First Mariner Bancorp sets auction procedures for sale of bank unit

By Caroline Salls

Pittsburgh, Feb. 11 - First Mariner Bancorp requested court approval of the bid procedures for the proposed sale of subsidiary 1st Mariner Bank to a new bank formed by investors, according to a Monday filing with the U.S. Bankruptcy Court for the District of Maryland.

RKJS Bank is the stalking horse bidder. As previously reported, 1st Mariner Bank will be sold for $4.78 million via a transfer of First Mariner's shares in the bank and bank-related assets to the investors.

First Mariner said the sale will recapitalize the bank with about $100 million, enabling it to meet all state and federal capital standards, significantly improving the strength of its balance sheet and advancing its business plan to become one of the region's leading financial institutions.

The investors, led by Priam Capital, Patriot Financial Partners, GCP Capital Partners and TFO Financial Institutions Restructuring Fund LLC, as well as several members of the Baltimore business community, formed an interim bank that signed an agreement with the holding company to acquire 1st Mariner Bank for a cash payment to the holding company, subject to a competitive bidding process for higher and better offers.

If the interim bank is the successful bidder, the agreement calls for it to acquire the bank from First Mariner Bancorp and then recapitalize the bank to a level that will satisfy all capital requirements imposed by the bank's federal and state regulators.

According to the bid procedures motion, RKJS will receive a $1 million break-up fee if it is not the high bidder, consisting of $250,000 due from First Mariner Bancorp and $750,000 due from 1st Mariner Bank, as well as reimbursement of up to $1.75 million of its transaction-related fees and expenses.

Bids will be due about 30 days after the auction procedures order is entered.

The minimum overbid must be at least $250,000 more than the total sum of the purchase price and the stalking horse bidder fee.

Competing bids must also include a commitment to recapitalize the bank at specified levels.

First Mariner, the Baltimore-based holding company for 1st Mariner Bank, filed bankruptcy on Feb. 10. The Chapter 11 case number is 14-11952.

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