For years, Mary Ann Scully considered the creation of Howard Bank the crowning achievement of her banking career.

The Ellicott City, Md., bank has grown from a de novo with a single office in August 2004 into a $1.1 billion-asset, publicly traded company with more than a dozen branches across six Maryland counties.

"It still gives me chills some days to drive past one of our locations and look at the sign," said Scully, Howard's chairman, president and chief executive. "Starting a bank is like giving birth. It's creating something."

But Scully topped that with her deal for 1st Mariner Bank in Baltimore. The acquisition would double her bank's assets, and Howard would move its headquarters to Baltimore, giving the city its first marquee hometown lender since Provident Bankshares was sold to M&T Bank in 2009.

For Scully, the moves will launch a new chapter in a 44-year banking career, while distinguishing her as the woman who returned hometown banking to Charm City. "My goal is to have a bank in Baltimore that's like the banks of the 1970s and 1980s," able to serve any company in the city, Scully said.

Mary Ann Scull, president and CEO of Howard Bank.
"My goal is to have a bank in Baltimore that's like the banks of the 1970s and 1980s," able to service the needs of any company in the city, said Howard Bank CEO Mary Ann Scully.

This combination of vision, charisma and chutzpah, along with Scully's ability to expand her startup bank while the financial crisis took out so many others like it, led American Banker to recognize Scully as an "Enterprising Builder" as part of its 2017 Banker of the Year awards.

A detour into banking

Scully was raised in a Pittsburgh suburb. Her father was an IRS auditor and her mother was a homemaker.

“It was a very strict upbringing,” she said. “My father was a very traditional man. He discouraged my mother from ever working outside the home.”

But he was also an enthusiastic father to two girls. “He put everything into us that I think he would have put into a son. He always said you can be anything you want to be,” Scully said.

Banking wasn’t her first choice.

After graduating from Seton Hill University in Greensburg, Pa., in 1973, the American-studies major planned to attend law school, but wanted to take a break from studying for a couple of years first.

As she began her job hunt, "people told me to look at insurance companies and banking because they had the best training programs," she said. Scully received several offers and eventually accepted one from First National Bank of Maryland, a venerable institution founded in 1806.

At the time Baltimore had a thriving banking scene. It was home to 1 million residents and at least a half dozen banks with $1 billion or more in assets. The city's population today is closer to 600,000 and out-of-state banks have scooped up its largest local institutions.

Scully plans to do her part to reverse those trends. Buying 1st Mariner "brings back something that I remember," she said. "In Baltimore, that means a lot."

Scully's local prominence is noteworthy. Four decades earlier, at First National, she was blocked from entering a commercial banker training program — she says it was because she was a woman.

"I was explicitly told when I said I wanted to be commercial banker that it was not in the cards and that you had to have a master's degree in business before you could do that," she said.

The rejection served as motivation.

Years later — after attending night school —Scully arrived in the credit department, MBA in tow. “No surprise,” she said, “there were all these guys there who didn't have master's degrees."

Scully never held a grudge. “I actually wasn’t that resentful,” she said. “I thought, ‘I’ve got my degree. It’s going to help me. It’s not a bad thing.’ ”

She was right.

Once she added the all-important commercial banking experience, Scully steadily climbed the ranks at First National, which rebranded itself as Allfirst Bank in 1999. She moved from a leadership post in the international banking division to the mergers-and-acquisition team, where she helped engineer the 1998 purchase of the $6 billion-asset Dauphin Deposit Bank in Harrisburg, Pa.

Scully rounded out her 30 years at Allfirst by overseeing its community and middle-market banking operations.

A critical turning point

Scully might have spent her entire career at Allfirst if not for a fraud scandal in 2002.

After topping $15 billion of assets, the company was rocked by the revelation that currency trader John Rusnak had racked up an incredible $691 million in losses over a five-year period, mostly by trading in Japanese yen.

