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First Mariner Bancorp Message Board

  • timehusk timehusk Oct 27, 2013 5:30 PM Flag

    Branch visit

    I visited a 1st Mariner branch over the weekend and spoke with the branch manager. I identified myself as a shareholder and she allowed me to ask her some general questions about the company she works for. She is extremely positive about the bank, says the only time they lose accounts is through divorce or fraud, that current customers are very happy with the bank's services, and have been receptive to an increase in the debit fee (from .75 to .85). And the bank's 360 website is gaining traction. Go ahead and check it out for yourselves.
    She is also a shareholder, and says her husband bought shares when things looked really bleak (when it dropped to near zero).
    My only concern was seeing that the branch's outdoor lights were turned on (at noontime) and some of the bulbs were burned out. But images of Joe Flacco are everywhere, and I like the fact that Baltimore's most popular athlete is the face of the bank.
    All in all, the visit confirms my thesis on investing in FMAR: this bank will fully recover and return to a conservative p/e of about 10. That puts shares in a range of $7-$10. And if the company reinstates the dividend, this is a "forever" hold. I am willing to hold shares through the next two earning cycles, even if FMAR posts per share losses. FMAR is not going out of business, even though the current share price seems to indicate people believe that. We'll see if I'm right, and we should know for sure around this time next year. Take care.

    Sentiment: Strong Buy

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    • A bank should have a Tier-1 capital ratio above 10.00, a price to book value under 1.50 and positive retained earnings to have any value. FMAR doesn't meet any of that criteria. In fact it has a negative book value and huge negative retained earnings. It remains on FDIC negative watch list does it not?

      • 1 Reply to y2k7trillionover
      • How would an acquiring bank value FMAR? Probably it would value on the basis of the existing accounts, and those have value. You cannot say that installed base is worthless.

        The negative book value is because of one time events. It's not a forward trend.

        Inability to make positive earnings here is unfortunate. They received too much from refinancings and that has gone away. But if they can even get to breakeven by increasing fees that is enough to let them go to positive earnings as economy recovers.

        The real short-term event is the preferred shares that are due at end of year. But that's only about $15M of par value remaining to be paid? It seems pretty realistic that they can rollver to new preferred shares with a sweetener to extend the maturity.

        The important question here is how can we value a bank that has negative earnings and book value.

 
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