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Banking on a Harvest

Many banks – and their top tier holding companies – are public companies with shares of stock that trade on open markets like NASDAQ and the New York Stock Exchange. Merchants & Marine Bancorp, Inc., the parent company of Merchants & Marine Bank, is such a company itself, with shares traded on the OTCQX Markets under the ticker symbol MNMB.

I’m sometimes asked how, as a publicly traded company, we take such a long view to community banking in the face of never-ending pressure from a variety of sources, including:  investors, stock analysts, regulators, and other stakeholders. Each of these stakeholders have different views on how companies should be run. And, their views can often differ from each other and from bank clients, leaving CEO’s and their leadership teams to reconcile the differences and to establish a clear path forward. This seemingly endless pressure leads many banks to take a quarterly view of their business. It also leads them to regularly make large, wholesale changes to business units and even overall company strategy, in reaction to a particularly good or bad quarter.

While we have all the traditional stakeholders of other publicly traded banks, our approach to managing these relationships is different. In fact, our strategy is the opposite of the quarterly approach taken by others. We believe that success is best measured over the long term, the same horizon used to build strong value. Conversely, having a narrow quarterly view, and making short sighted and reactive changes most always reduces long term value. When we make strategic changes or investments at Merchants & Marine Bank, it’s with a long-term view and a disciplined focus on building stronger value for our stakeholders and better serving our clients and our communities for generations to come.

So, how are we able to play by our own rules at Merchants & Marine Bank? Well, it takes a lot of faith on the part of many folks, including our investors and our directors. It also takes a tremendous commitment to transparency, accountability and excellence on the part of our leadership team and the many men and women who comprise the Merchants & Marine Bank Family.

My view on the value of a long-term approach to value building was developed over my years as an FDIC bank examiner and through interactions with my mentor, Royce Cumbest.  Royce, who was my predecessor as CEO and continues to Chair our Board of Directors, learned this approach from his predecessors and refined its application over decades of leading our bank.

Our team sometimes likens our approach to that of farming. Farmers know that there are certain seasons in which they’re going to be sowing seeds, and in certain seasons in which the rains come and germinate those seeds. From there, roots are established. Through it all, the farmer continues to maintain careful watch on his crop because they know at some point there will be a harvest. We are sowing seeds and making investments in our bank and in our communities today, investments that may not reap significant return, as traditionally measured, for five, ten, or fifteen years even.

We’ve observed similar seasons for decades as an organization. Time and time again, we’ve had seeds that were sown well in the past–client relationships, business strategies, and strategic investments—bear fruit that has benefitted our bank and our stakeholders.

We most recently observed this phenomenon in the endlessly challenging year that was 2020. Strategies that were enacted three to four years prior to the pandemic enabled us to be as nimble as any bank, and to pivot regularly to serve our clients, our team members and the communities we call home throughout the pandemic. For example, prior investments in technology infrastructure allowed us to comfortably convert our operations to 100 percent digital, with the ability to operate our bank without a single brick-and-mortar branch or operational office open. We achieved something–together as a team–that would have been unthinkable for a community bank even five years ago!

In addition, investments in client facing technology and best-in-class bankers enabled us to answer the call of hundreds of suffering businesses throughout the Gulf Coast with Small Business Administration Paycheck Protection Program (PPP loans). As has been well documented, community banks like Merchants & Marine Bank answered these calls for help in a profound way, far outpacing the efforts of much larger banks in distributing PPP funds to businesses in need. I would stack our team of community bankers, and those at many of our sister banks throughout the country, against anyone in the “megabanks.” And when you equip these talented, big-hearted community bankers with technology on par with our larger competitors–look out!

I am incredibly grateful to serve alongside a group of bankers, and to work for a strong board and group of investors. Together, we are focused on disciplined, long-term performance and value building. When we look at our history, we see something that’s worth repeating, and that’s taking a long-term view that mirrors the approach to life and work of those we serve so faithfully. We are excited to be planting the seeds we are today as a company. We know that these seeds will not only take root, but that they will produce a significant harvest that benefits all our stakeholders, and that allows us to continue pursuing our mission of building stronger communities and brighter futures.

Written by: Clayton Legear, President & CEO