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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
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:
/X/ Preliminary Proxy Statement
/_/ Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/_/ Definitive Proxy Statement
/_/ Definitive Additional Materials
/_/ Soliciting Material Pursuant to ss.240.14a-12
FIRST MARINER BANCORP
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(Name of Registrant as Specified In Its Charter)
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(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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/_/ 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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[FIRST MARINER BANCORP LOGO]
February ____, 2010
Dear Stockholder:
You are cordially invited to attend a Special Meeting of Stockholders
of First Mariner Bancorp (the "Company") to be held at the CLARENCE "DU" BURNS
ARENA located at 1301 South Ellwood Avenue, Baltimore, Maryland 21224 on,
_________, ___________, 2010 at ___:00 __.m., local time.
YOUR VOTE IS IMPORTANT. As described in the attached Proxy Statement,
First Mariner Bancorp has called this Special Meeting to ask our stockholders to
vote on the following proposals: (1) to approve the redemption of up to $26.0
million aggregate liquidation amount of trust preferred securities in exchange
for up to $2.6 million of common stock and warrants to acquire additional shares
of common stock; (2) to sell shares of common stock in a non-public offering in
an amount in excess of 20% of the Company's outstanding shares of common stock;
and (3) to grant management the authority to adjourn the Special Meeting to
solicit additional proxies if there are insufficient votes to approve proposals
(1) and (2).
ON BEHALF OF THE BOARD OF DIRECTORS, WE URGE YOU TO VOTE VIA THE
INTERNET, BY TELEPHONE OR BY COMPLETING AND MAILING THE ENCLOSED PROXY CARD AS
SOON AS POSSIBLE EVEN IF YOU CURRENTLY PLAN TO ATTEND THE SPECIAL MEETING. Your
vote is important, regardless of the number of shares you own. This will not
prevent you from voting in person but will assure that your vote is counted if
you are unable to attend the meeting.
Sincerely,
EDWIN F. HALE, SR.
Chairman of the Board of Directors
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FIRST MARINER BANCORP
1501 S. CLINTON STREET
BALTIMORE, MARYLAND 21224
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TIME AND DATE.......................... ___:00 __.m. on _____________,
________________, 2010
PLACE.................................. CLARENCE "DU" BURNS ARENA
1301 South Ellwood Avenue
Baltimore, Maryland 21224
ITEMS OF BUSINESS...................... (1) The approval of the redemption of
up to $26.0 million aggregate
liquidation amount of trust
preferred securities in exchange
for up to $2.6 million of common
stock and warrants to acquire
common stock;
(2) The approval of an issuance of
shares of common stock in a
non-public offering in an amount
in excess of 20% of our
outstanding shares of common
stock;
(3) To grant management the authority
to adjourn the special meeting to
solicit additional proxies in the
event there are insufficient
votes to approve the foregoing
proposals; and
(4) Such other business as may
properly come before the meeting.
The Board of Directors is not
aware of any other business to
come before the meeting.
RECORD DATE............................ In order to vote, you must have been a
stockholder at the close of business on
February 8, 2010.
PROXY VOTING........................... It is important that your shares be
represented and voted at the meeting.
You can vote your shares by completing
and returning the enclosed proxy card
sent to you. Voting instructions are
printed on your proxy card and included
in the accompanying proxy statement.
Most holders will be able to vote by
phone or Internet by following the
instructions on their proxy form. If you
need help in voting your shares or if
you have any questions regarding the
proposals, please call our proxy
solicitor, Laurel Hill Advisory Group
toll-free at 888-742-1305. You can
revoke a proxy at any time before its
exercise at the meeting by following the
instructions in the proxy statement. A
copy of the following proxy statement
and the enclosed proxy card are also
available on the Internet at
http://www.____________________________.
BY ORDER OF THE BOARD OF DIRECTORS
EUGENE A. FRIEDMAN
Secretary
Baltimore, Maryland
February ______, 2010
NOTE: Whether or not you plan to attend the special meeting, please vote via the
Internet, by telephone or by marking, signing, dating and promptly returning the
enclosed proxy card in the self-addressed, stamped envelope.
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FIRST MARINER BANCORP
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PROXY STATEMENT
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GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation
of proxies by the Board of Directors of First Mariner Bancorp to be used at the
Special Meeting of Stockholders, which will be held at the CLARENCE "DU" BURNS
ARENA located at 1301 South Ellwood Avenue, Baltimore, Maryland 21224 at ___:00
__.m., local time, on __________, _________________, 2010. The accompanying
notice of meeting, this proxy statement and proxy card are being first mailed to
stockholders on or about ________________, 2010. In this proxy statement, we may
also refer to First Mariner Bancorp as "First Mariner," the "Company," "we,"
"our" or "us."
First Mariner is the holding company for First Mariner Bank. In this
proxy statement, we may also refer to First Mariner Bank as the "Bank."
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
STOCKHOLDERS MEETING TO BE HELD ON ________________, 2010.
The proxy statement and proxy card are available on the Internet at
http://www._____________________________.
INFORMATION ABOUT VOTING
Who Can Vote at the Meeting
You are entitled to vote your shares of First Mariner common stock, par
value, $0.05 per share, that you owned as of February 8, 2010 (the "Record
Date"). As of the close of business on February 8, 2010, there were ____________
shares of common stock issued and outstanding. Each share of common stock has
one vote.
Ownership of Shares; Attending the Meeting
You may own shares of First Mariner in one or more of the following
ways:
o Directly in your name as the stockholder of record; or
o Indirectly through a broker, bank or other holder of record in
"street name."
If your shares are registered directly in your name, you are the holder
of record of these shares and we are sending these proxy materials directly to
you. As the holder of record, you have the right to give your proxy directly to
us or to vote in person at the meeting. Alternatively, you may be able to vote
by phone or Internet by following the instructions on your proxy form.
If you hold your shares in street name, your broker, bank or other
holder of record is sending these proxy materials to you. As the beneficial
owner, you have the right to direct your broker, bank or other holder of record
how to vote by filling out a proxy card or voting instruction form that
accompanies your proxy materials. Your broker, bank or other holder of record
may allow you to provide voting instructions by telephone or by the Internet.
Please see the instruction form provided by your broker, bank or other holder of
record that accompanies this proxy statement. If you hold your shares in street
name, you will need proof of ownership to be admitted to the meeting. A recent
brokerage statement or letter from a bank or broker are examples of proof of
ownership. If you want to vote your shares of First Mariner common stock held in
street name in person at the meeting, you must obtain a written proxy in your
name from the broker, bank or other holder of record of your shares.
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Quorum and Vote Required
Quorum. We will have a quorum and will be able to conduct the business
of the meeting if the holders of at least a majority of the total number of
shares of common stock outstanding and entitled to vote are present at the
meeting, either in person or by proxy.
