We reported a few weeks ago that First Mariner Bank had entered into a profit sharing agreement with LTC Global which may result in the acquisition of its reverse mortgage subsidiary Next Generation Financial Services over the next 18 months and now its parent company is looking to raise $20 million.
According to the Baltimore Business Journal, NGFS’s parent company (First Mariner Bank) is under orders from federal banking regulators to increase its Tier 1 capital ratio and total risk based capital ratio which stood at 5.4 percent and 8.4 percent respectively as of Sept. 30, the company said in its filing.
First Mariner Bancorp, the parent company of First Mariner Bank, plans to offer up to $20 million in stock to existing shareholders. The proceeds of the sale would be used “to improve First Mariner Bank’s capital position and the company’s consolidated capital position,” according to the filing.
Regulators want the bank to increase its Tier 1 capital ratio and total risk-based capital ratio to 7.5 percent and 11 percent respectively by June 30, 2010.
As far as the sale of NGFS is concerned, according to the SEC filing, the deal is subject to numerous conditions which include that the parties obtain consents and approvals from certain lenders and governmental agencies that license and supervise the Bank.
One of the challenges LTC Global faces in purchasing NGFS surrounds the licensing requirements. Since NGFS operates under a bank, it’s able to origination nationwide without individual licenses for each state. Odds are good that LTC Global is trying to line up another bank which enables it to continue originating nationwide using a bank charter.