MNMB Merchants and Marine Bancorp Inc (QX)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.    )

Filed by the Registrant   x                             

Filed by a Party other than the Registrant   ¨

Check the appropriate box:

 

¨		Preliminary Proxy Statement
¨		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x		Definitive Proxy Statement
¨		Definitive Additional Materials
¨		Soliciting Material Pursuant to §240.14a-12
MERCHANTS & MARINE BANCORP, INC.
(Name of registrant as specified in its charter)
(Name of person(s) filing proxy statement, if other than the registrant)
Payment of Filing Fee (Check the appropriate box):
x		No fee required.
¨		Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
		(1)		Title of each class of securities to which transaction applies:
		(2)		Aggregate number of securities to which transaction applies:
		(3)		Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
		(4)		Proposed maximum aggregate value of transaction:
		(5)		Total fee paid:
¨		Fee paid previously with preliminary materials.
¨		Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
		(1)		Amount Previously Paid:
		(2)		Form, Schedule or Registration Statement No.:
		(3)		Filing Party:
		(4)		Date Filed:

 

 

 

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MERCHANTS & MARINE BANCORP, INC.

3118 Pascagoula Street

Pascagoula, Mississippi 39567

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

To be held on April 5, 2012

To Our Shareholders:

The Annual Meeting of the Shareholders of Merchants & Marine Bancorp, Inc. (the “Company”) will be held at Merchants & Marine Bank, 3118 Pascagoula Street, Pascagoula, Mississippi 39567, at 10:00 A.M. (local time) on Thursday, April 5, 2012, for the following purposes:

 

(1)

To elect four directors to serve for a term of office expiring at the 2015 Annual Meeting of Shareholders and until their respective successors are duly elected and qualified;

 

(2)

To transact such other business as may properly come before the meeting.

Only shareholders of record of the Common Stock, par value $2.50 per share, of the Company at the close of business on the record date, February 3, 2012, will be entitled to notice of and to vote at the 2012 Annual Meeting.

You are cordially invited to attend the meeting in person. Shareholders who do not expect to attend the meeting are requested to sign, date and return the enclosed proxy in the accompanying envelope. You may revoke your proxy at any time prior to its exercise.

Proxies must be signed in the same manner in which the shares are registered. Failure to sign the proxy exactly as the shares are held of record may result in the proxy not being voted.

 

Pascagoula, Mississippi

March 9, 2012

 

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NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS

Important Notice Regarding the Availability of Proxy Materials for the

Annual Shareholder Meeting to be Held on April 5, 2012

Pursuant to rules promulgated by the Securities and Exchange Commission, we have elected to provide access to these proxy statement materials (which includes this proxy statement, a proxy card and our 2011 Annual Report) both by sending you this full set of proxy statement materials, including a proxy card, and by notifying you of the availability of such materials on the Internet.

This proxy statement, the Company’s 2011 Annual Report and a proxy card are available at: http://www.cfpproxy.com/7088.

The Annual Meeting of Shareholders will be held April 5, 2012 at 10:00 A.M. local time at 3118 Pascagoula Street, Pascagoula, Mississippi 39567. In order to obtain directions to attend the Annual Meeting of Shareholders, please call 1-866-223-9512. The Proposals to be voted upon at the Annual Meeting of Shareholders, all of which are more completely set forth in this proxy statement, are as follows:

 

1.

To elect four directors, each to serve for a term of office expiring at the 2015 Annual Meeting of Shareholders and until their respective successors are duly elected and qualified; and

 

2.

To transact other such business as may properly come before the meeting.

Our Board of Directors recommends that you vote FOR the approval of Proposal #1.

 

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TABLE OF CONTENTS

 

PROXY STATEMENT			1
BUSINESS TO BE CONSIDERED AT ANNUAL MEETING OF SHAREHOLDERS			1
SUMMARY			2
The Annual Meeting			2
STOCK OWNERSHIP			3
Security Ownership of Certain Beneficial Owners and Management			3
Section 16(a) Beneficial Ownership Reporting Compliance			4
CORPORATE GOVERNANCE			4
General			4
Director Independence			4
Director Nominations			5
Code of Ethics			5
Shareholder Communications with Members of the Board			6
Director Attendance at Annual Meeting			6
Board Committees			6
Board Leadership Structure			6
Board’s Role in Risk Oversight			7
Advisory Committee and Honorary Directors			7
Certain Transactions			7
Audit Committee Report			8
EXECUTIVE OFFICERS			8
PROPOSAL 1: ELECTION OF DIRECTORS			9
General			9
Directors			9
EXECUTIVE COMPENSATION			12
2011 Summary Compensation Table			12
Pension and Retirement Plans			13
Director Compensation			14
RELATIONSHIP WITH PRINCIPAL ACCOUNTANTS			15
OTHER MATTERS			16
SHAREHOLDER PROPOSALS			16
ADDITIONAL INFORMATION			16

 

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MERCHANTS & MARINE BANCORP, INC.

3118 Pascagoula Street

Pascagoula, Mississippi 39567

March 9, 2012

PROXY STATEMENT

The enclosed proxy is being solicited by the Board of Directors (the “Board”) of Merchants & Marine Bancorp, Inc., (the “Company”) in connection with the Annual Meeting of Shareholders, scheduled to be held on April 5, 2012, at Merchants & Marine Bank, 3118 Pascagoula Street, Pascagoula, Mississippi 39567, at 10:00 A.M., local time. Each of the persons designated as a proxy is either a director or officer of the Company. This Proxy Statement and the enclosed form of proxy, together with the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2011, will be mailed on March 9, 2012, to each shareholder of record on February 3, 2012. To assure adequate representation at the Annual Meeting, shareholders are requested to sign, date and return promptly the enclosed form of proxy.

BUSINESS TO BE CONSIDERED AT

ANNUAL MEETING OF SHAREHOLDERS

It is expected that the following business will be considered and action taken thereon at the Annual Meeting:

 

(1)

Election of four directors, each to serve for a term of office expiring at the 2015 Annual Meeting of Shareholders and until their successors are duly elected and qualified; and

 

(2)

Transaction of such other business as may properly come before the meeting.

No person is authorized to give any information or to make any representation other than those contained in this Proxy Statement and if given or made such information must not be relied upon as having been authorized.

 

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SUMMARY

This summary of certain information contained elsewhere in this Proxy Statement is intended for the convenience of the shareholders of the Company and does not purport to be complete. The recipient of this Proxy Statement should read and understand the entire Proxy Statement. This summary is qualified in its entirety by the more detailed information contained herein and the documents referred to in this Proxy Statement.

