<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/X/ Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
FIRST MARINER BANCORP
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-----------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-----------------------------------------------------------------------
(3) Filing Party:
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(4) Date Filed:
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<PAGE>
[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, MAY 4, 1999, AT 9:00 A.M.
AT
SPARROWS POINT COUNTRY CLUB
919 WISE AVENUE
BALTIMORE, MARYLAND 21222
------------------------
The Annual Meeting of Stockholders of First Mariner Bancorp, a Maryland
corporation, will be held on May 4, 1999, at 9:00 a.m., local time, at the
Sparrows Point Country Club, 919 Wise Avenue, Baltimore, Maryland 21222 to
consider and vote upon:
1. The election of eight directors, five to serve until the Annual Meeting
of Stockholders to be held in 2002 and three to serve until the Annual
Meeting of Stockholders to be held in 2000, and until their successors
are duly elected and qualified.
2. Ratification of the selection of KPMG LLP, to serve as the Company's
independent auditors for the 1999 fiscal year.
3. Any other matters that may properly come before the meeting or any
adjournment thereof.
Only stockholders of record at the close of business on March 12, 1999 will
be entitled to notice of and to vote at the meeting or any adjournment thereof.
Accompanying this notice is a proxy statement and proxy card. Whether or not you
plan to attend the meeting, please indicate your choices on the matters to be
voted upon, date and sign the enclosed proxy and return it to our transfer
agent, American Stock Transfer & Trust Company, in the enclosed postage-paid
return envelope. You may revoke your Proxy at any time prior to or at the
meeting by written notice to the Company.
You are cordially invited to attend the meeting in person.
By Order of the Board of Directors,
Eugene A. Friedman
SECRETARY
April 5, 1999
<PAGE>
FIRST MARINER BANCORP
1801 SOUTH CLINTON STREET
BALTIMORE, MARYLAND 21224
------------------------
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, MAY 4, 1999 AT 9:00 A.M.
------------------------
SOLICITATION AND REVOCATION OF PROXIES
The enclosed proxy is solicited by the Board of Directors of First Mariner
Bancorp (the "Company") for use at the Annual Meeting of Stockholders (the
"Meeting") to be held on May 4, 1999 at Sparrows Point Country Club, 919 Wise
Avenue, Baltimore, Maryland 21222. The proxy is revocable at any time prior to
or at the Meeting by written notice to Eugene A. Friedman, Secretary of the
Company. In addition to solicitation by mail, proxies may be solicited by
officers, directors and employees of the Company who will not be specifically
compensated for soliciting such proxies. In addition, the Company has retained
MacKenzie Partners, Inc. as proxy solicitors to provide certain services in
connection with the solicitation of proxies. The fee for these services is
$2,500 plus expenses, which will be paid by the Company. Brokers and other
persons will be reimbursed for their reasonable expenses in forwarding proxy
materials to beneficial owners of the Common Stock of the Company registered in
names of nominees. This proxy material is being sent to the Company's
stockholders on or about April 5, 1999.
OUTSTANDING SHARES AND VOTING RIGHTS
Stockholders of record at the close of business on March 12, 1999 (the
"Record Date"), are entitled to notice of and to vote at the Meeting. As of the
close of business on that date, there were outstanding and entitled to vote
3,166,813 shares of Common Stock, $.05 par value ("Common Stock"), each of which
is entitled to one vote.
The presence, in person or by proxy, of stockholders entitled to cast a
majority of all votes entitled to be cast at the Meeting shall constitute a
quorum. The affirmative vote of a majority of all shares voted at the Meeting is
sufficient for the approval of Proposals One and Two described in this Proxy
Statement. An abstention or broker non-vote is included for purposes of
determining the presence or absence of a quorum for the transaction of business
but is not included in calculating votes cast with respect to the Proposals. The
Company designates individuals to serve as the Inspectors of Elections for
purposes of tallying shares voted. The Inspectors of Elections will be present
at the Meeting.
All proxies will be voted as directed by the stockholder on the proxy card.
A proxy, if executed and not revoked, will be voted in the following manner
(unless it contains instructions to the contrary, in which event it will be
voted in accordance with such instructions):
- FOR the nominees for directors named below.
- FOR ratification of the selection of KPMG LLP as the Company's independent
auditors for the 1999 fiscal year.
- Proxies will be voted in the discretion of the holder with respect to such
other business as may properly come before the Meeting or any adjournments
thereof.
