The merger of the Federal Home Loan Banks in Des Moines and Seattle became official on Monday, shrinking the overall number of banks in the system to 11.
The Federal Housing Finance Agency formally approved the deal after the membership of both institutions had voted for it to move forward. It marks the first voluntary merger in the history of the Home Loan Banks.
"The paperwork has been formally approved and signed and the merger of the Federal Home Loan Bank of Des Moines is now official," FHFA Director Mel Watt said in a press release. "FHFA views this voluntary merger as consistent with safety and soundness and with the mission of the system to support home mortgage lending and community investment."
The merged bank is headquartered in Des Moines and includes nearly 1,500 financial institutions, primarily banks, thrifts and credit unions, over 13 states and the U.S. Pacific territories.
The Seattle FHLB was the weaker party in the merger. Its advance business struggled after the 2008 failure of Washington Mutual, its largest borrower. It also ran into problems in pursuing an aggressive program that purchased mortgages from its member institutions.
"We are pleased to have finalized this merger with overwhelming support from our members," said Dick Swanson, the merged bank's chief executive officer. "As a cooperative, we strive to make decisions that are in the best long-term interest of our members. We believe that the continuing bank will be stronger by virtue of its larger and more geographically diverse membership base and can achieve operational efficiencies that will help maintain our sound financial condition over the long run."
The expanded Des Moines Home Loan Bank district now includes Alaska, Hawaii, Idaho, Iowa, Minnesota, Missouri, Montana, North Dakota, Oregon, South Dakota, Utah, Washington and Wyoming, the U.S. territories of American Samoa and Guam and the Commonwealth of the Northern Mariana Islands.