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Organizers spent six years raising money and filling out paperwork to open Maine Harvest Federal Credit Union in October 2019. It took the credit union just over two years to decide to find a bigger credit union to acquire it.
Maine Harvest Federal Credit Union ended 2019 with $2.1 million in assets and 20 members, and goals of attracting 100 members and lending $12 million solely to farmers and other agricultural operations in its first six years.
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By March 31, 2022 it had $2.8 million in assets, 78 members and a loan balance of $1 million. While its loans were up 81% from a year earlier, its losses mounted.
In its first year it lost $128,035, or -4.99% of average assets. Last year's losses were $182,634, or -6.14% ROA. Its first-quarter loss was $72,330, or -10.1% ROA, an improvement from -12.85% ROA a year earlier.
Losses are expected for new credit unions as they build their loan balances.
Scott Budde, Maine Harvest's president/CEO and one of its original organizers, said the credit union did a good job of making loans, but was still highly dependent on investment income. Investment margins fell from about 200 basis points to 20 bps after COVID-19 was declared a pandemic in March 2020.
"We don't get a prize for timing," Budde said. "That rate collapse pushed out our break-even by years."
Scott Budde At the end of 2020, the credit union was forced to lay off two employees, leaving Budde and Chief Lending Officer Patty Duffy to run the show.
Budde said the credit union still had plenty of capital, and the decision to seek a merger wasn't because of the organization's tiny scale. "We tried to control for that by being very specialized." The credit union made only agricultural loans. It had no consumer loans, didn't handle cash and had no teller lines.
"We certainly proved there is a space for very specialized credit unions," he said.
The plan now is to continue their mission as a department of Five County Credit Union ($372.3 million, 28,783 members) based in Bath, Maine, about 65 miles southwest of Maine Harvest's headquarters in the small central Maine city of Unity.
The merger is subject to approval by members and regulators, according to a June 3 letter from Budde, Duffy and Board Chair Sam May.
"Moving forward to better meet the needs of Maine's farmers and food producers, we will be able to offer a wider range of loans including lines of credit, larger real estate loans, and other options including business checking accounts and personal and business online banking," the letter said.
"We are happy to say that (Five County) is strongly embracing our work and is excited about working in the agriculture sector," it said.
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Jim DuPlessis
Jim covers economic data trends emerging for credit unions, as well as branch news and dividends.
