Why buy abank like this when you can buy USB with the GREATEST investor on the planet who has"approved it".??????????. My worldwde forum of investors have voiced their opinion Reply
Our goal for MBR in any time frame is profitable growth in the business we know, community banking. That said, the business model for banks continues to morph and I'm reluctant to risk too far forward on what our model will look like that far out. Progressive community banks can compete and compete well with super regional and national brands, but it requires quality bankers and flexibility, so I'm prone to shorter term plans.
Providing a glimpse of specificity, as I indicated in an answer yesterday we are spending time enhancing trust and brokerage offerings from a community bank perspective to supplement the margin business and therefore total income stream. The level of demand for those services will increase with boomers and a community bank level approach to meeting those needs in a quality manner will be sought by consumers. We are and will compete well for that business.
As to your second question, and quite limited to my knowledge of other countries banking charter laws or allowance of foreign ownership, I would not perceive opportunities for a company such as ours to consider a foreign based entity. Too, I believe the US is very unique in its banking structure as to state vs. national charters, private vs. public companies and large vs. small banks.
That is the proverbial crystal ball question Mr. Li.
Offering only observations and opinions, sure there may be some surprises in isolated cases at some community banks, but I don’t believe so as a sector. Can business activity slow to the point where commercial loans in some markets across the country are negatively affected? Certainly. Would it be of the magnitude of the subprime issues that many of the major financial companies are disclosing now? I would say that is doubtful in an economy that the FOMC has declared has a low probability of a recession.
Generally speaking, the asset growth and margin compression reflected on community bank's balance sheets in recent years is not a reflection of accepting elevated credit risk, but a lack of flexibility to pricing to a risk profile due to the flat yield curve and competitive pressures. Credit pricing was very competitive but community banks cannot afford to turn a blind eye to credit risk.
So my opinion is no, I do not think the other shoe will drop in the community bank sector. I expect the normal credit cycle whereby loan loss provisions are elevated to levels that are indicative to a normal slowing of economic growth and nothing more.
We have not seen account attrition in banks we have purchased. In all fairness to the meaning of your question, I think appropriate to disclose we have not purchased a bank competing against one of our own in any market until our most recent, and the merger of those two banks is a year away. We expect none or minimal loss of business when that occurs.
As to our core clients being happy or unhappy with the results of our business strategy, I'll assume you mean from our bank clients versus our company owners. The general perception of our bank clients in the markets we serve is they are not aware that the bank is part of a company of banks. We have historically maintained the charter, the name, the local bank board and executive management. Decisions relative to their clients are theirs subject to standard policies. As we have executed a few charter collapses and merged some of our banks in the same regions over the last 18 months, we have seen no attrition from those steps as well. Responsive and quality service to the customer base is key.
To keep that quality intact in a growing organization is keeping in place the ability to listen to our customers and then communicate internally. Secondly, we are now developing consistent training across our collective banks. Lastly, we empower our employees to deal with our customers fairly and honestly on a common sense level. That approach generally diffuses any real problems.
When we lose business, and we of course do, it is generally due to pricing that is reflective of too many banks in a market, though I am sure most consumers would beg to differ to that thought.
Many thanks for doing this. My question is about the banking sector overall, and the impact of debt repricing (not just subprime, as you pointed out above). Do you think that all the "shoes have dropped", or are there any other companies that could make announcements that investors aren't expecting?
I don’t recognize your questions as off color Mr. Sterman, so I will do my best to provide you my perspective.
Though Yahoo is a large site and I find it unfortunate they choose to minimalize small cap opportunities, I do not monitor every site. One could have quickly drilled down that in fact a split occurred by visiting our Company site.
To your direct questions:
1) Yes, the stock was split as a first step toward improving the number of shares outstanding and we recognize there is more to do.
2) Yes, there is low liquidity. We have engaged an investor relations firm and initiated a program to improve the same, including this forum and meeting with investors in person. From our beginning as a public company in early 2005, the steps to date have proven returns. However, liquidity might stay on the low side until more people begin to invest in banks again. Too, as you are aware, with low liquidity the leverage can work in favor of an investor as well as against one. More trading will attract more investors, including institutional and we believe that would be a healthy addition to our mix. Some very good investors like limited float stocks.
3) I can’t speak for the awareness of the investment community in general toward regional small caps, but it would stand to reason there are undiscovered opportunities when comparing market valuations of some to others.
4) My personal stock investing would offer little insight to MBR.
5) Again, I doubt my perception of advantages or disadvantages of a small cap-low liquidity issue are relevant to anyone’s interest, but most large-caps start out as a small cap, so the single issue of not investing in stocks similar to MBR by you or others would seem a missed opportunity if the overall fundamentals of a stock met your risk tolerances otherwise.
Though I doubt I have changed it, I do fully respect your disposition, and your taking the time to inquire.
Hi Ted, thanks for putting yourself up to the scrutiny of the Seeking Alpha community.
There seems to be an ongoing trend within the community banking sector towards consolidation through the purchase of competing community banks. A case in point was Sovereign Bank's purchase of Independence Community Bank. As a former account holder at Independence, I've seen the negative impact that their buyout had on my service and I therefore migrated to another bank.
