When Mark Hanna advised his banker buddies that the Maryland-based community bank he leads was planning to purchase a mortgage lender, they “checked out me as if I had 5 eyes,” he recalled this week.
The underwhelming response got here as little shock, mentioned Hanna, who’s the president and CEO of Glen Burnie Bancorp. After all, with rates of interest nonetheless stubbornly excessive, mortgage origination exercise is at lower than half of its 2021 peak, in line with knowledge from the Mortgage Bankers Association.
And different banks proceed to exit the mortgage market. Ally Financial in Detroit, Seattle-based WaFd and Blue Ridge Bankshares in Richmond, Virginia, all introduced plans to give up residential lending this yr.
Bucking that development, the $351 million-asset holding firm for the Bank of Glen Burnie introduced Monday that it had closed its deliberate acquisition of VA Wholesale Mortgage. Under the deal’s phrases, the bank agreed to pay $750,000, plus a share of earnings over the subsequent three years, Hanna mentioned.
Mark Hanna
For Bank of Glen Burnie, which has struggled to e-book loans lately, the acquisition “makes loads of sense,” Hanna mentioned in an interview.
Bank of Glen Burnie is “very a lot in a progress mode,” and mortgage lending stays “an incredible technique to develop and retain relationships,” Hanna advised American Banker. “We’re attempting to convey as many new relationships to the bank as we will. We’re additionally attempting to retain all our current purchasers.”
VA Wholesale, based mostly in Virginia Beach, Virginia, closed about $125 million of residence loans in 2024. It’s well-versed in making loans to veterans, in addition to Federal Housing Administration and first-time homebuyer transactions.
Bank of Glen Burnie has traditionally provided mortgages, however its lending was beforehand confined largely to 30-year fixed-rate offers with comparatively giant down funds. Its loan-to-value ratios typically went no increased than 80%.
“There had been individuals in our communities that wanted mortgages, however we did not have the merchandise to serve them,” Hanna mentioned. “Now, we’ll be capable to assist nearly anyone who’s serious about shopping for a house.”
For his half, VA Wholesale Mortgage CEO Eric Tan mentioned his firm, which is able to function as a division within Bank of Glen Burnie, ought to be capable to do extra enterprise as a bank subsidiary.
“Having a dedicated funding supply will broaden our attain, permitting us to develop and meet the wants of our clients extra readily, whereas additionally growing lending quantity,” Tan mentioned Monday in a press launch.
While VA Wholesale serves all homebuyers, it focuses on providing loans to active-duty navy personnel and veterans. That focus ought to work effectively in Bank of Glen Burnie’s footprint, which incorporates Fort Meade, one of many Army’s largest bases, the National Security Agency’s headquarters and the U.S. Naval Academy, in line with Hanna.
“We assume their enterprise mannequin interprets properly into the communities we serve,” Hanna mentioned.
Hanna began as CEO of Bank of Glen Burnie in October 2023. The 76-year-old firm excelled at service, however its cabinet was naked by way of merchandise, in line with Hanna. “We wanted to get again to rising consumer relationships, and embedded in that’s having the merchandise to compete,” he mentioned.
Over the previous yr, Bank of Glen Burnie has rolled out a collection of treasury administration instruments, in addition to a high-yield cash market account. The bank’s mortgage and deposit portfolios, which had been trending down for a number of years, expanded within the second quarter. Hanna mentioned he is hopeful the acquisition of VA Wholesale, in addition to plans to launch a bank card product, will spur much more progress.
“That’s actually the trail ahead,” Hanna mentioned. “There’s no secret sauce. We have to develop.”
