Annual Report - CoBank

U.S. AgBank CEO Darryl Rhodes (front left) and CoBank CEO Bob Engel (front right) sign merger documents at a jointmeeting of the banks’ boards in Denver, Colorado.The combined bank’s larger capital base andmore varied income streams also enhanceits long-term ability to meet the borrowingneeds of its customers in increasingly complexand volatile market conditions. In addition,the merger increases the human capitalof the bank by adding U.S. AgBank’sexperienced work force of professionalsin Wichita and Sacramento.GovernanceCoBank remains structured as a cooperative,with qualified borrowers earning cash andequity patronage in proportion to the amount ofbusiness they do with the bank during the year.And customer-owners continue to have a directvoice in the governance of the institution, electingdirectors on both a one-member-one-vote andmodified equity basis. That methodology hasbeen employed by CoBank for many years,and it helps ensure that all customers have afair and equitable voice in the direction ofthe business.However, the merger does result in somechanges to the bank’s governance structure.On January 1, 2012, the boards of bothCoBank and U.S. AgBank were combined,and the merged bank will operate undera 32-member board during its first year.Following a 12-month transition period,the size of the board will be reduced to 24elected directors chosen from six votingregions around the country (compared tothree at CoBank pre-merger). It will also havebetween two and five appointed directors.The combined board will continue to utilize asystem of committees, including an ExecutiveCommittee, Compensation Committee,Governance Committee, Audit Committeeand Risk Committee.An independent Nominating Committee willcontinue to identify and put forth qualifiedcandidates for the board to ensure the bankis governed in accordance with the bestcooperative principles.2011 approve merger2012FCA preliminary approvalCoBank and AgBank stockholdersJanuaryFebruary March April May June July August September October November DecemberJanuaryCoBank & AgBank submit mergerapplication to the FCAFCA finalapprovalBUILDING FORTOMORROW11Merger closes onJanuary 1, 2012