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Issuer Free Writing Prospectus filed pursuant to Rule 433
Registration No. 333-163560
Issuer Free Writing Prospectus dated February 3, 2010
Relating to the Preliminary Prospectus dated January 21, 2010
INFORMATION
FOR IMMEDIATE RELEASE
FIRST MARINER BANCORP
1501 S. Clinton Street
Baltimore, Maryland 21224
FOR FURTHER INFORMATION CALL
Mark A. Keidel
410.558.4281
FIRST MARINER BANCORP ANNOUNCES AGREEMENT TO EXCHANGE
COMMON STOCK AND WARRANTS FOR TRUST PREFERRED SECURITIES
BALTIMORE, MD - FEBRUARY 3, 2010 - First Mariner Bancorp (Nasdaq: FMAR)
announced today that it has entered into an agreement with its Chairman and
Chief Executive Officer, Edwin F. Hale, Sr., who has agreed to purchase trust
preferred securities issued by Mariner Capital Trust II, Mariner Capital Trust
IV and Mariner Capital Trust VIII. Mr. Hale, through the agreement with First
Mariner Bancorp, has agreed to exchange $20.0 million of the trust preferred
securities for $2.0 million in common stock of First Mariner Bancorp plus
warrants to purchase shares equal to 20% of the shares issued in the exchange.
Mr. Hale has agreed to purchase the trust preferred securities, which have an
aggregate liquidation amount of $20.0 million, for $2.0 million.
The exchange is subject to the approval of the Company's stockholders under the
Nasdaq Marketplace Rules. The Company intends to submit a proposal for the
approval of the exchange for the consideration of its stockholders as soon as
possible.
Mr. Hale commented, "I am pleased to have the opportunity to exchange $20.0
million of debt for common stock valued at $2.0 million and warrants. This will
provide a significant benefit to the Company by canceling $20.0 million of its
debt and increasing its equity. There will be immediate value added to the
Company and its stockholders as this exchange will substantially increase its
consolidated capital ratios, improve tangible common equity as a percentage of
assets, utilize a significant level of its deferred tax assets, and improve its
debt to equity ratio. All of these positive effects will happen without diluting
the book value per share of existing shares." Mr. Hale continued, "I am fully
committed to recapitalizing the Company and have confidence in our success. This
is yet another step forward in our overall plan to raise capital for the
Company. We anticipate that the impact of the transaction will bring us much
closer to achieving our goal of meeting and exceeding the capital requirements
established in the Company's Written Agreement with the Federal Reserve Bank,
and will further support our efforts to recapitalize the Company and the Bank,"
Mr. Hale concluded, "As a result this investment in the Company through the
purchase and exchange of the trust preferred securities, I anticipate that I
will not purchase shares of common stock in our upcoming rights offering".
The Trust Preferred securities subject to the exchange are hybrid securities
with characteristics of both subordinated debt and preferred stock. The
securities are carried as debt on the Company's statement of condition. First
Mariner Bancorp and many bank holding companies have utilized these securities
for their favorable tax, accounting and regulatory capital treatments. Upon
completion of the agreed upon exchange, the Company intends to cancel the $20.0
million in trust preferred securities in exchange for common stock and warrants,
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eliminating this significant long term debt. The exchange is expected to
increase stockholders' equity by approximately $12.8 million.
Under the agreement, First Mariner Bancorp will acquire the trust preferred
securities in exchange for consideration consisting of shares of First Mariner
common stock and warrants to buy First Mariner 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
"20-Day Average Closing Price"). The value of $2.0 million equals the amount the
investors paid to acquire the securities. In the event that by June 30, 2010 the
Company completes a public or private offering of its common stock for a price
that is lower than the 20-Day Average Closing Price, then the Company will issue
additional shares of common stock so that the total shares issued would be
calculated based on the price per share at which shares were sold in the public
or private offering.
In addition to the common stock, Mr. Hale will receive warrants to purchase a
number of shares equal to 20% of the Initial Shares. The exercise price for the
warrants will be the lesser of (i) the 20-Day Average Closing 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 exchanged for such trust preferred securities exclusive of any warrants,
warrant shares or warrant prices. The warrants will be exercisable for a period
of five years.