How We Count Votes. If you return valid proxy instructions or attend
the meeting in person, we will count your shares for purposes of determining
whether there is a quorum, even if you abstain from voting. Broker non-votes, if
any, also will be counted for purposes of determining the existence of a quorum.
Votes Required for Proposals. In voting on the proposal to approve the
redemption of up to $26.0 million aggregate liquidation amount of trust
preferred securities in exchange for up to $2.6 million of common stock and
warrants to acquire common stock, you may vote in favor of the proposal, vote
against the proposal or abstain from voting. Approval of this proposal requires
the affirmative vote of a majority of the votes cast on the proposal.
Abstentions and broker non-votes will have no effect on the outcome of the vote
on this proposal.
In voting on the proposal to approve the issuance of shares of common
stock in a non-public offering in an amount in excess of 20% of the Company's
outstanding shares of common stock, you may vote in favor of the proposal, vote
against the proposal or abstain from voting. Approval of this proposal requires
the affirmative vote of a majority of the votes cast on the proposal.
Abstentions and broker non-votes will have no effect on the outcome of the vote
on this proposal.
In voting on the proposal to grant management the authority to adjourn
the meeting to solicit additional proxies in the event there are insufficient
votes to approve the foregoing proposals, you may vote in favor of the proposal,
vote against the proposal or abstain from voting. Approval of this proposal
requires the affirmative vote of a majority of the votes cast on the proposal.
Abstentions and broker non-votes will have no effect on the outcome of the vote
on this proposal.
Voting by Proxy
The Company's Board of Directors is sending you this proxy statement
for the purpose of requesting that you allow your shares of First Mariner common
stock to be represented at the meeting by the persons named in the enclosed
proxy card. All shares of Company common stock represented at the meeting by
properly executed and dated proxy cards will be voted according to the
instructions indicated on the proxy card. If you sign, date and return a proxy
card without giving voting instructions, your shares will be voted as
recommended by the Company's Board of Directors. The Board of Directors
recommends a vote "FOR" the proposal to redeem up to $26.0 million aggregate
liquidation amount of trust preferred securities, a vote "FOR" the proposal to
approve the issuance of shares of common stock in a non-public offering in an
amount in excess of 20% of the Company's outstanding shares of common stock and
a vote "FOR" the proposal to grant management the authority to adjourn the
meeting to solicit additional proxies in the event there are insufficient votes
to approve the foregoing proposals.
If any matters not described in this proxy statement are properly
presented at the meeting, the persons named in the proxy card will vote your
shares as determined by a majority of the Board of Directors. If the meeting is
postponed or adjourned, your First Mariner common stock may be voted by the
persons named in the proxy card on the new Special Meeting date as well, unless
you have revoked your proxy. The Company does not know of any other matters to
be presented at the meeting.
You may revoke your proxy at any time before the vote is taken at the
meeting, regardless of whether you submitted your original proxy by mail, the
Internet or telephone. To revoke your proxy you must either advise the Secretary
of the Company in writing before your common stock has been voted at the
meeting, deliver a later-dated proxy, or attend the meeting and vote your shares
in person. Attendance at the meeting will not in itself constitute revocation of
your proxy.
Instead of voting by mailing a proxy card, registered stockholders can
vote their shares of Company common stock via the Internet or by telephone. The
Internet and telephone voting procedures are designed to authenticate
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stockholders' identities, allow stockholders to provide their voting
instructions and confirm that their instructions have been recorded properly.
Specific instructions for Internet or telephone voting are set forth on the
enclosed proxy card. The deadline for voting by telephone or via the Internet is
11:59 p.m., Eastern time, on _________________, 2010.
STOCK OWNERSHIP
The following table sets forth, as of January 27, 2010, certain
information as to the common stock beneficially owned by each of the Company's
directors, and by all executive officers and directors of the Company as a
group. Other than those persons listed below, the Company is not aware of any
person or group that beneficially owned more than 5% of the common stock as of
January 27, 2010.
Amount and Percent of
Nature of Shares of
Name and Address of Beneficial Beneficial Common Stock
Owner(1) Ownership(2) Outstanding(3)
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Edwin F. Hale, Sr.(4)................................................................ 1,452,316 21.70%
Barry B. Bondroff(5)................................................................. 64,842 1.00
John Brown, III(6)................................................................... 7,930 *
Robert L. Caret(7)................................................................... 10,890 *
George H. Mantakos(8)................................................................ 143,823 2.20
John P. McDaniel(9).................................................................. 40,800 *
John J. Oliver, Jr.(10).............................................................. 7,300 *
Patricia Schmoke, MD(11)............................................................. 6,200 *
Hector Torres(12).................................................................... 4,700 *
Michael R. Watson(13)................................................................ 13,385 *
Anirban Basu(14)..................................................................... 2,600 *
Gregory A. Devou(15)................................................................. 700 *
Mark A. Keidel(16)................................................................... 90,877 1.40
All directors and executive officers as a group (13 persons)(17)..................... 1,846,363 26.87
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* Less than 1%.
(1) All executive officers and directors of the Company have the Company's address: 1501 S. Clinton Street,
Baltimore, Maryland 21224.
(2) In accordance with Rule 13d-3 under the Exchange Act, a person is
deemed to be the beneficial owner, for purposes of this table, of any
shares of common stock if he has or shares voting or investment power
with respect to such common stock or has a right to acquire beneficial
ownership at any time within 60 days from January 27, 2010. As used
herein, "voting power" is the power to vote or direct the voting of
shares and "investment power" is the power to dispose or direct the
disposition of shares. Unless otherwise indicated, the beneficial owner
has sole voting and investment power with respect to the listed shares.
(3) Based on 6,452,631 shares outstanding, plus the number of shares of
Company common stock which such person or group of persons has the
right to acquire within 60 days after January 27, 2010 by the exercise
of stock options.
(4) Includes 11,664 shares in his Individual Retirement Account, and options to purchase 240,000 shares. Mr. Hale has
pledged 501,610 shares to secure indebtedness at other financial institutions.
(5) Includes 39,242 shares in his Individual Retirement Account, and 10,450 shares held jointly with his wife, and
options to purchase 15,150 shares.
(6) Includes options to purchase 6,350 shares.
(7) Includes options to purchase 1,950 shares.
(8) Includes 34,900 shares held in his Individual Retirement Account, 11,650 held jointly with his wife, and options
to purchase 75,000 shares.
(9) Includes options to purchase 1,900 shares.
(10) Includes options to purchase 7,150 shares.
(11) Includes options to purchase 6,100 shares.
(12) Includes options to purchase 4,100 shares.
(13) Includes 1,435 shares held jointly with his wife and options to purchase 11,850 shares.
(14) Includes options to purchase 500 shares.
(15) Includes options to purchase 600 shares.
(16) Includes options to purchase 47,000 shares.
(17) Includes options to purchase 417,650 shares.
