Maine Farm and Food Credit Union

1. Maine Farm and Food Credit Union (In process of formation ) SMM November 2012

2. Maine Farm and Food Credit Union For Maine’s new & expanding farmers / food processors / harvesters Member owned, Non-profit , State Chartered institution , Focused on $5k to $45k Working Capital and Infrastructure loans. About 120 $25k loans per year. $10mm cumulative over 3 years. Working to fill a “Donut Hole” in Maine Ag finance for new / small producers Will Coordinate with existing institutions, so that successful members can “graduate” to traditional financings

3. About Credit Unions Credit unions are member owned not-for-profit financial institutions that provide members with a place to save money, get reasonable rates on loans, and receive a level of service not available at other financial institutions. They serve groups with a common feature, such as employee groups, geographical communities or shared association membership Credit unions operate under the philosophy "not for profit, not for charity, but for service" - NCUA

4. Credit Union Conceptual Proposal • Keep services simple, and fill un-met members’ needs • Provide Loans under $50k each ( for working capital and infrastructure) • Agency guaranteed loans such as SBA and FAME • Low cost Credit card processing & sponsorship, including smart phone based for farmers’ markets • Savings, checking and deposit accounts, using Synergent 157 branch state wide branch network and 4950 branch national network + 000’s of ATMs • Manage, but not “own” a farm mortgage fund sponsored by Maine Farmland Trust

5. Credit Union Conceptual Proposal • “Virtual” Organization with a few part time professionals, one shared office • Enlist help from • State, ME CU League, Synergent, NCUA, CDCU, CU Business Group, MOFGA, MFT • Your organization? • Become a Community Development Credit Union, Possibly with “low Income” status for preferential funding • Network all involved constituencies before formal launch • State Ag Dept, Governor, Legislature, Maine Bankers Assoc., Farm Credit, USDA,CEI, Maine Food Producers Association , etc

6. Ag Finance in Maine Today Sources • Friends and family • Maine Farm Credit • Small Business Administration programs • USDA loan guarantees • Local Commercial / Savings Banks • Credit Cards • Private investors • CEI • Slow Money Maine • Maine Farmland Trust Challenges • US FDIC regulations on business profit and credit score standards - Need 3 profit years • Fear of “unfamiliar” business/collateral • Securitization demands “vanilla” loans • Farmer income limited during start ups • ME Banks not familiar with crop loans • Farmland / home already mortgaged • Available Funders too small or too large • Former Funders have new/ different targets • Few grants for “for profit” producers

7. Why a Farm and Food Credit Union in Maine? Maine has many commercial and savings banks – but they do not generally make farm loans Maine is well served by Maine Farm Credit – over $900mm in assets and one of strongest in Nation, but focus is on larger loans and well established producers Private investors often focus on transactions over $500k, while friends, families and credit cards rarely fund more than $5 or 10k CEI has ~$1.5mm in farm / food loans and makes ~10 or so such loans per year. and is focused on needed grocery store projects at present SBA credit standards have become very tight “Credit unions often make the small business loans that other lenders avoid. A 2011 Small Business Administration-commissioned study also found that more than 80 cents of every dollar in credit union member business lending is an entirely new source of capital not available in the market today.” – CU Times Nov. 2012

8. Maine Business Lending Statistics At year end 2008 there were 67 credit unions in Maine serving 601,268 members (then roughly 46% of the state's population - still about the same today) Credit union data is from NCUA. Bank data is from FDIC. Produced by CUNA's Economics & Statistics Department.

9. Financial rules • Can be State or Federally regulated, but all depositors are Federally Insured up to $250k/$500k • Can generally make farm loans up to $50k per borrower • State expects minimum asset base of $10mm after 3 yrs for viability • State Target of 10%+ capital, but better to match ME Farm Credit at 18-19% capital • Non- returnable donations to create capital can be tax deductible

10. Financial requirements • Assuming asset base of $10mm after 3 yrs and Target of 18% + capital ratio: • Need ~$2mm capital in 2 tranches to support $1omm+ loans • Need ~ $900k commitments for first 3 years expenses • Need ~ $50k for formation costs • Non- returnable donations to create capital can be tax deductible • Some capital contributions may be able to pay a small, permanent dividend • If achieve LICU status, can qualify for some capital grants

11. Required Infrastructure • Staffing • Professional Loan Officer on Staff • Paid Supervisory Staff (s) • Trained (but not necessarily paid) Credit Committees and Board of Directors • Other staff / services can be contracted • Offices • One physical office – can be shared with a sponsor organization • Membership in ME CU league /Synergent gives access to 157 ME branches and 4950 nationwide + ooo’s of ATMs

12. Networking to date ME State Bureau of Financial Institutions Superintendent - Lloyd LaFountain III Deputy Superintendent - Robert Studley Deputy Superintendent - John Barr SMM / Bonnie Rukin & Sam May, MOFGA/Russell Libby, Maine Farmland Trust / John Piotti ME Credit Union League, Synergent Better Harvest Federal Credit Union (in organization) CEI / Gray Harris

13. Volunteers / supporters • Sam Bishop – Consultant for bakeries, food producers • Warren Cook – MOM • Matt Fadiman – Bank Operations Consultant • Norm Levesque – Financial Advisor • Russell Libby - MOFGA • Sam May – Former Wall St Analyst / Current Ag Investor • Taylor Mudge - MFT • John Piotti - MFT • Bonnie Rukin – Slow Money Maine • John Sharood – Consultant / Mushroom Farmer • Dick Spencer – Drummond Woodsum • Linzee Weld - SMM • YOU?

14. Questions & Suggestions?

15. Thank You – and Please Volunteer John Sharood Sam May Sam Bishop

16. Appendix - Partner capabilities

17. CU Business Group LLC

18. Synergent • We focus on the best solutions for your credit union, so you can focus on your members. • We have been specializing in credit union products and services since 1971. At Synergent, you can choose to use one of many intelligent solutions, or a synergy of all we have to offer. • Technology Services • We provide the most powerful, stable and flexible system available, with enhanced efficiencies so you can do what you do best - serving your members.