It is anticipated that the Company's directors and officers will vote their
shares of common stock in favor of the nominees for election to the Board of
Directors listed herein and for the ratification of the selection of KPMG LLP as
the Company's auditors.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following sets forth information as of the Record Date relating to the
beneficial ownership of the Common Stock by (i) each person or group known by
the Company to own beneficially more than five percent (5%) of the outstanding
Common Stock; (ii) each of the Company's directors and director nominees; and
(iii) all directors and executive officers of the Company as a group. Unless
otherwise noted below, the persons named in the table have sole investment
powers with respect to each of the shares reported as beneficially owned by such
person. The address of each person named below is the address of the Company.
<TABLE>
<CAPTION>
NAME AND ADDRESS NUMBER OF SHARES PERCENT OF CLASS(1)
- ------------------------------------------------------------------------- ----------------- -------------------
<S> <C> <C>
Edwin F. Hale, Sr.(2).................................................... 1,017,030 27.43%
Barry A. Bondroff(3)..................................................... 20,296 .64%
Edith B. Brown (4)....................................................... 1,000 --
Rose M. Cernak(5)........................................................ 26,841 .85%
Joseph A. Cicero(6)...................................................... 19,700 .62%
Christopher P. D'Anna(7)................................................. 16,431 .52%
Howard Friedman.......................................................... 2,000 --
Bruce H. Hoffman(8)...................................................... 26,493 .84%
Melvin S. Kabik(9)....................................................... 15,821 .50%
Michael J. Lynch (10).................................................... 1050 --
George H. Mantakos(11)................................................... 33,500 1.05%
Jay J.J. Matricciani(12)................................................. 22,441 .71%
Walter L. McManus, Jr.(13)............................................... 88,073 2.76%
James P. O'Conor(14)..................................................... 26,900 .85%
John J. Oliver, Jr. (15)................................................. 1,000 --
Patricia Schmoke, MD..................................................... 0 --
Hanan Y. Sibel(16)....................................................... 20,876 .66%
Leonard Stoler(17)....................................................... 22,990 .72%
Michael R. Watson(18).................................................... 35 --
All directors and executive officers as a group (19 persons)(19)......... 1,362,247 35.62%
</TABLE>
- ------------------------
(1) Includes shares of Common Stock subject to options or warrants held by the
named individual which are exercisable as of, or within 60 days of December
31, 1998. The address of all individuals named in the table is 1801 South
Clinton Street, Baltimore, Maryland 21224.
(2) Includes warrants to purchase 408,839 shares and options to purchase
132,000 shares and 2,530 shares in his Individual Retirement Account.
(3) Includes warrants to purchase 3,666 shares and options to purchase 1,320
shares.
(4) Includes 330 shares owned by her husband over which she may be deemed to
have beneficial ownership.
(5) Includes 11,000 shares held jointly with her husband; 3000 shares owned by
her husband; 3500 shares held by the Rosewood Group, Inc., of which she is
the owner; also includes warrants to purchase 3,666 shares and options to
purchase 1,210 shares.
(6) Includes options to purchase 16,500 shares.
(7) Includes 11,000 shares held by D'Anna Family Enterprise, LLC, of which he
is a member; also includes warrants to purchase 3,666 shares and options to
purchase 1,210 shares.
2
<PAGE>
(8) Includes 17,800 shares held jointly with his wife; also includes warrants
to purchase 3,666 shares and options to purchase 1,320 shares.
(9) Includes 11,000 shares held jointly with his wife; also includes warrants
to purchase 3,666 shares and options to purchase 1,100 shares.
(10) Owns shares individually.
(11) Includes 4,400 shares held in an Individual Retirement Account and 1,100
shares held jointly with his wife; also includes warrants to purchase 5,500
shares and options to purchase 22,550 shares.
(12) Includes 5,300 shares held jointly with his wife, 1,100 shares held in an
Individual Retirement Account, and 11,000 shares held by Matro Properties,
of which he is a partner; also includes warrants to purchase 3,666 shares
and options to purchase 1,320 shares.
(13) Includes warrants to purchase 18,333 shares and options to purchase 1,320
shares.
(14) Includes warrants to purchase 11,000 shares and options to purchase 1,100
shares.
(15) Own shares individually.
(16) Includes warrants to purchase 3,666 shares and options to purchase 1,210
shares.
(17) Includes warrants to purchase 5,500 shares and options to purchase 990
shares.
(18) Owns shares individually.
(19) Includes warrants to purchase 474,834 shares and options to purchase
183,100 shares.