The losses hit Allfirst, by that time a unit of Allied Irish Banks, like a tsunami. Scully, an executive vice president, played a crucial role keeping the company afloat. The network of 200-plus branches she was running provided the liquidity that Allfirst relied on to keep functioning. "Those were scary meetings with regulators proving that we were going to be able to fund ourselves," she said.

The looming regulatory cloud compelled Scully and her team to create innovative financial reports, tracking daily deposit trends over a two-year period to convince examiners that there were no irregularities in Allfirst’s funding.

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"It wasn’t like it was the same bank I had joined in 1973. It had changed. The culture had changed," Scully says of her decision to move on after Allfirst's sale.

Looking back, Scully said her final year at Allfirst was “an incredible experience” that raised her profile within the company.

Still, she felt adrift when M&T bought the company for $3.1 billion in April 2003.

“It was hard," Scully said. “In some respects, the grief had started years before. It wasn’t like it was the same bank I had joined in 1973. It had changed. The culture had changed."

Though M&T discussed new roles with her, Scully opted not to stay. She considered joining another big bank or leaving the industry.

Instead, she made what she called her “most profound career-related decision,” founding a community bank.

Entrepreneur at heart

For most of her time at Allfirst, Scully viewed community banks as bit players in the industry. Her outlook changed radically in her last few years there, however.

“I became this passionate advocate for community banks,” she said. “I would make these speeches: `These are the banks that are doing things that resonate with the customers. Stop dismissing them. Stop looking down on them.’ ”

Not surprisingly, “when I left, lots of people told me the rumor was I was going to start a bank,” Scully said. “I promise you, that wasn’t on my mind at all. I was going to take a two-week vacation, grieve, then decide what I was going to do.”

Still, an intrigued Scully ran the idea past Charles Schwabe, a former colleague at Allfirst and now Howard’s chief risk officer, during a lunch meeting. Schwabe, who had managed Allfirst’s strategic planning unit, quickly recognized the logic behind her plan.

“Mary Ann brought up the idea of starting a community bank,” Schwabe recalled. “I hadn’t thought about it, but as we talked it really made sense.”

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The key to the plan's success lay in Howard County's geography. Though it was a prosperous and growing suburb, nestled between Washington and Baltimore, it had been largely overlooked as banks instead stumbled over each other to carve out niches across the Potomac River in affluent northern Virginia.

"I remember at the time saying to people, Has anybody noticed that Howard County and Anne Arundel County have demographics very similar to Fairfax and Loudoun counties?"

After months of preparation, Scully and Schwabe drafted a compelling business plan.

Scully's methodical approach left a strong impression on Kathleen Murphy, the longtime president and CEO of the Maryland Bankers Association. Scully asked for a meeting to discuss her plans to start Howard —something no other de novo bank executive had done.

“I know lots of other individuals who’ve started banks,” Murphy said. “She’s the only one who ever purposefully asked to consult with me beforehand. It’s a great example of how thoughtful she is.”

Scully raised nearly $17 million, a record at the time for a Maryland de novo, and the bank opened on Aug. 9, 2004.

An unexpected challenge

Howard weathered typical de novo growing pains before hitting its stride a year after opening. It raised another $5 million in 2005 and reached profitability late in 2006. Then the housing market imploded and the Great Recession hit.

“All the surprises in the first few years were pleasant — until the recession,” Scully said.

Through 2007 and into 2008, as the economy nationally was experiencing free fall, Howard still hadn’t sustained any losses. Scully was relieved, obviously, but she wasn’t about to let her guard down, so when the government began offering capital to community banks through the Troubled Asset Relieve Program she was eager for an infusion.

“My board originally didn’t want to do that,” she recalled. “We weren’t seeing any losses. … They asked me, Why would you want to do this?”

For Scully, it was a cautious move, to put Howard in a stronger position when and if losses came.