The Annual Meeting

 

Time, Date and Place:		The Annual Meeting of the shareholders of the Company will be held at Merchants & Marine Bank, 3118 Pascagoula Street, Pascagoula, Mississippi 39567 at 10:00 A.M. local time on Thursday, April 5, 2012.
Record Date:		Only shareholders of record of the Company Common Stock at the close of business on February 3, 2012 are eligible to vote at the 2012 Annual Meeting. On February 3, 2012, the Company had outstanding 1,330,338 shares of Common Stock held by approximately 974 holders of record.
Purpose of Meeting:		The shareholders of the Company are being asked to consider and act upon (i) the election of four directors to serve for a term of office expiring at the 2015 Annual Meeting of Shareholders and until their respective successors are duly elected and qualified; and (ii) such other matters as may properly come before the Annual Meeting.
Vote Required:		As of the record date, directors and executive officers of the Company and their affiliates currently beneficially owned 209,534 shares of Company Common Stock which represents 15.75% of the outstanding shares of Company Common Stock. All such directors and officers intend to vote their shares of Company Common Stock “For” each of the nominees for election as directors. On all matters, except the election of directors, each share of Company Common Stock is entitled to one vote. For the election of directors, cumulative voting is permitted. See “PROPOSAL 1: ELECTION OF DIRECTORS — General.”
		The board of directors of the Company recommends that you vote “For” each of the nominees for election as directors.
Voting and Solicitations of the Proxy:		Any shareholder giving a proxy has the power to revoke it at any time before the proxy is voted. A proxy may be revoked at any time before it is exercised (i) by delivering to the President of the Company, or to the officer presiding at the meeting, either a written notice of revocation or a properly executed proxy bearing a subsequent date, or (ii) by voting in person at the Annual Meeting. All proxies that are properly executed and returned will be voted at the meeting in accordance with the instructions contained in the proxy, unless the proxy is revoked prior to the vote. If no instructions are given, the proxy will be voted by the designated holder(s) of the proxy (i) FOR the election of the nominees for election as directors listed in this Proxy Statement; and (ii) in their discretion with respect to such other business as may properly come before the meeting. The cost of the solicitation of proxies is paid by the Company. In addition to the use of the mails, proxies may be solicited in person, or by telephone, by certain officers of the Company.
Quorum: Abstentions and Non-Votes:		The presence, in person or by proxy, of the holders of at least a majority of the shares of Company Common Stock outstanding and entitled to vote will constitute a quorum for the transaction of business at the Annual Meeting. If a properly executed proxy is returned and the shareholder has abstained from voting on a matter, the shares represented by such proxy will be considered present at the Annual Meeting for purposes of determining a quorum and for purposes of calculating the vote, but will not be considered to have voted in favor of such matter.

 

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		If you do not expect to attend the meeting in person, please sign, date and return the proxy in the enclosed envelope so that a quorum can be obtained and your stock can be voted in accordance with your directions.

STOCK OWNERSHIP

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information as of February 3, 2012, with respect to the shares of Company Common Stock owned by (i) the directors and the nominees for election to the Board, (ii) the Named Executive Officers (as defined herein), (iii) each shareholder of the Company known to management of the Company to own beneficially more than 5% of the outstanding shares of the Company Common Stock, and (iv) all directors and executive officers as a group.

 

			September 30,				September 30,
Name of Beneficial Owner		Amount and Nature of Beneficial Ownership (1)				Percent of Class
Thomas B. Van Antwerp (2)			88,851	(3)			6.68	%
Gerald J. St. Pé			46,523	(4)			3.50	%
Paul H. (Hal) Moore, Jr., M.D.			17,062	(5)			1.28	%
Lynda J. Gautier			13,253	(6)			1.00	%
Royce Cumbest			13,041	(7)			*
Frank J. Hammond, III			11,876	(8)			*
Julius A. (Jay) Willis, Jr., DMD			5,116	(9)			*
John F. Grafe			4,596	(10)			*
Scott B. Lemon			500	(11)			*
Diann M. Payne			250	(12)			*
Herman E. Smith			5,222	(13)			*
C. Henry Fox			100	(14)			*
All Directors and Executive Officers as a Group (14 persons) (15)			209,534				15.75	%

 

*	Represents less than 1% of the Company Common Stock outstanding.

 

(1)	All persons listed have sole investment and sole voting power as to the shares shown as beneficially owned by them except where noted otherwise.

(2)	Address: 7752-A Patrick Landing Road, Bay Minette, Alabama 36507.

(3)

Mr. Van Antwerp may be deemed the beneficial owner of 36 shares owned of record by his spouse. Mr. Van Antwerp has sole voting power and may be deemed the beneficial owner of 11,178 shares held by The Hearin-Chandler Foundation for which he serves as Trustee. Mr. Van Antwerp has sole voting power pursuant to Powers of Attorney as follows: 1,304 shares for T. Bragg Van Antwerp, Jr.; 1,304 shares for Virginia O. Van Antwerp; 1,304 shares for Sherry B. McGowin; 908 shares for Buckner W. Hamilton, III; 290 shares for Buckner W. Hamilton, Jr.; 870 shares for Emily H. Shell; 18,424 shares for Louise S. McCarron; 17,167 shares for Catherine V. Hamilton; 6,469 shares for Alfred L. S. Shearer; and 6,469 shares for Thomas M. Shearer.

(4)	Mr. St. Pé may be deemed the beneficial owner of 46,331 shares owned of record jointly with his spouse.

(5)	Dr. Moore may be deemed the beneficial owner of 2,926 shares owned of record by his spouse, 480 shares held in an IRA account for his benefit and 985 shares owned by the Paul H. Moore, Sr. and Jean M. Moore GST Trust, of which Dr. Moore is both trustee and beneficiary. He is also the

 

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beneficial owner of 1,000 shares owned of record by Michael Riley Moore. Dr. Moore holds voting power in his capacity as a custodian under the Mississippi UGTML to 1,581 shares and may be deemed a beneficial owner with respect to those shares.

(6)	Ms. Gautier may be deemed the beneficial owner of 2,053 shares owned jointly with her spouse, and 1,414 shares listed as Morgan Keegan, Custodian for Lynda J. Gautier, SEP IRA, and deemed beneficial owner of 6,610 shares owned of record by her spouse.

(7)

Mr. Cumbest may be deemed the beneficial owner of 2,725 shares owned of record jointly with his spouse. Mr. Cumbest is direct owner of 9,416 shares payable upon death to Lum Gray Cumbest and Lum Gray Cumbest as Custodian for Hayden Laurel Johnson under the Mississippi UTMA. Mr. Cumbest holds voting power in his capacity as a custodian under the Mississippi UTMA to 900 shares and may be deemed a beneficial owner with respect to those shares.

(8)

Mr. Hammond holds voting power and may be deemed the beneficial owner of 9,500 shares owned by the Frank J. Hammond, Jr. Testamentary Trust, the beneficiaries of which are Jane L. Hammond, widow of Frank J. Hammond, Jr., Alice L. Hammond, one of the children of Frank J. Hammond, Jr., and five grandchildren of Frank J. Hammond, Jr., two of whom are children of Frank J. Hammond, III.

(9)	Dr. Willis may be deemed the beneficial owner of 5,016 shares owned of record jointly with his spouse and a direct owner of 100 shares payable upon death to his spouse.