The agreement further provides that in the event that on or prior to June 30,
2010 First Mariner Bancorp enters into an agreement to acquire other trust
preferred securities 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 this transaction relative to the $20.0
million aggregate liquidation amount of trust preferred securities to be
exchanged, the investors also will receive additional warrants at the same
exercise price. The number of additional warrants would be such that the
relative value of the aggregate consideration to be paid in this transaction
equals the relative value of the aggregate consideration to be paid in the
subsequent transaction, provided that the number of shares subject to the
additional warrants could not exceed 20% of the Initial Shares.
Other directors and executive officers of the Company have agreed to purchase
trust preferred securities issued by Mariner Capital Trust IV with an aggregate
liquidation amount of $6.0 million. The Company may seek to negotiate a
substantially identical agreement for the exchange of common stock and warrants
for that $6.0 million of trust preferred securities. Any such exchange also
would be expected to be subject to the approval of the Company's stockholders
under the Nasdaq Marketplace Rules. However, no agreement with the holders of
the $6.0 million of trust preferred securities exists and that $6.0 million of
trust preferred securities will remain outstanding unless and until an agreement
is reached with the holders of the trust preferred securities.
The shares of stock, warrants and stock issuable upon the exercise of warrants
have not been registered under the Securities Act of 1933, as amended and may
not be offered or sold in the United States absent registration or an applicable
exemption from such registration requirements.
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1st Mariner Bancorp is a bank holding company with total assets of $1.38
billion. Its wholly owned banking subsidiary, 1st Mariner Bank, with total
assets of $1.37 billion, operates 24 full service bank branches in Baltimore,
Anne Arundel, Harford, Howard, Talbot, and Carroll counties in Maryland, the
City of Baltimore, and Shrewsbury, Pennsylvania. 1st Mariner Mortgage, a
division of 1st Mariner Bank, operates retail offices in Central Maryland and
the Eastern Shore of Maryland. 1st Mariner Mortgage also operates direct
marketing mortgage operations in Baltimore County. 1st Mariner Bancorp's common
stock is traded on the NASDAQ Global Market under the symbol "FMAR". 1st
Mariner's Website address is www.1stMarinerBancorp.com, which includes
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comprehensive level investor information.
This press release contains forward-looking statements as defined by the Private
Securities Litigation Reform Act of 1995. Forward-looking statements do not
represent historical facts, but are statements about management's beliefs, plans
and objectives about the future, as well as its assumptions and judgments
concerning such beliefs, plans and objectives. These statements are evidenced by
terms such as "anticipate," "estimate," "should," "expect," "believe," "intend"
and similar expressions. Although these statements reflect management's good
faith beliefs and projections, they are not guarantees of future performance and
they may not prove true. These projections involve risk and uncertainties that
could cause actual results to differ materially from those addressed in the
forward-looking statements, including the uncertainty of the receipt of
stockholder approval of the exchange and the Company's continuing ability to
fully utilize its net operating loss carryforwards. For a discussion of other
risks and uncertainties, see the section of the periodic reports that 1st
Mariner Bancorp files with the Securities and Exchange Commission entitled "Risk
Factors."
First Mariner Bancorp will file a preliminary proxy statement concerning the
exchange with the Securities and Exchange Commission (the "SEC") and expects to
file and mail a definitive proxy statement to shareholders as soon as
practicable. Shareholders of First Mariner Bancorp are urged to read the proxy
statement when it is available because it will contain important information.
Investors are able to obtain all documents filed with the SEC by First Mariner
Bancorp free of charge at the SEC's website, www.sec.gov. In addition, documents
filed with the SEC by First Mariner Bancorp may be read and copied at the SEC's
public reference room at 100 F Street, N.E., Washington, DC. The directors,
executive officers, and certain other members of management and employees of
First Mariner Bancorp are expected to be participants in the solicitation of
proxies in favor of the exchange from the shareholders of First Mariner Bancorp.
Information about the directors and executive officers of First Mariner Bancorp
will be included in the proxy statement to be filed with the SEC.
The Company has filed a registration statement (including a preliminary
prospectus) with the SEC for the offering to which this communication relates.
Before you invest, you should read the prospectus and other documents the issuer
has filed with the SEC for more complete information about the issuer and this
offering. You may get these documents for free by visiting EDGAR on the SEC
website at www.sec.gov. Alternatively, the issuer will arrange to send you the
prospectus if you request it by calling toll free 1-888-742-1305. The documents
can also be obtained for free from the "Investor Relations -- Documents" section
of the Company's website at
http://www.snl.com/Irweblinkx/doc.aspx?IID=1024706&DID=10449498.
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