YouSaid · the spoken record

Brian Philpot

lines on the record: 52
first: 2023-02-09
most recent: 2023-02-09
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“I wish I would have listened had I given myself this advice, but it's the journey. It's not the destination, right? And I know that people talk about that, but really that was one of those lessons for us high achievers, the type A's of the world. You know, we always have some goal or some idea of success. And I liked your podcast tagline about compounding knowledge. And for me, that's it. We become better people the more we know and we make better decisions the more we know. And I mean, that's enough reward in itself. And I wish I would have probably known that earlier. I gained a lot of knowledge, but I think a lot of us at a young age where we're ready to conquer the world and check the box.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Person and leader in terms of how to delegate and how to provide leadership in a more impactful way. So I wouldn't be here if I hadn't gone through that experience, but it was a stinker. That was a tough year and a half.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“In 2005, I was finally diagnosed with Lyme disease in a co-infection. Brucellosis was the name of it. And I had had both of those for about two and a half years. And I'm not trying to be dramatic, but I had probably been slowly dying for about two and a half years and finally got to the point where I couldn't work. And infectious disease doctor figured it out at University of South Florida. So I'm on intravenous. I'm taking three antibiotics for 18 months and for a year I couldn't go to the office. So you go from being healthy and then your 30s and trying to conquer the world to now you can't go to the office and you really have no stamina and all of that. So forced me to prioritize. It forced me to understand what's important in life and reprioritize life and family and all of that. I think it made me an effective, more effective business.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“My friend Rob Harper, who I started Land South with, we grew up together as business people. And so we pushed each other and learned together and solved a lot of things together. We fed off each other and learned from each other there. So that was, we were in school. Would be George Jenkins. George was the founder of public supermarkets. And I grew up here in Lakeland where Publix was founded and the corporate headquarters are located. And I had the opportunity to know him. And if you've ever been in a public culture is everything there. The employees make sure that company has outlived him and continues to be at the top of the list in terms of standards and grocery stores. So those would be my two.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Being retraded when it gets transactional, and you know they agreed to the deal and you knew that they planned when they agreed to the deal that they were going to retrade you. And it's just like, man, you're just wasting my time.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Large, complicated deal where the buyer, the borrower, whoever, they need us to help untangle that web. Those have always been the case. So I bought mitigation banks out of bankruptcy. We put together Unitranch deals that get pretty complicated to help farmers expand the operation. Anything that's in that realm, those are pretty rewarding and love to jump in and solve.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Reading and walking in the woods. Those are my two. I like walking with my dog, but I've always been an outdoor guy and I'm a tree hugger who is a capitalist. I like to make money too, but I like the outdoors and nature. And I think that's probably be the top of my list.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“America is becoming a, for lack of a better term, a merchant bank in this space. We are a conduit between the farmer and the financial markets and the institutional market and agriculture. And as we continue to fill out the team in those roles, we want to be able to solve those problems and be that. And that's a lofty goal. There's a lot of interest in agriculture and U.S. agriculture, but for us, that's going to require us to create more products for the investor environment, both equity and credit. And it also is going to require us to deepen our relationships with farmers. And I think ultimately the more investors that we can bring into this market ultimately are going to be able to solve a lot of these problems and lower the cost of capital and all of that. And that's a good thing.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“People that are smart, motivated from the financial and business sector and make them passionate about the farmer. We have people that have grown up in rural America and grown up around AG and understand it and our business development team is full of people that are agriculture to the core, but ultimately we want to be a sophisticated finance company in order to do that. We have to have sophisticated financial professionals. We've got two clients. We have the farmer that produces our food supply in rural America. They need us. And we have sophisticated investors. So it's a pretty neat area and mission to have. It's just working to find locate those people that fit those two things.