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ITEMS TO BE VOTED UPON BY STOCKHOLDERS
OVERVIEW OF PROPOSALS 1 AND 2
Background
Like many financial institutions across the United States, our
operations have been impacted by the current economic crisis. During our fiscal
year ended December 31, 2008 and continuing in 2009, the economic crisis that
was initially confined to residential real estate and subprime lending has
evolved into a global economic crisis that has negatively impacted not only
liquidity and credit quality but also economic indicators such as the labor
market, the capital markets and real estate values. As a result of this
significant downturn, we have been adversely affected by declines in the
residential and commercial real estate market in our market area. The declining
home prices, slowing economic conditions and increasing levels of delinquencies
and foreclosures have negatively affected the credit performance of our
residential real estate, commercial real estate and real estate acquisition and
development loans, resulting in an increase in our level of nonperforming assets
and loans past due 90 days or more and still accruing interest and charge-offs
of problem loans. At the same time, competition among depository institutions in
our markets for deposits and quality loans has increased significantly. These
market conditions and the tightening of credit have led to increased
deficiencies in our loan portfolio, a decreased interest margin, increased
market volatility.
During the nine months ended September 30, 2009, nonperforming assets
and loans 90 days or more past due and still accruing interest increased $7.08
million, or 10.49% to $74.52 million. Nonperforming assets and loans 90 days or
more past due and still accruing interest as a percentage of total assets
increased during this period from 5.16% as of December 31, 2008 to 5.28% as of
September 30, 2009. Our allowance for loan losses as a percentage of total loans
decreased during this period from 1.71% as of December 31, 2008 to 1.23% as of
September 30, 2009 and our allowance for loan losses as a percentage of
nonperforming assets and loans 90 days or more past due and still accruing
interest decreased from 33.68% as of December 31, 2008 to 22.20% as of September
30, 2009. The primary reason for the decrease was the removal of the allowance
for loan losses of our subsidiary, Mariner Finance, LLC ("Mariner Finance"),
which maintained an allowance for loan losses in excess of 4.5%.
From December 31, 2007 to December 31, 2008, nonperforming assets and
loans past due 90 days or more and still accruing interest increased $21.05
million, or 45.34%, to $67.44 million. Nonperforming assets and loans 90 days
past due or more and still accruing interest as a percentage of total loans
increased during this period from 3.72% at December 31, 2007 to 5.16% at
December 31, 2008. In addition, our allowance for loan losses as a percentage of
total loans increased during this period from 1.50% to 1.71% and our allowance
for loan losses as a percentage of nonperforming loans and loans 90 days or more
past due and still accruing interest increased from 44.66% to 33.68%.
We recorded provisions for loan losses of $2.10 million and $8.36
million during the three and nine months ended September 30, 2009, respectively,
and $14.78 million during the year ended December 31, 2008, which had a
significant negative impact on our earnings. The impact of the increase in non
performing loans and related credit losses has resulted in significant losses
over the past three years and has eroded our stockholders' equity and the
regulatory capital ratios of the Bank.
On September 18, 2009, First Mariner Bank entered into a Stipulation
and Consent to the Issuance of an Order to Cease and Desist with the Federal
Deposit Insurance Corporation (the "FDIC") and the Commissioner of Financial
Regulation for the State of Maryland (the "Commissioner") whereby the Bank
consented to the issuance of an Order to Cease and Desist (the "September
Order") promulgated by the FDIC and the Commissioner without admitting or
denying the alleged charges of unsafe or unsound banking practices.
The September Order requires the Bank to adopt a plan to achieve and
maintain a tier 1 leverage capital ratio of at least 7.5% of the Bank's total
average assets and a total risk-based capital ratio of at least 11% of its total
risk-weighted assets by June 30, 2010. The September Order also requires the
Bank to adopt a plan to achieve and maintain its tier 1 leverage and total
risk-based capital ratios at 6.5% and 10%, respectively, beginning on March 31,
2010. First Mariner Bank has presented a capital plan to the FDIC and the
Commissioner detailing how it intends to achieve these capital thresholds by the
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required dates. At September 30, 2009, the Bank reported tier 1 leverage and
total risk-based capital ratios of 5.4% and 8.4%, respectively.
On November 24, 2009, First Mariner entered into a Written Agreement
with the Board of Governors of the Federal Reserve System (the "FRB") which
replaced the Company's existing Memorandum of Understanding with the Federal
Reserve Bank of Richmond (the "FRB Agreement"). The original FRB Agreement
required First Mariner to: (i) develop and implement a strategic business plan
that includes (a) actions that will be taken to improve our operating
performance and reduce the level of parent company leverage, (b) a comprehensive
budget and an expanded budget review process, (c) a description of the operating
assumptions that form the basis for major projected income and expense
components and provisions needed to maintain an adequate loan loss reserve and
(d) a capital plan incorporating all capital needs, risks and regulatory
guidelines; and (ii) submit plans to improve enterprise-wide risk management and
effectiveness of internal audit programs. First Mariner also agreed to provide
the Federal Reserve Bank of Richmond with advance notice of any significant
capital transactions. The new FRB Agreement (the "New FRB Agreement") prohibits
First Mariner and the Bank from taking any of the following actions without the
FRB's prior written approval: (i) declaring or paying any dividends; (ii) taking
dividends from the Bank; (iii) making any distributions of interest, principal
or other sums on First Mariner's subordinated debentures or trust preferred
securities; (iv) incurring, increasing or guaranteeing any debt; or (v)
repurchasing, redeeming any shares of its stock. In addition, under the New FRB
Agreement, First Mariner has submitted a written plan to the FRB to maintain
sufficient capital, on a consolidated basis, such that First Mariner satisfies
the FRB's requirements to be considered "adequately capitalized." To be
considered adequately capitalized, First Mariner's consolidated tier 1 capital
to total assets, tier 1 capital to risk-weighted assets and total capital to
risk-weighted assets ratios at September 30, 2009 must be at least 4.0%, 4.0%
and 8.0%, respectively. At September 30, 2009, those capital ratios were 2.4%,
2.7% and 5.4%.
The failure to comply with the Cease and Desist Orders or the New FRB
Agreement could result in the initiation of further enforcement action by the
FDIC, the Commissioner or the FRB, including the imposition of civil monetary
penalties, as well as the imposition of further operating restrictions. Our
regulators also could direct us to seek a merger partner or possibly place the
Bank in receivership.
In response to these events, the Company has taken steps to strengthen
the Company's and the Bank's capital structure by reducing debt and raising
equity. The Company and the Bank have submitted comprehensive capital plans to
regulators of both the Bank and the Company. The core components of the plan
included selling the Company's consumer finance subsidiary, Mariner Finance,
increasing capital through a rights offering, and strategically lowering the
asset levels of the Bank through loan runoff and the sale or closure of
underperforming Bank branches. In December, the Company completed the sale of
Mariner Finance, and subsequently injected $12.5 million of additional capital
into First Mariner Bank, significantly increasing the Bank's capital ratios as
of December 31, 2009.
