CoBank-US AgBank Merger Gets Preliminary Okay
June 27, 2011 The U.S. Farm Credit Administration, the regulator of the government-sponsored Farm Credit System, voted on Wednesday to grant preliminary approval for FCS’s CoBank and U.S. AgBank to merge, the banks said.
FCA’s three-member board “voted unanimously to grant preliminary approval for the transaction, subject to certain conditions” during a special meeting at its headquarters in McLean, VA, the banks said.
The vote allows CoBank and U.S. AgBank — major lenders to U.S. agriculture — to submit the merger proposal to their stockholders for a vote later during the first half of July. Completed merger ballots are due September 7.
FCA reviews merger proposals of Farm Credit banks to ensure they do not pose safety and soundness issues and that disclosure materials are prepared adequately for stockholders. FCA’s merger conditions include post-merger requirements for governance and reporting.
CoBank, a $69 billion co-op bank based in Denver, CO, and U.S. AgBank, headquartered in Wichita, KS, with $25 billion in assets, announced in December 2010 their plans to merge this year to boost diversification and efficiency.
The combined bank will do business under the CoBank name, providing financing to more than 70,000 farmers, ranchers and other rural borrowers through Farm Credit association banks in 23 states.
CoBank’s president and CEO Robert Engel will become chief executive of the combined bank. U.S. AgBank CEO Darryl Rhodes will retire after the merger completes, expected 35 days after shareholders approve the transaction and final FCA approval.
There has been massive consolidation of FCS banks over the years, now down to four banks with the CoBank-US AgBank merger. Once there were some 37 regional banks lending to the system’s association banks. FCS obtains its basic capital by selling securities on domestic and international capital markets.
(Source Reuters)
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