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“We have a syndication desk, capital markets desk. We do some pretty neat things on the financial structuring side, but also we do business in rural America. And so some hot to trot person comes out of NBA school. They don't want to go work in rural America. They don't necessarily have to with us. We try to work around that. But the ability to find high-end motivated talent that wants to interface with the farmers probably the number one challenge. Yep, there's technology. We're a high growth company. There's all of that. But the big one is talent. And I know everybody's dealing with that now, but it's been one that when I look across the landscape at our competitors, there's not a lot of talent for us to pull out of those areas the way we think about it.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Large role in that. And I think that's something we need to be thinking about. It's urbanization. There's a lot of pressure with solar farms now. We've been seeing a lot of that. Solar farms have been going up on high quality farmland. So there's a lot of things going on out there that are reducing the amount of farmland we have. And I think that's something that hopefully is paid more attention to as we move forward.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“UN says that we need to produce 50% more food worldwide over the next 30 years with population growing. May you think about the other areas that produce a lot of food. You've got the Ukraine. You have South America that's having drought. Australia has drought issues. And as we enter into an era of warmer planet, American farmland, especially east of the Rockies, is about as good as it gets. We have multiple directions that wind spring moisture to the area, which is more drought resistant in terms of climate change. And we have more navigable waterways than the rest of the world combined. And so we have the ability to move it around. So I think America as a source of food, we need it for ourselves, but I think in terms of world food scarcity, we should play a large role.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“There's this combination of shrinking supply. You also mentioned that a bunch of the farmers you work with are retirement age. You've got a demographic issue. What does that imply about as you look out at things like food sourcing in the country over the next five or ten years?”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Taking more sustainable practices that may have a longer payback, and also precision ag, which is more efficient as well. And so you look at the landscape, and it's not analogous to TMOs, as we were talking about earlier. A TMO, you can buy a big timber track. The trees grow, and you can have a fiber agreement with the local forest products company. Here, you buy a farm, the value in the productions in the farmer and the practices they have. And so we haven't quite figured out, I mean, I say we, the industry, is not quite figured out what the next evolution of this looks like. And we're a pro farmer needs to own the farm company. And as we think about capital, we need to be thinking about ways that the farmer can have benefit from the improvements that they put into that, whether they own it outright or they're aligned otherwise with the capital that is.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“There are institutional investment groups in this space that do a good job. Traditionally, I've mentioned the way they do that is by a farm and then lease it out or buy a farm and hire the management to farm it. And that can work out. I think the challenge, though, is that it's been a scale problem for a lot of folks in that it's hard to get labor. It's hard to get a high quality manager in farming that doesn't already own a farm. Your best farmers own their own farm, own their own asset. And so you've got a labor problem, but then I also hit on the other piece, which is sustainable farming. If you're a farmer and you're leasing a farm, that's a short-term lease. I mean, all of these leases and maybe a 10-year lease, but there's a 90 day eviction clause in there in case the landlord wants to sell. And so it doesn't induce the farmer into.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“You've got this marketplace that you've been in for a while, whereas you mentioned there's co-ops, there's banks, there's not a lot of institutional capital, and yet the characteristics sound great, right? They're pretty stable assets, inflation protected. What's the nature of your competition?”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Value in that property by doing that. And for us, being a lender as well, they're making our regular lease payment over three, four years. We'll finance them out. So that's the exit. We take it out on the other side. And it's a win-win for everybody.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“The agriculture market, as long as I've been around it, is pretty liquid. You think, oh, it's rural America, there's not buyers, but a good parcel of land a farmer wants to sell it. It rarely gets to a realtor. A lot of times it's being sold to the farmer next door and they know someone that's going to buy it. So first off, the market's more liquid than people might realize and has been that way. You know, as we think about equity investing, we're talking about putting investment capital alongside the winners. We have a lease option program. That's a situation where a farmer needs to do a higher LTV loan. It's pretty expensive for them to be able to tap into Mezd, as I mentioned earlier, and it's self-defeating. We're better off buying that property and letting them pay us a smaller down payment for an option to buy it later and four-year or five-year period. And as they're improving that property, the value of it's going up, and they know that they're building.