The Company has filed with the Securities and Exchange Commission a
Registration Statement registering shares of common stock to be sold in a public
offering and a non-public offering. In the public offering, we expect to give
priority subscription rights to the Company's stockholders (the "Rights
Offering"). Concurrently with the Rights Offering, the Company anticipates that
it will sell shares of common stock in a non-public offering in an amount in
excess of 20% of the Company's outstanding shares of common stock (the
"Non-Public Offering"). The Rights Offering and the Non-Public Offering are
referred to collectively herein as the "Stock Offerings." The targeted amount of
the capital raise through the rights offering is $20 million.
On December 8, 2009, the Company filed a Registration Statement on Form
S-1 with the Securities and Exchange Commission registering shares of common
stock to be sold in the Stock Offerings. This Registration Statement has not yet
become effective. These securities may not be sold nor may offers to buy be
accepted prior to the time the registration statement becomes effective. You may
obtain a written prospectus for the offering meeting the requirements of Section
10 of the Securities Act of 1933, as amended, by writing to the Company, 1501 S.
Clinton Street, Baltimore, Maryland 21224, Attention: Eugene A. Friedman,
Secretary. This proxy statement is not an offer to sell or the solicitation of
an offer to buy shares of our common stock or any other securities, including
the rights or any shares of common stock issuable upon exercise of the rights.
Offers and sales of common stock and common stock issuable upon exercise of the
rights will only be made by means of a prospectus meeting the requirements of
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the Securities Act of 1933, as amended, and applicable state securities laws, on
the terms and subject to the conditions set forth in such prospectus.
On February 3, 2010 the Company entered into an agreement (the
"Exchange Agreement") with Edwin F. Hale, Sr., the Company's Chairman and Chief
Executive Officer, who has agreed to purchase trust preferred securities with an
aggregate liquidation amount of $20.0 million issued by First Mariner Capital
Trusts II, IV and VIII. Pursuant to the Exchange Agreement, Mr. Hale will tender
$20.0 million aggregate liquidation amount of trust preferred securities to the
Company in exchange for an aggregate of a number of shares of common stock
valued at $2.0 million and warrants to acquire additional shares of common
stock, as described in more detail below (the "Exchange"). Upon consummation of
the Exchange, which is subject to stockholder approval, the Company intends to
submit for cancellation the trust preferred securities, the common securities
issued by Mariner Capital Trusts II, IV and VIII and the related subordinated
debentures. If completed, the Exchange is expected to eliminate $20.0 million of
subordinated debentures (recorded as debt on the Company's statement of
condition). As a result of this elimination of $20.0 million in debt, the
Company will no longer accrue interest expense with the respect to the $20.0
million of trust preferred securities to be exchanged. First Mariner accrued
interest expense of $51,245 on the $20.0 million of trust preferred securities
during the year ended December 31, 2008 and $832,865 during the nine months
ended September 30, 2009. The Exchange also will increase the Company's total
stockholders' equity by approximately $12.8 million, although the exact amount
is subject to variation based on the valuation of the warrants at closing, from
the cancellation of the trust preferred securities, the common securities and
the subordinated debentures. The Exchange would be recorded during the quarter
in which the trust preferred securities were cancelled, which is expected to be
the first or second quarter of calendar year 2010. The Exchange is expected to
significantly improve the Company's debt to equity ratios, debt service
requirements, consolidated regulatory capital ratios, and book value per share.
The Exchange will have no effect on the Bank's capital.
The shares of common stock and warrants to acquire common stock to be
issued in the Exchange, and any shares of common stock that may be issued upon
the exercise of warrants granted in the Exchange, have not been registered under
the Securities Act and may not be offered or sold in the United States absent
registration under the Securities Act or an applicable exemption from such
registration requirements. The Company has agreed to file a registration
statement with the Securities and Exchange Commission within 60 days of the
closing date with respect to the Initial Shares (as defined below) and the
warrants to be issued in the Exchange.
The Company is asking stockholders at the special meeting to support
its plan to reduce the Company's outstanding debt burden by supporting the
Exchange. Further, the Company is asking stockholders at the meeting to approve
the sale of shares of common stock in the Non-Public Offering in an amount in
excess of 20% of the Company's outstanding shares of common stock.
The Board of Directors believes that the Exchange is a crucial step
that the Company must complete for the Company and the Bank to meet the capital
objectives directed by their respective regulators. The Board of Directors
believes that if the Company is unable to consummate the Exchange, it will be
more difficult to complete the Stock Offerings, or, in order to complete the
Stock Offerings it will be required to offer more shares of common stock at a
lower price than it would have to if the Exchange is completed, thereby causing
greater dilution to stockholders in the Stock Offerings.
Due to the benefits that will result from the Exchange and the Stock
Offerings and the adverse consequences the Company will face if these
transactions are not completed, the Board recommends that the stockholders vote
"FOR" Proposals 1 and 2.
Risk Factors--Risk Relating to Proposals 1 and 2
Stockholders may face significant dilution as a result of the Exchange
and the Stock Offerings.
If Proposals 1 and 2 are approved and the Exchange and the Stock
Offerings are completed, the Company's existing stockholders may incur
substantial dilution of their voting interests and may own a significantly
smaller percentage of the Company's outstanding common stock following the
Exchange and the Stock Offerings. Other than stockholders who purchase
sufficient shares of our common stock in the Rights Offering, including the
exercise of over-subscription rights to the extent sufficient shares are
available to maintain their proportionate ownership interest, the issuance of
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shares of our common stock in the Stock Offerings would dilute, and thereby
reduce, each existing stockholder's proportionate ownership in our shares of
common stock. The dilutive effect of the Exchange and the Stock Offerings may
have an adverse impact on the market price of the Company's common stock.
PROPOSAL 1 -- THE APPROVAL OF THE EXCHANGE
The Proposal
The Company has entered into an agreement with Mr. Hale, who has agreed
to purchase trust preferred securities with an aggregate liquidation amount of
$20.0 million issued by First Mariner Capital Trusts II, IV and VIII. Pursuant
to the agreement, Mr. Hale will tender $20.0 million aggregate liquidation
amount of trust preferred securities to the Company in exchange for an aggregate
of a number of shares of common stock valued at $2.0 million and warrants to
acquire additional shares of common stock, as described in more detail below.
The Company is seeking stockholder approval under the applicable provisions of
Nasdaq Marketplace Rule 5635 for the issuance of the Initial Shares (as defined
below) and warrants and the shares of common stock issuable upon the exercise of
the warrants granted in the Exchange.