(10)	Mr. Grafe may be deemed the beneficial owner of 1,444 shares owned of record jointly with his spouse, 96 shares owned jointly with his children, 1,200 shares owned of record by his spouse and 1,055 shares held in an IRA account for his benefit.

(11)	Mr. Lemon is a direct owner of 500 shares payable upon death to his spouse.

(12)	Mrs. Payne may be deemed the beneficial owner of 20 shares owned jointly with her spouse and a direct owner of 230 shares payable upon death to her spouse.

(13)	Mr. Smith may be deemed the beneficial owner of 5,222 shares owned of record jointly with his spouse.

(14)	Mr. Fox may be deemed the beneficial owner of 100 shares owned of record jointly with his spouse.

(15)	The address for each of the above-named executive officers and directors is c/o Merchants & Marine Bancorp, Inc., 3118 Pascagoula Street, Pascagoula, Mississippi 39567.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the Company’s officers and directors, and persons who own more than ten percent of Company Common Stock, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the “SEC”). Officers, directors and greater than ten percent shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.

To our knowledge, based solely on its review of the copies of such forms received by it during the year ended December 31, 2011, or written representations from certain reporting persons, that no Forms 5 were required for those persons, all filing requirements applicable to the Company’s officers, directors and greater than ten percent beneficial owners were complied with during the period ended December 31, 2011.

CORPORATE GOVERNANCE

General

The Company believes that good corporate governance is important to ensure that the Company is managed for the long-term benefit of its shareholders. The Company has Corporate Governance Guidelines and charters for the Company’s audit committee and nominating committee. You can access the Company’s Corporate Governance Guidelines and current committee charters in the “About Us – Corporate Governance” section of the Company’s website – www.mandmbank.com.

Director Independence

The Board has determined that each of the following directors is an “independent director” within the meaning of The Nasdaq Stock Market LLC (“Nasdaq”) listing standards: Paul H. (Hal) Moore, Jr., M.D., Lynda J. Gautier, John F. Grafe, Gerald J. St. Pé, Thomas B. Van Antwerp, Frank J. Hammond, III, Scott B. Lemon, Diann M. Payne, and Julius A. (Jay) Willis, Jr., DMD.

 

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Director Nominations

The nominating committee is responsible for (i) annually reviewing with the Board the appropriate skills and characteristics required of members of the Board, which, at a minimum, include professional integrity, sound judgment, and sufficient time to devote to Board activities; (ii) annually reviewing and determining any specific qualities or skills that one or more directors must possess; (iii) identifying individuals qualified to become directors consistent with the criteria approved by the Board; (iv) evaluating and considering director candidates proposed by management, any director or any shareholder; and (v) recommending for selection by the Board director nominees for the next annual meeting of shareholders. The Board will then review and approve director nominees for the annual meeting of shareholders.

Each potential director nominee is evaluated on the same basis regardless of whether he or she is recommended by management, by a director or by a shareholder. The Board has not adopted a policy with respect to minimum qualifications for directors. Rather, the nominating committee annually reviews and determines the specific qualifications and skills that one or more director must possess. Each of the nominees for director to be elected at the Annual Meeting of Shareholders was nominated and recommended by the nominating committee and approved by the Board.

The Company does not have a formal policy with regard to the consideration of diversity in identifying director nominees, but the Board strives to nominate directors with a variety of complementary skills and backgrounds so that, as a group, the Board will possess the appropriate talent, skills, and expertise to oversee the Company’s business.

The Company has not received director nominee recommendations from any shareholders for the term commencing in 2012 and expiring in 2015. The Board will consider nominees recommended by shareholders, provided that such recommendations comply with the notice, timing and other requirements provided for in the Company’s Bylaws. The Bylaws require that shareholder recommendations be delivered to the Secretary of the Company not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the preceding year’s annual meeting. Any shareholder recommendations must set forth, as to each person the shareholder proposes to nominate for election as a director, all information relating to that person that is required to be disclosed pursuant to Regulation 14A under the Exchange Act, including the proposed nominee’s written consent to being named in the Company’s proxy statement as a nominee and to serving as a director if elected. The recommendation also must set forth the name and address of the shareholder making the recommendation, the class and number of shares of Company Common Stock that are owned beneficially and of record by the shareholder, a representation that the shareholder holds Company Common Stock entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to propose the nomination, and a representation as to whether the shareholder intends or is part of a group which intends to deliver a proxy statement or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to elect the nominee or otherwise solicit proxies from shareholders in support of the nomination. The Company may require any proposed director nominee to furnish other reasonably requested information to determine whether the nominee is eligible to serve as a director of the Company.

Historically, the Company has not engaged third parties to assist in identifying and evaluating potential director nominees. However, upon approval of the Board, the nominating committee has authority to retain a third party search firm to identify director candidates and to determine the search firm’s fees and retention terms.

Code of Ethics

The Company has a Code of Ethics which is applicable to all of the Company’s employees, officers, directors, agents and attorneys. In addition, the Company has a Code of Ethics for Principal Executive and Financial Officers of the Company. The Code of Ethics and the Code of Ethics for Principal Executive and Financial Officers are available on the “About Us – Corporate Governance” section of the Company’s website – www.mandmbank.com. The Company intends to post amendments to or waivers from its Code of Ethics and its Code of Ethics for Principal Executive and Financial Officers (to the extent applicable to the Company’s directors, Chief Executive Officer or principal financial officer) at this location on its website.

 

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Shareholder Communications with Members of the Board

Shareholders who wish to communicate with the Board should do so by sending written correspondence containing any such communications to Merchants & Marine Bancorp, Inc., P.O. Box 729, Pascagoula, Mississippi 39568-0729, Attention: Barbara Bass. As soon as reasonable, but at least once per quarter, Ms. Bass will attend a Board meeting and present to the Board at such meeting any shareholder communications received in the manner described above during the preceding quarter.

Director Attendance at Annual Meeting

The Company has a policy that strongly encourages the Board to attend the annual meeting of shareholders. In order to encourage director attendance at the annual meeting of shareholders, a meeting of the Board is generally held immediately following the annual meeting of shareholders each year. All directors, except Gerald J. St. Pé, attended the 2011 Annual Meeting of Shareholders.

Board Committees

The Board has a separately-designated standing audit committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The audit committee is composed of Paul H. (Hal) Moore, Jr., M.D., Lynda J. Gautier, Gerald J. St. Pé, Thomas B. Van Antwerp, Julius A. (Jay) Willis, Jr., DMD, Scott B. Lemon and Diann M. Payne. Each of the members of the audit committee satisfies the definitions of “independent director” established by the SEC and the Nasdaq listing standards. The audit committee oversees the accounting and financial reporting processes of the Company and the audits of the financial statements of the Company, and prepares the report required by the rules promulgated by the SEC to be included in the Company’s annual report to shareholders and filed with the SEC. The audit committee operates pursuant to a written charter which has been adopted by the Board, a copy of which is available in the “About Us – Corporate Governance” section of the Company’s website at www.mandmbank.com. The Board believes that the cumulative experience of the directors serving on the audit committee is adequate to provide appropriate oversight of the audit functions and therefore an audit committee financial expert, as defined in Item 407(d)(5) of Regulation S-K promulgated by the SEC, is not necessary for there to be a satisfactory discharge of the audit committee’s responsibilities to the Board and the Company’s shareholders.