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Just doing whatever you can. You know, the thing though that coming from the investment side intuitively, I knew that if I kept my weighted average loan to value in that range, I was going to be okay. I mean, you can't predict when a weather event's going to happen. I wasn't a mind reader at that point pick out, is this guy a great grower? I knew if they had equity in it and we had that loss had taken care, we'd be okay as you build scale, you've got to identify it just for efficiency, right? You don't want to have a bunch of special asset deals you're just having to manage.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Very consistent. Our probability default model we track, you know, if our model says less than half a percent will default in this particular bucket, we're dead on with it. So we're pretty consistent with that. Our team's done a remarkable job there.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“The biggest risk would be operational risk, either if you're leasing out the property, the tenant ends up being not so good, or if you've partnered with a farmer that they end up not being a good producer. And so there's a lot of due diligence required there. After that, it's season-specific, right? So it's a weather event or it is going to be some major drop in commodity prices. Both of those, though, great thing in agriculture is we've got a great crop insurance system here in the US that has really grown and been developed the last 30 years since the 80s and that program covers you for major drops in commodity prices but more importantly for weather events and so there is a floor in terms of your investment in those situations”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“I haven't lost money on a loan knock on wood, but three loans REO. Two of them went to federal prison for financial fraud on other parties and one of them, unfortunately. He'd inherited it and just didn't have the fortitude to do what he needed to do.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Work with that. That's not a big deal. If it's a situation, though, where for whatever reason the debt's gotten to be too big and there's challenges, you've got to give them some time to sell off the back 80. And it's remarkable a lot of these farmers, especially, you know, the older generation, when they made money, they'd buy more farmland. And when they were losing money, they'd sell some farmland. Or they'd borrow more money and then pay off more money, pay off the debt. And so having that mentality when you go into it, it prevents you from, hey, where's my payment and bowing up and creating a situation where there's not trust, we found that rarely does a late pay go beyond 60 days? A lot of times it's just a matter of working with them. And for us, I mean, we've done thousands upon thousands of transactions, taken back three properties REO.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Work with them. I mean, think about it. If you are a farmer and most of these farmers, it's multi-generational. So if the farmer's been in your family for three or four generations and you have equity in that asset, you're not going to lose it. They're going to do everything they can. They stress over it a lot more than we do. And so I think the important thing is for us as a lender to have empathy and to help be proactive in coming up with solutions. And so unlike a lot of lenders in this space, we talk to each of our clients every three months. It's good business. It's good to have that relationship. But it's also important for us to know that there's a problem before there's a payment issue. And so that allows us to be proactive. You know, the farmer, hey, I took my cows through and they didn't get the right price. And I think I'm going to run them back through in two months, but I might be a little late.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“The other big area is sustainability and cover crops and no-till. You'll hear that. And a lot of farmers are already doing no-till. They're not churning up the soil when they go to sow the seeds in. That can have not so negative impact on your yields. Cover crops cost money to plant when the farm is not producing, but that takes a number of years for the improvements in the soil to take place where you get gains and yields. And so both the precision ag with the fitzcrops and the cover crops and no-till practices before you see the return on that can take three to five years and to survive, farmers are having to do that. They just got to get bigger.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Agriculture is a big one. You know, your irrigation systems now rely on drone technology. They rely on, you know, relying on computers. We want to conserve water and we want to make sure that we want to control costs in terms of fertilizer, delivery, and that sort of thing. And so as you invest in more of that technology, right, it's a huge fixed cost. You need to be able to average that out over.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“And we're seeing a lot of consolidation in this space. And so what does it look like? It's not as much, hey, I'm a farmer and I'm buying 80 acres next to me. I'm a decent-sized farmer and I'm doubling the size of my farm in one transaction. And so with a lot of farmers that can be done, they've paid down their debt. They can put up the current farm and finance that. But with a number of others, it's, you know, in order to have working capital, they need to partner. That's a big change in agriculture. 97% of the farms are family owned. There's really not a lot of institutional coverage in agriculture like in the other sectors of real estate, especially for a $3 trillion real estate market.