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Q&A With Howard Bank President & CEO Mary Ann Scully

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Mary Ann Scully is the president and CEO of Howard Bank, and also serves as chair of the institution’s board of directors. She is a lifelong banker with more than 30 years of varied executive experiences in the Maryland marketplace.

It was in 2003 that Scully spearheaded the team that founded Howard Bank, the first new bank to open in the county in 15 years. It targets small and medium-sized businesses in Anne Arundel, Baltimore, Harford and Cecil counties from its headquarters in Ellicott City and its 16 branch offices. The bank also serves homebuyers through mortgage offices in Baltimore, Anne Arundel, Harford and Howard counties.

A Howard County resident since 1995, she has successfully led the company through six equity raises and Securities and Exchange Commission Act 34 registration, as well as four business combinations.

Scully is past chair of the Maryland Bankers Association and past chair of the Community Foundation of Howard County; today, she is a trustee and vice president of the board of Associated Catholic Charities, a trustee and corporate campaign co-chair of Kennedy Krieger Institute, a board member of the Baltimore Federal Reserve and a community advisory board member for the Federal Deposit Insurance Corp.; she has served as a member of the Maryland Economic Development and Business Climate Commission and is currently a member of the Augustine Commission. She is also a 2007 graduate of Leadership Maryland.

In 2007, Scully was recognized as an honoree in the Howard County Women’s Hall of Fame; she was named Entrepreneur of the Year by the Howard County Chamber of Commerce. She received the Howard County “Good Scout” award from the Baltimore Area Council of the Boy Scouts of America in 2011.

The list goes on: In 2002, 2005 and 2007, she was recognized as one of Maryland’s Top 100 Women by The Daily Record, was a 2008 and 2012 Daily Record Influential Marylander, a 2012 and 2015 Most Admired CEO, again by the same publication; and was a winner of a 2012 Trailblazer Award presented by the Baltimore Center Club. She is a Loyola University Alumni laureate and a Seton Hill University Distinguished Alumna.

With the start of the 2016 session, what are your feelings about the findings of the Augustine Commission?

It was an incredibly rigorous experience that gave me a newfound respect for Norm Augustine [retired chairman and CEO of Lockheed Martin, and chair of the commission], as well as an appreciation for the time so many people invested in the effort. It was definitely a worthwhile endeavor, and I’m interested in the response to it by various Marylanders, since it has been made public.

I am extremely positive about the first part of the study, which explored the general business climate and regulatory environment. There were a number of recommendations, such as making the commerce secretary a full cabinet position, an assessment of regulations and what their various impacts would be. It was embraced by Gov. Hogan and state legislature, so it was a win-win.

The second part was more complex in the face of some of the compelling data provided. It is a very complicated balancing act. One question it raised was, “How do we cut taxes to be more competitive without losing important funding dollars for education?” The framework was all about business taxes and what we need to do to rank better with other states, since we’re behind, and how can we differentiate ourselves; it delved into the costs of the recommended moves and why the legislature needs to hear from us.

There was also a strong suggestion that we look at the individual tax base via pass-through entities, such as LLCs and partnerships, which are not charged corporate income tax. That can mean certain individuals are charged more in individual income taxes, which tend to be high compared to other states. It was also determined that any cuts should not put education spending at risk. The pass-through entities work was of special interest to me, since the bank’s clients are small and medium-sized businesses.

Are you optimistic that most of the suggestions made in the Augustine Report will be implemented?

I think almost all of the major recommendations in the first section have been accepted and embraced. Cultures don’t change overnight, but there is a commitment. I am optimistic that tax recommendations eventually will be accepted, but not so much that it will happen in the short term.

I am personally less worried about major corporations than small businesses, as our bank is about small and medium-sized businesses. We need to encourage the small business base so we can create jobs, especially in the sections of the state like Baltimore City, Western Maryland and the Eastern Shore, which have higher-than-average unemployment.

What are your feelings about the current state of companies, small and large, doing business in Maryland?

Companies are, generally speaking, better off today than they were five years ago, but not as well off as they were 10 years ago. The impact of the last recession is still lingering, and the small businesses have come back more slowly than others have.

And I don’t think the economy is particularly robust. It’s growing, but slowly.