The Board has a separately-designated standing nominating committee. The nominating committee is composed of Gerald J. St. Pé, Paul H. (Hal) Moore, Jr., M.D., Thomas B. Van Antwerp and Diann M. Payne. Each of the members of the nominating committee satisfies the definition of “independent director” established by the Nasdaq listing standards. The nominating committee provides assistance to the Board in identifying and recommending candidates qualified to serve as directors of the Company and reviews the composition of the Board. The nominating committee operates pursuant to a written charter which has been approved by the Board, a copy of which is available in the “About Us – Corporate Governance” section of the Company’s website www.mandmbank.com.

The Board does not have a separate loan committee. Instead, the Board, acting as a whole, performs this function at meetings specifically called for such purposes. When acting in the capacity of a loan committee, the Board approves, reviews and regulates all matters pertaining to loans, discounts and extensions of lines of credit to individuals, corporations and other entities.

The Board also does not have a separate compensation committee. Instead, the independent directors perform this function at meetings specifically called for that purpose. When acting in the capacity of a compensation committee, the independent directors review the performance of the executive officers of the Company and determine the level of such officers’ salary and incentive compensation.

Board Leadership Structure

The Board appointed the Company’s Chief Executive Officer as Chairman because he is the director most familiar with the Company’s business and industry, and as a result is best suited to effectively identify strategic priorities and lead the discussion and execution of strategy. The Board believes that the combined position of Chairman and Chief Executive Officer promotes a united direction and leadership for the Board and gives a single, clear focus for the chain of command for our organization, strategy and business plans. The Board believes that the Company’s current leadership structure with the combined Chairman/Chief Executive Officer leadership role enhances the Chairman/Chief Executive Officer’s ability to provide insight and direction on important strategic initiatives to both management and the independent directors and, at the same time, ensures that the appropriate level of independent oversight is applied to all board decisions.

 

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Board’s Role in Risk Oversight

While the Board has the ultimate oversight responsibility for the risk management process, various committees of the Board assist the Board in fulfilling its oversight responsibilities in certain areas of risk. In particular, the audit committee focuses on financial and enterprise risk exposures, including internal controls, and discusses with management, the internal auditors, and the independent registered public accountants the Company’s policies with respect to risk assessment and risk management, including risks related to fraud, liquidity, credit operations and regulatory compliance. The audit committee also assists the Board in fulfilling its duties and oversight responsibilities relating to the Company’s compliance and ethics programs, including compliance with legal and regulatory requirements.

Advisory Committee and Honorary Directors

The Company has had an advisory committee consisting of individual(s) who have been appointed by the Board and who serve at the Board’s pleasure. The advisory committee attends meetings of the Board, including the loan committee meetings, and acts in an advisory capacity to the members of the Board. Currently there are no members elected to the Advisory Committee. The Company will evaluate whether to appoint candidates to the Advisory Committee in the future.

The Company has two honorary directors who have been appointed by the Board and who serve at the Board’s pleasure. The honorary directors, Paul H. Moore, Sr. and Jerry L. Lee, attend meetings of the Board, including the loan committee meetings, and act in an advisory capacity to the members of the Board.

During the last fiscal year, the fees paid to each of Dr. Moore and Mr. Lee for attendance at meetings equaled, in the aggregate, $35,400. At December 31, 2011, Dr. Moore owned of record and beneficially 2.34% of the total outstanding shares of Company Common Stock and Mr. Lee owned of record and beneficially 2.22% of the total outstanding shares of the Company Common Stock.

Certain Transactions

The independent directors are responsible for reviewing and approving the terms and conditions of all related party transactions.

The Company has banking and other business transactions in the ordinary course of business with directors and officers of the Company and their affiliates, including members of their families, corporations, partnerships or other organizations in which the directors and officers have a controlling interest. These transactions are on substantially the same terms (including price, interest rate and collateral) as those prevailing at the same time for comparable transactions with unrelated parties. In the opinion of management, these transactions do not involve more than the normal risk of collectability or present other unfavorable features to the Company.

Watkins & Eager PLLC, of which Mr. Frank J. Hammond, III is a member, from time to time renders legal services to the Company in the ordinary course of the Company’s business. Watkins & Eager PLLC last year received $244,073 in fees and expenses related to legal services performed. This represents less than 1.00% of the revenue of Watkins & Eager PLLC for the year 2011.

Furthermore, Mr. Cumbest, the Company’s Chairman, serves as the Company’s nominee to First National Bankshares, Inc. (“FNBB”) headquartered in Baton Rouge, Louisiana and serves on the Board of Directors of FNBB. FNBB acts like a cooperative, providing banking services and products to community banks throughout the State of Mississippi. Mr. Cumbest owns ten (10) shares of First National Bankshares, Inc. (“FNBB”) stock, which is required by individuals serving on FNBB’s Board of Directors. The shares are subject to an irrevocable option to purchase granted to the Company, and, upon Mr. Cumbest’s leaving the Board of Directors of FNBB, the ten (10) shares would immediately be transferred to the Company. The Company, a founding member of FNBB, owns 1,705 shares of FNBB stock. During the year ended December 31, 2011, the Company paid $45,299 in fees to FNBB for correspondent services.

 

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Audit Committee Report

The audit committee has reviewed the Company’s audited consolidated financial statements and discussed such statements with management.

The audit committee has discussed with Wolfe, McDuff & Oppie, P.A., the matters required to be discussed by the Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards , Vol. 1, AU Section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The audit committee has received the written disclosures and the letter from Wolfe, McDuff & Oppie, P.A., required by applicable requirements of the Public Company Accounting Oversight Board regarding Wolfe, McDuff & Oppie, P.A.’s communications with the audit committee concerning independence, and has discussed with Wolfe, McDuff & Oppie, P.A. its independence. Based on the review and discussions noted above, the audit committee has recommended to the Board that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, and be filed with the SEC.

 

Gerald J. St. Pé		Julius A. (Jay) Willis, Jr., DMD		Thomas B. Van Antwerp
Paul H. (Hal) Moore, Jr., M.D.		Lynda J. Gautier		Scott B. Lemon
Diann M. Payne

The foregoing report shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

EXECUTIVE OFFICERS

The following are the current executive officers of the Company who are not also directors. For information regarding the executive officers who are also directors, see “Proposal 1: Election Of Directors—Directors.”