3
<PAGE>
PROPOSAL ONE:
ELECTION OF DIRECTORS
The Board proposes the election of the eight directors named below, five
directors to hold office for a three year term until the Annual Meeting of
Stockholders to be held in the year 2002 and three directors to hold office
until the Annual Meeting of Stockholders to be held in the year 2000 and until
the election and qualification of their successors. All of the nominees are now
directors of the Company except Howard Friedman and Dr. Patricia Schmoke. The
directors whose terms have not expired will continue to serve as directors until
the expiration of their respective terms in accordance with the Company's
Charter and By-Laws. It is not contemplated that any of the nominees will become
unavailable to serve, but if that should occur before the Meeting, proxies that
do not withhold authority to vote for the nominees listed below will be voted
for another nominee, or nominees, selected by the Board of Directors. The Board
of Directors of the Company recommends that stockholders vote FOR election of
all nominees.
The following table sets forth certain information concerning the nominees
for election.
NOMINEES FOR ELECTION AS DIRECTORS
TERM TO EXPIRE IN 2002
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE
- ------------------------------------------------------------------------- --- ---------------
<S> <C> <C>
Edwin F. Hale, Sr........................................................ 52 1995
Barry B. Bondroff........................................................ 50 1995
Bruce H. Hoffman......................................................... 51 1995
Walter L. McManus, Jr.................................................... 56 1995
James P. O'Conor, Jr..................................................... 70 1995
</TABLE>
EDWIN F. HALE, SR. is Chairman and Chief Executive Officer of the Company
and of First Mariner Bank (the "Bank"). He also is Chairman and Chief Executive
Officer of Hale Trans, Inc,. the parent company of both Hale Intermodal
Transport Co., and Hale Intermodal Marine Co., private Baltimore-based trucking
and shipping companies which he founded in 1975 and 1984, respectively. He is
the Chairman and Chief Executive Officer of Hale Trucks of Maryland, LLC, the
parent company of both Peterbilt of Central Maryland, LLC, and Volvo Truck,
North America, Inc., organized in 1997 and 1998, respectively. He is also the
Chairman of the Baltimore Blast Corp., an indoor soccer franchise. Mr. Hale is
the former Chairman of the Board and Chief Executive Officer of Baltimore
Bancorp, which is now First Union Bancorp.
BARRY B. BONDROFF has been the managing officer of Grabush, Newman & Co.,
P.A. a certified public accounting firm, since 1982. Mr. Bondroff is a member of
the American Institute of Certified Public Accountants, and is a former member
of the Board of Directors of Baltimore Bancorp.
BRUCE H. HOFFMAN has served as the executive director of the Maryland
Stadium Authority since 1989. Mr. Hoffman is responsible for the operation and
maintenance of Oriole Park at Camden Yards, the Baltimore Convention Center, the
Ocean City Convention Center, and operation of the National Football League
stadium for the Baltimore Ravens, Baltimore's NFL professional football team. He
is a former member of the Board of Directors of Baltimore Bancorp.
WALTER L. MCMANUS, JR. has served as president of Castlewood Realty Co.
Inc., a commercial real estate company, since 1970.
JAMES P. O'CONOR has served as chairman and chief executive officer of
O'Conor, Piper & Flynn, a real estate brokerage company, since 1984. He is a
former member of the Board of Directors of Baltimore Bancorp.
4
<PAGE>
TERM TO EXPIRE IN 2000
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE
- ------------------------------------------------------------------------- --- ---------------
<S> <C> <C>
Howard Friedman.......................................................... 33 1999
Michael J. Lynch......................................................... 39 1998
Patricia Schmoke, MD..................................................... 45 1999
</TABLE>
HOWARD FRIEDMAN has been the Chairman of Arca Capital, since 1997, and the
Publisher and CEO of Water Press, since 1987.
MICHAEL J. LYNCH is the Vice President of The General Ship Repair, a ship
repair company, and has been with the company since 1982.
PATRICIA SCHMOKE, MD is a practicing pediatrician at Liberty Medical Center
and Sinai Hospital.
CONTINUING DIRECTORS
The directors of the Company whose terms have not expired, their ages, the
years in which their terms expire and year in which they became directors are as
follows:
TERM EXPIRES IN 2000
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE
- ------------------------------------------------------------------------- --- ---------------
<S> <C> <C>
Joseph A. Cicero......................................................... 54 1996
Melvin S. Kabik.......................................................... 74 1995
Jay J.J. Matricciani..................................................... 57 1995
John J. Oliver, Jr....................................................... 53 1997
Hanan Y. Sibel........................................................... 67 1995
Leonard Stoler........................................................... 68 1995
</TABLE>
JOSEPH A. CICERO is the President of the Company and Chief Operating Officer
of the Bank. Mr. Cicero was Maryland Area President of First Union Bank during
1996 and Maryland Area President for First Fidelity Bank from November, 1994 to
December, 1995. Prior thereto, he was Executive Vice President and Chief
Financial Officer and Director of Baltimore Bancorp from January, 1992 to
November, 1994.
