FAME's new CEO Bruce Wagner sees room for more financing programs in improving economy

PHOTo / Amber Waterman Bruce Wagner, the new CEO of the Finance Authority of Maine, says the business financing authority is considering new programs to adapt to an improving economy.

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By Darren Fishell

Four weeks in as the Finance Authority of Maine's new CEO, Bruce Wagner says conversations are starting about how the state education and business financing agency will adapt to a changing — and improving — economy. Since taking the helm, the agency's board has approved and is considering another loan in its new $120 million major business expansion program. It also will change administration of the program it runs for the Harold Alfond Foundation, giving $500 to all newborns in the state. Parents are no longer required to sign up for NextGen 529 college savings accounts to get the funds, a change Wagner hopes will improve savings and access to college, with less debt at the end, for Maine students.

The former Barber Foods CEO spoke with Mainebiz in a phone interview about his plans for FAME and what legacy he hopes to leave at the end of his four-year term. An edited transcript follows.

Mainebiz: Do you expect to make any changes at FAME? If so, what might those be?

Bruce Wagner: I think [the state's economic] environment is changing, so FAME is going to adapt. If I think about what we're going to do to achieve our mission of making the difference for Mainers in accessing higher education and well-paying jobs, that's going to mean that FAME is taking more risk and extending itself out in a way that I think a private institution can't.

We have economic recovery loans. We're really making the difference in whether or not someone is going to be able to get financing to continue their business or not. We also have the commercial loan insurance program where we lower the risk for banks to make loans to companies, and that's been growing leaps and bounds here at FAME. In 2008, our commercial loan insurance was about $48 million. It's about $104 million today. We currently have the capacity to loan up to $150 million, so we get excellent leverage from that program.

MB: How is the lending environment changing and how might FAME have to adapt?

BW: First, the economy is improving. It's improving very slowly — but as it does, banks will be able to make deals at lower and lower levels of risk. That just goes with the economy improving. With FAME making a difference on riskier loans, we have to look at how we'll fit into a healthier environment and help continue to make things grow. To do that, one of the things I'm looking at is putting in a new product development and launch program where we can have a pipeline of products and services that would meet the needs of the current economy.

Right now, for example, there are a lot of people who would like to take advantage of the natural resource businesses in Maine. That's fishing and farming and logging. They're all fairly capital-intensive, expensive businesses.

We would set aside resources so that somebody who really understands farming or really understands the logging industry or fishing would be able to talk to someone about what it takes to get the loans they need to start up their business. That's an example of something that we might do in the future to adapt to changes in the economy. That's in the fairly early stages. We just started having some conversations with our partners in the industry about how we would do that.

But it's an area we're looking at that's very important to us because I think it is something that can help the parts of the state that aren't currently as well-employed — particularly, the northern counties.

MB: In the long run, where do you see FAME fitting in?

BW: I would generally say I think that we're going to continue to fill our current role, which has been to continue to help both startups and existing companies that may be in trouble do things. We're basically structured to provide debt [financing], and I think we'll continue in that role and rely on other partners that I've named to help out with the equity portions. We do have the seed capital program, which has some funding that's just been renewed.

MB: Are there any other programs you hope to expand?

BW: There's a program that already exists that's huge for us, the major business expansion bonds. FAME administrates that for the state, where we pledge the moral obligation of the state for major business expansions. Since I've been here we've had two major business expansion loans [the first of their kind]: They were St. Croix Tissue [in Baileyville] and Thermogen [in Millinocket]. The first was a $7.5 million bond. We're pledging the moral obligation of the state to repay those bonds, but FAME addresses that as if it was our money and our loss. We act on behalf of the people of the state of Maine to protect that investment. And those are huge deals for us. [There is $120 million available for the major business expansion program].

We think we're going to see more of these [loans] — and we hope we see more, because projects like that represent many millions of investment dollars into areas that are more depressed.

MB: What is your outlook on financing for companies in Maine?

BW: I think the banks are recovering from the shock of 2008 and they're starting to lend, so I believe debt [financing] is flowing more readily than it had been. The other area is equity, and [organizations] like Maine Technology Institute and Coastal Enterprises Inc. and the Maine Venture Fund are helpful in that area. We want to be partnering with them to help the combination of providing equity and debt, but I do generally think things are improving.

If you have a clear sense of your market and opportunities, I believe there is generally more funding available.

MB: Are there lessons from the private sector you feel will be useful in your new role?

BW: I had 24 years at W.R. Grace [and Co.], from the time I was 27. I stepped through a series of different businesses that needed to be turned around for some reason or another — needed renewal — ranging from [companies involved in] very exotic thermal plastic welding technology to synthetic lubricants to food packaging. After leaving Grace, I started my company Traverse CEO LLC, which is a corporate renewal firm. My clients were mostly banks that had customers who were out of compliance with their covenants or needed help operationally to regain their health. When I was CEO of Barber Foods, I was in that [turnaround] capacity, too.

I have to say that when people at FAME first heard I was coming, they probably thought: “Oh my gosh, are we getting the turnaround guy? Do they think we need a turnaround?” That's not the case, but most of our clients are in need of help and what I can bring from my background doing corporate renewal work I think is pretty extensive. My viewpoint is different than a banker's and that's why the banks hired me. My viewpoint comes from having worked as an operating manager … I can go much deeper into market strategies. I think my ability to understand technology and how it applies and what critical competitive advantages are and what the outlook for companies is [in proven industries over the years] is going to serve me well here at FAME.

MB: How directly do you get involved with FAME clients or financing applications?

BW: The answer after four weeks is I have been getting very involved. We're a good group here, so as a team when we've got big things happening, we're all engaged. I've already been involved in all the major loans that have come through in the past four weeks. At the end of the day, I sign off on all the big ones. As I learn more about the banking side, I'll be able to contribute more to the team to look at things they might not have considered.

MB: What do you hope to accomplish by the end of your four-year term as CEO?

BW: I want to see more major business expansions. I hope we can attract large economic development and more high-paying jobs. Looking back, I'd want to see that the volume of loans increased and I would also want to look back and see the percentage of [parents contributing to] 529 accounts moving from around 12% to well over 50%. I think we need to be ambitious and aggressive to help with that issue.

MB: What will you do to try and increase loan volume?

BW: We're receptive to efforts at the state level to provide more funding. I think a recent study done by the Department of Economic and Community Development found that FAME's Economic Recovery Loan and Commercial Loan Insurance programs were among the highest return areas in which the state can invest. I would add that obviously in a time of austerity within the state budget, we look at the amount of funding that we get each year for our State of Maine Grant program, which is need-based grants we can give to students, usually about $1,000 per student. That fund is roughly $10 million, but has been reduced a bit in the last few years. We hope to continue to have that level of funding, if not expand it going forward.

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