Terms of the Exchange
The Exchange Agreement provides that on the closing date of the
transaction (the "Closing"), Mr. Hale will exchange his trust preferred
securities for consideration to be paid by the Company consisting of common
stock and warrants to buy common stock. The aggregate number of shares of common
stock to be exchanged (the "Initial Shares") will be valued at $2.0 million
based on the average daily closing price of the common stock over the 20 trading
days prior to the closing of the transaction (the "Conversion Price"). In the
event that by June 30, 2010 the Company completes a public or private offering
of its common stock, then Mr. Hale will be issued additional shares of common
stock such that the total shares to be issued to Mr. Hales would equal $2.0
million divided by the price per share at which shares were sold in the public
or private offering. If common stock is sold in the Stock Offerings at a price
below the Conversion Price, the Stock Offerings will result in the issuance of
additional shares of common stock to Mr. Hale.
Mr. Hale also will receive warrants (the "A Warrants") to purchase in
the aggregate 20% of the Initial Shares. In addition, Mr. Hale will receive
additional warrants (the "B Warrants" and, together with the A Warrants, the
"Warrants") in the event that on or prior to June 30, 2010 First Mariner Bancorp
enters into another agreement to acquire other trust preferred securities,
including an agreement, if any, with the Investors (as defined below) as
described below, and the value of the consideration to be issued in that
transaction relative to the aggregate liquidation amount of trust preferred
securities to be acquired is greater than the value of the consideration to be
issued by First Mariner Bancorp in the Exchange relative to the $20.0 million
aggregate liquidation amount of trust preferred securities to be exchanged. In
that event, Mr. Hale would receive additional warrants such that the relative
value of the aggregate consideration to be paid in the Exchange equals the
relative value of the aggregate consideration to be paid in the subsequent
transaction, provided that the number of shares subject to the B Warrants could
not exceed 20% of the Initial Shares.
In the event Mr. Hale's ownership of Company common stock immediately
following the Closing would be equal to or greater than 41.33% (the
"Threshold"), assuming exercise of the A Warrants, then the amount of trust
preferred securities Mr. Hale would exchange initially would be reduced by the
minimum amount necessary so that immediately following the Closing, Mr. Hale's
ownership of Company common stock would be below the Threshold. If such a
reduction occurs at the Closing, the remaining trust preferred securities held
by Mr. Hale could be exchanged in the future subject to the terms of the
Exchange Agreement assuming such exchange would not cause Mr. Hale's ownership
of Company common stock to exceed the Threshold.
The Warrants are exercisable for five years following the Closing at a
price equal to the lesser of (i) the Conversion Price, (ii) if on or prior to
June 30, 2010 the Company sells shares of common stock in a public or private
offering, the price at which shares are sold in that offering, or (iii) the
price utilized in any subsequent agreement for the acquisition of trust
preferred securities to determine the number of shares of common stock to be
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exchanged for such trust preferred securities exclusive of any warrants, warrant
shares or warrant prices. The warrants will be exercisable for five years.
The Company's Board of Directors believes the Exchange will benefit the
Company by eliminating $20.0 million of indebtedness and simultaneously
increasing stockholders' equity. The Exchange will also substantially increase
the regulatory capital ratios of the Company, be sufficient to satisfy the
consolidated capital requirements under the New FRB Agreement, as well as
utilizing a substantial portion of the Company's deferred tax assets. If
completed, the Exchange is expected to eliminate $20.0 million of subordinated
debentures (recorded as debt on the Company's statement of condition) and,
although the exact amounts are subject to variation based on the valuation of
the warrants at closing, increase the Company's total stockholders' equity by
approximately $12.8 million. The Exchange would be recorded during the quarter
in which the trust preferred securities were cancelled, which is expected to be
the first or second quarter of calendar year 2010. On a pro forma basis at
September 30, 2009, the Exchange would increase the Company's consolidated
ratios of tier 1 capital to total assets, tier 1 capital to risk-weighted assets
and total capital to risk-weighted assets from 2.4%, 2.7% and 5.4%,
respectively, to 4.22%, 4.78% and 8.32%, respectively.
As described above, if the Exchange is completed, the Company will
issue shares of common stock and warrants to acquire common stock in exchange
for trust preferred securities with an aggregate liquidation amount of $20.0
million, and following the Exchange, the trust preferred securities and
subordinated debentures will be cancelled. The subordinated debentures represent
an unsecured claim to the Company's assets that is subordinated to existing and
future debt. In certain circumstances relating to the Company's liquidation,
dissolution, winding up, reorganization, insolvency or similar proceedings, the
holders of any senior indebtedness would first be entitled to receive payment in
full before the holders of the subordinated debentures would be entitled to
receive any payment on the subordinated debentures. The subordinated debentures
and the trust preferred securities each have 30-year lives. The subordinated
debentures and the trust preferred securities are each callable by the Company
or the Trusts, at their respective option after five years.
The issuance of Company common stock pursuant to the Exchange will be
made by the Company pursuant to an exemption from the registration requirements
of the Securities Act, contained in Section 4(2) of such Act and Rule 506
promulgated thereunder. The shares of common stock and Warrants to acquire
common stock in the Exchange, and any shares of common stock that may be issued
upon the exercise of Warrants granted in the Exchange, have not been registered
under the Securities Act and may not be offered or sold in the United States
absent registration under the Securities Act or an applicable exemption from
such registration requirements. The Company has agreed to file a registration
statement with the Securities and Exchange Commission within 60 days of the
completion of the Exchange with respect to the Initial Shares and the Warrants
and within 60 days of the exercise of any Warrant with respect to the resale of
common stock issued upon the exercise of a Warrant.
On February 3, 2010, investors made up of members of our Board of
Directors and members of executive and senior management of the Company and the
Bank (the "Investors") agreed to purchase trust preferred securities with an
aggregate liquidation amount of $6.0 million issued by First Mariner Capital
Trust IV. If permitted under applicable banking regulations, the Company may
seek to negotiate a substantially identical agreement to the Exchange Agreement
with the Investors for the exchange of common stock and warrants for that $6.0
million of trust preferred securities. However, no agreement with the Investors
exists and that $6.0 million of trust preferred securities will remain
outstanding unless and until an agreement is reached with the Investors. If an
agreement with the Investors is reached, the resulting exchange is expected to
eliminate $6.0 million of subordinated debentures (recorded as debt on the
Company's statement of condition). On a pro forma basis at September 30, 2009,
the Exchange together with the elimination of the $6.0 million aggregate
liquidation amount of Investor held trust preferred securities, would increase
the Company's consolidated ratios of tier 1 capital to total assets, tier 1
capital to risk-weighted assets and total capital to risk-weighted assets from
2.4%, 2.7% and 5.4%, respectively, to 4.8%, 5.4% and 8.9%, respectively.
As the Company is seeking approval of the redemption of up to $26.0
million aggregate liquidation amount of trust preferred securities in exchange
for up to $2.6 million of common stock and warrants to acquire common stock, an
affirmative vote on this Proposal 1 would constitute an affirmative vote with
respect to any exchange by the Investors under terms substantially identical to
those set forth in the Exchange Agreement.