MELVIN S. KABIK operates his own commercial real estate company. He
previously owned and operated Eddie's Supermarkets in Baltimore, Maryland. He is
a former member of the Board of Directors of Baltimore Bancorp.
JAY J. J. MATRICCIANI has served as president of The Matricciani Company, a
utility and paving contractor, since 1992. He is also a partner of Matro
Properties, a heavy equipment rental company.
JOHN J. OLIVER, JR. is the CEO and Publisher of the Afro-American
Newspapers.
HANAN Y. SIBEL has served as chairman and chief executive officer of
Chaimson Brokerage Co., Inc., a food brokerage company, since 1970.
LEONARD STOLER has been the owner and president of Len Stoler Inc., an
automobile dealership, since 1968.
5
<PAGE>
TERM EXPIRES IN 2001
<TABLE>
<CAPTION>
NAME AGE DIRECTOR SINCE
- ------------------------------------------------------------------------- --- ---------------
<S> <C> <C>
Edith B. Brown........................................................... 66 1998
Rose M. Cernak........................................................... 68 1995
Christopher D'Anna....................................................... 34 1995
George H. Mantakos....................................................... 56 1994
Michael R. Watson........................................................ 56 1998
</TABLE>
EDITH B. BROWN has served as the Director of Public and Community Relations
at Centre Management, a sports and entertainment arena, since 1979.
ROSE M. CERNAK has served as president of Olde Obrycki's Crab House, Inc.,
since 1995. Prior thereto, Ms. Cernak acted as a general manager and vice
president of Obrycki's. She is a former member of the Board of Directors of
Baltimore Bancorp.
CHRISTOPHER P. D'ANNA is an executive vice president of Mars Super Markets,
Inc., a regional supermarket chain, and has been employed with Mars in various
capacities for more than five years.
GEORGE H. MANTAKOS is Executive Vice President of the Company, and the
President of the Bank. Mr. Mantakos previously served as President of the
Company and Chief Executive Officer for the Bank. Mr. Mantakos began his banking
career with Union Trust Company (now First Union Bank). In 1985, he resigned his
position as senior vice president in charge of the Corporate and Commercial
Banking Division of Union Trust to become president and chief executive officer
of Fairview Federal. Fairview Federal was acquired by Columbia Bancorp in June
1992. Mr. Mantakos was appointed to the Board of Directors of Columbia Bancorp
and to the Executive Committee/Board of Directors of the Columbia Bank. He
resigned from these positions to become a founder and organizer of Maryland
Bank, FSB, the predecessor of the Bank.
MICHAEL W. WATSON has served as the President of the Association of Maryland
Pilots, since 1983.
BOARD MEETINGS AND COMMITTEES
During 1998, the Board of Directors met twelve times, the Audit Committee
met three times, and the Compensation Committee met three times. Each director
attended seventy-five percent or more of all meetings of the Board of Directors
and committees of the Board on which he or she served.
The Executive Committee of the Board of Directors serves as the Nominating
Committee. The Executive Committee consists of Edwin F. Hale, Sr. (Chairman),
Barry B. Bondroff, Joseph A. Cicero, Bruce H. Hoffman, Melvin S. Kabik, George
H. Mantakos, and Walter L. McManus, Jr. In its capacity as the Nominating
Committee, the Executive Committee selects qualified persons as nominees for
election by the stockholders to the Company's Board of Directors. Its
recommendations are presented to the Board of Directors at regularly scheduled
meetings. The Executive Committee will also consider those recommendations by
stockholders which are submitted in writing to the Secretary of the Corporation,
giving the recommended candidates name, biographical data and qualifications.
The Executive Committee met one time in 1998 in its capacity as the Nominating
Committee.
The Audit Committee of the Board of Directors consists of Walter L. McManus
(Chairman) and Jay Matricciani. The Committee recommends to the Board the
selection of the independent public accountants, reviews the financial
statements with such accountants, discusses with the accountants and management
other results of the audit, and oversees internal accounting procedures and
controls. The Audit Committee also reviews, considers and makes recommendations
regarding proposed related party transactions, if any.
6
<PAGE>
The Compensation Committee of the Board of Directors consists of Barry B.