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's farming today. So let's break that down. Last 10 years, we've lost several hundred thousand farms in America. And there's two farm categories that are expanding and everything else is shrinking. Farms 50 acres and smaller, that category is increasing in farms 2,000 acres and more is increasing. 50 acres and smaller, that's the hippie farm. That's the fun farm. That's all of your COVID people that decided to move outside of town and get a few cows or grow something and take it to the farmer's market. And we finance that and it's fantastic. And I love it that people are doing that. But everybody else in farming's being squeezed out. And it's because of the technology required because of with sustainability. A lot of the techniques require longer payback. And so you have to have scale in order to survive.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“If you're making a loan, you could imagine you're loaning to a specific asset. You just want the farmer to operate that asset, generate cash flow. You can model that out. Equity, you think of growth. What does it look like when a farmer goes from whatever their plot of land to expansion mode?”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Invest direct in a farm like others out there and just lease it out. We bring in hundreds of qualified leads a month and a lot of the business that comes through this door are farmers that maybe they do have a higher debt to assets. And because this business doesn't lend itself to a lot of high yield debt, the answer you jump straight from is it's a loan with some equity. And so we become their partner. And so when we're doing that, is it a good operator? What's their track record? Do we see this farmer as being a long-term, a good bet? So there's a lot of other factors that get into that.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“A credit deal, you want to make sure that the loan terms are such that the farmer has flexibility. Last thing we want to do is make a loan that straight jackets a farmer. That doesn't mean you don't put covenants in the loan or whatever, but you want to make sure that the payment frequency, you want to make sure that the interest rate, even you shock it and all of that, you want to make sure that that farmer is going to be able to survive a weather event or drop in prices. And the stress from that is not going to put them in a situation where they're worse off. And so it's a balance, right? And this business we're in in terms of loaning to farmers is not short-term bridge loans. If you're looking to loan off your reputation and also to do the right thing by the farmer, it's just hard to do. So that's one thing. Now, on the equity side, we do not.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“That loan in two, three years, right? They're going to be buying something else, or they're going to be otherwise needing something else out of us. And so that's what you're agreeing to. It's a relationship. And to get back to the beginning of this conversation, which is why did I get into this? I think that's probably the biggest reason is I've been in other areas of business that are more transactional and it can sound a little hokey being in the relationship oriented business yet it's more rewarding, but also saves a heck of a lot of time when you're not retrading and there's a lot more trust built up.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Of the big things that I've learned over the years is that it takes a lot of listening with the farmer. We're not dictating a product. We need to listen to them on their goals because there is a farmer life cycle. There's the farmer that's established that's farming that isn't necessarily growing. You know, there's a product for that. There's the farmer that's growing, expanding, and has big dreams and all of that. And then there's the farmer that's at the end. And we have about half of our farmers now are retirement age, the big issue for them, it's not just, what am I going to do the next however many years, but what's the legacy of this? My kids aren't coming back, my grandkids is helping them think about the future of that farm. And so it's great when you strike a deal and you sign on the dotted line, but I think what I'm getting at is this is a big relationship business. And when you get them to agree to the deal, they're agreeing to be in relationship with you. We'll get that loan done, but we're going to be changing.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“The assets key because it's the producer of the cash flow. You need to make sure that it's an A or a B quality farm, A and B quality farms are going to hold their value even when times get a little bit tighter. It's important in that respect. I think when you're investing into the equity investing side of things, it becomes more important there because you want to have that A quality in the business, we call it dirt, right? The A quality dirt always holds value and becomes more pronounced in its value as we move forward to the next 30 years, we think.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's what protects you. We saw a period in the 80s back to farm aid days and then back during the Depression where we saw values drop in the 2025 percent range, but no huge crashes. On the income side, as we're lending and we're a commercial lender, these are commercial loans. We have to look at repayment. It can vary. I always tell people, if you're going to be in the agricultural lending business, you have to realize that debt is a killer. Farmers just cannot have a lot of debt, not only looking at LTVs, but the debt assets have to be within control because they have huge margins in good years, but then you'll have years where it's lean and they need to have, they have the ability to tap into more working capital or have cash on hand to take care of that. But your margins, these are 15 to 40 percent margin businesses. So they're good businesses.