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Interests of Certain Persons in the Exchange
Mr. Hale and the Investors are directors and/or officers of the Company
and the Bank. The following table sets forth for Mr. Hale, and if an exchange
agreement should be reached with the Investors, for the Investors, the
liquidation amount of trust preferred securities to be surrendered to the
Company and the consideration to be received in exchange for the securities to
be surrendered. The table below assumes that no B Warrants will be issued.
Liquidation Amount of
Trust Preferred Securities Initial Shares Shares Subject to
Name to be Exchanged ($) (1) A Warrants (1)
------------------------------------ --------------------------- ----------------- ----------------------
Edwin F. Hale, Sr. 20,000,000
Anirban Basu 100,000
Barry B. Bondroff 500,000
Robert L. Caret 250,000
Gregory A. Devou 250,000
Mark A. Keidel 600,000
George H. Mantakos 500,000
John P. McDaniel 1,000,000
Paul B. Susie 250,000
Hector Torres 100,000
Michael R. Watson 250,000
----------------
(1) Assumes the Conversion Price will be $_____, the closing price for the
common stock as quoted on the Nasdaq Global Market on ________, 2009.
Reason for Request for Stockholder Approval
The Company's common stock is listed on the Nasdaq Global Market, and
the Company is subject to the Nasdaq Marketplace Rules. The Company is seeking
stockholder approval for the issuance of the Initial Shares and the Warrants and
the issuance of shares of common stock upon the exercise of the Warrants under
the Nasdaq Marketplace Rules, which apply to the issuance of securities in
certain circumstances.
Under Marketplace Rule 5635(c), listed companies are required to obtain
stockholder approval prior to issuance of common stock or securities convertible
into or exercisable for common stock to certain affiliates in a private
placement at a price less than the market value of the common stock, as such
issuance is considered a form of "equity compensation." To the extent that the
issuance to directors and officers of the Company of shares of common stock to
be issued as part of the exchanges described above, the Warrants and the shares
of common stock issuable upon exercise of the Warrants could be considered a
form of "equity compensation," the Company is seeking stockholder approval
pursuant to Marketplace Rule 5635(c). The individuals who will tender trust
preferred securities in the exchanges purchased such trust preferred securities
for a price equal to 10% of the liquidation amount of the trust preferred
securities purchased.
Furthermore, Nasdaq Marketplace Rule 5635(d) requires stockholder
approval of the issuance in a private placement of common stock equal to 20% or
more of the common stock outstanding before the issuance for less than the
greater of book or market value of the stock. It is anticipated that the
aggregate number of shares issuable as a result of the Exchange could equal or
exceed more than 20% of the Company's shares outstanding prior to the Exchange
at a price that is lower than the greater of the book or market value of the
shares. As a result, the Company also is seeking stockholder approval pursuant
to Marketplace Rule 5635(d).
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Impact on Stockholders of Approval or Disapproval of this Proposal
If this Proposal is not approved, the Company will be unable to
complete the Exchange described above. As discussed under "Overview of Proposals
1 and 2- Background," if this Proposal is not approved, it will be more
difficult to complete the Stock Offerings, or, in order to complete the Stock
Offerings it will be required to offer more shares of common stock at a lower
price than it would have to if the Exchange is completed, thereby causing
greater dilution to stockholders in the Stock Offerings. In turn, it will be
more difficult to meet the capital requirements set forth in the Cease and
Desist Order and the New FRB Agreement.
Board of Directors' Recommendation
A Special Committee of the Company's Board of Directors consisting of
disinterested directors has approved the Exchange and the issuance of shares of
common stock, the Warrants and shares of common stock issuable upon exercise of
the Warrants. Based on the Company's reasons for the Exchange described in this
proxy statement, the Special Committee and the Board of Directors of the Company
believe that the approval of the Exchange, including an exchange by the
Investors under terms substantially identical to those set forth in the Exchange
Agreement, and the issuance of the Initial Shares, the Warrants and the shares
of common stock issuable upon exercise of the Warrants is in the best interests
of the Company and its stockholders and recommend that you vote "FOR" approval
of Proposal No. 1.
-----
PROPOSAL 2 - APPROVAL OF THE SALE OF SHARES IN A NON-PUBLIC OFFERING
We are seeking stockholder approval to permit us to sell an amount of
common stock representing more than 20% of our outstanding shares of common
stock in a non-public offering. We are currently proposing to conduct a Rights
Offering and give subscription rights to purchase common stock to the Company's
stockholders. Concurrently with the Rights Offering, we intend to conduct a
related offering of shares of common stock to certain institutional investors
and high net worth individuals, who we refer to as "standby purchasers" in this
proxy statement. In the offering to standby purchasers, we propose to sell up to
_______ shares of our common stock. The shares to be sold to standby purchasers
in the Non-Public Offering will be sold at a maximum discount of __% to the
closing sale price of the common stock on the day prior to the expiration date
for the Rights Offering. If the Stock Offerings close, the gross proceeds from
the sales to standby purchasers would be up to $____ million.
Background
As described above under "Overview of Proposals 1 and 2 - Background,"
the September Order requires the Bank to adopt a plan to achieve and maintain a
tier 1 leverage capital ratio of at least 7.5% of the Bank's total average
assets and a total risk-based capital ratio of at least 11% of its total
risk-weighted assets by June 30, 2010. In addition, under the New FRB Agreement,
First Mariner has submitted a written plan to the FRB to maintain sufficient
capital, on a consolidated basis, such that First Mariner satisfies the FRB's
requirements to be considered "adequately capitalized." To be considered
adequately capitalized, First Mariner's consolidated tier 1 capital to total
assets, tier 1 capital to risk-weighted assets and total capital to
risk-weighted assets ratios at September 30, 2009 must be at least 4.0%, 4.0%
and 8.0%, respectively. At September 30, 2009, those capital ratios were 2.4%,
2.7% and 5.4%.
Concurrently with the Rights Offering, we may offer shares of our
common stock to certain standby purchasers. The issuance of shares of common
stock to standby investors requires stockholder approval as the amount of shares
of common stock to be issued to standby investors is expected to exceed 20% of
the Company's common stock outstanding.
Our Board of Directors' current intention is to raise capital through
the Rights Offering to give our current stockholders the opportunity to limit
ownership dilution from the offering to standby purchasers by allowing our
current stockholders to buy additional shares of common stock. However, due to
current market conditions, individual investment decisions of our stockholders
and other factors, there is no guarantee that a rights offering to existing
stockholders will raise sufficient capital to meet the capital targets
established by our regulators. As a result, the Board of Directors expects to
conduct an offering of common stock to a limited number of institutional
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investors and high net worth individuals, who will act as standby purchasers to
ensure that we will raise sufficient capital regardless of the success of the
Rights Offering.
