CoBank Reduces Capitalization Requirements for Its Customer-Owners
DENVER (August 12, 2022) — CoBank, a cooperative bank serving agribusinesses, rural infrastructure providers and Farm Credit associations throughout the United States, today announced it is reducing capitalization requirements for its customer-owners.
By a unanimous vote, the bank’s board of directors has lowered the target equity levels contained in its capital plans for cooperatives and other patronage-eligible commercial borrowers, as well as for affiliated and nonaffiliated Farm Credit institutions. The reduction follows a board-recommended vote by CoBank stockholders earlier in the year to reduce the target equity ranges specified in the bank’s capitalization bylaws.
“This change will deliver meaningful economic value to our customer-owners over time,” said Kevin Still, chair of the CoBank board. “Our board and management team are extremely pleased to be able to enhance capital efficiency for our customers through this decision, which is supported by CoBank’s consistent track record of strong financial performance and our robust levels of capital.”
The new target equity levels take effect starting in the 2022 calendar year and are detailed in the table below:
|Customer type||Prior equity target||New equity target|
|Cooperatives and other patronage-eligible commercial borrowers||8%||7%|
|Affiliated Farm Credit associations||4%||3%|
|Non-affiliated Farm Credit institutions||4%||3.25%|
Tom Halverson, CoBank’s president and chief executive officer, noted that the bank expects to migrate to a moderately lower level of capitalization as a result of the reduction in equity targets. “Though we expect CoBank’s capital ratios to decline modestly over time as a result of these changes, CoBank will remain well capitalized overall and well positioned to continue meeting the financial needs of our customers across rural America,” Halverson said.
Customers seeking information about their current level of capitalization should contact their CoBank relationship manager.
CoBank is a cooperative bank serving vital industries across rural America. 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 bank also provides wholesale loans and other financial services to affiliated Farm Credit associations serving more than 76,000 farmers, ranchers and other rural borrowers in 23 states around the country. CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture, rural infrastructure and rural communities. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.