Bondroff (Chairman), James P. O'Conor, and Hanan Y. Sibel. The Committee reviews
and determines salaries and other benefits for executive and senior management
of the Company and its subsidiaries, reviews and determines the employees to
whom stock options are to be granted and the terms of such grants, and reviews
the selection of officers who participate in incentive and other compensation
plans and arrangements.
DIRECTOR COMPENSATION
Directors receive fees for their services, and are reimbursed for expenses
incurred in connection with their service as directors. Directors received $400
for each Board meeting attended through September and $500 for each Board
meeting attended thereafter. Directors receive no compensation for attending
other committee meetings.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company's directors and executive officers, and persons who own more
than 10% of the Company's Common Stock, are required to file with the Securities
and Exchange Commission initial reports of ownership and reports of changes in
ownership of any securities of the Company. To the Company's knowledge, based
solely on a review of the copies of such reports furnished to the Company and
written representations that no other reports were required, all of the
Company's directors, executive officers and beneficial owners of greater than
10% of the Company's Common Stock made all required filings during the fiscal
year ended December 31, 1998 except that one report on Form 4 of Bruce H.
Hoffman was filed late and reports on Form 3 for Edith B. Brown, Michael J.
Lynch and Michael R. Watson were filed late.
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company and the
Bank for the last three fiscal years to the Chief Executive Officer of the
Company and the Bank and to any other executive officer of the Company or the
Bank who received compensation in excess of $100,000 during any of the last
three fiscal years of the Company.
7
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
------------------------------------- ------------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION UNDERLYING OPTIONS COMPENSATION
- ---------------------------------------- --------- ---------- ---------- ------------- ------------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Edwin F. Hale, Sr....................... 1998 $ 250,000 $ 300,000 $ 12,238(2) 132,000 $ 2,500(1)
Chairman of the Board and Chief 1997 $ 200,000 $ 100,000 $ 12,050(2) $ 1,260(1)
Executive Officer of the Company and 1996 $ 50,000 $ 12,048(2)
the Bank
Joseph A. Cicero(3)..................... 1998 $ 175,000 $ 25,000 16,500 $ 2,500(1)
President of the Company and Chief 1997 $ 150,000 $ 1,299(1)
Operating Officer of the Bank 1996 $ 9,135
George H. Mantakos...................... 1998 $ 125,000 $ 45,000 $ 4,139(2) 11,000 $ 2,136(1)
Executive Vice President of the 1997 $ 110,000 $ 20,000 $ 4,000(2) $ 1,580(1)
Company and President of the Bank 1996 $ 110,000 $ 20,000 $ 3,000(2)
</TABLE>
- ------------------------
(1) The amount disclosed represents the matching funds under the Company's
401(K) Plan.
(2) The amount disclosed represents car lease payments made by the Company on
behalf of Mr. Hale and Mr. Mantakos, respectively.
(3) Mr. Cicero started with the Company in December, 1996.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
No stock options were exercised by the executive officers named in the
Summary Compensation Table during 1998. The following table sets forth certain
information regarding unexercised options held by the Named Executive Officers
as of December 31, 1998.
<TABLE>
<CAPTION>
AGGREGATE FISCAL YEAR-END OPTION VALUES
------------------------------------------------------------
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR-END IN-THE-MONEY OPTIONS AT
(#) FISCAL YEAR-END ($)(1)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------- ----------- ---------------- ----------- ----------------
<S> <C> <C> <C> <C>
Edwin F. Hale, Sr....................... 132,000(2) -- $ 524,320 --
Joseph A. Cicero........................ 16,500(2) -- 65,546 --
George H. Mantakos...................... 22,550(2) -- 89,580 --
</TABLE>
- ------------------------
(1) The closing price of the Common Stock on December 31, 1998 was $13.0625.
(2) The exercise price of these options is $9.09 per share.
8
<PAGE>
EMPLOYMENT ARRANGEMENTS AND AGREEMENTS
The Bank has a key man life insurance policy on Mr. Hale in the amount of
$10,000,000.
The Company and the Bank are parties to an Employment Agreement with George
H. Mantakos dated May 1, 1995, pursuant to which Mr. Mantakos is employed as the
President of the Bank. This Employment Agreement will expire on May 1, 1999. The
agreement provides for an annual salary of $110,000 which will be adjusted on
the anniversary date of the agreement to an amount to be approved by the Board
of Directors. Mr. Mantakos is entitled to participate in any management bonus
plans established by the Bank and to receive all benefits offered to employees.
