First NH mutual bank in 99 years seeks approvals

·5 min read

Nov. 21—During the COVID-19 pandemic, many people turned to local food sources as supply chains of national brands broke down. But even with more interest in buying local, many farmers and food businesses struggle with their own financial sustainability.

Charley Cummings, who founded Massachusetts-based Walden Local, which delivers grass-fed beef and other locally raised products, saw business spike during the pandemic. He also saw the struggles of his nearly 100 partners to secure financial backing from traditional lenders. Given the perishable nature of food, it can be a risky endeavor.

The Hopkinton resident is working to launch a new bank, Walden Mutual, in support of local food and farm businesses. Walden would be the first established mutual bank in New Hampshire in 99 years. It would be headquartered in Concord.

"We observed a lot of gaps in the existing lending structure," said Cummings, who stepped down as CEO of Walden Local in January. He remains the board chairman.

If everything goes well with banking regulators, the bank will open in 2022. The bank applied for insurance through the Federal Deposit Insurance Corporation and for a state charter in August.

Anyone can deposit money into the bank, but lending will be focused on commercial food and agriculture operations across New England and New York.

Interest in local, sustainable food sources has grown significantly in the past decade.

"I'm not sure I'd say I have an interest in meat or banking," Cummings said. "I view them both as sort of an important aspect of addressing the problems that are at the intersections of agriculture, energy and waste, which I am very passionate about."

Cummings, 37, brought in some well established banking professionals to help launch the bank. The bank is being started with $3.3 million in seed money.

About 5,000 people are on a waitlist for consumer depositors and a lending pipeline of $10 million in potential loans.

"There really is no remaining smaller agricultural lender in the region," Cummings said.

Many people apply stringent social and environmental values on brands, Cummings said.

"Banking is a place that has historically lacked compelling brands," he said.

The bank will operate mostly online but will have a branch at 66 North Main St. in Concord.

New England tradition

A mutual bank does not have any shareholders, according to Kristy Merrill, president of the New Hampshire Bankers Association.

"They originally started to help some of the smaller agricultural communities, so it's kind of interesting that Charley has decided to go that route," she said.

The association has 17 mutual banks as members, 11 which are chartered in New Hampshire.

"We are excited about them coming into the market, and we are rooting for them," she said. "We hope they get the necessary approvals and can open up their doors as expected. We think it is a great thing."

Mutual banks are similar to credit unions but can offer insurance through the FDIC.

One of the reasons for choosing the mutual bank model is Cummings wants to raise investment capital, whereas a credit union needs to be started with grants.

The governance model has a long and successful history in New England, according to the bank.

In 1914, mutual savings banks accounted for nearly 80% of deposits in New England with 650 institutions serving more than 8 million depositors, according to the bank's website. Many mutual banks have stood the test of time with financial crises dating back to the 1800s.

"It is like going back to what a bank was 100 years ago where there was a much clearer connection between the borrower and depositor, and that's a big part of what we are trying to do," Cummings said.

Several state-chartered banks have opened in the state since 2015, including Primary Bank in Bedford and Millyard Bank in Nashua, which is rare even on the national level.

Merrill said it will be interesting to see if more mutual banks are formed in the future.

"Potentially it will encourage others," she said of Walden Mutual.

Supporting a cause

Walden Mutual will not offer consumer lending, such as mortgages and personal loans. The commercial lending will focus on farms, distributors, consumer branded food products and other like- minded businesses.

The loans will support land purchases, equipment, refinancing, organic transitions, working capital and more. The bank will live by the motto: "Grow your Change."

Walden Local is already considering an application from Julie's Happy Hens, a producer of pasture-raised free-range eggs and meat in Mont Vernon.

Eileen Groll Liponis, executive director of the New Hampshire Food Bank, serves as one of more than 25 corporators who will help steward the long-term success of the bank.

She said local food is more nutrient rich and lowers the carbon footprint.

"I was completely blown away by his concept and what (Cummings) is doing to provide what these farmers really need," Liponis said.

She said she is familiar with the struggles of farming with her father being a seventh generation farmer in the Hudson Valley — especially when it comes to financing.

"I remember those struggles and Dad just saying, 'A farm is just not black and white,'" Liponis said. "Seeing someone who is like, 'Yeah, I want to fix that.' Who would not want to get behind that?"

The Food Bank works with local farmers for fresh produce, protein and dairy products.

"This type of bank to financially support the effort of these folks is going to do a tremendous amount for the agricultural economic growth in New England," she said. "I couldn't be more excited."

The bank has received positive feedback from regulators so far.

"We've gone back and forth with regulators answering additional questions they have," Cummings said. "The goal is to open in the first quarter of next year, but obviously this is the first mutual application that all of these regulators have seen in their careers."