Louisville, KY - In 1989, three Louisville businessmen came up with an idea that a company focused on helping banks and others understand the new legislation that created Farmer Mac, and help them use its programs to provide capital to farmers, could be successful.
Armed with their idea and the gumption to leave their jobs and go out on their own, Alan Singleton, Don Mattern and Marc McCance created a fledgling business to help bankers learn and develop the secondary market process for agricultural loans. They began by teaching the new process to other rural bankers who gathered in cramped hotel rooms. Twenty five years later that same business has evolved and is celebrating the attainment of over $1 billion in managed and serviced loan assets.
AGRIfinancial Services (AFS), a division of CGB Enterprises, is now one of the largest seller/servicer operations in the country, originating and servicing loans for Farmer Mac and others. Its offices in Louisville KY house more than 30 people including underwriters, loan servicing specialists and sales and technical specialists. They are joined by a growing national sales force which has positions in Minnesota, California, Illinois, Louisiana, North Carolina, Indiana and Kentucky.
“It’s been a very rewarding experience for us,” said Alan Singleton, General Manager of AGRIfinancial who shares the leadership role of the company with original partner Don Mattern (Mr. McCance left the business about 10 years ago). “I believe the most rewarding part is that we’ve been able to create a number of good jobs for people in this community, jobs that weren’t here before. But equally important are the farm customers we’ve been able to serve. Our customers are all across the U.S. They represent the diversity of American agriculture. They are wonderful people to work with, and we are thankful every day for their business.”
AGRIfinancial’s operations include servicing a growing portfolio of loans that have been made through Farmer Mac, the Washington D.C. Government Sponsored Enterprise (GSE) that created a secondary market for ag loans. As a GSE, the role of Farmer Mac and its partners like AGRIfinancial is to enhance the flow of credit to designated sectors – in this case, farmers. Farmer Mac was created in the late 1980’s in a response to the credit crisis facing agriculture. Basically, it provides efficiencies and standards that safeguard and reduce the risks in lending to both farmers and investors. In another view, Farmer Mac does for rural bankers and farmers the same thing that the first GSE – the Farm Credit System does. But until it was formed, banks had no access to longer term funding instruments (as did Farm Credit). AFS also originates and services loans placed with other institutional investors who want a stake in agriculture.
About 13 years ago, Consolidated Grain & Barge (whose operations include the nearby Jeffersonville IN elevator and shipping port) decided it wanted to provide credit programs to its farm customers. CGB bought AGRIfinancial, and today the finance operation is just one of the grain company’s many holdings. CGB, with over 70 grain elevators across the Midwest, oversees a diverse family of businesses providing an array of services for producers. The company’s entrepreneurial approach has thrived over 40 years and also includes transportation, processing, bulk handling, crop insurance and logistics services for a global base of customers.
According to Don Mattern, Vice President of AGRIfinancial, the company’s activities include direct loan origination (sales staff calling on farmers) ; a growing farm leasing program; and originating and closing loans for independent correspondents and correspondent banks. A very large and key component of the company is providing service on thousands of loans (in excess of $850 million in volume) that have been placed by Farmer Mac through other banks and farm lenders across the country. “Our servicing operation is the foundation of our business. We place a high emphasis on giving farmers immediate attention to their needs, making sure their loans are well handled. When they have a need, we want to be there.”
AGRIfinancial’s reach is national, and the customer base extends from Louisiana to North Dakota, and from North Carolina to California.
“I think they offer farmers some great alternatives for their financing needs,” said Gary Ihry, a Hope, ND farmer and businessman. Ihry used AGRIfinancial to purchase a new farm, and used its Ag Equity credit line to pay expenses on his other farm operations. “It’s really one of the most flexible farm loan programs I’ve ever encountered,” Ihry said. While many operating lines require annual or every 3 year renewal, his loan provides a 10-year open draw period. “That gives you a lot of confidence to farm, knowing you have capital when you need it –knowing that even if there is a bad year, the lender’s not going to pull the window down.”
Alan Singleton says future goals are straightforward. “We want to continue being a great servicing operation for Farmer Mac. We’re very proud of that side of our business. We also see growth opportunities as we’ve expanded our sales force. We’re now able to be in more markets and closer to the customer. One goal is to continue a close relationship with Diversified Services, CGB’s crop insurance operation. They help bring us to producers who don’t know us yet, he explained. Another is to expand the farm leasing program. A change in tax rules at the end of 2013 (elimination of bonus depreciation), means more farmers may look to leasing as a preferred way to add fixed assets, like new barns, or grain storage on the farm. Finally, the company also plans to upgrade internal accounting systems and increase the functionality of its website www.cgb-afs.com
AGRIfinancial’s offices are located at 2209 River Road in Louisville and saw expansion within the past 12 months. In addition to hiring regional sales staff, the company added positions in underwriting, credit support and administration areas in Louisville.
“It’s been an exciting time for us and an exciting time for agriculture,” Singleton said. “Prices in the farm markets are changing, and it appears the next few years will have some tighter margins in agriculture, at least for grain producers. But this is a dynamic industry and while some have to tighten their belts and watch expenses, other sectors like livestock producers may get a needed breath of relief on feed costs and that can help their industry. We think most producers are pretty well positioned to handle the next few years, even with lower prices. Farmers have a way of adjusting to their environment. They are resilient and forward thinking. They’ve learned to be that way.”
For more information about AGRIfinancial Services call Bill Medley at 502-899-2938
, or go to the AFS website www.cgb-afs.com. You can also read more about CGB by going to its website at www.cgb.com