First Mariner Denies Takeover of Another Maryland Bank

First Mariner Bancorp says it recently purchased a 24.9% stake in another Maryland bank to collect collateral on a debt — not to take it over.

First Mariner in Baltimore bought 1.8 million shares of Cecil Bancorp in Elkton, Md., according to a filing with the U.S. Securities and Exchange Commission on Friday. News quickly spread of the stock acquisition by First Mariner, which had negative capital ratios at yearend. First Mariner issued a clarification Monday, stating Cecil’s "shares were obtained through the collection process of a defaulted loan," not in order to acquire the bank. The defaulted debtor used shares in Cecil as collateral on the loan.

First Mariner said in its annual report filed March 27 that it did not have enough capital to meet a regulatory order, nor was it certain it could raise the capital. The company had secured a $36.4 million commitment from New York hedge fund Priam Capital I LP a year ago contingent upon First Mariner raising an additional $123.6 million from other investors. Neither of the capital efforts has been completed.

First Mariner had a total risk-based capital ratio of negative 2.6% at Dec. 31.