FEDERALDEPOSIT INSURANCE CORPORATION WASHINGTON,D.C.

FEDERAL DEPOSIT INSURANCE CORPORATION

WASHINGTON, D.C.

First Mariner Bank, Baltimore, Maryland (“Bank”), through its board of directors (“Board”), having been advised of its right to the issuance and service of a NOTICE OF CHARGES AND OF HEARING detailing the unsafe or unsound banking practices alleged to have been committed by the Bank and of its right to a hearing on the alleged charges under section 8(b) of the Federal Deposit Insurance Act (“Act”), 12 U.S.C. § 1818(b), and having waived those rights, entered into a STIPULATION AND CONSENT TO THE ISSUANCE OF AN ORDER TO CEASE AND DESIST (“CONSENT AGREEMENT”) with counsel for the Federal Deposit Insurance Corporation (“FDIC”) dated September 17, 2009, and having also entered into a Stipulation and Consent to the Issuance of an Order to Cease and Desist, dated September 17, 2009, with the Commissioner of Financial Regulation for the State of Maryland (“Commissioner”), whereby, solely for the purpose of this proceeding and without admitting or denying the alleged charges of unsafe or unsound banking practices, the Bank consented to the issuance of an ORDER TO CEASE AND DESIST (“ORDER”) by the FDIC, and consented to the adoption of the ORDER by the Commissioner.

 

The FDIC considered the matter and determined that they had reason to believe that the Bank had engaged in unsafe or unsound banking practices.  The FDIC, therefore, accepted the CONSENT AGREEMENT and issued the following:

 

IT IS ORDERED, that the Bank, institution-affiliated parties, as that term is defined in section 3(u) of the Act, 12 U.S.C. § 1813(u), of the Bank and its successors and assigns, cease and desist from the following unsafe or unsound banking practices:

 

1.

Operating the Bank with an inadequate level of capital protection for the kind and quality of assets held by the Bank;

2.

Operating the Bank with inadequate earnings to support operations, maintain capital levels, and support loan loss reserves appropriate to prospective economic conditions;

3.

Operating the Bank with an excessive level of adversely classified loans or assets;

4.

Operating the Bank with inadequate management policies and practices; and

5.

Operating the Bank with inadequate liquidity in light of the Bank’s reliance on non-core funding, its capital position, and prospective funding needs.

IT IS FURTHER ORDERED, that the Bank, its institution-affiliated parties and its successors and assigns take affirmative action as follows:

1.           The Bank shall have and retain qualified management.  Each member of management shall possess qualifications and experience commensurate with his or her duties and responsibilities at the Bank.  The qualifications of management personnel shall be evaluated on their ability to:

 

(i)

comply with the requirements of this ORDER;

(iii)

comply with applicable laws and regulations; and

(iv)           restore all aspects of the Bank to a safe and sound condition, including improving the Bank’s asset quality, capital adequacy, earnings, management effectiveness, and liquidity.

2.            (a)           While this ORDER is in effect, the Bank shall not extend, directly or indirectly, any additional credit to or for the benefit of any borrower whose existing credit has been classified “Loss” by the FDIC or the Commissioner as the result of its examination of the Bank, either in whole or in part, and is uncollected, or to any borrower who is already obligated in any manner to the Bank on any extension of credit, including any portion thereof, that has been charged off the books of the Bank and remains uncollected.  The requirements of this paragraph shall not prohibit the Bank from renewing credit already extended to a borrower after full collection, in cash, of interest due from the borrower.

 

(b)           While this ORDER is in effect, the Bank shall not extend, directly or indirectly, any additional credit to or for the benefit of any borrower whose extension of credit is classified “Doubtful” and/or “Substandard” by the FDIC or the Commissioner as the result of its examination of the Bank, either in whole or in part, and is uncollected, unless the Board has signed a detailed written statement giving reasons why failure to extend such credit would be detrimental to the best interests of the Bank.  The statement shall be placed in the appropriate loan file and included in the minutes of the applicable meeting of the Board.

3.            (a)           Within 30 days of the end of the calendar year 2009, the Bank shall formulate and submit to the Regional Director of the New York Regional Office of the FDIC (“Regional Director”) and the Commissioner for review and comment a written profit plan and a realistic, comprehensive budget for all categories of income and expense for calendar year 2010.  The plan required by this paragraph shall contain formal goals and strategies, be consistent with sound banking practices, reduce discretionary expenses, improve the Bank’s overall earnings and net interest income, and shall contain a description of the operating assumptions that form the basis for major projected income and expense components.

 

(b)          The written profit plan shall address, at a minimum:

 

(iii)

A recommendation for reducing the Bank’s cost of funds.

 

(c)          Within 30 days after the end of each calendar quarter following completion of the profit plan and budget required by this paragraph, the Board shall evaluate the Bank’s actual performance in relation to the written profit plan and budget, record the results of the evaluation, and note any actions taken by the Bank in the minutes of the Board meeting when such evaluation is undertaken.

 

(d)          A written profit plan and budget shall be prepared for each calendar year for which this ORDER is in effect and shall be submitted to the Regional Director and the Commissioner for review and comment within 30 days after the end of each year.  Within 30 days after receipt of all such comments from the Regional Director and the Commissioner, and after adoption of any recommended changes, the Board shall approve the written profit plan and budget, which approval shall be recorded in the minutes of the applicable Board meeting.  Thereafter, the Bank shall implement and follow the plan.