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CoBank-U.S. AgBank merger gets preliminary approval.

The Farm Credit Administration (FCA) has voted to grant preliminary approval of the proposed plan of merger between CoBank and U.S. AgBank. FCA serves as the independent regulator for both banks and the rest of the Farm Credit System. The agency s three-member board voted unanimously to grant preliminary approval for the transaction, subject to certain conditions.

The preliminary approval will enable CoBank and U.S. AgBank to submit the merger proposal to their stockholders for a vote later this summer. "This is a critical milestone in the merger approval process," says John Eisenhut, chairman of the U.S. AgBank board of directors.

Under statute and applicable regulations, the FCA reviews merger proposals involving Farm Credit entities to ensure they don t present safety and soundness issues and also to ensure that disclosure materials prepared for stockholders adequately communicate key aspects of the merger. The FCA conditions for the merger constitute post-merger requirements in a number of areas, including governance and reporting. The entire body of conditions will be provided in disclosure materials that will be sent to stockholders in connection with the vote.

"[This] 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," said Everett Dobrinski, chairman of the CoBank board. "We believe the conditions articulated by the FCA can be accommodated by the combined bank without significant financial or operational impacts."

If approved, the merged bank will continue to do business under the CoBank name and be headquartered in Colorado. It will maintain U.S. AgBank's existing presence and operations in Wichita, Kan., and Sacramento, Calif.

The combined 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. Robert B. Engel, CoBank s president and CEO, will remain as the chief executive of the combined entity. Darryl Rhodes, president and CEO of U.S. AgBank, has announced he plans to retire following the merger.

The banks planned to distribute disclosure and voting materials to stockholders in the first half of July, with completed merger ballots due to be returned by September 7.
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Title Annotation:Newsline: Co-op developments, coast to coast
Publication:Rural Cooperatives
Date:Jul 1, 2011
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