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“As a lender, you have to split the conversation between the cash flow economics of the enterprise from the asset. The real estate asset, whether we own the asset on our equity side or we're lending and taking a first position mortgage, agricultural real estate is so stable, has one-third the volatility of commercial real estate over a long, long period. We generally are between 10 and 15 percent of real estate debt real estate asset value in farmland. And so we don't have credit bubbles. Has a 97% correlation with inflation. So last year, agricultural real estate did really well. But even when we come off of inflationary time periods, there's a smoothing. It's not a crash, a major pop in terms of that value. So it's a really good asset to lend on. That's your loss given default.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Our deal team is made up of a client loan officer, loan operations manager, and a credit analyst. They like a commercial loan, three years tax returns and a balance sheet, and they analyze historical and put a pro forma together. Great thing about agriculture is we have great data. And so you can look at what a farmer has done the last three years and compare that to the average farmer has done in that county. We can get granular USA data and compare them. Are they a good grower compared to the norm or they are less than? And then pro forma that out and make a credit schedule. And we've got a probability default model, the ratios go into the machine and it gives us a probability default. We have pricing bands based off of that and the deal is negotiated. And then of course it goes through the appraisal title process and close.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“In 2011, 2012, more demand than we had personnel to process loans, which is a good problem. It's been 13, 14 years since we started. That's led to us having brand recognition now. So we're not advertising to get loans. We're advertising just to keep the name out there. Majority of our loan flow now comes from referrals from our existing clients, which is the best advertising you can get.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Is going to sound crazy. In 2007, we bought a theme park out of bankruptcy, former Cypress Gardens here in Florida. It's now the home of Legoland, Florida. That was the first time I was exposed to a major marketing operation. So that park we bought, we had a management team in there. But if you can imagine a large theme park in Florida, the marketing apparatus was pretty significant. And marketing in 2007 was radio and newspapers. By 2010, it was digital and direct mail. And so we brought that model in our infancy here with Ag America, Glover Digital and Direct Mail and storytelling, right? We want our advertising to be almost like art. We want it to evoke an emotion. And so we started direct mail. We started digital. That drove a lot of demand.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“We are a lending company and an investment company specializing in agriculture. On the lending side, our client is the farmer, right? We have a retail lending group, a private client group, and an institutional lending group. And the idea is for us to be able to create financial solutions on the debt side for farmers to help them grow and sustain in the light on the investment side. The goal is for us to provide a return for our investors by giving them a way to get into the agricultural market. It's hard to do. And so the idea is for us to be able to provide a way to have credit exposure and to have equity exposure through the capital stack with these farmers that we're helping out to bridge between the two. We're one of the only lenders across the lower 48 and the only mortgage rate in a America, that it's in agriculture.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Imagine what a weather event does to your book. And it's not that it blows up. It just makes it where it's more intensive in terms of playing defense, right? Having to meet with clients, make sure they're in a good spot and you're not able to as an organization attack the market and innovate. And so for us, I mean, since our inception, all of our concentration levels have continued to drop, whether it's regions, whether it's commodities or whatever, and that's led to a healthier portfolio and the metrics bear that out.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Technologies allowed the world to get closer, has made the world smaller. And I think we saw that that would allow us to provide service to a wider group of people. I think farmer behavior is such that you don't have to be in Sunday school with the farmer every weekend to do business with them. They're more willing to do remote business. That's more the norm now. But if you're building an organization that's investing or lending into agriculture, you're going to be able to offer a better portfolio to your investors and you're going to be able to ultimately offer a better rate to the farmer if you're more diverse. And so you need geographic and commodity diversification. And so I look at the landscape, all of the competitors are small regional lenders, right? If you're a community bank or you're a co-op in that area.