Have you seen account attrition in the banks you've been purchasing? With all the benefits of scale, do you find that your core clients are unhappy or happy with the results of your business strategy? How do you propose to keep the quality of service of a small community bank intact, while incorporating it into your growing organization?
I am absolutely seeing additional opportunities for MBR, and I am seeing and hearing of the current climate bringing forth an unusual number of sellers or merging opportunities to the market.
That being said, the challenge to us as a small-cap banking company is to protect our capital and invest wisely in markets and bankers that best positions MBR for quality, profitable growth. I purposefully did not include the word rapid.
The delivery system of low-cost Internet banking has already proven not to be the end of community banks. Financial service consumers will always seek qualified advice and services from reputable companies and individuals they trust.
Our plan to maintain profitability on the margin side is to stay focused on interest rate risk and balance sheet management of our banks from a top down level. Interest rate markets have been difficult the last couple of years, and we have limitations to the tools available to manage the risk on our balance sheets, but it is a daily management focus to which we have become conditioned to, mistakes and all, and we learn from. It is the business we're in.
I too believe it is important to further develop dependable and quality non-margin income streams. It would be inappropriate to provide details of the strategy, but we are working to enhance across our bank platform services in trust and brokerage offerings to our customer base that we are experiencing success with already, and believe it can be a core benefit to the bottom line as well.
Reply
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Betting on a Banker's Bank [view article]
Why buy abank like this when you can buy USB with the GREATEST investor on the planet who has"approved it".??????????. My worldwde forum of investors have voiced their opinion ReplyBetting on a Banker's Bank [view article]
Great coverage here! We need more well written and reseached articles such as this one!!Thank you for your work. Reply
Betting on a Banker's Bank [view article]
Why buy Financials?? You obviously where late to the real estate party. And will be late to the Stock Market Party.Buy when prices are low and sell when they are high!!!!!! Simple.
All the past real estate buyers of the last 10 years baught from someone who really made a killing selling. The real profits...
Buy stocks (equity) today and you WILL sell them in 2-5 years with
huge gains. This is not hard just discipline. Reply
Betting on a Banker's Bank [view article]
Because of the opportunities. It takes work to make significant gains and there is also risk. However ... ReplyTiedeman
Betting on a Banker's Bank [view article]
Why bother with anything in the financial sector? ReplyEditors
General Discussion on MBR
Is this a buy or a sell? ReplyInteractive Q&A: Ted Awerkamp, President and CEO of Mercantile Bancorp [view article]
Zach:Our goal for MBR in any time frame is profitable growth in the business we know, community banking. That said, the business model for banks continues to morph and I'm reluctant to risk too far forward on what our model will look like that far out. Progressive community banks can compete and compete well with super regional and national brands, but it requires quality bankers and flexibility, so I'm prone to shorter term plans.
Providing a glimpse of specificity, as I indicated in an answer yesterday we are spending time enhancing trust and brokerage offerings from a community bank perspective to supplement the margin business and therefore total income stream. The level of demand for those services will increase with boomers and a community bank level approach to meeting those needs in a quality manner will be sought by consumers. We are and will compete well for that business.
As to your second question, and quite limited to my knowledge of other countries banking charter laws or allowance of foreign ownership, I would not perceive opportunities for a company such as ours to consider a foreign based entity. Too, I believe the US is very unique in its banking structure as to state vs. national charters, private vs. public companies and large vs. small banks.
Thank you for your interest.
Ted
Reply
Interactive Q&A: Ted Awerkamp, President and CEO of Mercantile Bancorp [view article]
Thank you Ted for taking the time to chat.1. What goals do you have for MBR over the next 5-10 years? Follow up: How will you acheive these goals?
2. As investors continue to shift their focus overseas, does MBR have any intention to enter the international banking arena?
Thanks again for your time,
Zach Reply
Interactive Q&A: Ted Awerkamp, President and CEO of Mercantile Bancorp [view article]
That is the proverbial crystal ball question Mr. Li.Offering only observations and opinions, sure there may be some surprises in isolated cases at some community banks, but I don’t believe so as a sector. Can business activity slow to the point where commercial loans in some markets across the country are negatively affected? Certainly. Would it be of the magnitude of the subprime issues that many of the major financial companies are disclosing now? I would say that is doubtful in an economy that the FOMC has declared has a low probability of a recession.
Generally speaking, the asset growth and margin compression reflected on community bank's balance sheets in recent years is not a reflection of accepting elevated credit risk, but a lack of flexibility to pricing to a risk profile due to the flat yield curve and competitive pressures. Credit pricing was very competitive but community banks cannot afford to turn a blind eye to credit risk.
So my opinion is no, I do not think the other shoe will drop in the community bank sector. I expect the normal credit cycle whereby loan loss provisions are elevated to levels that are indicative to a normal slowing of economic growth and nothing more.
Thank you for your inquiry,
Ted
Reply
Interactive Q&A: Ted Awerkamp, President and CEO of Mercantile Bancorp [view article]
User 47298:We have not seen account attrition in banks we have purchased. In all fairness to the meaning of your question, I think appropriate to disclose we have not purchased a bank competing against one of our own in any market until our most recent, and the merger of those two banks is a year away. We expect none or minimal loss of business when that occurs.
