Cecil Bancorp, Inc., a bank holding company Elkton, MD, has entered into stock purchase agreements that aim to raise $30 million through a private placement of stock.
Cecil Bank. Bancorp also announced it has submitted a bankruptcy petition under Chapter 11 in U.S. Bankruptcy Court in Baltimore.
This plan, the terms of which have been agreed to by the company’s creditors, is aimed at reestablishing Cecil Bank as an on-going, well-capitalized community bank.
The bank has been under state and federal supervision for years, due to problems with bad loans. The bank has avoided a takeover by regulators that would occur if capital cannot be raised.
The Cecil Bank customer base includes neighboring New Castle County, DE.
“We are very pleased to reach this stage in what has been a long journey aimed at keeping Cecil Bank in business and serving our customers in Cecil and Harford Counties, as well as the surrounding areas,” said Terrie Spiro, CEO of Cecil Bancorp and Cecil Bank. “We have dealt with a legacy of troubled assets and have worked hard with our creditors and investors to establish a path for recapitalizing the bank and allowing it to move forward as a healthy, profitable institution.”
U.S. Bankruptcy Court in Baltimore will consider Bancorp’s petition this summer. One of the key steps will be a 55-day auction period in which additional bids for Bancorp’s assets will be considered. Any new bids must generate a higher return for creditors in order to be favorably considered. If there are no better bids, the $30 million investment is expected to close and the bankruptcy process would be finalized by the end of August or the beginning of September.
“The reorganization of Cecil Bancorp through this voluntary, process will allow Cecil Bank to be poised for new growth and service in northeastern Maryland,” said Spiro. “Upon approval by the Court and regulatory authorities, the bank will further its mission as a strong and secure community bank. We will meet all federal and state regulatory requirements for being well capitalized.”
Customers of Cecil Bank will not see any changes during the bankruptcy process, as the filing only affects the holding company.
“Cecil Bank has been a fixture in Elkton, Maryland since 1959 and we intend to remain in this community for a long time to come,” Spiro stated. “We are committed to our community, our customers and our employees who have stayed with us through some very challenging times. We thank them and look forward to serving them now and in the future.”
Hovde Group, LLC serves as the exclusive placement agent for the private placement and as financial advisor to Bancorp and Cecil Bank. Nelson Mullins Riley & Scarborough LLP serves as legal counsel to Bancorp and Cecil Bank.