 

		September 30,		September 30,		September 30,
Name		Age		Position(s) with Company (1)		Executive Officer Since
C. Henry Fox, Jr. (2)		56		Executive Vice President and Chief Operating Officer		2008
Herman E. Smith (3)		69		Executive Vice President and Chief Credit Officer		1996
Elise Bourgeois (4)		45		Senior Vice President, Cashier and Chief Financial Officer		2009
Martin J. Regan (5)		61		Senior Vice President – Operations		2010
G. Todd Trenchard (6)		53		Senior Vice President – Marketing and Business Development		2009
James M. Wheat (7)		60		Senior Vice President – Investment Officer		2010

(1) Unless otherwise indicated, each of the persons listed in the above table has been engaged in his or her present or a similar position for at least the past five years.

(2) Mr. Fox was promoted to Executive Vice President and Chief Operating Officer on April 18, 2010. Prior to that, Mr. Fox was Senior Vice President – Commercial Lending since August 2008. From June 2005 to August 2008 he was Executive Vice President – Chief Lending Officer for First Bank and Trust of Mississippi and prior to that was with Hancock Bank serving in various capacities including Auditor, Assistant Vice President, and Vice President from February 1979 to June 2005.

 

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(3) Mr. Smith was promoted to Executive Vice President and Chief Credit Officer on April 18, 2010. Prior to that Mr. Smith was Senior Vice President – Lending since June 10, 1996.

(4) Ms. Bourgeois was promoted to Senior Vice President and Chief Financial Officer on April 18, 2010. Her employment with the Company started on April 3, 2006 as Accounting Clerk, and on May 8, 2007 she was promoted to Cashier.

(5) Mr. Regan became employed with the Company September 13, 2010 as Senior Vice President – Operations. From 1998 to August 2010 he was Senior Vice President – Payment Processing Operations with Hancock Bank, and was employed with Manufacturers and Traders Trust Company as Assistant Vice President – Operations Manager from 1979-1998.

(6) Mr. Trenchard was a consultant for public relations for the Company since 2003. In 2005 he became employed with the Company as Communications Director. From 2007 to 2008 Mr. Trenchard was Vice President and Public Relations Director. In 2009 he was promoted to Senior Vice President of Public Relations, and in April 2010 he became Senior Vice President – Marketing & Business Development.

(7) Mr. Wheat was promoted to Senior Vice President – Investment Officer on April 18, 2010. Prior to that, he was Vice President – Branch Manager of the Moss Point branch office since November 1996.

PROPOSAL 1: ELECTION OF DIRECTORS

General

The Company’s Bylaws provide for a board consisting of at least ten members. The Board of Directors has the authority, from time to time, to change the number of directors so long as there is a minimum of ten directors thereof. Pursuant to the classified board provision of the Company’s Articles of Incorporation, the Board is divided into three classes, with directors of one of the three classes elected annually for three-year terms. The terms of directors of the class elected in 2009 to serve until 2012 are due to expire with the 2012 Annual Meeting, and the directors currently serving in this class have been nominated by the Board for reelection for terms that will expire in 2015. These nominees are Scott B. Lemon, Diann M. Payne, Thomas B. Van Antwerp, and Julius A. (Jay) Willis, Jr., DMD.

Each shareholder has the right to cumulate votes and thereby cast that number of votes which is equal to the number of shares entitled to be voted by the shareholder multiplied by the number of directors (4) to be elected, (i.e., one share = 4 votes). These votes may be cast in favor of any one nominee or may be distributed in any manner among all or several of the nominees, at the shareholder’s sole discretion. Directors are elected by a plurality of the votes cast.

Should any nominee be unable to serve as a director for any reason, of which none is presently foreseen, it is intended that the proxies will be voted FOR the election of such substitute nominee(s) as the current Board may designate.

Directors

The following table sets forth certain information regarding the four nominees for election to the Board at the 2012 Annual Meeting and the incumbent directors whose terms of office will continue after the 2012 Annual Meeting.

The information describing the current position and prior business experience of each of the nominees and continuing directors below contains information regarding the person’s service as a director, public reporting company director positions help currently or at any time during the last five years and the experiences, qualifications, attributes or skills that caused the Board to determine that the person should serve as a director for the Company.

 

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		September 30,		September 30,		September 30,		September 30,
Name and Principal Occupation (if other than with the Company)		Age		Company Position		Director Since		Term Expires
Scott B. Lemon Insurance Agent Lemon-Mohler Insurance (1)		47		Director		2009		2012
Diann M. Payne Executive Director Jackson County Civic Action Committee (2)		54		Director		2009		2012
Thomas B. Van Antwerp Executive Director Providence Hospital Foundation (3)		61		Director		1985		2012
Julius A. (Jay) Willis, Jr., DMD Dentist Willis and Parker Family Dentistry P.A. (4)		59		Director		2007		2012
Royce Cumbest (5)		61		Chairman of the Board, President and Chief Executive Officer/Director		1985		2013
Frank J. Hammond, III Attorney Watkins & Eager PLLC (6)		58		Director		1997		2013
Paul H. (Hal) Moore, Jr., M.D. President and Radiologist Singing River Radiology Group (7)		60		Director		2001		2013
Lynda J. Gautier Retired, Certified Public Accountant Lynda J. Gautier, CPA (8)		68		Director		1977		2014
John F. Grafe Retired (9)		68		Director		1988		2014
Gerald J. St. Pé St. Pé and Associates, LLC (10)		72		Director		1985		2014

(1) Scott B. Lemon – Mr. Lemon has been an insurance agent with Lemon-Mohler Insurance Agency since July 2000 and has extensive experience in the field of insurance and manufacturing. His business relationships with a significant number of clients in the service area offer valuable insight to the Board. Mr. Lemon served as an Advisory Member of the Board from July 31, 2007, and became a Director of the Company in April 2009.

(2) Diann M. Payne – For the past eleven years, Ms. Payne has served as the executive director of the Jackson County Civic Action Committee. Her experience in the banking industry as a bank examiner for the FDIC and later an analyst for a financial institution provides the Board with valuable insight. She began her career in nonprofit work as a finance director in 1984, and served as a fiscal officer for thirteen years. Ms. Payne served as an Advisory Member of the Board from July 31, 2007, and became a Director of the Company in April 2009.

(3) Thomas B. Van Antwerp – Mr. Van Antwerp has a diverse background in the business world having held various high level management positions in the newspaper industry and the field of philanthropy which provides the Board with valuable leadership and business experience. In addition, he was president of his own staffing firm in Atlanta, Georgia where he was responsible for the financial, marketing and human resource functions of this company. Mr. Van Antwerp served as a director of EnergySouth, a publicly traded gas distribution

 

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company, from 1993 until its sale in 2008. During his tenure on that board, he served on the executive, governance and audit committees and he was chairman of the compensation and planning committee. He is currently the sole trustee of a charitable foundation and responsible for all investment and distribution decisions of the foundation. He is currently the executive director of Providence Hospital Foundation since June 2004.

