The Federal Home Loan Bank of Des Moines and the Federal Home Loan Bank of Seattle announced they have entered into a definitive agreement to merge the two banks.

The combined entities would provide funding solutions for more than 1,500 member financial institutions in 13 states when some institutions only cover 2 states. In addition, they would hold about $119 billion in assets.

“The boards of directors of both institutions believe that a merger between FHLB Des Moines and FHLB Seattle would combine two complementary organizations with similar cultures, membership characteristics and solid financial positions,” said FHLB Des Moines President and CEO Dick Swanson.

“The combined Bank would remain a member- owned and member-centric cooperative, deeply focused on helping its members strengthen their institutions to better serve their customers and communities,” Swanson added.

Under the terms of the merger agreement, Swanson and FHLB Seattle President and Chief Executive Officer Mike Wilson would be co- executive leaders, serving as chief executive officer and president, respectively.

From here, the banks submit a merger application to the Federal Housing Finance Agency. Following regulatory approval of the merger agreement, FHLB Des Moines and FHLB Seattle members will receive detailed information about the potential merger. The potential merger must be approved by the members of both banks through a voting process that is expected to take place in the first half of 2015.

“Given the fundamental changes that have occurred in the financial system since the creation of the Federal Home Loan Banks, FHFA views the merger agreement approved by the boards of the Federal Home Loan Bank of Seattle and the Federal Home Loan Bank of Des Moines positively,” FHFA Director Mel Watt said.

“FHFA has and will continue to work with the Banks throughout this process, and we will review the merger application to ensure that this transaction results in a financially strong Bank that supports the interests of all its members.”

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