By Sara Wyant
© Copyright Agri-Pulse Communications, Inc.
MCLEAN, VA. June 22 – The board of the Farm Credit Administration (FCA) unanimously voted on Wednesday to grant preliminary approval of the proposed merger between CoBank and U.S. AgBank.
The agency’s preliminary approval is subject to certain conditions, including approval by the voting stockholders of both banks. If the plan is approved by stockholders later this summer, FCA will consider the plan for final approval.
Under the merger plan, CoBank, FCB, a wholly owned subsidiary of CoBank, ACB, will be chartered. U.S. AgBank, FCB, will then be merged into CoBank, FCB.
“The FCA has thoughtfully evaluated our merger proposal with a long-term view of Farm Credit’s mission and the important role the System plays in America’s rural economy,” said Everett Dobrinski, chairman of the CoBank board. “Today’s action by our regulator reaffirms our belief that the merger will create a stronger, more durable bank that is better able to fulfill its mission and serve its customers for generations to come. We believe the conditions articulated by the FCA can be accommodated by the combined bank without significant financial or operational impacts.”
U.S. AgBank, headquarted in Wichita, KS., provides loan funds and financial services to Agricultural Credit Associations (ACAs), Federal Land Credit Associations (FLCAs), and other financing institutions across 11 states and has approximately $25 billion in total assets.
CoBank is a $69 billion cooperative bank based in Denver, CO. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states.
The directors of both CoBank and U.S. AgBank will meet over the next week to formally consider the FCA’s conditions. Provided the boards accept the conditions, the banks will finalize and distribute disclosure and ballot materials to their voting stockholders in early July. The boards of the two banks have approved a merger effective date of January 1, 2012.
In December 2010, CoBank and U.S. AgBank executed a Letter of Intent to merge. The merged bank will continue to do business under the CoBank name and be headquartered in Colorado but will maintain U.S.AgBank’s existing presence and operations in Wichita, Kansas, and Sacramento, California. It will also continue to be organized and operate as a cooperative, with eligible borrowers earning cash and equity patronage based on the amount of business they do with the organization.
Robert B. Engel, CoBank’s president & chief executive officer, will remain as the chief executive of the combined entity. Darryl Rhodes, president & chief executive officer of U.S. AgBank, will retire in connection with the merger.
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