(4) Julius A. (Jay) Willis, Jr., D.M.D. – Dr. Willis has practiced dentistry at Willis and Parker Family Dentistry P.A., since June 1979. A lifelong resident of Pascagoula, Dr. Willis offers the Board valuable business experience from his many years as a small businessman and owner of a successful dental practice and from his service as an involved civic leader in various capacities. He has many years of service as a member and president of the local school board of the Pascagoula Municipal Separate School District, guiding the district’s operations including a successful bond issue campaign and the construction of two new high schools for Jackson County. His leadership experience includes participation as a member of the boards of directors of the local Chamber of Commerce, the United Way, the Regional YMCA, the Gulf Coast Community Foundation, and serving also as President of the Coast Dental Society and the University of Mississippi School of Dentistry Alumni Association.

(5) Royce Cumbest – Mr. Cumbest, in addition to serving as the Chairman of the Board, President and Chief Executive Officer of the Company since its formation in 2008, also serving in those capacities for the Bank since 1991, serves on the Boards of Directors of Mississippi Export Railroad Company, Inc., First National Banker’s Bank, First National Bankers Bankshares, Inc., and Mississippi Power Company. His extensive banking experience and his experience managing the day to day operations of the Company’s business provide the Board with knowledge and insight into the Company’s operations. Additionally, his active involvement with the Company provides the Board with invaluable institutional knowledge and a comprehensive understanding of the Company’s mission.

(6) Frank J. Hammond, III – Mr. Hammond is a member of Watkins & Eager, PLLC in Jackson, Mississippi. He has degrees in accounting, law and a Master of Laws in Taxation. Mr. Hammond has practiced law for over thirty years in Pascagoula and Jackson, Mississippi and has represented a broad array of corporations and individuals with an emphasis on banking, business and estate planning. He is able to contribute to the Board through the breadth and depth of his experience in a broad range of business, corporations, real estate, legal and regulatory matters.

(7) Paul H. (Hal) Moore, Jr., M.D. – Along with practicing medicine since 1980, Dr. Moore serves as president of Singing River Radiology Group. This combination provides a unique perspective to the Board concerning responsibility for a small business and insight to the local medical community. Furthermore, Dr. Moore serves as secretary/treasurer of the Singing River Medical Society providing knowledge of the health care industry locally and beyond.

(8) Lynda J. Gautier – Ms. Gautier’s over 40 years of being a Certified Public Accountant in Pascagoula, the principal officer of her Company, with clients also in Mobile, Alabama, has enabled her to draw on her financial and tax accounting background as well as long time business and social relationships of the area. Her financial knowledge and skill add to her ability to serve as chairperson of the Company’s audit committee.

(9) John F. Grafe – Mr. Grafe is an experienced business leader. His business relationships with a significant number of the Company’s clients and target clients offer valuable insight to the Board. He has served on various boards in Jackson County including the Singing River Hospital, and Moss Point Redevelopment. After retiring from his business, Grafe Auto Company in February 1999, Mr. Grafe worked as a consultant with the Company until December 31, 2008.

(10) Gerald St. Pé – Prior to St. Pé and Associates, LLC, a private investment company in 2001, Mr. St. Pé served 40 years in senior management and corporate executive assignments with both Litton Industries and Northrop Grumman Corporation, two of the nation’s largest defense contractors. He retired from Northrop Grumman, after serving 16 years as President and Chief Operating Officer of Northrop Grumman Ship Systems (formally Litton Ship Systems), the nation’s largest designer and builder of naval vessels with $5 billion in annual sales and 12,000 employees. He also served as corporate officer of both Litton Industries and Northrop Grumman, with responsibility for the overall operations and management of the company’s shipbuilding business, including marketing, strategic planning, production, financial performance, and compliance with Federal and state regulatory agencies. Through his 25 years of service on the board of The Southern Company, one of the country’s largest utility companies, Mr. St. Pé provides the Board with invaluable leadership in the area of corporate governance, having served on both the compensation and governance committees of The Southern Company.

 

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The Board recommends that you vote “For” the proposed director nominees.

EXECUTIVE COMPENSATION

The Company does not have a compensation committee. Instead, the Board sets the compensation for all officers, including the Chief Executive Officer, based upon annual corporate and individual performance. After 2011 year-end totals were reconciled, the Company’s goals were reached. Therefore, a performance incentive was approved on January 10, 2012 for the Tier 3 level at 5.0% of base salary and paid to executive officers and employees for an aggregate amount of $253,608.

The overacting policy of the independent directors in determining executive compensation, including the compensation of the Chief Executive Officer, is to attract and retain the highest quality talent to lead the Company and to reward key executives based upon the performance of the Company. The independent directors believe that providing incentives to and rewarding the performance of the Company’s executive officers enhances the profitability of the Company. The components of executive compensation consist of salary, bonus, pension plan benefits and perquisites. The Company presently has no agreements to provide stock options to its officers.

The Board has reviewed our compensation policies as generally applicable to our employees and believes that our policies do not encourage excessive and unnecessary risk taking, and that the level of risk that they do encourage is not reasonably likely to have a materially adverse effect on the Company.

In evaluating annual corporate performance, the independent directors take into account the return on assets, deposit growth, and other strategic goals set by the Company’s management which may change from time to time. In evaluating annual individual performance, the independent directors look to evaluations which are performed on all executive officers by Mr. Cumbest. Mr. Cumbest does not participate in discussions of or vote on matters relating to Chief Executive Officer compensation. All full-time employees, including the executive officers, other than the Chief Executive Officer, were covered in 2011 by the Company’s Performance Incentive Plan. After 2011 year-end totals were reconciled, the Company’s goals were reached. Therefore, a performance incentive was approved on January 10, 2012 for the Tier 3 level at 5.0% of base salary and paid to executive officers and employees. The independent directors use the Mississippi Bankers Association’s Annual Salary Survey and other sources to monitor and, if necessary, adjust compensation in order to remain competitive in the Company’s peer group. The Company is not party to any agreements providing for payments to executive officers upon termination, change of control, or change in responsibilities.

2011 Summary Compensation Table

The following table summarizes the compensation paid or accrued by the Company during the years ended December 31, 2011 and 2010, for the Named Executive Officers.

 

Name and Principal Position		Year				Salary ($)				Bonus ($) (1)				Non-Equity Incentive Plan Compensation ($)				Nonqualified Deferred Compensation Earnings ($) (2)				All Other Compensation ($) (3)				Total ($)
L. Royce Cumbest			2011				283,077								4,812				313,328				17,779				618,996
Chairman, President and Chief Executive Officer			2010				285,577								8,938				210,109				16,970				521,594
C. Henry Fox			2011				140,088				800				2,362				59,479				2,291				205,020
Executive Vice President and Chief Operating Officer			2010				132,692				3,782				4,387				30,042				2,216				173,120
Herman E. Smith			2011				125,085				5,750				2,144				168,702				6,229				307,910
Executive Vice President and Chief Credit Officer			2010				125,349				8,793				3,981				84,448				4,452				227,023

 

(1)	Messrs. Fox and Smith received loan incentives from the Company.

