Total assets also declined to $1.25 billion from $1.4 billion a year ago. A key reason for the decline was a $45 million decrease in outstanding commercial loans and a $23 million drop in residential construction loans, executives said.

First Mariner has stopped issuing ‘‘Alt-A” mortgages — loans falling between prime and high-risk subprime quality — through its wholesale lending division, said CEO Edwin F. Hale Sr. The company has also decided to close its wholesale lending operation and taken steps to modify underwriting guidelines and strengthen borrower qualification terms.

The bank will slow its development of new branches and ‘‘eliminate any poor-performing locations,” Hale said. Some job cuts are expected, mostly through attrition, he said.

‘‘Despite the challenges arising from wholesale mortgage lending, we are seeing strong performance in our reverse mortgage lending, consumer finance and investment brokerage platforms,” Hale said.

Provident Bankshares Corp. of Baltimore saw residential mortgage loans decline by $92 million, or 23 percent, in its second quarter from a year ago. Unlike First Mariner, however, Provident still showed a profit. But the $15.5 million in net income was down 22.5 percent from a year ago.

Home equity, commercial real estate and commercial business loans all increased for the quarter.

Home foreclosures continued to increase in September across Maryland from a year ago, according to Irvine, Calif., data company RealtyTrac. Last month, the state had about 2,800 foreclosure filings, a rise of 393 percent from September 2006.

Nationally, the increase was 99 percent for September. However, Maryland’s rate of one foreclosure per 806 households in September was below the national average.

Some banks have bucked the trend to see residential mortgage loans rise in the second quarter. M&T Bank Corp. of Buffalo, N.Y., the fourth largest bank in Maryland in deposits, had an increase of $1 billion, or 21 percent, in consumer real estate loans and leases in the quarter.

M&T works hard with qualified borrowers who don’t carry as much risk, said Atwood Collins III, president of M&T’s mid-Atlantic division in Baltimore.

‘‘The residential mortgage loan market is not what it was two years ago, but qualified borrowers need not worry,” Collins said.

Acacia Federal Savings Bank, a Falls Church, Va., bank, has actually increased its mortgage staff at a time when many banks are downsizing. Acacia added 12 mortgage representatives in September, doubling the staff, executives said.

The move followed three months of record mortgage volume. Most of the new hires came from the McLean, Va., office of American Home Mortgage, a national lender that filed for bankruptcy in August.

‘‘As a conservative bank, we find the best strategy is often counter-cyclical,” James Barber, Acacia executive vice president, said in a statement. ‘‘We verify loan information, keep a close relationship with the customer and keep much of the business in our own portfolio.”

The credit crunch probably has reached the bottom, said Paul Joegriner, co-CEO of American Partners Bank, a small but growing Bethesda community bank.

Many banks and other lenders are curbing the high-risk loans that come with skyrocketing interest rates, he said.

‘‘Subprime borrowers need to be able to buy homes,” Joegriner said. ‘‘They need to be educated to buy the right way.”

Large in-state banks are vanishing

A decade ago, half of the eight largest banks in deposits in Maryland were headquartered in the state. Today, there is onlyone — Provident Bank.

2007

1996

* in billions of dollars

** PNC acquired Mercantile in 2007; market share figures are combined for June 2007