UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
-----------------
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________________ to ________________________
COMMISSION FILE NUMBER: 333-16011
FIRST MARINER BANCORP
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Maryland 52-1834860
- ------------------------ --------------------------------------
(State of incorporation) (I.R.S. Employer Identification Number)
1801 South Clinton Street, Baltimore, MD 21224 410 - 342 - 2600
- ---------------------------------------- ---------- ------------------
(Address of principal executive offices) (Zip Code) (Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports, and (2) has been subject to filing
requirements for the past 90 days.
YES |_| NO |_|
The number of shares of common stock outstanding as of April 30, 1997 is
2,837,263 shares.
<PAGE>
FIRST MARINER BANCORP
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets at
March 31, 1997 and December 31,1996 ......................... 1
Consolidated Statements of Operations for the
Three Month Periods Ended March 31, 1997 and 1996 ........... 2
Consolidated Statements of Cash Flows for the
Three Month Periods Ended March 31, 1997 and 1996 ........... 3
Notes to Consolidated Financial Statements .................... 4
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS ................. 4 - 7
PART II - OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON 8-K ................................... 7
SIGNATURES ............................................................ 8
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
FIRST MARINER BANCORP AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March December
31, 1997 31, 1996
------------ ------------
(Unaudited)
<S> <C> <C>
Cash on hand and in banks $ 5,568,837 $ 5,323,984
Interest-bearing deposits 24,152,567 27,186,076
Available-for-sale securities, at fair value 1,134,000 --
Investment securities, fair value of $13,062,400
and $1,097,438, respectively 13,099,000 1,099,000
Loans receivable, net 107,085,577 94,607,187
Federal Home Loan Bank of Atlanta stock, at cost 932,900 480,800
Property and equipment, net 2,683,779 2,671,018
Prepaid expenses and other assets 1,890,427 868,606
------------ ------------
Total assets $156,547,087 $132,561,546
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $118,889,357 $102,289,146
Federal Home Loan Bank advances 10,000,000 6,000,000
Accrued expenses and other liabilities 1,375,469 476,398
------------ ------------
Total liabilities 130,264,826 108,765,544
------------ ------------
Stockholders' equity:
Common stock, $.05 par value; 5,000,000 shares
authorized; 2,837,263 and 2,627,263 shares issued
and outstanding, respectively 141,863 131,363
Additional paid-in capital 29,683,218 27,350,118
Accumulated deficit (3,672,828) (3,696,904)
Unrealized gain on available-for-sale securities 130,008 11,425
------------ ------------
Total stockholders' equity 26,282,261 23,796,002
------------ ------------
Total liabilities and stockholders' equity $156,547,087 $132,561,546
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
FIRST MARINER BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1997 1996
---------- -----------
Interest income:
Loans $2,525,088 $ 850,401
Investments 379,298 226,929
---------- -----------
Total interest income 2,904,386 1,077,330
---------- -----------
Interest expense:
Deposits 1,141,838 517,925
Borrowed funds and other 42,209 --
---------- -----------
Total interest expense 1,184,047 517,925
---------- -----------
Net interest income before provision for loan losses 1,720,339 559,405
Provision for loan losses 135,000 33,200
---------- -----------
Net interest income after provision for loan losses 1,585,339 526,205
---------- -----------
Noninterest income:
Service fees on loans 159,305 64,359
Service fees on deposits 260,419 28,777
Other 37,581 17,532
---------- -----------
Total noninterest income 457,305 110,668
---------- -----------
Noninterest expenses:
Salary 960,721 504,572
Occupancy 232,236 118,025
Insurance premiums 13,025 24,101
Furniture, fixtures and equipment 97,999 45,983
Professional services 38,564 (28,315)
Advertising 116,400 60,126
Data processing 101,000 44,067
Office supplies 20,944 14,649
Amortization of cost of intangible assets 18,732 18,732
Other 418,947 160,651
---------- -----------
Total noninterest expenses 2,018,568 962,591
---------- -----------
Income (loss) before income tax benefit 24,076 (325,718)
Income taxes -- --
---------- -----------
Net income (loss) $ 24,076 $ (325,718)
========== ===========
Net income (loss) per common share .01 (.27)
========== ===========
See accompanying notes to consolidated financial statements.