The Stock Offerings
The Rights Offering. We intend to distribute to the record holders of
our common stock non-transferable subscription rights to subscribe for and
purchase shares of our common stock, subject to approval of the amendment to our
Articles of Incorporation to increase our authorized shares as described in the
Company's proxy statement dated January 13, 2010. This proxy statement is not an
offer to sell or the solicitation of an offer to buy shares of our common stock
or any other securities, including the rights or any shares of common stock
issuable upon exercise of the rights. Offers and sales of common stock issuable
upon exercise of the rights will only be made by means of a prospectus meeting
the requirements of the Securities Act and applicable state securities laws, on
the terms and subject to the conditions set forth in such prospectus.
The Non-Public Offering. We expect to enter into separate standby
purchase agreements with certain institutional investors and high net worth
individuals, pursuant to which we will agree to sell, and these standby
purchasers severally will agree to purchase from us, shares of our common stock.
We propose to sell up to ______ shares of our common stock to these standby
purchasers. These standby purchase commitments will be subject to certain
conditions as set forth in the standby purchase agreements. The price per share
paid by the standby purchasers for such common stock will be equal to the
subscription price paid by our stockholders in the Rights Offering. Our
negotiations with standby purchasers may result in additional agreements,
including providing the standby purchaser with the right to designate a Company
board member or a commitment fee to be paid to the standby investors. As of the
date of this proxy statement, the Company has not entered into any agreement to
sell shares in the Non-Public Offering and no assurances can be made that such
agreement or arrangement will be entered into.
Principal Effects on Outstanding Common Stock
The issuance of shares to the standby purchasers will have no effect on
the current rights of stockholders of our common stock under Maryland law,
including without limitation, voting rights, rights to dividend payments and
rights upon liquidation. Other than with respect to the anticipated Rights
Offering, holders of our shares of common stock are not entitled to preemptive
rights with respect to any shares that may be issued.
Other than stockholders who purchase sufficient shares of our common
stock in the Rights Offering, including the exercise of over-subscription rights
to the extent sufficient shares are available to maintain their proportionate
ownership interest, the issuance of shares of our common stock in the Stock
Offerings would dilute, and thereby reduce, each existing stockholder's
proportionate ownership in our shares of common stock. The issuance of such
shares at less than the then-existing market price would likely reduce the price
per share of shares held by existing stockholders. Subject to the discretion of
the Board of Directors, a person, together with certain related persons and
associates, may not purchase a number of shares such that upon completion of the
Stock Offerings the person owns in excess of 4.9% of First Mariner's common
stock outstanding. Subject to regulatory approval, an individual or individuals
acting in concert may not acquire more than 9.9% of First Mariner's common stock
outstanding. It is anticipated that some of the shares we sell in the Stock
Offerings will be to one or more stockholders such that each of those
stockholders could acquire amounts up to these limits. This would concentrate
voting power in the hands of a few stockholders who could exercise greater
influence on our operations or the outcome of matters put to a vote of
stockholders.
The Board of Directors has not yet determined the terms and conditions
of the Stock Offerings, including the offering to standby purchasers. As a
result, the actual net proceeds of the sale of common stock in the Stock
Offerings cannot yet be determined at this time. We intend to use the proceeds
of the Stock Offerings to invest in the Bank to improve its regulatory capital
position and for general corporate purposes.
Reasons for Requesting Stockholder Approval
Under Nasdaq Marketplace Rules, we are required to obtain approval from
our stockholders in order to sell or issue shares of our common stock in a
non-public offering in an amount equal to 20% or more of the outstanding shares
11
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of our common stock for less than the greater of book or market value of such
shares of common stock. We are not required to seek stockholder approval of the
Rights Offering to our existing stockholders. However, because we may seek to
sell more than 20% of our outstanding shares of common stock in the Non-Public
Offering to standby purchasers at a price that is less than the greater of the
book or current market value of such shares, we are seeking stockholder approval
before completing the sales to standby purchasers.
Stockholder approval of this proposal does not require us to conduct a
sale of shares to standby purchasers. Accordingly, if stockholders approve this
proposal, we may sell such shares of our common stock in any manner that we
choose without receiving further stockholder approval, subject to the
limitations set forth above (including the maximum number of shares to be sold,
the price at which shares will be sold, and other restrictions imposed by Nasdaq
requirements). Similarly, because we are not requesting stockholder approval of
the Rights Offering to existing stockholders, we may conduct a rights offering
to our existing stockholders even if we do not receive stockholder approval of
this Proposal 2.
Consequences if the Non-Public Offering is Not Approved by the Stockholders
If the stockholders do not approve the sale of more than 20% of our
outstanding shares of common stock in a non-public offering, it likely will be
more difficult for us to raise sufficient capital to meet the levels directed by
our regulators in the September Order and the New FRB Agreement. If we do not
raise sufficient capital in the Stock Offering, the Company and the Bank could
become subject to the adverse regulatory consequences as described above. Such
action by our regulators could have a material negative effect on the Company's
business and financial condition and the value of its common stock. The Company
and the Bank could also become subject to other supervisory actions by our
regulators if we are unable to achieve compliance with the requirements of the
September Order and the New FRB Agreement or if market conditions were to
deteriorate to such an extent that the equity capital we raised in the Stock
Offerings proved to be insufficient for their needs.
Board Recommendation
The Board of Directors recommends a vote "FOR" the proposal to allow
the sale of shares of common stock in an amount greater than 20% of the
Company's outstanding shares of common stock in a non-public offering.
PROPOSAL 3.- GRANT MANAGEMENT THE AUTHORITY TO ADJOURN THE SPECIAL MEETING IF
THERE ARE INSUFFICIENT VOTES TO APPROVE THE FOREGOING PROPOSALS
Proposal
If at the meeting, the number of shares of the Company's common stock
present or represented and voting in favor of Proposals 1 or 2 is insufficient
to approve the Proposals, the Company's management may move to adjourn, postpone
or continue the meeting in order to enable its Board of Directors to continue to
solicit additional proxies in favor of Proposals 1 or 2. In that event, you will
be asked to vote only upon the adjournment, postponement or continuation
proposal and not on any other Proposals.
In this proposal, the Company is asking you to authorize the holder of
any proxy solicited by its Board of Directors to vote in favor of adjourning,
postponing or continuing the meeting and any later adjournments. If the
Company's stockholders approve the adjournment proposal, the Company could
adjourn, postpone or continue the meeting, and any adjourned session of the
meeting, to use the additional time to solicit additional proxies in favor of
Proposals 1 or 2, including the solicitation of proxies from stockholders that
have previously voted against the Proposals. Among other things, approval of the
adjournment, postponement or continuation proposal could mean that, even if
proxies representing a sufficient number of votes against the other Proposals
have been received, the Company could adjourn, postpone or continue the meeting
without a vote on the other Proposals and seek to convince the holders of those
shares to change their votes to votes in favor of the approval of the Proposals.