 

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(2)	Represents aggregate change in the actuarial present value of named executive officer’s accumulated benefit under the Merchants & Marine Bank Pension Plan (the “Pension Plan”). Assumptions used to calculate these figures are provided under the table in the section below entitled “Pension Benefits.”

 

(3)

Represents premiums paid for life insurance on Messrs. Cumbest, Fox, and Smith for the benefit of their beneficiaries, taxes paid on behalf of Messrs. Cumbest, Fox and Smith for life insurance, director fees for Mr. Cumbest as well as the benefit received by Mr. Cumbest from a vehicle the Company provides him.

Pension and Retirement Plans

The Merchants & Marine Bank Pension Plan (the “Pension Plan”) is a defined benefit pension plan. No contributions to the Pension Plan were made for the Plan Year ending October 31, 2011. The estimated years of credited service and benefit information for the Named Executive Officers, as of December 31, 2011, were:

2011 PENSION BENEFITS

 

September 30,

September 30,

September 30,

September 30,

Name

Plan Name

Number of Years Credited Service (#)

Present Value of Accumulated Benefit (1) ($)

Payments During Last Fiscal Year ($)

(a)

(b)

(c)

(d)

(e)

L. Royce Cumbest

Merchants & Marine Pension Plan

34

$

1,216,825

__

C. Henry Fox

Merchants & Marine Pension Plan

3

110,916

__

Herman E. Smith

Merchants & Marine Pension Plan

22

938,943

__

(1) The Present Values of Accumulated Benefits are based on the same assumptions as used under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 715 to prepare Pension Plan information for the Company’s financial statements.

The following are among the material features and provisions of the Pension Plan:

 

•

Plan year-end: October 31.

 

•

Eligibility: Salaried employees who have reached age 21 and completed one year of service with at least 1,000 hours.

 

•

Compensation: Total compensation, including salary, any overtime and any bonuses, for the plan year.

 

•

Average earnings: Average total compensation during highest five consecutive plan years.

 

•

Vesting: Five years of service with 1,000 hours.

 

•

Normal retirement age: 65

 

•

Normal retirement benefit: 60% of average earnings, less 75% of Social Security PIA, all reduced proportionately for less than 15 years of service at age 65.

 

•

Early retirement age: 55 and 10 years of service with at least 1,000 hours.

 

•

Early retirement benefit: accrued benefit based on average earnings and years of service to date, reduced actuarially for payment beginning before age 65.

 

•

Normal form of benefit payment: Life income, 120 payments guaranteed.

 

•

Optional forms of benefit: Life income with 0 or 60 guaranteed payments, and joint & survivor forms. Optional forms are actuarially equivalent to the normal form.

 

•

Incidental pre-retirement disability and death benefits are provided.

 

•

Benefits are generally guaranteed by the Pension Benefit Guaranty Corporation, up to certain statutory limits, pursuant to Section 4022 of the Employee Retirement Income Security Act of 1974 (“ERISA”).

 

•

The Pension Plan is funded by the Company, with contributions actuarially determined pursuant to ERISA and the Code.

Messrs. Cumbest and Smith have met the age and service requirements for the Pension Plan’s early retirement benefit as described above.

 

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Director Compensation

 

			September 30,				September 30,				September 30,				September 30,
Name (1)		Fees Earned or Paid in  Cash ($)				Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)				All Other Compensation ($)				Total ($)
Lynda J. Gautier			23,850				62,980				—				86,830
John F. Grafe			22,100				51,610				—				73,710
Frank J. Hammond, III			10,100				12,000				—				22,100
Scott B. Lemon			23,850				—				—				23,850
Paul H. (Hal) Moore, Jr., M.D.			11,600				12,000				—				23,600
Diann M. Payne			23,850				—				—				23,850
Gerald J. St. Pé			23,400				33,935				—				57,335
Thomas B. Van Antwerp			11,600				12,000				—				23,600
Julius A. (Jay) Willis, Jr., DMD			23,850				—				—				23,850

 

(1)	Royce Cumbest, the Company’s Chairman, President and Chief Executive Officer, is not included in the table above as he is a Named Executive Officer and his compensation as a director is reflected in the 2011 Summary Compensation Table on page 12.

Directors fees are established annually by the Board. During 2011, each director received fees of $22,100 and each member of the audit committee received $250 for each meeting attended. The members of the nominating committee did not receive compensation for attending the nominating committee meetings. During the year ended December 31, 2011, the Board held a total of 80 meetings. In 46 of the 80 meetings, the Board was acting as a loan committee. In addition, there were nine holding company meetings, seven audit committee meetings and one nominating committee meeting held during 2011. No director attended fewer than 75% of the aggregate of the 80 meetings and committee meetings on which such director serves.

The Company maintains an unfunded deferred compensation plan for directors (the “Plan”) pursuant to which a director may defer fees until the date on which the director attains the age of 65, or, earlier, under certain circumstances, if the director retires after attaining the age of 55. Under the Plan, the Company may, but is not obligated to, purchase life insurance on the director’s life. The Plan provides for benefits to be paid to the Director in the event of death prior to retirement or the commencement of retirement benefits. Benefits are actuarially determined individually for a participant based upon the level of contribution, age and normal retirement age. Substantially all of the costs associated with the Plan are related to the contributed directors fees. At December 31, 2011, participants in the Plan were Messrs. Cumbest, Hammond, Van Antwerp, and Dr. Moore. From time to time, with the approval of the Board, other directors may join the Plan or existing participants may cease participation in the Plan.

 

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RELATIONSHIP WITH PRINCIPAL ACCOUNTANTS

Wolfe, McDuff, & Oppie, P.A. are the principal accountants for the Company, and it is anticipated that the firm will continue as such during the current year. The Board has also engaged that firm to render various accounting services to the Company in connection with filings with the SEC and other agencies, including tax returns. A representative of the firm is expected to be present at the 2012 Annual Meeting, and will be available to make a statement to shareholders, should he desire to do so, and to respond to appropriate questions.

Fees Billed to the Company during Fiscal 2011 and Fiscal 2010:

 

			September 30,				September 30,
		2011				2010
Audit Fees		$	97,000.00			$	106,500.00
Audit-Related Fees			13,500.00				13,000.00
Tax Fees			5,325.00				5,500.00
All Other Fees			12,640.00				14,900.00
Total Fees		$	128,465.00			$	139,900.00

The audit committee has pre-approval policies pursuant to which the audit committee is required to pre-approve the audit and non-audit services performed by the independent accountants in order to assure that the provision of such services is consistent with the SEC’s rules and do not impair auditor independence. Unless a type of service to be provided by the independent accountants has received general pre-approval, it will require specific pre-approval by the audit committee. Any proposed services exceeding pre-approved cost levels will require specific pre-approval by the audit committee. For the year ended December 31, 2011, the Company pre-approved all non-audit services.

