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State banking cooperative helping community banks remain independent

Ridgeland — For five years, the Mississippi National Banker’s Bank (MNBB) has been helping the state’s community banks stay strong and viable. Such a banking cooperative was begun in Louisiana 20 years ago by Gulfport native Joe Quinlan, who was asked to assist Joseph H. Neely in organizing the bank in Mississippi.

It began with 44 member banks and now has 60 members and more than $200 million in assets. Members purchase shares of stock in the holding company and services are provided for banks, not individual customers. No shareholder bank may own a controlling interest, ensuring the cooperative structure of the organization.

“It was created by Mississippi community banks for Mississippi community banks,” said Neely, the MNBB’s chief executive officer. “Our most important service is providing community banks the opportunity to remain independent and to do business with someone who will never compete with them.”

Neely describes a community bank as a bank that is locally owned and operated. Also, it has deep ties in the community from an investment and involvement standpoint. “The amount of assets doesn’t always make it a community bank,” he said. “It involves the ownership structure and management. It makes most of its loans back into the community and the employees are coaching Little League and doing other things in the community.”

Merchants & Marine Bank, headquartered in Pascagoula, is a founding member of the banker’s bank and M & M president Royce Cumbest serves on the board of directors. He says M&M Bank is a large community bank that like other community banks bases its business on relationships; something that gets harder as banks get larger.

“Size is not always an indicator of a community bank, although most are under $500 million in size,” he said. “Community banks are those that are localized in their geography. They’re not always in real hot markets, but they serve a real need in more rural areas. Large banks, especially those coming from out of state, like metropolitan areas.”

As correspondence banks were bought out by large groups that became competitors of community banks, these smaller banks could no longer depend on larger banks for money transfers and services not handled on a daily basis.

“The banker’s bank has been a real life saver to community banks,” Cumbest said. “Now, we can compete and provide the same services that larger banks can.”

Neely said the most beautiful advantage is that the banker’s bank will never come into their members’ communities and open a branch across the street. “We are a non-threatening entity,” he said. “We respond to the needs of our shareholder banks and will grow as they want us to grow. Collectively, we can provide services that are difficult to provide alone and we can provide them cheaper.”

The CEO feels the banking cooperative’s true value to member banks was shown after Hurricane Katrina when MNBB’s employees helped get banks up and running. With the Federal Reserve Bank in New Orleans underwater, the MNBB got money from the Federal Reserve Bank in Birmingham, Ala.

Cumbest says M&M Bank could not have opened so quickly without the banker’s bank. “It was such a massive storm,” he said. “Many of our employees lost their homes. The only place we could get a cell phone signal to make a call was on top of the Moss Point bridge. If we hadn’t had them to make Federal shipments, we couldn’t have opened and supplied payrolls for our customers.”

He feels the MNBB is a real success story, working with a high caliber of people and an excellent staff that includes former bankers with a lot of expertise to offer. The cooperative concept is spreading throughout the Southeast.

“It’s important for people to know that the banker’s bank helps community banks throughout the state, and those banks help small businesses and individuals with whatever they need,” he added.

Among the services the MNBB provides are letters of credit with international companies, internal control auditing, compliance audit and review, loan review, assistance to liability management, the purchase of securities and educational offerings.

“Banks are outsourcing more internal functions than ever before,” Neely said. “Through a banker’s bank, community banks can provide essential services as a group that are too expensive to provide by themselves. We stand ready to assist our bankers with strategic funding needs necessary to support the activities of the organization while protecting the franchise and its ownership.”

He added that MNBB’s sole purpose for existence is to serve community banks and enhance their performance and independence.

Contact MBJ contributing Lynn Lofton at llofton656@aol.com.

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