CEO Reflections

Dear Partner:

If you asked the average Texas public school teacher if they would like to invest in a chemical company offering exceptional returns, but dumping carcinogens into the water supply a few miles upstream from their hometown, what might they say?

My guess is that they would pass on the investment, and perhaps even hold up a sign in protest.

But when the teacher is four or five steps removed from the decision, that is not what happens. The Teacher Retirement System of Texas (TRS) invests in, for example, a fund of funds, which then invests in a private equity fund, which invests in a company, which is run by managers. Four or more layers of agents are theoretically working on behalf of the principals (teachers). The original principal-agent theory says that the issue at hand is that the agents will act in their own self-interest, enriching themselves instead of the principals. And that ir certainly relevant here given the fee structures of some of these funds (and below market return to boot). But the theory — and increasingly, state law in Texas and many other states — also assumes the sole interest of Texas public school teachers is to maximize their returns through all legal means, unconstrained by any other consideration. Is it?

We cannot solve the principal-agent problem for Texas teacher. But contrast this structure with one of out 2025 initiatives: We offered community members the opportunity to invest in a co-branded CD that backed a working capital loan for the fledging Assabet Co-op Market in Maynard, Massachusetts. Without this backing, the Co-op would have otherwise not had access to a loan. And customers would have lacked a mechanism to support their co-op. In this context, the self-interest of the investor — many of whom were themselves member-customers of the co-op — takes on a more holistic meaning.

Instead of layers upon layers of financial intermediaries obscuring where our dollars are invested, what if there is an alternative dedicated to (re)building these bridges? We believe reconnecting borrowers and depositors in a myriad of impactful ways can result in profound economic, environmental, and cultural outcomes. That is foundationally the promise of our bank. If done well, it will set us on a path to build a truly enduring institution.

A note we recently received from a partner says it better:

"I wanted to take a moment to ley you know how local Walden Mutual is, and how personal — last week one of our CSA members asked for a receipt so that she could submit it for a summer dividend reimbursement. Talk about local dollars making the rounds. The same day, a neighbor came up to us at a local farm stand where we deliver, wearing his Walden Mutual hat, and asked if they could get on our milk subscription. I take proud credit for turning both of these individuals onto Walden back in the early days, when we were merely account holders and not Seedlings borrowers. Little did we know then how much the bank would come to play a role in out farm and our neighborhood. We are so grateful that you are our bank and really stand by your mission. It allows us to fulfill ours, of growing food and community."

2025 Results

We celebrated a lot of milestones this year. We ended the year with $171 million in assets, up roughly $50M (40%) over 2024, having not yet quite hit out third anniversary from opening. We approached breakeven profitability. We started massive projects to implement Salesforce and a new digital account opening solution. We launched our Spend Local and Save Local accounts. We closed 113 individual loans and added 670 new retail accounts. It often takes three months for a new hire to acclimate, and another three months to start being truly productive. Given that we added 40% of our staff in the last 12 months, this list feels all the more meaningful.

We are proud to say that we have a strong foundation for an enduring institution: Over 3,000 retail depositors across 48 states, and over 500 partner businesses. A brand that looks nothing like a bank and feels timely in the current climate. A staff keen on delivering a partner experience that feels more like Zingerman’s Deli than Bank of America. A blossoming Seedlings program that is funding truly underserved entrepreneurs and developing the underpinning of an innovative peer-based underwriting model. A passion and a commitment to build something meaningful in the world.

I am grateful to be working with an exceptional group of people, surrounded by an unique set of stakeholders that share our interest in accomplishing something meaningful in the ecosystems that sustain us. Thank you. As always, please give us a shout anytime — if you are in the Concord or Boston area, I am always up for a cup of coffee.

Sincerely,
Charley