Mr. Mantakos will, at the discretion of the Chairman, have the opportunity to
receive a bonus in a maximum amount of $20,000 per year. Mr. Mantakos receives
the use of an automobile provided by the Bank. The term of the Employment
Agreement is one year, expiring in 1999 and, if not terminated within 90 days of
its termination date, is automatically renewed for one additional year,
provided, however, that the Board of Directors of the Bank may terminate the
agreement at any time. In the event of involuntary termination for reasons other
than gross negligence, fraud or dishonesty (or in the event of the material
diminution of or interference with Mr. Mantakos' duties, or a change of control
of the Bank), the Bank is obligated to pay Mr. Mantakos his salary through the
remaining term plus additional severance equal to the then current annual
salary, but not less than $110,000. In such event, Mr. Mantakos is permitted to
exercise all options, and warrants held by him, and the Company is obligated to
repurchase all or part of Mr. Mantakos' Common Stock.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Compensation Committee of the Board consists of Messrs. Bondroff,
O'Conor and Sibel, who are non-employee directors and have no interlocking
relationship or insider participation as defined by the Securities and Exchange
Commission.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The objectives of the Company's management compensation policy are to
attract and retain the best available executive officers; to motivate them to
achieve the goals set forth in the Company's business plan; to link executive
and stockholder interest through equity-based compensation; and to provide a
compensation package that recognizes the executive's contribution, as well as
the Company's performance, measured by both short-term and long-term
achievements.
The management compensation policy and the general compensation policies of
the Company are established by the Compensation Committee of the Board (the
"Committee"). The Committee formulates the compensation policy and specific
compensation levels for executive officers and administers the Company's stock
option plans.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
The Committee believes that the compensation of the Chief Executive Officer,
Edwin F. Hale, Sr., should be based largely upon corporate performance relative
to the Company's business plan. In setting Mr. Hale's salary and bonus, the
Committee considered the key role Mr. Hale plays in the development and
expansion of the Company, its substantial growth, the increase in public
awareness of the Company and the development of commercial and consumer business
of the Bank.
In 1995, Mr. Hale acquired a significant financial position in the Company's
predecessor and changed the name to First Mariner Bancorp. He developed a
business plan which emphasized rapid growth, branch expansion, market awareness,
a strong capital base and the generation of profits within a short time frame.
Largely through Mr. Hale's efforts, personal contact and his own financial
resources, the Company generated capital in 1995 and 1996 through private
placements. The Company then undertook an initial public offering in December,
1996 to generate significant additional capital and to offer stock in the public
9
<PAGE>
market. This public offering was very successful largely due to the efforts of
Mr. Hale and his image and reputation in the market and community.
After the success of the capital generation program, the Company with Mr.
Hale's leadership, implemented its business plan of expansion of branch
locations and growth in loans and deposits. During the period mid-1995 to the
end of 1998, the Corporation increased its branch locations to twenty two from
two while assets grew twenty times to $497 million at year end 1998. According
to investment banking sources, the Company's growth rate was the second fastest
in the United States. Public awareness of the Company and the Bank's customer
base have also increased substantially over this period. The Company recorded
its first profitable quarter in early 1997 and has increased its earnings each
quarter thereafter.
In establishing Mr. Hale's base salary for 1998, the Committee reviewed his
performance for the prior year, including the extraordinary growth achieved by
the Bank, the significant increase in profitability and the enhanced awareness
and reputation of the Company in the Grater Baltimore market. The Committee, in
determining Mr. Hale's bonus for 1998, considered, in addition to the factors
above, the successful issuance of Trust Preferred securities which enhanced the
Company's capital base and the successful disposition of the Company's interest
in Glen Burnie Bancorp stock, which contributed significant profits in 1998.
The successes listed above were largely the result of Mr. Hale's leadership
and his commitment to the success of the Company.
COMPENSATION OF OTHER EXECUTIVE OFFICERS
Recommendations regarding the base salary of the Executive Officers, other
then the Chief Executive Officer, are made to the Compensation Committee by the
Chief Executive Officer and either approved or modified by the Compensation
Committee. The recommendation as to the bonus paid to each Executive Officer is
based upon a review of the performance of these officers during the prior year
by the Chief Executive Officer and includes the factors described in the
preceding section on compensation of the Chief Executive Officer. The
Compensation Committee concurred with the recommendations made by the Chief
Executive Officer.
