CEOCFO-Members Login
Become A Member!
|
This is a printer friendly page!
The Howard Bank Story Speaks to High Growth Performance…
Outstanding Market Location….
And An Undervalued Sector …
Financial
Community Banks
(HBMD-OTC: BB)
Howard Bancorp, Inc.
6011 University Boulevard, Suite 370
Ellicott City, MD 21043
Phone: 410-750-0020
Mary Ann Scully
Chairman, President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published – December 7, 2007
BIO:
Mary
Ann is the President and Chief Executive Officer of Howard Bank and chairs
the bank’s board of directors. She is a lifelong banker with over 30 years
of varied executive experiences in the Maryland marketplace. In 2003, she
headed the organizing team for Howard Bank, the first new bank to open in
this fast growing, high wealth county in 15 years. Prior to organizing
Howard Bank, Mary Ann was employed by Allfirst Bank (formerly The First
National Bank of Maryland and now M&T Bank) from 1973-2003. Included in the
positions she held were Executive Vice President for Regional Banking,
Senior Vice President for Strategic Planning, Mergers and Acquisitions, and
Senior Vice President / Group Head of International Banking. As EVP for
Regional Banking for Allfirst Bank, Mary Ann managed all branch, small
business and middle market customer activities in four states and the
District of Columbia
Mary Ann has been a Howard County resident since 1995.She serves as a
community leader and presently chairs the Howard County United Way
Partnership Board and serves on the board of the United Way of Central
Maryland, is a Horizon Foundation board trustee and is Vice Chair and a
board member of the Columbia Foundation as well as the Howard County
Women’s Giving Circle. She is also a member of the Columbia Rotary and a
member of St. Louis Parish in Clarksville, Maryland and is leading the
Howard Community College strategic Commission on the Future.
In 2007, Mary Ann was recognized as an honoree in the Howard County Women’s
Hall of Fame and was named Entrepreneur of the Year by the Howard County
Chamber of Commerce. In 2002, 2005 and 2007, Mary Ann was recognized as one
of Maryland’s Top 100 Women by The Daily Record, was one of the Baltimore
Business Journal’s 2004 “Enterprising Women” and was a 2005 Alumni Laureate
honoree for Loyola College.
Mary Ann and her family reside in West Friendship.
Company Profile:
Opened
in August of 2004, Howard Bank is the only locally owned and locally
operated bank in Howard County, Maryland.
The Bank is
an organization focused on serving small businesses operating in Howard
County and their owners and employees, as well as other professionals living
in Howard County. Howard County is one of the fastest growing counties in
Maryland with a well-educated and well-compensated labor force. It is the
wealthiest county within the wealthiest state in the United States in terms
of household income.
This market
is served through four full service branch offices - located in eastern
Ellicott City, Columbia, Laurel ( near the new town of Maple Lawn), and in
western Ellicott City, Maryland (estimated opening date of the second
quarter of 2008) and additionally through the operation of couriers picking
up non-cash deposits and non negotiable documents throughout the county as
well as the recent roll-out of the Hands on Connection product- the bank’s
remote deposit service.
Howard Bank is the only bank headquartered in the county focused on the
business and professional segment. Four physical branches allow the bank to
better serve those businesses in that immediate area but also allow the
bank, in the immediate radius of those branches, to operate as a traditional
community bank - focused on broader mass affluent and other community needs.
These branches also serve as public markers of the bank’s presence,
improving access to broader funding sources and thus improving overall net
interest margins. Land in the county, given its relatively small size but
very attractive location between the cities of Baltimore and Washington, is
both scarce and becoming more costly. Seizing limited attractive
opportunities to locate in high traffic, high visibility, growing areas of
the county will, the bank believes, ultimately position the bank well as
those types of locations become increasingly scarce.
CEOCFO:
Ms. Scully, what was your vision when the bank was started and where are you
today?
Ms. Scully: “Our vision for Howard Bank
was to rapidly grow the bank and shareholder value by combining our
customers’ access to the best of today’s technology with an old fashioned
focus on face-to-face meetings For Howard Bank, this means spending a lot
of time getting to know someone in order to foster and encourage
relationship development and relationship management. New technology is
demanded by clients and is increasingly available to younger community banks
because of the growth in web based products and the associated growth in
outsourcing. The challenge was then to bring this best of both to a very
attractive market that, in our opinion, had been relatively underserved by
other institutions despite great demographics in terms of new business
formation, wealth and population growth.”