If it is necessary to adjourn the meeting, no notice of the adjourned Special
Meeting is required to be given to stockholders other than an announcement at
the meeting of the hour, date and place to which the meeting is adjourned.
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Board of Directors' Recommendation
The Company's Board of Directors recommends that stockholders vote
"FOR" the proposal to grant management the authority to adjourn, postpone or
continue the meeting.
SUBMISSION OF BUSINESS PROPOSALS AND STOCKHOLDERS NOMINATIONS
Any stockholder desiring to present a proposal pursuant to Rule 14a-8
of the Exchange Act to be included in the proxy statement and voted on by the
stockholders at the 2010 Annual Meeting of Stockholders was required to have
submitted that proposal in writing, including all supporting materials, to the
Company at its principal executive offices no later than December 4, 2009 and
meet all other requirements for inclusion in the proxy statement. Additionally,
pursuant to the Company's Bylaws, if a stockholder intends to present a proposal
for business to be considered at the 2010 Annual Meeting of Stockholders but
does not seek inclusion of the proposal in the Company's proxy statement for
such meeting, then the Company must have received the proposal no earlier than
December 4, 2009 but no later than January 4, 2010 for it to have been
considered timely received. If the notice of a stockholder proposal is not
timely received, then the proxies will be authorized to exercise discretionary
authority with respect to the proposal.
OTHER MATTERS
The Board of Directors is not aware of any business to come before the
meeting other than those matters described above in this proxy statement and
matters incident to the conduct of the meeting. However, if any other matters
should properly come before the meeting, it is intended that proxies in the
accompanying form will be voted in respect thereof in accordance with the
determination of a majority of the Board of Directors. A representative of
Stegman & Company, the Company's independent registered public accounting firm,
is not expected to be present at the special meeting.
MISCELLANEOUS
The cost of soliciting proxies will be borne by the Company. The
Company will reimburse brokerage firms and other custodians, nominees and
fiduciaries for reasonable expenses incurred by them in sending proxy materials
to the beneficial owners of common stock. In addition to solicitations by mail,
directors, officers and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional compensation. The
Company has retained Laurel Hill Advisory Group, a proxy soliciting firm, to
assist in the solicitation of proxies, for which they will receive a fee of
$__________ plus reimbursement of expenses.
INCORPORATION BY REFERENCE
The SEC allows the Company to "incorporate by reference" the
information it files with the SEC, which means that the Company can disclose
important information to you by referring you to those documents. The
information the Company incorporates by reference is an important part of this
proxy statement. The Company incorporates by reference the following:
o "Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations," "Item 7A - Quantitative
and Qualitative Disclosures about Market Risk," "Item 8 -
Financial Statements and Supplementary Data" and "Item 9 -
Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure" of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2008; and
o "Item 1 - Financial Statements," "Item 2 - Management's
Discussion and Analysis of Financial Condition and Results of
Operations," and "Item 3 - Quantitative and Qualitative
Disclosures about Market Risk" of the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30,
2009.
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The sections referenced above can be found in the Company's Report on
Form 10-K for the fiscal year ended December 31, 2008 and the Company's Report
on Form 10-Q for the fiscal quarter ended September 30, 2009 that accompany this
proxy statement. Only such sections referenced above are to be deemed
incorporated by reference into this proxy statement.
Any statement contained in a document that is incorporated by reference
will be modified or superseded for all purposes to the extent that a statement
contained in this proxy statement modifies or is contrary to that previous
statement. Any statement so modified or superseded will not be deemed a part of
this proxy statement except as so modified or superseded.
BY ORDER OF THE BOARD OF DIRECTORS
EUGENE A. FRIEDMAN
Secretary
Baltimore, Maryland
____________, 2010
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FIRST MARINER BANCORP
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
The Notice of Meeting, proxy statement and proxy card are available at
http://www.________________.
YOUR VOTE IS IMPORTANT
Regardless of whether you plan to attend the Special Meeting of
Stockholders, you can be sure your shares are represented at the
meeting by promptly returning your proxy in the enclosed
envelope.
* Please fold and detach card at perforation before mailing. *
--------------------------------------------------------------------------------
FIRST MARINER BANCORP
SPECIAL MEETING OF STOCKHOLDERS
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Dennis Finnegan and Eugene A. Friedman, with
full powers of substitution, to act as attorneys and proxies for the
undersigned, to vote all shares of common stock of First Mariner Bancorp (the
"Company") which the undersigned is entitled to vote at the Special Meeting of
Stockholders (the "Special Meeting"), to be held at the CLARENCE "DU" BURNS
ARENA, 1301 South Ellwood Avenue, Baltimore, Maryland, on ______, _________,
2010 at __:00 _.m., local time, and at any and all adjournments thereof.
Should the undersigned be present and elect to vote at the special meeting or at
any adjournment thereof and after notification to the Secretary of the Company
at the special meeting of the stockholder's decision to terminate this proxy,
then the power of said attorneys and proxies shall be deemed terminated and of
no further force and effect. The undersigned acknowledges receipt from the
Company prior to the execution of this proxy of a Notice of Special Meeting of
Stockholders and a Proxy Statement dated February __, 2010.
Dated: , 2010
----------------------------
-----------------------------------------
Signature of stockholder
-----------------------------------------
Signature of stockholder if held jointly.
Please sign exactly as your name appears
hereon. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title. If
shares are held jointly, each holder
should sign.
* Please fold and detach card at perforation before mailing. *
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19
FIRST MARINER BANCORP REVOCABLE PROXY
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR EACH OF PROPOSALS LISTED BELOW. IF ANY OTHER BUSINESS IS
PRESENTED AT THE SPECIAL MEETING, THIS PROXY WILL BE VOTED BY THOSE NAMED IN
THIS PROXY IN ACCORDANCE WITH THE DETERMINATION OF A MAJORITY OF THE BOARD OF
DIRECTORS. AT THE PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER
BUSINESS TO BE PRESENTED AT THE SPECIAL MEETING. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY ON THE HOLDERS THEREOF TO VOTE WITH RESPECT TO THE
LISTED PROPOSALS AND MATTERS INCIDENT TO THE CONDUCT OF THE SPECIAL MEETING.
The Board of Directors recommends a vote "FOR" proposals #1, #2, and #3.
1. The approval of the redemption of up to $26.0 million aggregate liquidation
amount of trust preferred securities in exchange for up to $2.6 million of
common stock and warrants to acquire additional shares of common stock.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
2. The approval of an issuance of shares in a non-public offering in an amount
in excess of 20% of our outstanding shares of common stock.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
3. To grant management the authority to adjourn the special meeting to solicit
additional proxies in the event there are insufficient votes to approve the
foregoing proposals.
/_/ FOR /_/ AGAINST /_/ ABSTAIN
* Please fold and detach card at perforation before mailing. *
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