SUBMITTED BY THE COMPENSATION
COMMITTEE OF FIRST MARINER
BANCORP BOARD OF DIRECTORS
Barry B. Bondroff, Chair
James P. O'Conor
Hanan Sibel
10
<PAGE>
PERFORMANCE GRAPH
The following graph compares the performance of the Company's Common Stock,
since its 1996 initial public offering, with the performance of a broad market
index and a nationally-recognized industry standard assuming in each case both
an initial $100 investment and reinvestment of dividends. The Company has
selected the Nasdaq Market Index as the relevant broad market index because
prices for the Company's Common Stock are quoted on Nasdaq National Market.
Additionally, the Company has selected the Middle Atlantic Bank Index as the
relevant industry standard because such index consists of financial institutions
which are headquartered in the mid Atlantic region and the Company believes that
such institutions generally possess assets, liabilities and operations more
similar to the Company than other publicly-available indices. However, given the
short history of the Company's operations and its rapid growth, the Company
believes no truly appropriate comparative index exists.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
FIRST MARINER BANCORP MIDDLE ATLANTIC BANK INDEX NASDAQ MARKET INDEX
<S> <C> <C> <C>
1996 $100.00 $100.00 $100.00
1997 $123.08 $163.09 $122.32
1998 $110.54 $179.52 $172.52
</TABLE>
Due to the fact that the Company only went public in December 1996 at $12
per share, the following chart reflects performance for 1997 and 1998 only.
<TABLE>
<CAPTION>
DECEMBER 31
-------------------------------------
1996 1997 1998
--------- --------------- ---------
<S> <C> <C> <C>
First Mariner Bancorp...................................................... $ 100.00 $ 123.08 $ 110.54
Middle Atlantic Bank Index................................................. $ 100.00 $ 163.09 $ 179.52
Nasdaq Market Index........................................................ $ 100.00 $ 122.32 $ 172.52
</TABLE>
11
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company has had in the past, and expects to have in the future, banking
transactions in the ordinary course of business with directors and executive
officers on substantially the same terms, including interest rates and
collateral on loans, as those prevailing at the same time for comparable
transactions with other unaffiliated persons and, in the opinion of management,
these transactions do not and will not involve more than the normal risk of
collectibility or present other unfavorable features.
The Bank has seven full-service branches with ATMs and seven non-branch ATMs
in Mars Super Markets. The Bank pays rent of $35,000 per year to Mars Super
Markets, Inc. for approximately 200-500 square feet of space in each of the
stores where branches are located. The Bank also bears all costs of construction
of each branch. The Bank, however, incurs no charge from Mars in connection with
the installation of ATMs. The Bank may open additional branches in Mars Super
Markets in the future. The terms of the arrangement are described in a Master
Lease Agreement between the Company and Mars dated March 1, 1996. Christopher P.
D'Anna, Executive Vice President of Mars Super Markets, Inc., is a member of the
Board of Directors of the Company and the Bank. Dennis C. McCoy, formerly the
Chief Executive Officer and General Counsel of Mars Super Markets, Inc., was
also a member of the Board of Directors of the Company and the Bank until July,
1998.
The Company entered into a 16 year Lease Agreement dated November 1, 1997,
amended and restated on October 1, 1998, with Hale Properties, L.L.C., a wholly
owned corporation of Edwin F. Hale, Sr. for the premises that has a full service
branch of the Bank and the headquarters and executive offices of the Bank and
the Company at 1801 South Clinton Street, Baltimore, Maryland. The Company pays
rent of $566,988 per year. Mr. Hale is the Chairman and Chief Executive Officer
of the Company.
The Company entered into a 16 year Lease Agreement dated September 1, 1998,
amended and restated on October 1, 1998, with Building No 2, L.L.C., a wholly
owned corporation of Edwin F. Hale, Sr. for the premises that has served as the
operations center of the Company at 1516 Baylis Street, Baltimore, MD 21224. The
Company pays the rent of $132,000 per year.
PROPOSAL TWO:
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
The Board of Directors has appointed the firm of KPMG LLP as independent
public accountants for the Company for 1998. KPMG LLP has served the Company in
such capacity since May, 1994.
The Company has been informed that neither KPMG LLP nor any of its partners
has any direct financial interest or any material indirect financial interest in
the Company and during the past three years has had no connection therewith in
the capacity of promoter, underwriter, voting trustee, director, officer, or
employee.
A representative of KPMG LLP is expected to be present at the Meeting with
the opportunity to make a statement, if such representative so desires, and to
be available to respond to appropriate questions.
The Board of Directors of the Company recommends that stockholders vote FOR
the ratification of selection of such firm.
