Special to the American Banker

Credit card trivia buffs know that MBNA Corp. took its name from its former affiliation with the now-defunct Maryland National Bank.

Today the "M" might as well stand for Maine.

One of the first card companies to take advantage of favorable tax and interest rate laws in Delaware, where it set up headquarters in 1982, MBNA began moving customer service and marketing functions into the coastal town of Camden three years ago.

MBNA, the second-largest issuer of MasterCard and Visa cards, now has 2,000 employees in five Maine locations. That's almost 14% of its corporate work force.

The move hasn't exactly turned Maine - a state of sleepy villages whose people are wary of outsiders - into a Delaware-style business enclave. Despite having created jobs where they were desperately needed, MBNA has had continually to respond to public suspicion of its citizenship credentials and community impact.

But the early protests have died down, and the company is more than happy with its move - for personal as well as business reasons.

Charles Cawley, MBNA America Bank's chairman and chief executive officer, was considering several southern New England sites in 1992 when an acquaintance in Camden suggested an old woolen mill here.

The idea quickly took root in the mind of Mr. Cawley, whose grandparents had lived nearby and whose father had relocated his business to the area in 1938.

After a brief flirtation with a leasing arrangement, the company went all the way and bought the six-acre complex. That was 1993, when MBNA envisioned having just 200 employees in Maine.

"We were comfortable with the region," said Richard K. Struthers, MBNA's director of regional operations, who noted that Camden (population: 5,000) had been the site of MBNA management retreats since the early 1980s.

The initial attraction may have been personal connections, not to mention the town's picturesque harbor and temperate climate. But Camden and the rest of the Penobscot Bay region had long lacked year-round jobs for many of its people. MBNA could tap that labor pool, which, incidentally, came at relatively low cost.

"We are a people-to-people business," said Shane Flynn, MBNA's Northeast regional director, who reports to Mr. Struthers. "Maine people have a good work ethic and are self-motivated."

Attracted by the quality of life but forced to seek jobs elsewhere, some people returned when MBNA opened up, Mr. Struthers said.

"They are keeping families together," said Keith Patten, president and CEO of Camden National Bank.

To capitalize on the availability of students at the University of Maine, MBNA opened an office in Orono with 250 part-time and 50 full-time workers. It offers an affinity card with the university and has been able to recruit hundreds of students for full-time work, said Mr. Flynn.

MBNA's presence has tended to raise wages and reduce the labor oversupply, Mr. Patten said. "We used to have 50 applicants for a job, with 10 qualified; now we have 10, with one qualified."

Camden is four-and-a-half hours by car from Boston and two hours north of Portland, Maine's biggest city, but for executive travel, MBNA uses a small county airport just outside nearby Rockland. The company has built a hangar for its jets, and the county extended the runway.

The remote location did pose a few difficulties that Mr. Flynn minimized.

The recent severing of a phone cable in Freeport silenced Camden's phones for about six hours. MBNA calls were routed to other offices. But company executives were reportedly livid at the phone company and its antiquated network.

Now, Mr. Flynn said, a contingency plan assures MBNA's Maine phones will keep operating even after a trunk line fails. Indeed, shortly after MBNA opened in the state, Nynex installed fiber-optic cables.

"The infrastructure in Maine may not be extensive, but it is firm," Mr. Flynn said.

Another benefit of being in Maine was MBNA's closing a deal to offer an affinity card with Freeport-based retailing giant L.L. Bean.

"I know if we didn't have an operation in Maine we wouldn't have" Bean, Mr. Struthers said.

All L.L. Bean calls must be answered in Maine, Mr. Flynn added. "They like a Maine accent."

"With regard to the Maine location, it was not a requirement, but it was beneficial," said L.L. Bean spokeswoman Lynn Calhoun. "We were familiar with their work force and operation."

MBNA has successfully used its regionalization strategy to get closer to its customers, said James Accomando, a Fairfield, Conn.-based consultant.

The Maine operation also serves MBNA's desire to control its environment, he said. The credit card company has an aversion to outsourcing a function as critical as customer service.

It also does nationwide customer research out of Camden. In the early 1990s, the company had used an outside company, but executives concluded it was more cost-effective to do it in-house.

Mr. Struthers added that a request for a report used to take up to a month to be fulfilled; now it takes about three days.

MBNA has its own advertising agency, too. That keeps costs down by avoiding the markups associated with a Madison Avenue address, said David W. Spartin, senior executive vice president.

Another part of the in-house religion is credit analysis, which MBNA regards as a necessary "human skill." Mr. Spartin said some might argue the reliance on analysts is more expensive than packaged programs, but he said it pays off in lower loss rates. MBNA's most recently reported loss ratio on managed loans was 3.3%, well below the industry average.

Camden, too, has a history of trying to control its environment. When MBNA came in with plans to use the old mill, native Yankee resistance was quick to mount.

"Most communities would take off both arms and legs to get a business like MBNA that is nonpolluting," Camden National's Mr. Patten said.

But Camden had seen Kodak ride into town with big plans, renovate a building up the street from the mill for a "creative imaging center," then abruptly leave two years later.

Some worried MBNA might do the same. Or worse, change the character of the town.

Rick Rector, chief financial officer at Wayfarer Marine Corp., a ship repair company, was on Camden's Board of Selectmen when MBNA's plans for the old mill came to light. He said it made residents nervous.

"There was some feeling that they were taking over the town," Mr. Rector said. "I don't see this becoming a company town." He explained that many residents never had had any experience with a big corporation.

"In Knox County they certainly have been the big story," said Ken Bridges, a senior economic analyst at the Maine Department of Labor.

In MBNA's first year, 1993, Knox County went from seventh to third among Maine's 16 counties in per capita income. Mr. Rector said real estate values also stabilized after having slipped since the mid-1980s.

Small businesses got work as MBNA built, renovated, and decorated its central office and the seaside homes it bought for executives.

The worst fears about a corporate takeover of Camden haven't come true, according to Mr. Rector. MBNA isn't on Main Street, and because of its shift structure "you don't see a mass evacuation of town at 5 p.m."

Last year, Camden residents opposed the company's plan to expand into a new neighborhood. Within two weeks MBNA decided instead to build in nearby Belfast.

Still, there is sniping. "Some people don't like the color (tan) that they paint their buildings," Mr. Rector said.

Even if MBNA left mid-coast Maine tomorrow, Mr. Rector said, it would leave a legacy of improved buildings. As for its year-round presence, he observed dryly, "it gives us something to talk about in winter."

Mr. Moore is a freelance writer based in Vassalboro, Maine.

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