A Conversation with John Witherspoon
John Witherspoon was appointed by Gov. John Baldacci as CEO for the Finance Authority of Maine (FAME) earlier this year. He was most recently president and CEO of UnitedKingfield Bank (a subsidiary of Camden National Corp.), which has its roots with the Kingfield Savings Bank, where he began his banking career in January 1979. He is a graduate of the University of Maine at Orono, and the National School of Finance and Management. He recently spoke at the MACB CEO quarterly meeting. Here is a recap of his comments on various topics:
FAME is being asked to handle larger loans with a relatively small capital base. In addition, our revolving loan fund, the Economic Recovery Loan Program, was recently as low as $2 million in available funding. We are looking into ways to recapitalize FAME to meet the growing demands.
Sometimes it’s not too easy to understand why FAME will do one loan and not another. Our mission is to provide access to capital to help businesses, create or retain jobs and support the economic development plans of the state. So in addition to collateral, cash flow and credit, we consider the public benefit in weighing the amount of risk to assume with state-backed financing. Therefore a loan that impacts a large number of jobs in a depressed rural area may result in a higher risk tolerance.
FAME’s volumes move in the opposite direction of the banking system. In cycles of tight credit and economic downturns, lenders seek credit enhancements for loans, while in a highly competitive market with plenty of capital and liquidity (such as now!) banks (and customers) are less inclined to require credit enhancements on loans. For FAME, the result is our portfolio of higher-rated loans has shrunk, while the risk level in the balance of the portfolio has been stable for several years.
FAME’s mission is to provide access to capital for businesses that can’t get it in the private sector – or to leverage capital with the private sector. We also are a source of information and capital for students seeking higher education opportunities. We have a wide range of programs available that are not well known or understood, and we need to do a better job of getting the word out. We have advisory groups for our education division and are considering setting up a similar program for our business division.
Procedures FAME has made significant improvements in the last four years and we are developing a strategic plan to include a review of our work processes and how we can streamline in order to improve our customer service.
FAME is continuously working to meet the needs of Maine with innovations such as our new Higher Education Loan Purchase Program, which allows banks to make loans with attractive benefits to Maine students and families for higher education.
FAME is committed to seeking ways to help businesses and students succeed by getting access to the capital they need. Our banking partners are important links to the community and I’d invite them to let us know what we can do to better serve them and the communities they serve.