STOCKHOLDER PROPOSALS
Any stockholder desiring to present a proposal pursuant to Rule 14a-8 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") to be included
in the proxy statement and voted on by the stockholders at the Annual Meeting of
Stockholders to be held in May 2000 must submit in writing proposals, including
all supporting materials, to the Company at its principal executive offices no
later than
12
<PAGE>
November 24, 1999 (120 days before the date of mailing based on this year's
proxy statement date) and meet all other requirements for inclusion in the proxy
statement. Additionally, the Company will be authorized to exercise
discretionary voting authority with respect to any stockholder proposal not
disclosed in the Company's 2000 proxy statement if the Company has not received
written notice of such proposal by February 6, 2000 (45 days before the date of
mailing based on this year's proxy statement date).
ANNUAL REPORT
THE COMPANY'S ANNUAL REPORT FOR THE YEAR ENDED DECEMBER 31, 1998 IS ENCLOSED
HEREWITH. COPIES OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1998, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, ARE
AVAILABLE TO SHAREHOLDERS WITHOUT CHARGE UPON A WRITTEN REQUEST DIRECTED TO
EUGENE A. FRIEDMAN, SECRETARY, FIRST MARINER BANCORP, 1801 SOUTH CLINTON STREET,
BALTIMORE, MARYLAND 21224.
OTHER MATTERS
The Board of Directors knows of no other business to be presented for action
at the Meeting, but if any other business should properly come before the
Meeting, it is intended that the proxies will be voted in accordance with the
best judgment of the persons acting thereunder in their discretion.
By Order of the Board of Directors,
Eugene A. Friedman
SECRETARY
13
<PAGE>
SOLICIATED BY THE BOARD OF DIRECTORS
FIRST MARINER BANCORP
ANNUAL MEETING OF STOCKHOLDERS
MAY 4, 1999
The undersigned stockholder of First Mariner Bancorp (the "Company") hereby
appoints Kevin M. Healey and Eugene A. Friedman and each of them acting singly,
with full power of substitution, the attorneys and proxies of the undersigned
and authorizes them to represent and vote on behalf of the undersigned as
designated all of the shares of capital stock of the Company that the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held on May 4, 1999, and at any adjournment or postponement of
such meeting for the purposes identified on the reverse side of this proxy and
with discretionary authority as to any other matters that may properly come
before the Annual Meeting, including substitute nominees, if any of the named
nominees for Director should be unavailable to serve for election in accordance
with and as described in the Notice of Annual Meeting of Stockholders and Proxy
Statement. This proxy when properly executed will be voted in the manner
directed herein by the undersigned stockholder.If this proxy is returned without
direction being given, this proxy will be voted FOR proposals 1 and 2. The
undersigned acknowledges receipt of the Company's 1998 Annual Report and the
Notice of the Annual Meeting of the Company.
(IMPORTANT - TO BE SIGNED AND DATED ON REVERSE SIDE) SEE REVERSE
SIDE
<PAGE>
Please Detach and Mail in the Envelope Provided
/X/ Please mark your
votes as in this
example
<TABLE>
<CAPTION>
WITHHOLD
AUTHORITY
TO VOTE
FOR ALL
FOR ALL NOMINEES
NOMINEES LISTED LISTED AT
AT RIGHT RIGHT THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2 FOR AGAINST ABSTAIN
<S> <C> <C> <C> <C> <C><C> <C> <C> <C>
1. Election of / / / / NOMINEES: 2. Ratification of Appointment / / / / / /
Class II Edwin F. Hale, Sr. of KPMG Peat Marwick,
Directors for a Barry B. Bondroff Certified Public
Three-Year Term Bruce H. Hoffman Accountants, as independent
Michael J. Lynch auditors of the Company for
Walter L. McManus, Jr. the fiscal year ending
James P. O'Connor December 31, 1999.
Howard Friedman
Patricia Schmoke
FOR, EXCEPT VOTE WITHHELD FROM THE FOLLOWING PLEASE MARK, SIGN, DATE AND RETURN CARD PROMPTLY USING THE
NOMINEE(S): ENCLOSED ENVELOPE.
- ---------------------------------------------
</TABLE>
MARK HERE FOR / / MARK / /
ADDRESS CHANGE HERE FOR
AND NOTE BELOW COMMENTS
Signature __________ Date _____, 1998 Signature __________ Date _____, 1999
Note: Please sign exactly as your name appears on stock certificate. If acting
as attorney, executor, trustee, guardian, or in other representative
capacity, sign name and title. If a corporation, please sign in full
corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person. If
held jointly, both parties must sign and date.