As to our core clients being happy or unhappy with the results of our business strategy, I'll assume you mean from our bank clients versus our company owners. The general perception of our bank clients in the markets we serve is they are not aware that the bank is part of a company of banks. We have historically maintained the charter, the name, the local bank board and executive management. Decisions relative to their clients are theirs subject to standard policies. As we have executed a few charter collapses and merged some of our banks in the same regions over the last 18 months, we have seen no attrition from those steps as well. Responsive and quality service to the customer base is key.
To keep that quality intact in a growing organization is keeping in place the ability to listen to our customers and then communicate internally. Secondly, we are now developing consistent training across our collective banks. Lastly, we empower our employees to deal with our customers fairly and honestly on a common sense level. That approach generally diffuses any real problems.
When we lose business, and we of course do, it is generally due to pricing that is reflective of too many banks in a market, though I am sure most consumers would beg to differ to that thought.
Thank you for your inquiry.
Ted
Reply
Interactive Q&A: Ted Awerkamp, President and CEO of Mercantile Bancorp [view article]
Ted,Many thanks for doing this. My question is about the banking sector overall, and the impact of debt repricing (not just subprime, as you pointed out above). Do you think that all the "shoes have dropped", or are there any other companies that could make announcements that investors aren't expecting?
Many thanks. Reply
Interactive Q&A: Ted Awerkamp, President and CEO of Mercantile Bancorp [view article]
I don’t recognize your questions as off color Mr. Sterman, so I will do my best to provide you my perspective.Though Yahoo is a large site and I find it unfortunate they choose to minimalize small cap opportunities, I do not monitor every site. One could have quickly drilled down that in fact a split occurred by visiting our Company site.
To your direct questions:
1) Yes, the stock was split as a first step toward improving the number of shares outstanding and we recognize there is more to do.
2) Yes, there is low liquidity. We have engaged an investor relations firm and initiated a program to improve the same, including this forum and meeting with investors in person. From our beginning as a public company in early 2005, the steps to date have proven returns. However, liquidity might stay on the low side until more people begin to invest in banks again. Too, as you are aware, with low liquidity the leverage can work in favor of an investor as well as against one. More trading will attract more investors, including institutional and we believe that would be a healthy addition to our mix. Some very good investors like limited float stocks.
3) I can’t speak for the awareness of the investment community in general toward regional small caps, but it would stand to reason there are undiscovered opportunities when comparing market valuations of some to others.
4) My personal stock investing would offer little insight to MBR.
5) Again, I doubt my perception of advantages or disadvantages of a small cap-low liquidity issue are relevant to anyone’s interest, but most large-caps start out as a small cap, so the single issue of not investing in stocks similar to MBR by you or others would seem a missed opportunity if the overall fundamentals of a stock met your risk tolerances otherwise.
Though I doubt I have changed it, I do fully respect your disposition, and your taking the time to inquire.
Ted
Reply
Interactive Q&A: Ted Awerkamp, President and CEO of Mercantile Bancorp [view article]
Hi Ted, thanks for putting yourself up to the scrutiny of the Seeking Alpha community.There seems to be an ongoing trend within the community banking sector towards consolidation through the purchase of competing community banks. A case in point was Sovereign Bank's purchase of Independence Community Bank. As a former account holder at Independence, I've seen the negative impact that their buyout had on my service and I therefore migrated to another bank.
Have you seen account attrition in the banks you've been purchasing? With all the benefits of scale, do you find that your core clients are unhappy or happy with the results of your business strategy? How do you propose to keep the quality of service of a small community bank intact, while incorporating it into your growing organization?
Thank you in advance for your reply. Reply
Interactive Q&A: Ted Awerkamp, President and CEO of Mercantile Bancorp [view article]
Ezra:I am absolutely seeing additional opportunities for MBR, and I am seeing and hearing of the current climate bringing forth an unusual number of sellers or merging opportunities to the market.
That being said, the challenge to us as a small-cap banking company is to protect our capital and invest wisely in markets and bankers that best positions MBR for quality, profitable growth. I purposefully did not include the word rapid.
Thank you for your question.
Ted
Reply
Interactive Q&A: Ted Awerkamp, President and CEO of Mercantile Bancorp [view article]
Thank you for your interest Mr. Liss.The delivery system of low-cost Internet banking has already proven not to be the end of community banks. Financial service consumers will always seek qualified advice and services from reputable companies and individuals they trust.
Our plan to maintain profitability on the margin side is to stay focused on interest rate risk and balance sheet management of our banks from a top down level. Interest rate markets have been difficult the last couple of years, and we have limitations to the tools available to manage the risk on our balance sheets, but it is a daily management focus to which we have become conditioned to, mistakes and all, and we learn from. It is the business we're in.
I too believe it is important to further develop dependable and quality non-margin income streams. It would be inappropriate to provide details of the strategy, but we are working to enhance across our bank platform services in trust and brokerage offerings to our customer base that we are experiencing success with already, and believe it can be a core benefit to the bottom line as well.
Reply