CEOCFO: How has that worked for you?
Ms. Scully: “Our story and message have
been extremely well received. We had, aggressive goals. The financial model
is very much a growth model: to grow the balance sheet initially and,
through that initial emphasis on balance sheet scale, to grow profits and
thus, to grow long-term shareholder value. We have, in many respects,
exceeded the initial projections that we had financially, and that is very
important because it tells us that customers are embracing the story.
Customer loyalty is what all financial services companies seek. ”
CEOCFO: Who is your typical customer?
Ms. Scully:
“We have a wide variety of businesses and individuals as customers, but
some patterns emerge. Most of our clients are either small to medium sized
business who are still growing or transitioning in other ways and looking
for assistance and advice on that growth and/or the owners and professionals
who work in those businesses, many of whom live in the county as well.”
CEOCFO:
How has the area been faring under the downturn?
Ms. Scully:
“As a long-term banker, I would never want to say that this is an area that
will not be affected; all markets are ultimately affected by slowing - but
to different degrees. While Maryland has seen an uptick in residential
mortgage foreclosures, we have not seen anything on the scale of the
California, Florida, Nevada, Ohio, and Michigan foreclosures. We certainly
see residential builders in our market who are seeing a significant slowdown
in sales, and we see land developers that are being impacted negatively as
well. It is too early to tell whether that will affect the commercial
market. Fortunately, the commercial market is fortified by something other
than strong construction and development activity. There is a strong and
growing defense contracting and sub-contracting industry that drives much of
the economic growth in this market because of the region’s proximity both to
Washington DC and to military bases like Fort Meade. Fort Meade, by the way,
is slated to be one of the beneficiaries of the ongoing base realignment
activities in the country. We also benefit from the county’s core personal
wealth. The ultimate strength of our consumer relative to some other
markets’ consumers creates a certain diversification of service businesses
When this is combined with the concentration of some of these niche
businesses like government contractors and subcontractors, our potential
for greater economic resilience is powerful. Our economy is not growing at
the rate that it was before but it is not, today, slowing either. None of
this means that there will not be an impact from the larger global and
national economic trends, but the impacts are less worrisome than in some
other markets.
I should also
note that Howard Bank is primarily a commercial bank but we do originate
our own mortgages .Most of the mortgages we have on our books are driven by
relationships that were initially focused on a commercial relationship and
evolved with an owner or a professional in that business.”
CEOCFO:
How is Howard Bank different?
Ms. Scully:
“We are different in many ways, but most importantly, we are different in
the breadth, depth and caliber of experience of our people. And with those
people, we have structured a very flat organization structure and
have created a very different culture. We have been able to attract and
retain a very strong staff. A significant percentage of our staff at all
levels of the company are long time bankers. Admittedly, we are a small
company so I am candid in acknowledging that it may be relatively easier for
us to insist on this consistently high quality of staff but whatever has
caused that success has led to a win for our clients. The fact of the matter
is that our executive management team, our relationship managers, our branch
managers, our customer support staff have far more experience at their level
than the staffs at many of our competitors. What does it mean if we
are delivering more experienced people to focus on the problems, challenges
and opportunities of smaller companies? It means that Howard Bank’s small
business customers have, quite simply, access to better advice. We also have
very active and proactive involvement from our executive management and our
board of directors. One of the reasons why people bank with community banks
is because they want to know that they are “close” to the decision-makers;
that means that they want to actually know the decision-makers. Clients
recognize that when they have a deeper connection with the decision-makers,
they have much more flexibility and receive customized solutions. We deliver
on that expectation. I make a lot of calls on clients. In many cases, I am
there on the first call. We aren’t just introducing the bank; we are
delivering on a brand promise. Finally, our culture is much more focused on
finding solutions than that of other banks. The ever present challenge to a
customer problem is ‘How could we make this work?’ We don’t start with the
premise of why something won’t work. We are very proud of these differences.
And we know that they are difficult for others to replicate. It’s a
strategic advantage."
CEOCFO:
How do you reach your new customers?
