ENFIELD, Conn. — The Northeast's largest agricultural financial institution has merged with a similar Maine-based firm, following approval by stockholders of both customer-owned companies on Nov. 22.
Enfield, Conn.-based Farm Credit East, which has 13,000 clients in six states, is joining forces with 800-member Farm Credit of Maine effective Jan. 1, pending approval by the federal Farm Credit Administration.
The move strengthens both firms financially and from a personnel standpoint, said James Putnam, Farm Credit East executive vice president for planning and marketing.
"Talent is very, very critical," he said. "Bringing all their people on board, combines their human resources with our own. We primarily deal with dairy, greenhouses and nurseries. They're more focused on forest products, potatoes and fishing. So we also gain further diversification of our loan portfolio."
Short term, clients won't see any change in services.
However, combining forces makes a stronger institution that can weather tough economic times such as the recent "Great Recession," Putnam said.
"Our board of directors wants to make sure when there is a downturn that our agriculture customers can still count us," he said.
In addition to loans, both companies provide a variety of services such as record keeping, tax preparation, business consulting and crop insurance.
Merger plans were first discussed earlier this year. The boards of both companies voted for the move this summer.
Following a review period by federal regulators — the FCA — a stockholder vote was held Nov. 22. A letter has been mailed to all voting stockholders notifying them about results of the merger vote.
"Our customer-owners recognized the advantages of this merger, which is why they overwhelmingly supported it through their positive vote," said Andy Gilbert, Farm Credit East board chairman. "The merged association will create the opportunity for enhanced earnings, further diversification of the loan portfolio and a stronger capital base. The larger organization will be able to hold a substantially higher amount of large loans currently made and serviced by Farm Credit of Maine, with the enhanced earnings benefiting all customers."
The company will be called Farm Credit East, ACA, and will still be based in Enfield, Ct.
At present, Farm Credit East extends more than $4.6 billion in loans and has 19 local offices in its six-state service area that includes New York, New Jersey, Connecticut, Rhode Island, Massachusetts and southern New Hampshire.
Bill Lipinski, Farm Credit East CEO, said: "Both agricultural cooperative associations are coming off excellent years and are financially and operationally strong, which is the most opportune time to implement a merger. This is a strategic opportunity to position Farm Credit in the Northeast for future change in order to maintain Northeast agriculture's continued access to global money markets and to compete with large regional banks and other funding institutions."
Farm Credit of Maine extends more than $580 million in loans and serves the state of Maine from two regional offices.
Raymond J. Nowak, Farm Credit of Maine's CEO, said: "From a strategic perspective, this strengthens Farm Credit's ability to remain the most dependable and trusted source of credit for the region's agricultural, commercial fishing and forest products industries. This should also help this customer-owned cooperative continue to grow as these industries evolve and fulfill its rural-based mission in the region."
Hank McPherson, Farm Credit of Maine's chairman, added: "By merging, Farm Credit East and Farm Credit of Maine combine their services and expertise to achieve the best possible value for agribusinesses across seven Northeastern states. The enhanced geographical and industry diversification of the loan portfolio will benefit all customers by further improving the risk-bearing ability of the association."
The newly-merged firm will serve agricultural producers, forest product businesses, commercial fishermen and other rural landowners with combined assets of more than $5 billion and a portfolio in excess of 14,000 loans.