1st Mariner Bancorp. declined to identify the customer who lost nearly 25 percent of Cecil Bancorp's total shares to 1st Mariner in a collateral claim on a bad loan. The only person with such a significant stake in Elkton-based Cecil is its chairman, Charles F. Sposato, according to regulatory filings.
Florida. His Cecil County home is in foreclosure, with $1 million sought by debt collectors, Cecil County court records show.
1st Mariner reported Friday to the Securities and Exchange Commission that it had acquired 24.9 percent of Cecil's shares.
While the deal on its face could indicate that 1st Mariner was acquiring small local banks, the Baltimore bank released a "clarification" Monday afternoon outlining the mundane reason for the transaction: It simply was seizing collateral on a failed loan.
1st Mariner has been dogged by bad loans and has worked to shore up its finances while under scrutiny by federal and state bank regulators. The company lost $30.2 million last year, according to an SEC filing.
Cecil lost $4.7 million last year, according to an SEC filing.
Sposato was the largest individual shareholder in Cecil, owning 1.4 million shares, or 36.9 percent, according to last year's proxy statement filed with the SEC. The next-largest individual shareholder is Mary B. Halsey, the company's chief executive officer, with 5.69 percent, the proxy showed.
Sposato could not be reached for comment Monday. Cecil Bank officials declined to comment.
1st Mariner took ownership of 1.8 million shares, or 24.9 percent of the company, from the individual borrower connected to Cecil Bancorp, according to an SEC filing Friday. 1st Mariner took the shares on March 28, when they finished trading at 75 cents, for a value of about $1.35 million.
Shares of Cecil, which like 1st Mariner's trade in the over-the-counter market, have risen 29 percent since March 28 and on Monday stood at 90 cents. That makes 1st Mariner's new Cecil holdings worth $1.62 million.
1st Mariner executives said in a statement that the company had "no intention of exercising its ownership position to influence Cecil Bancorp's board of directors or management in the performance of their responsibilities."
Both banks were hit hard by the foreclosure crisis and the recession and struggled to get bad loans off their books.
1st Mariner did not take a loan from the U.S. Treasury's Troubled Asset Relief Program, while Cecil took an $11.5 million loan, which it has not yet repaid, according to SEC filings.
1st Mariner is worth more than Cecil in the over-the-counter stock market. 1st Mariner's market capitalization is $7.92 million, while Cecil's is $6.68 million.