2
<PAGE>
FIRST MARINER BANCORP AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) $ 24,076 $ (373,862)
Adjustments to reconcile net loss to net cash
used by operating activities:
Amortization of unearned loan fees, net (214,803) (44,652)
Amortization of premiums on deposits (7,008) (7,008)
Accretion of discounts on loans (16,437) (19,654)
Depreciation and amortization 146,180 96,634
Provision for losses on loans 135,000 33,200
Gain on sale of investment securities (13,500) --
Net changes in:
Accrued expenses and other liabilities 899,071 439,648
Prepaids and other assets (1,040,553) (135,842)
Other, net -- 28,489
------------ ------------
Net cash (used) provided by operating
activities (87,974) 16,953
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan disbursements, net of principal repayments (12,382,150) (13,253,900)
Purchases of property and equipment (140,238) (430,908)
Purchases of Federal Home Loan Bank of Atlanta stock (452,100) --
Proceeds from available for sale securities sold -- 2,337,625
Purchase of investment securities available-for-sale (677,013) --
Purchase of investment securities held-to-matuity (12,000,000) --
------------ ------------
Net cash used in investing activities (25,651,501) (11,347,183)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 16,607,219 7,071,499
Proceeds from advances from
Federal Home Loan Bank of Atlanta 10,000,000 --
Repayment of advances from
Federal Home Loan Bank of Atlanta (6,000,000) --
Proceeds from stock issuance, net 2,343,600 --
------------ ------------
Net cash provided by financing activities 22,950,819 7,071,499
------------ ------------
DECREASE IN CASH AND CASH EQUIVALENTS (2,788,656) (4,258,731)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 32,510,060 17,654,115
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 29,721,404 $ 13,394,384
============ ============
Supplemental information:
Interest paid on deposits and borrowed funds $ 1,179,149 $ 513,027
============ =============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
FIRST MARINER BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
NOTE 1 - GENERAL
The foregoing financial statements of First Mariner Bancorp (the
"Company") are unaudited; however, in the opinion of management, all adjustments
(comprising only normal recurring accruals) necessary for a fair presentation of
the results of the interim periods have been included. These statements should
be read in conjunction with the financial statements and accompanying notes
included in First Mariner Bancorp's 1996 Annual Report to Shareholders. The
results shown in this interim report are not necessarily indicative of results
to be expected for the full year 1997.
The accounting and reporting policies of the Company conform to generally
accepted accounting principles and to general practice within the banking
industry. Certain reclassifications have been made to amounts previously
reported to conform with current classifications.
Consolidation has resulted in the elimination of all significant
intercompany accounts and transactions.
NOTE 2 - PER SHARE DATA
Net income per common share is based on the weighted average number of
shares outstanding of 2,783,596 in 1997 and 1,272,962 in 1996.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Management's discussion and analysis contains forward-looking
statements, including statements of goals, intentions and expectation, regarding
or based upon general economic conditions, interest rates, developments in
national and local markets, and other matters, and which, by their nature, are
subject to significant uncertainties.
4
<PAGE>
THE COMPANY
The Company is a bank holding company formed in Maryland in 1994 under the
name MarylandsBank Corp. The business of the Company is conducted through its
wholly-owned subsidiary First Mariner Bank (the "Bank"), whose deposits are
insured by the Federal Deposit Insurance Corporation ("FDIC"). The Bank, which
is headquartered in Baltimore City, serves the central region of the State of
Maryland through 13 full service branches and 21 Automated Teller Machines
("ATMs").
The Bank is an independent community bank engaged in the general
commercial banking business with particular emphasis on the needs of individuals
and small to mid-sized businesses. The Bank emphasizes personal attention and
professional service to its customers while delivering a range of traditional
and contemporary financial products and performing many of the essential banking
services offered by its larger competitors. The Bank offers its customers access
to local bank officers who are empowered to act with flexibility to meet
customers' needs in order to foster and develop long-term loan and deposit
relationships.
The Company's executive offices are located at 1801 South Clinton Street,
Baltimore, Maryland 21224 and its telephone number is (410) 342-2600.
a) Financial Condition
The Company's total assets were $156,547,087 at March 31, 1997, compared
to $132,561,546 at December 31, 1996, increasing $23,985,541 or 18.1% during the
first quarter of 1997. Earning assets increased $23,165,981 or 18.6% to
$147,780,707 from $124,614,726.
Total loans increased $12,613,390 or 13.2% to $108,462,240 during the
first quarter of 1997. Real estate mortgages showed the most significant growth
rising $9,104,899 or 12.0%. As a result of the loan growth a provision for loan
losses of $135,000 was recorded during the first quarter of 1997. The allowance
for loan losses stands at $1,376,663 at March 31, 1997 compared to $1,241,663 at
December 31, 1996. As of March 31, 1997 the allowance for loan loss coverage is
1.27% of outstanding loans.
