Annual Report - CoBank

CoBank-U.S. AgBankMergerAT A GLANCEIn the corporate world, the vast majority ofmergers and acquisitions follow a predictablepattern. The operations of the mergingcompanies are combined. Redundant costsand other “synergies” are identified andeliminated. Value for shareholders is createdby driving expense out of the business asquickly as possible.The merger of CoBank and U.S. AgBank, whichclosed on January 1, 2012, is different. Thebenefits of the transaction lie elsewhere – inimproved diversification of the bank’s loanportfolio, in enhanced lending capacity, and inthe long-term financial strength of the combinedenterprise. With the merger, the new CoBank isfirmly established as a leading provider of creditto the U.S. rural economy – and will remain sofor generations to come.PortfolioDiversificationand Other BenefitsPrior to the merger, CoBank’s portfolio includedloans to customers in all 50 states. But itshighest concentrations of direct loans were inthe central region of the U.S. and in the grain,farm supply, dairy and rural electric industries.The bank also served as a wholesale provider offinancing to four Farm Credit associations in thenortheast and northwest regions of the country.The merger delivers substantial diversificationbenefits by adding U.S. AgBank’s portfolio ofhigh-quality wholesale loans to 25 Farm Creditassociations operating in 11 states. Thosestates include California, the state with thenation’s largest agricultural economy, alongwith Arizona, New Mexico, Nevada, Utah,Wyoming, Idaho, Colorado, Kansas, Oklahomaand Hawaii.Rural Home - 2%Generation & Transmission - 4%Telecommunications -4%Farm Related Business Services - 4%Forest Products - 4%Other Rural Utilities - 4%Export Finance - 5%Field Crops Except Grains - 6%Cattle - 6%Electric Distribution - 6%IndustryDiversificationFish, Livestock, Poultry - 6%CoBank post-merger loan portfolio$66 billion as of January 1, 2012Nursery, Green House - 2%Fruits, Nuts & Vegetables - 12%Dairy - 11%Grain - 7%Other Ag - 10%Farm Supply/Marketing - 7%Merger Timeline2010AgBank board launchesstrategic reviewAgBank board votes topursue merger with CoBankAgBank & CoBank boardsapprove merger Letter of IntentJanuary February March April May June July August September October November December10COBANK 2011ANNUAL REPORT