Things held up through the first quarter of 2008, but then the company began experiencing loan losses that started as a trickle and grew to a steady stream, totaling just under $6 million through 2010. They were offset, however, by the $6 million Howard received from the Troubled Asset Relief Program in February 2009.

Howard lost $2.1 million in 2009, but it’s made money every year since. It repaid the last of its Tarp capital in September 2011.

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“All the surprises in the first few years were pleasant — until the recession,” Scully says.

One of the secrets behind Howard's success, Murphy said, is a powerhouse board and management team that includes two former bank CEOs and another executive who served as market president for two large regional lenders. And Scully's diplomatic skills make her just the personality to manage them, Murphy said.

“There’s an incredible team of leaders at that bank,” Murphy said. “That’s a real credit to [Scully’s] leadership and her ability to put strong people in leadership roles.”

Howard has really hit its stride in 2017. Net income through Sept. 30 totaled $5.3 million, up 27% year over year — even including the impact of $378,000 of costs related to the First Mariner deal. Loans increased 8.6% to $892.2 million, while deposits were up 6.6% to $862.1 million.

The market has responded to Howard’s story: Its shares are up nearly 40% so far this year.

Buying 1st Mariner would bring Howard’s assets to $2.1 billion. Joe Gladue, an analyst at Merion Capital Group, said that while neither Howard nor 1st Mariner was a “linchpin” in the Baltimore market, their combination “moves them closer to that status."

Gladue grew up in Baltimore and worked his first decade as an investment analyst in the city. Having seen all of the city’s major banks swallowed up by out-of-state players, “it’s nice to see one come back," he said.

Robert Kunisch, 1st Mariner’s CEO, spent his formative years in banking working at another grand old Baltimore institution, Mercantile Bankshares, which had a “healthy” rivalry with First National for more than a century, he said. Mercantile was bought by PNC Financial Services Group in 2007.

Kunisch, who became 1st Mariner’s CEO in mid-July, barely had enough time to warm his seat before the sale to Howard was disclosed. Still, he bought into Scully’s vision from the start.

“The first thing she said was, 'We have to have the headquarters in Baltimore,’ which was music to my ears because of my commitment to the city,” Kunisch said. He has agreed to serve as president of the merged company, adding to Scully's already strong team of executives.

Heavy lifting begins

Scully worked hard to set the stage for buying 1st Mariner, initially reaching out to one of its biggest shareholders to express interest in a deal. In addition to the management team, she also met with board representatives for each of the bank’s three biggest investors as the parties discussed a merger.

The $163 million deal is a major accomplishment for the veteran banker, whose influence extends beyond just her own institution. She chaired the Maryland Bankers Association from 2011 to 2012 and has served on the board of the Federal Reserve Bank of Richmond since 2014. (She also earned a spot on American Banker's ranking of Women to Watch for 2017 and 2016.)

Scully is doing all she can to ensure the integration goes as smoothly as possible. Howard’s previous acquisition and integration was the $226 million-asset Patapsco Bancorp.

“When you acquire a smaller bank, it’s really more of a bolt-on kind of thing,” Scully said.

In acquiring a bank of about the same asset size, she said, “you’ve got to get people from both sides involved at the very beginning or you’re not going to have a bank.”

Scully, who played a key role in Allfirst’s integration of Dauphin, is drawing heavily on that experience to make sure the union with 1st Mariner succeeds.

“You’re putting two companies together … but behind the scenes you’re also ripping the companies apart,” Scully said. “You’re letting a lot of people go. When you’re the CEO, you’re the one who has done it. … But it’s also the pinnacle of so many things we’ve talked about.”

In the end, “the things that scar you are the things that bind you together,” Scully said. “The scar that binds all of us together was seeing all those banks that we loved that were rivals disappear.”

Corrected December 1, 2017 at 12:55PM: An earlier version of this story gave the wrong title for Charles Schwabe. He is Howard Bank's chief risk officer.