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Merchants & Farmers Bank: Not too big, not too small

Essential Business

KOSCIUSKO — You don’t have to have a degree in banking and finance, and only a casual follower of current events, to know that the banking industry today is dynamic, fast-paced and evolving. With all the merger and acquisition activity, big banks are getting bigger. In the meantime, small community start-ups are coming in to fill the void of individualized attention and familiarity left by all the growth.

So, in this competitive environment, with bigger and smaller jockeying for market share and position, where is there room in which banks can grow? How about right in the middle.

That is exactly the strategy that Merchants & Farmers Bank of Koscuisko has employed for decades now. It is kind of the best of both worlds — keep that local, community bank atmosphere while pursuing a course of aggressive growth and vision.

“We’re looking to build on our traditions, and also adapt to the times,” said Hugh Potts Jr., president and CEO of First M&F Corp., holding company of Merchants & Farmers Bank. “Our markets are Mississippi towns. People in those towns are just like the people of Koscuisko, and we value folks just like ours.

“By the same token, we have to meet the needs of our customer constituency. You have to offer the services they want or need. If they want to use plastic at the ATM, come in the bank in shorts and curlers or use their PC, you have to have it available. Society as a whole seems in a hurry and is less tolerant of waiting. The tough part of growth is making sure the quality of service remains high.”

Fortunately for Merchants & Farmers Bank, it has a wealth of experience in managing growth. The bank was founded in Koscuisko in 1890, and the Potts family was one of the pioneer founders. (Hugh Potts Jr. represents the fifth generation of leadership at the bank.) However, besides an easy-going style, everything else about the bank has changed drastically.

Most of this change is a result of an aggressive merger and acquisition vision that was instilled long before the current trend was in vogue. Today, via every kind of buy-out strategy available from cash to stock swaps, Merchants & Farmers Bank is in 14 markets operating around 30 offices. It employs approximately 350 people.

“A lot of the credit for our growth has to go to my father,” Potts said. “My father came in 1969, and we embarked on a merger in 1972. He had a vision of expanding the bank geographically and looked for opportunities. That set a pattern that continues today.”

Indeed, the growth has continued under Potts Jr.’s leadership. A Koscuisko native and graduate of Ole Miss, when he came into the bank as a full-time associate in the early 1970s, Merchants & Farmers was a $23-million institution. Today, it has assets of $713 million.

Other changes besides acquisitions are also ongoing. The bank currently offers a PC banking product. Testing on its new Internet banking program is set to begin next month, and scheduled to be rolled out in September or October of this year. And the bank’s exhaustive Y2K compliance efforts, which have included educational programs for the general public to help meet potential panic, are nearing an end, and Potts Jr. said he has every confidence that Merchants & Farmers will be fine come January 1.

But while things and the bank change, other time-honored facets remain. One of those is community involvement.

“I believe banking is of vital importance to every community,” he said. “The bank is the storehouse of wealth. A strong bank reflects on the town’s strengths. A well-run Merchants & Farmers is a stimulus to the community to also be well-run, and vice versa. So, being the best we can be is not only good for us, it is good for the community. And it is obviously good for us if the community is prosperous. So, we take that very seriously.”

Not content to sit still long, Potts Jr. did say that Merchants & Farmers would spend perhaps a year “digesting” the bank’s recent moves, but added that, if an opportunity arose, the bank would be interested.

Potts also said Merchants & Farmers was fiercely committed to remaining under local control. Still, the possibility remains that some bigger bank may come calling one day to buy the bank. Potts said the key to the direction taken if that arises is strictly up to him and his staff.

“We have to serve all of our constituencies, including the shareholders,” Potts said. “Everyone at Merchants & Farmers understands that we have to address the shareholders concerns because it effects the bank’s future viability. I believe that if our shareholders believe in our philosophy of quality of service, of serving our community with integrity, and see that it is paying returns, we will always have a bright future.

“Many things have changed in the banking industry. It has never been more competitive. But one thing remains true today as yesterday — this business is built on confidence. We believe our philosophy and level of service is what Mississippians want. There is a place for the large and the small.”

And all points in between.

Contact MBJ staff writer Wally Northway at northway@msbusiness.com.

About Wally Northway

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