Ms. Scully:
“Largely through networking and word-of-mouth. We have a proactive board, a
shareholder base that is largely local and personally known to us because of
the way we have raised capital. We have never used an investment bank in any
of our capital raises Capital raising has always been done by the board and
executive management reaching out to people and meeting shareholders face to
face. Our shareholders are more engaged and, therefore, speak highly of the
bank, making sure people know about the bank. Of course, we also cultivate
the normal referral sources and try to reward these potential partners-
accounting firms, law firms, brokerage firms. We also depend on client
referrals. We are very active in the community. You might have seen on our
website that one of the things we have committed to from the beginning is
that we require all of our managers to be involved in community activities.
That doesn’t just mean executive managers, or relationship managers or even
branch managers, but our customer support supervisory staff are all involved
in community activities and most of them at a board level. We have become,
in a very short time, a very integral part of the community. That makes that
networking approach work. We advertise but much of our advertising is
institutional advertising, so it is more about introducing and reinforcing
the brand than it is about “flogging” a particular product.”
CEOCFO:
You take a proactive approach with your clients; tell us about that.
Ms. Scully:
“We have a commitment at Howard Bank that we will call you before you call
us. We reach out to prospective clients, but we also reach back out to
existing clients. And we reach out from multiple points in the company- the
board, executive management, relationship managers, branch managers,
customer support. So at the end of the day, we just do a lot of picking up
the phone and checking up on people. We also have a goal to sustain a
culture of both individual and team excellence. All of us are always
thinking about, ‘How do I carry the ball a little bit further down the field
today? To do that we cannot just react to issues or problems. Our definition
of excellence revolves around reaching out to anticipate
and prevent problems. That’s what we mean by proactivity."
CEOCFO:
Do you see the need for new branches or will there be new branches in the
future?
Ms. Scully:
“We are actually building our fourth branch now. Our fourth location should
be a great venue. It is on one of the busiest roads in the community- a road
where according to FDIC deposit share data, half of the deposits in the
county are domiciled. We are believers in branches because, in the
long-term, they are very effective deposit gatherers, but they also provide
invaluable opportunities for people to have access to multiple outlets where
they can have those face-to-face conversations that we dreamt of when we
created the bank. We still carefully look at other sites for their potential
further in the future."
CEOCFO:
Are there services that you do not currently offer that you would like to
offer?
Ms. Scully:
“We believe that we are where we need to be. We have just added within the
last six months a check imaging service that allows us to reach out to some
clients, who might have been borrowing customers in a contiguous geography,
but couldn’t easily deposit with us. In general, we have demonstrated that
if we believe that our target customer needs a new product we will make the
commitment to offer it. While we feel today like we are in good shape, the
market is changing all the time and we are constantly evaluating that.”
CEOCFO:
Why should potential investors be interested?
Ms. Scully:
“Long term value is usually most influenced by markets served, industry
sector influences and individual performance- not in that order. We operate
in a very attractive market; most of our focus is on the wealthiest county
in the wealthiest state in the country. It is one of the top five counties
in the country and is the leader in the state of Maryland in terms of
household income. It is also a vibrant county from an education perspective.
Examining the number of branches per household, or per business, as a proxy
for potential, shows that Howard County is less over served than most
counties in the region. Our sector- commercial banking or financials
services is certainly out of favor right now; that implies value for me. We
believe that community banking; especially de novo community banking is a
good place for investors to be. Community banks have generally performed
better-in the long term, from a shareholder value perspective, than the
larger banks. I think that when the markets step back and look at community
banks they will realize that many community banks haven’t been buying
brokered loans or selling actively into the secondary market. Therefore, the
fact that the mortgage brokerage business is in dire straights right now
doesn’t affect our sub-sector. The fact that we hold our originated loans in
our portfolio means that we are not negatively impacted by the disarray of
the secondary market. It is really a very attractive sector. So you have a
great location, and an undervalued sector. What about individual
performance? This bank has done exceptionally well in terms of balance
sheet growth, achieving profitability, attracting capital repeatedly without
using the services of an investment banker, attracting strong staff. I
think this is a home run story. I have to add that anyone looking at our
proxies on our website would see that not only the board but also executive
management of this bank has literally put their money where their mouth is.
If you see the people that are closest to an organization continuing to
invest in it, that is always a good thing.”
disclaimers
Any reproduction or further distribution of this
article without the express written consent of CEOCFOinterviews.com is prohibited.
|
