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Howard Bank sells mortgage business to ex-employees

Howard Bank is getting out of the mortgage business, its parent company announced Tuesday.

Late in the fourth quarter, Howard Bancorp Inc. reached an agreement with some managers in its mortgage division to release them from their employment contracts and let them form a new company to buy the mortgage line of business, the bank said in its earnings report for the quarter.

In the report, Howard Bank Chairman and CEO Mary Ann Scully characterized the bank’s plan to exit the mortgage business as “creatively structured” and said it resulted in a modest net gain for the bank, which is focused on building its core commercial banking business.

Howard Bank CEO Mary Ann Scully. (File)

Howard Bank CEO Mary Ann Scully. (File)

“This focus has been reinforced with the financially attractive exit of our residential mortgage banking business,” Scully said. “And that focus will continue to bear fruit for all of our stakeholders.”

The newly formed company, which Howard Bank did not immediately identify, paid Howard Bank $750,000 in the deal, in which the company assumes Howard Bank’s mortgage employees and Howard Bank transfers an internet domain name, vamortgage.com, to the new company.

Internet records show the domain name belongs to VA Domain LLC of Baldwin, Maryland. The company did not respond to inquiries from The Daily Record.

The deal allows for a transition period of roughly 45 days before Howard Bank ends its mortgage banking operations, the bank said. Howard Bank expects to have most of its residential first lien mortgage pipeline finalized by the end of the first quarter.

The bank in 2019 settled a lawsuit stemming from mortgages that originated at First Mariner Bank, which Howard acquired in 2018. The confidential settlement cost the company $700,000.

Howard Bank’s profit rose in the fourth quarter. Net income rose to $5.9 million, a nearly 4,000% increase from $145,000 in 2018, the year of the acquisition. Net income in the fourth quarter was also higher than the $4.6 million reported in the third quarter.

Earnings per share also rose to $0.31 per basic and diluted common share, up from $0.24 per share for the third quarter of 2019 and 1 cent per share for the fourth quarter of 2018.


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