Carrollton Bancorp in Baltimore said Friday that it will take a $1.2 million after-tax charge to its second-quarter earnings after falling victim to a check-kiting scheme.
The $350 million-asset Carrollton is the second Baltimore banking company to be duped by the scheme, which, according to a report last week in The Sun of Baltimore, was perpetrated by A&B Check Cashing Inc.
Late last month the $800 million-asset BCSB Bankcorp Inc. announced that it would record an after-tax charge of $6.9 million for its fiscal third quarter, which ended June 30, for losses incurred in the scheme. Those losses most likely will erase BCSB's earnings for this fiscal year.
A&B, which provides check-cashing services in liquor stores and supermarkets, was a customer of both Carrollton and BCSB. The Federal Bureau of Investigation is looking into allegations of check kiting, and Maryland's Commissioner of Financial Regulation issued a cease-and-desist order against A&B last month.
As a result of the charge, Carrollton expects to report only $18,000 of earnings for the second quarter, versus $868,000 for the first quarter.
Carrollton said that it is "aggressively pursuing collection of the loss from the customer" and will be able to satisfy the capital requirements of its regulators.
