1.1 million incurred in the three months ended December 31, 2012 and $895 thousand incurred in the three months ended December 31, 2011. Corporate insurance expense increased as the renewal rates increased beginning in the third quarter. For the three months ended December 31, 2012 corporate insurance expense was $852 thousand compared to $526 thousand for the three months ended December 31, 2011.
For the year ended December 31, 2012, non-interest expenses were $68.6 million versus $68.0 million for the year ended December 31, 2011. Costs related to foreclosed properties, including write-downs due to declining appraised values, amounted to $6.5 million for the year ended December 31, 2012 versus $7.8 million recorded for the year ended December 31, 2011. FDIC insurance premiums remained high with $4.3 million incurred in the years ended December 31, 2012 and 2011. Corporate insurance increased during the quarter as the renewal premiums became effective in August. Corporate insurance expense was $2.4 million for the year ended December 31, 2012 compared to $1.6 million for the year ended December 31, 2011.
Comparing balance sheet data as of December 31, 2012 and 2011, total assets increased 17% to $1.38 billion, from the prior year's $1.18 billion. The increase is due to a $222.6 million increase in loans held for sale that resulted from the high level of mortgage banking activity.
Average earning assets were $1.1 billion for the fourth quarter of 2012, which was a 17% increase over the fourth quarter 2011 balance of $954.2 million. The increase was due to higher average loans held for sale that resulted from the higher mortgage banking activity.
Total loans outstanding were $610.4 million as of December 31, 2012, down 13% from the $701.8 million reported in the prior year. This was due to loan maturities, loan sales, and reduced portfolio loan production.
Total loans held for sale were $405.6 million as of December 31, 2012, an increase of 122% over the $183.0 million held for sale as of December 31, 2011. The increase was due to the high mortgage division production achieved during the year ended December 31, 2102. For the year ended December 31, 2012, gross mortgage loan production volume was $2.5 billion.
The allowance for loan losses as of December 31, 2012 was $11.4 million, a decrease of 17% over the prior year's $13.8 million. The decrease was due to lower loan balances as of December 31, 2012 and lower charge offs during the year. The allowance for loan losses as a percentage of total loans was 1.87% as of December 31, 2012, compared to 1.97% as of December 31, 2011.
Total deposits increased 14.9% from $1.01 billion as of December 31, 2011 to $1.19 billion as of December 31, 2012. Money market and NOW accounts increased $27.3 million, from $131.1 million as of December 31, 2011 to $158.4 million as of December 31, 2012. Savings accounts increased $5.7 million from $55.0 million as of December 31, 2011 to $60.7 million as of December 31, 2012. Certificates of deposit were $857.7 million as of December 31, 2012, representing an increase of $129.3 million, or 15.1%, from the $728.4 million as of December 31, 2011.
As of December 31, 2012, 1st Mariner Bank's capital ratios were as follows: Total Risk Based Capital 7.3%; Tier 1 Risk Based Capital 6.0%; and Leverage 3.9%.
1st Mariner Bancorp is a bank holding company with total assets of $1.38 billion. Its wholly owned banking subsidiary, 1st Mariner Bank, operates 21 full service bank branches in Baltimore, Anne Arundel, Harford, Howard, Talbot, and Carroll counties in Maryland, and the City of Baltimore. 1st Mariner Mortgage, a division of 1st Mariner Bank, operates retail offices in Central Maryland, the Eastern Shore of Maryland, and portions of Northern Virginia. 1st Mariner also operates direct marketing mortgage operations in Baltimore. 1st Mariner Bancorp's common stock is quoted on the OTC Bulletin Board under the symbol "FMAR". 1st Mariner's Website address is 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 the Company's efforts to meet regulatory capital requirements established by the Federal Reserve and the FDIC, 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, the Company's ability to increase its capital levels and those of 1st Mariner Bank, volatility in the financial markets, changes in regulations applicable to the Company's business, its concentration in real estate lending, increased competition, changes in technology, particularly Internet banking, impact of interest rates, and the possibility of economic recession or slowdown (which could impact credit quality, adequacy of loan loss reserve and loan growth).Greater detail regarding these factors is provided in the forward looking statements and Risk Factors sections included in the reports filed by the Company with the SEC, including the Company's Annual Report on Form 10-K for the year ended December 31, 2011 and the Company's Quarterly Reports on Form 10-Q for the nine months ended September 30, 2012 the six months ended June 30,2012, and the three months ended March 31, 2012. Our forward-looking statements may also be subject to other risks and uncertainties, including those we may discuss elsewhere in this news release, or in our SEC filings, which are accessible on our web site and at the SEC's web site, www.sec.gov.
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