The Federal Housing Finance Agency (FHFA) has approved the merger application for the Federal Home Loan Banks of Des Moines and Seattle that was submitted on October 31, 2014, according to a press release.
The historic voluntary merger between two FHLBanks is subject to satisfaction of specific closing conditions the FHFA approval letter set forth, including the receipt of approvals by members of both the Des Moines and Seattle Banks.
"This is a critical milestone in the merger approval process," FHLB Des Moines President and CEO Dick Swanson said. "We appreciate the care and attention the FHFA has shown, not only in its review of our merger application, but throughout this entire process. The FHFA’s support of this potential merger underscores the long-term value and benefit that would be derived from a combined Bank meeting the funding needs of nearly 1,500 financial institutions serving 13 states and the U.S. Pacific territories."
Approval of the merger application by the FHFA leads to the next step in the merger process, which is ratification of the merger agreement by the members of both the Des Moines and Seattle cooperatives. The FHFA merger rules require that members of both Banks must separately ratify the merger agreement by majority vote. The voting process is expected to begin in mid-January and run through late February, and individuals who were members of their respective Banks on or before September 30, 2014, are eligible to vote. The merger has already been unanimously approved by the boards of directors for both Banks.
Members who are eligible to vote will receive detailed disclosure materials regarding the merger in early January, and both Banks will host member meetings in their respective districts to answer questions about the merger.
"The disclosure materials are designed to provide the members of both Banks with a comprehensive view of the combined cooperative," FHLB Seattle President and CEO Mike Wilson said. "We are confident they will appreciate the careful consideration that has been given to the proposed merger and recognize that the decisions their boards have made will result in a cooperative that is stronger than either the Seattle or Des Moines Bank on an individual basis."
Swanson and Wilson would serve as the CEO and president, respectively, of the new Bank, which would be headquartered in Des Moines with a regional office operating in Seattle. An enhanced suite of products and services, as well as increased economies of scale and greater risk diversification, would be available to members of the combined cooperative. The new merged institution would remain a member-owned and member-centric cooperative and would retain the focus of the individual FHLBanks, which is to help members better serve their customers and communities.
The FHLBank System was created by Congress in 1932 as a source of funding for lenders to finance housing, community development, jobs, and economic growth. There are currently 12 FHLBanks, all cooperatives owned by member institutions, and membership in the FHLBank system includes more than 7,300 financial institutions.