What do you feel has been your best contribution to the Federal Reserve?

I think anyone who serves on any Federal Reserve board, and I’m on a branch board of the Richmond board, gets far more out of it than they contribute. It is a fascinating experience to see the wealth of experience that’s on display there. Being involved is a huge honor.

As for my contribution, it’s the same as any businessperson’s contribution. There are formats at every board meeting that asks each member to contribute to a roundtable discussion, and offer their perspective on what’s happening in your business and your part of the economy. They want information that has not shown up yet in stats.

What are your thoughts on interest rates, which are finally starting to rise?

For a long time, I was not an advocate of rates rising, since the economy was struggling, but I changed my mind a few months ago. My concern was the overreaction at even the mention of a small rate increase. And we were seeing an increasing number of deals that only worked in a low interest rate environment; that’s a problem, because rates will eventually rise.

So I became an advocate of a rate increase, if just to send a signal. Ideally, I think rates should continue to gradually rise. Of course, that can also have a ripple effect, due to slower growth in China and emerging markets, like Brazil. And remember, Europe never totally recovered from the last recession. Those are other factors to bear in mind that will all affect the trajectory of rates.

What do you suggest Howard Bank’s clients do, based on the rising interest rates?

The most important thing I do is try to keep people from being obsessed with interest rates, because there are many other factors to consider when making their investment decisions and figuring out how to grow their companies. They also need to analyze their ability to exercise middle ground-types of features, like using floating rates with fixed-rate options.

What is your take on the uneven performance of the stock market in January?

If I understood the stock market, I’d have moved to a warm desert island by now. Our share price has not been impacted, thankfully, but all movements in equities, more than people realize, is emotionally-driven.

We’ve been due for a market correction for a very long time. Today, we have low oil and low commodity prices in emerging markets, since the U.S. is one of the few strong countries in the market. A weak global economy does not bode well for the stock market in an interconnected world.

So, I think that, while the market has been more volatile, it’s more of a natural correction. I agree with my advisers in that we should focus on the long term, in addition to not obsessing over interest rates. That is not to say a recession is on the horizon; in fact, I firmly believe the opposite, though I do see continued sluggish growth.

What is your take on how recent low retail gas prices are allegedly negatively affecting the stock market?

Consumers definitely benefit in this case unless they own lots of oil stock or a gas station. But it should give everybody pause because of the long-term global repercussions due to the slowdown in demand, which is also due to alternative energy coming to the fore, as well as Iran producing more oil and adding to the glut on the market.

What is your take on how President Obama has handled economic matters since he was first elected?

To be balanced, when President Obama came into office, we were in the midst of the greatest global recession since the Great Depression. On the other hand, I do not think economic recovery, in any traditional sense, was one of his policy priorities. His focus has been largely on social issues in one way or another.

The lingering legacy of this last eight-year period has been significant dysfunction in the way Congress and the administration interact; as a result, nothing gets done and the art of compromise has been mutually lost. It takes two to tango, but the net effect has been a feeling on the part of almost all businesses that the way forward for their business is not transparent, predictable nor logical; that they cannot influence their future, because all of the people in charge are biased against finding lasting solutions. That dysfunction has been, in my opinion, a big reason for the slow economic recovery.

How has adding Dick Story, former head of the Howard County Economic Development Authority, to your executive staff furthered the mission of the bank?

Dick has been a godsend. He is one of the foremost experts in not just the region, but the country, in economic development. We all saw an enormous value add when he had a big hand in coordinating the bank’s move into the communities of Harford and Cecil counties.

I tell him all the time that I am humbled by the fact that he chose to work with us. He is a very astute assessor of the business landscape — and I think he masks that intentionally with his sense of humor.

Are there any more acquisitions on Howard Bank’s horizon for 2016?

I wouldn’t say there is anything specific now, but we have a three-legged strategy: organic growth, then creating a non-interest income stream via our mortgage division, with acquisitions of branches, teams or entire banks.

What is your long-term vision for the bank? Would you ever sell it?

My job as CEO and as a board member is to do what’s best for shareholders, so I can’t say that our board would never sell it. However, for now, we have found success with the above strategy and as we have been able to keep the bank relevant in an extremely competitive market, and our shareholders have been rewarded.