The term of any pre-approval is twelve (12) months from the date of pre-approval, unless the audit committee specifically provides for a different period. The audit committee will periodically revise the list of pre-approved services. The audit committee may delegate pre-approval authority to one or more of its members, but may not delegate its responsibilities to pre-approve services performed by the independent accountants to management. Any audit committee member to whom such authority is delegated shall report any pre-approval decisions to the audit committee at its next scheduled meeting.

All requests or applications for services to be provided by the independent accountants must be submitted to the Company’s principal financial officer, who will present such requests and applications to the chairman of the audit committee. The chairman of the audit committee will determine if such services are included within the list of services that have been pre-approved by the audit committee. Any breach of the audit committee’s pre-approval policies must be immediately reported to the chairman of the audit committee.

Audit Fees. These are fees related to professional services rendered in connection with the audit of the Company’s annual financial statements, the reviews of the financial statements included in each of the Company’s Quarterly Reports on Form 10-Q, and accounting consultations that relate to the audited financial statements and are necessary to comply with generally accepted accounting principles.

The annual audit services engagement terms and fees will be subject to the specific pre-approval of the audit committee. The audit committee will approve, if necessary, any changes in terms, conditions and fees resulting from changes in audit scope, Company structure or other matters.

In addition to the annual audit services engagement approved by the audit committee, the audit committee may grant pre-approval for other audit services, which are those services that only the independent accountants reasonably can provide.

Audit-Related Fees. Audit-related services are assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and that are traditionally performed by the independent accountants. Audit-related services also include ERISA required audits of the Company’s pension and 401(k) plans. The audit committee believes that the provision of audit-related services does not impair the independence of the auditor.

 

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Tax Fees. These are professional services related to tax compliance, tax planning and tax advice. The audit committee believes that the independent accountants can provide such services without impairing the independent accountants’ independence.

All Other Fees. These services include management advisory services, computer and other related IT services. The audit committee may grant general pre-approval to those permissible non-audit services that it believes are routine and recurring services, and would not impair the independence of the auditor.

Pre-Approval Fee Levels . Pre-approval fee levels for all services to be provided by the independent accountants will be established periodically by the audit committee. Any proposed services exceeding these levels will require specific pre-approval by the audit committee.

Prohibited Non-Audit Services . The following are specified as prohibited non-audit services under the audit committee’s pre-approval policies: management functions; human resources; broker-dealer, investment advisor or investment banking services; legal services; and expert services unrelated to the audit.

OTHER MATTERS

The Company’s management knows of no other business that will be brought before the meeting. Should other matters properly come before the meeting, the persons named in a properly executed and returned proxy will vote the shares represented by such proxy according to their best judgment on such matters.

SHAREHOLDER PROPOSALS

Pursuant to Rule 14a-8(e) of the Exchange Act, shareholder proposals submitted in accordance with applicable rules and regulations for presentation at the Company’s next annual meeting and received at the Company’s executive offices no later than November 1, 2012 will be considered for inclusion in the Company’s proxy statement and form of proxy relating to such annual meeting. For other shareholder proposals to be timely (but not considered for inclusion in the Company’s proxy statement), a shareholder’s notice must be delivered to the Secretary of the Company not later than the close of business on January 5, 2013 nor earlier than the close of business on December 6, 2012. For proposals that are not timely filed, the Company retains discretion to vote proxies it receives. For proposals that are timely filed, the Company retains discretion to vote proxies it receives provided (1) the Company includes in its proxy statement advice on the nature of the proposal and how it intends to exercise its voting discretion and (2) the proponent does not issue a proxy statement.

ADDITIONAL INFORMATION

A copy of the Company’s Annual Report to Shareholders for the fiscal year ended December 31, 2011, which includes the Company’s financial statements, is enclosed herewith. The Annual Report to Shareholders is not to be regarded as proxy soliciting material.

The Company is subject to the reporting requirements of the Exchange Act, and files an annual report on Form 10-K which also serves as the Company’s annual disclosure statement under applicable SEC regulations, quarterly and current reports, proxy statements and other information with the SEC. Our current SEC filings and accompanying exhibits may be inspected without charge at the public reference facilities of the SEC located at 100 F Street, N. E., Washington, D.C. 20549. You may obtain copies of this information at prescribed rates. The SEC also maintains a website that contains reports, proxy statements, registration statements and other information. The SEC website address is www.sec.gov. You may call the SEC at 1-800-SEC-0330 to obtain further information on the operations of the public reference room.

 

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PLEASE MARK VOTES REVOCABLE PROXY as in this example MERCHANTS & MARINE BANCORP, INC. il SS 1. For the election as Directors of the following Nominees: I I j THIS PROXY IS SOLICITED BY THE BOARD OF Scott B. Lemon, Diann M. Payne, Thomas B. Van I I I DIRECTORS FOR THE ANNUAL MEETING OF Antwerp, and Julius A. (Jay) Willis, Jr., DMD. To QWAPPWni nPRQ rn rf HFI n ON APR!! K omo withhold authority for any nominee, please strike SHAREHOLDERS TO BE HELD ON APRIL 5, 2012. ,hrougt) )he name of such namjnee and mark ,he The undersigned hereby appoint(s) Herman E. Smith and Frank J. withhold authority box. Hammond, III, or any one of them (with full power to appoint his substitute), , . attorneys to represent and to vote, as designated below, ail the shares of Total ™mulatlve VQtes held <as descrlbed m thfi accompanying Proxy statement) to be Common Stock of Merchants & Marine Bancorp, Inc. held of record by the allocaled amD”9!he Nominees as follows: undersigned on February 3, 2012, at ihe Annual Meeting of Shareholders to be held on April 5, 2012, at Merchants & Marine Bank, 3118 Pascagoula Street, Pascagoula, Mississippi 39567, at 10:00 A.M. (local time) and at any adjournments ihereof. Messrs. Lemon and Van Antwerp, Mrs. Payne, and Dr. Willis, Jr. ara to be elected for a three-year term to expire at the 2015 Annual Meeting. Further information is set forth in the accompanying Proxy Statement. 2. On such other matters as may properly come before the masting. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER. IF NO INSTRUCTIONS ARE INDICATED, THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES FOR ELECTION AS DIRECTORS AND OTHERWISE IN THE DISCRETION OF THE HOLDERS OF THE PROXIES. Please be sure to date and sign Date this proxy card in the box below. I— Sign above Co-holder (if any) sign above — Please sign exactly as your name appears on your stock certificates. Wtien signing as attorney, administrator, executor, guardian or trustee, please add your full title as such. If shares are ^registered in joint names, each registered owner should sign. Detach above card, sign, date and mail in postage paid envelope provided. MERCHANTS & MARINE BANCORP, INC. Pascagoula, Mississippi PLEASE ACT PROMPTLY PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY CARD PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE. IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED. I PROXY MATERIALS ARE I I AVAILABLE ON-LINE AT: j http://www.cf pp roxy. co m/7088 I PROXY MATERIALS ARE I

I AVAILABLE ON-LINE AT: j http://www.cfpproxy.CQm/7088