Nick Stokes will work across the Iowa-based firm’s alternative lending platforms, the latest of which focuses on borrowers that do not meet traditional underwriting criteria.
Conterra Asset Management has hired former Rabobank AgriFinance executive Nick Stokes as it seeks to tap the private debt opportunity in agriculture.
Stokes joins the Iowa-headquartered firm after four years with the Dutch lender, where he spent two years as a regional vice-president before being promoted to senior vice-president for the Mississippi River region. Earlier in his career, Stokes held lending positions with Marine Bank, Midlands States Bank and Longview State Bank.
Based in an Illinois suburb of St. Louis, Stokes will report directly to Conterra president and chief executive Paul Erickson in a senior vice-president role focused on origination, underwriting and servicing across all of the firm’s funds and platforms.
Those platforms include Conterra’s role as a servicer and seller of loans to Farmer Mac, as well as two vehicles designed to offer loans directly to farmers. In August, Conterra announced the creation of a $400 million fund from which the firm will make loans to farmers that do not meet traditional underwriting criteria.
Conterra’s loans to borrowers across agricultural sub-sectors range from $500,000 to $10 million, with interest rates of between 6.5 percent and 9 percent on terms of up to five years. The loans are secured by first-lien mortgages on farm real estate, with payment schedules and covenants tailored for individual borrowers.
Stokes told Agri Investor that in his new role he will look to combine his experience as a community banker with the focus on customer collaboration, data and analytics he experienced while at Rabobank. Because big banks continue to focus on larger metropolitan areas, he said that community banks and institutions like Conterra will continue to be a vital source of capital for family farming operations.
“As further regulation in the banking world continues, I think there are good opportunities for companies like ours to have a positive impact on agriculture as a whole,” he said, adding he would focus on helping both large and small farms with succession planning, capital structures and cash flow management.
Deterioration of working capital
Stokes said he has observed changes among the younger generation of farmers, which he thought were much more informed than their predecessors due to advancements in technology.
“They are more willing to have a circle of different people around them, whether it be their chemical seed fertilizer salesman, their banker, their attorney or their accountant. They seem to be more willing to communicate openly with that group around them.”
He echoed an assessment of the overall credit environment facing Conterra’s clients that Erickson offered Agri Investor in January, while stressing that each borrower’s situation varies significantly.
“There are different sectors in the ag economy that are struggling more than others,” he said. “The row crop sector is one. They have had three or four years of downturn prices. We are still seeing, in some cases, a deterioration of working capital, or a deterioration of equity by means of leveraging that equity on the balance sheet to get the operation to continue. That will continue as things come back into balance.”