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“About the farmer, farmers there in rural America, majority of your farmers don't have a college degree. They're smart people, very industrious, but they don't have finance and accounting background. So their lender in a lot of cases is their financial accountor. And so they're turning around to a co-op or a community bank with limited lending limits. And that's not enough of a solution. So it was pretty obvious to us early on that there could be something better that not only provided quick service, provided some value in terms of the advice you give and more sophisticated product offering. I would say that finance, what we've seen, the evolution of finance in the last 20, 30 years, we've not kept pace in the agricultural arena.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think you have to look at the changes that took place after 0708. 15 years ago, 40% of the loans in agriculture real estate were held by banks. We're down to about 30% now. And we continue to drop. You have to generalize it's community banks. About 50% of the market are the co-ops, the farm credit system. And that stayed solid. That's stayed about the same number it has, but that co-op system from a service standpoint can be a bit stagnant. So there are between 60 and 70 of these co-ops scattered around the US. Those co-ops cannot lend outside of their geographic area. That creates a lending institution that is owned by the borrowers that does not have incentive to grow anymore. It just is stagnant. And so if you think”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“I intuitively knew that. You go into a rural area and you treat a farmer in that area bad, you'll never do business there again. And so one, it's not good business. Two, it's just not good period. And it's good business if I'm buying debt at a discount to be able to turn around and work out a deal with that farmer. I mean, that's the best resolution I can have. That initial stage when we were buying a lot of that stuff, we turn around to the existing farmer and hey, can you work out some sort of payment plan? Yeah, I can. We did and that led to debt forgiveness and now those clients, most of those clients are still clients of ours. A lot of loyalty in that.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Luck is so good, right? We sold out in our assets of real estate in 2006. I think the last piece we sold was April of 2007. So we sold out before 0708 and owned part of a community bank down here. And after the crisis, we had a mobile home finance company. We had a broadcast tower portfolio. We were buying debt out of other financial institutions that was farm debt. And like a lot of businesses during tough times that start trading in that debt market started as buying that debt and turned into a mainline lender. I think the key to it though was 97% of the farms in America are family owned. If you're going to be in this business, you cannot be a loan to own shop.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“To a lot of different areas, geographies, a lot of different commodities, a lot of different types of uses of property. Over time, we built up a good core agricultural portfolio, core ag that we kept, some we sold off, but some we kept, and that higher and better use property allowed us to lower our basis in what we were holding.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, the timber company owns 50,000 acres of land between Chattanooga and Knoxville. You know, that's not one contiguous piece of property. That's a hundred separate pieces, some located close to Chattanooga, some a little bit more remote. Farce Products Company has made a decision we need to close by quarter in and move this asset, and they put it up for bid for a 60-day, 90-day closing. you know, it goes for a timberland type of price, but within that package, you have some core timberland, but you have some other pieces that have higher and better use value. And so the market was inefficient. So you have a large company that has an asset on the books and an asset that they value based off of its core agriculture use. And there's a lot of other uses to all of those parts. So that was some of what we were doing. Over time, we were”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“You start up a company and you've got Timberland changing hands. There was a lot of urbanization going on. So there were certainly farm properties that had a higher and better uses. And that pulled us into it, is the ability to make higher returns than what would have been available back in the 80s that we were able to sort of hit it the perfect time. And, you know, it led to other verticals as well.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source
“I practice law for about six months. I knew that wasn't going to work. Started out with my longtime partner and one of my best friends, we started a company. It's called Land South in the mid-90s up until the early 90s, the Forest Products Companies owned their material. They owned real estate to grow timber for them to take to the mill and produce lumber or paper or whatever it was. The financial markets getting more sophisticated. And I think someone in the early 90s realized, why do we need these low appreciating assets that are really asset cash intensive? Why do we need these on the balance sheet? That's when TMOs were born, timber investment management organizations. There's a lot of pension money now that is managed in passive timber land. But back then, that wasn't the case. And so during the 90s and early 2000s, there were 30 million acres that changed hands in the southeast U.S. And so we were part of that.”
2023-02-09 · Capital Allocators · Brian Philpot – Financing Farmers at AgAmerica (Capital Allocators, EP. 296) · IDENTIFIED FROM THE TRANSCRIPT · source