Alliance Bankshares Shutters Mortgage Unit, Cites Poor Market Conditions
Another mortgage operation said it will shut its doors today, with Alliance Bankshares Corporation announcing a major restructuring of its mortgage banking unit, Alliance Home Funding, LLC. Today, approximately 43 employees were told of the business decision to cease operations as a stand-alone mortgage banking subsidiary. "In 2006, management of Alliance Home Funding, LLC in concert with senior executives of the bank undertook a series of steps designed to improve results," said Thomas A. Young, Jr., President and Chief Executive Officer of Alliance Bankshares. "Regrettably, our actions have not yielded the desired outcome. As we enter 2007, with a continued modest outlook in the housing sector, we felt a radical change was necessary." Alliance Bankshares said it will take a fourth quarter pre-tax charge in a range of $540,000 and $675,000 to wind down the operations of Alliance Home Funding, LLC. This charge will have an after-tax impact on fourth quarter earnings of $350,000 to $450,000. The charges cover staff severance, systems charges, estimated subleasing costs and various other costs associated with the closure of Alliance Home Funding, LLC. "Our mortgage banking services will continue in a dramatically new fashion. Approximately ten people will join the Alliance Bank organization as part of a mortgage banking division. This division will offer home mortgages to bank customers, prospects and home builder clients. The focused approach of this division should lead to better performance metrics," said Thomas A. Young, Jr. Harvey E. Johnson, Jr., Chairman of the Board of Directors said, "The Board and Management strongly feel this action to revamp the mortgage banking operations is the proper course for Alliance. We remain committed to delivering high quality financial services in the Greater Washington, DC metropolitan marketplace yet we must constantly assess and modify our delivery channels." Alliance Bankshares Corporation is a locally managed community banking organization based in Northern Virginia.