5
<PAGE>
The investment portfolio, consisting of available-for-sale and
held-to-maturity securities increased $13,134,000 from December 31, 1996. The
increase was funded primarily from deposit growth experienced during the same
period. Interest bearing deposits as of March 31, 1997 fell $3,633,509 to
$24,152,567 when compared to December 31, 1996 balance of $27,186,076. The
balance as of March 31, 1997 represents a significant source of liquidity.
Deposits were $118,889,357 as of March 31, 1997, increasing $16,600,211 or
16.2% from the December 31, 1996 balance of $102,289,146. The increase in
deposits is attributable to an advertising campaign and the maturing branch
network. Federal Home Loan Bank advances increased to $10,000,000 as of March
31, 1997 from $6,000,000 as of December 31, 1996.
Net Interest Income
First quarter net interest income before provision for loan losses was
$1,720,339 in 1997, an increase of 207.5% over $559,405 in 1996, reflecting
primarily higher volume of average earning assets.
Credit Risk Management
The first quarter provision for credit losses was $135,000 in 1997
compared to $33,200 in 1996. No net charge-offs were recorded for the three
month period ended March 31, 1997 while there were net recoveries of $1,532 for
the same quarterly period a year earlier.
Nonperforming assets, expressed as a percentage of total assets, increased
to 1.6% at March 31, 1997 from 1.2% at December 31, 1996. The balance of
impaired loans was $2,563,922 at March 31, 1997 and the reserve on those loans
was $331,472 compared to $1,573,766 with a reserve of $193,360 at December 31,
1996.
6
<PAGE>
At March 31, 1997, the allowance for credit losses was 1.27% of total
loans versus 1.30% at December 31, 1996. Coverage of risk in the loan portfolio
may be evaluated using a ratio of the allowance for credit losses to
nonperforming loans. Significant variation in this coverage ratio may occur from
period to period because the amount of nonperforming loans depends largely upon
the condition of a small number of individual loans and borrowers relative to
the total loan portfolio. At March 31, 1997, the allowance for credit losses
represented 53.67% of nonperforming loans compared to 78.90% at December 31,
1996. Management believes the allowance for credit losses at March 31, 1997 is
adequate.
Noninterest Income and Expenses
First quarter noninterest income rose $346,637 or 313.2% in 1997 to
$457,305 from $110,668 in 1996. The primary causes were an increased volume of
service fees on loans and deposits.
First quarter noninterest expense increased $1,055,977 or 109.7% to
$2,018,568 in 1997 from $962,591 in 1996. Increases in all areas were realized
as noninterest expenses increased to support the substantially increased asset
base.
Income Taxes
The Company did not recognize any income tax benefit or expense for the
three months ended March 31, 1997 and 1996. As of March 31, 1997 and December
31, 1996 the entire net deferred asset, consisting primarily of net operating
loss carryforwards, has been offset by a valuation allowance.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on 8-K
(a) Exhibit No. 27 - Financial Data Schedule
(b) Reports on Form 8-K
No Reports on Form 8-K have been filed during 1997 through May 8, 1997.
7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this quarterly report to be signed on its behalf by
the undersigned, thereunto duly authorized.
FIRST MARINER BANCORP
(Registrant)
By: /s/ Edwin F. Hale, Sr.
-------------------------------------
Edwin F. Hale, Sr.
President and Chief Executive Officer
Date: May 15, 1997
----------------------------------
By: /s/ Kevin M. Healey
-------------------------------------
Kevin M. Healey
Controller and Senior Vice President
Date: May 15, 1997
----------------------------------
8
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 5,568,837
<INT-BEARING-DEPOSITS> 24,152,567
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,134,000
<INVESTMENTS-CARRYING> 13,099,000
<INVESTMENTS-MARKET> 0
<LOANS> 108,462,240
<ALLOWANCE> 1,376,663
<TOTAL-ASSETS> 156,547,087
<DEPOSITS> 118,889,357
<SHORT-TERM> 10,000,000
<LIABILITIES-OTHER> 1,375,169
<LONG-TERM> 0
0
0
<COMMON> 141,863
<OTHER-SE> 26,140,398
<TOTAL-LIABILITIES-AND-EQUITY> 156,547,087
<INTEREST-LOAN> 2,525,088
<INTEREST-INVEST> 379,298
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2,904,386
<INTEREST-DEPOSIT> 1,141,838
<INTEREST-EXPENSE> 1,184,047
<INTEREST-INCOME-NET> 1,720,339
<LOAN-LOSSES> 135,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,018,568
<INCOME-PRETAX> 24,076
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 24,076
<EPS-PRIMARY> $0.01
<EPS-DILUTED> 0
<YIELD-ACTUAL> 8.629
<LOANS-NON> 1,556,805
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,241,663
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,376,663
<ALLOWANCE-DOMESTIC> 1,376,633
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
