U.S. AgBank and CoBank, two of the five banks in the Farm Credit System, intend to pursue a merger in 2011.
The merged bank would continue to do business under the CoBank name and be based outside Denver, but it would maintain U.S. AgBank's existing presence and operations in Wichita, Kans., and Sacramento, Calif. Robert B. Engel, CoBank's president and chief executive, would be the chief executive of the combined entity.
John Eisenhut, chairman, U.S. AgBank, said "we have followed the guiding principle that we will pursue the solution that best positions our customers to continue receiving reliable credit at a reasonable and competitive cost."
U.S. AgBank has $25 billion in assets, while CoBank has $60 billion. The merged bank would 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.
In late March, the banks plan to submit a merger disclosure document to the Farm Credit Administration for its review and preliminary approval.
The merger proposal will also need to be approved by stockholders of the two banks. If stockholders endorse the transaction, the merger is expected to close on Oct. 1, 2011.
