The merger of the Federal Home Loan Bank of Des Moines and the Federal Home Loan Bank of Seattle is now one step closer to becoming a reality, as the Federal Housing Finance Agency has approved the merger.
The two entities entered into a definitive merger agreement in September, but required approval from the FHFA before the merger could move forward.
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.
"This is a critical milestone in the merger approval process," said FHLB Des Moines President and CEO Dick Swanson. "We appreciate the care and attention the FHFA has shown, not only in its review of our merger application, but throughout this entire process,” Swanson added.
“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,” he said.
Now that the FHFA has approved the merger application, the next step in the merger process is the ratification of the merger agreement by the members of the Des Moines and Seattle cooperatives. Members of both the Des Moines and Seattle banks must separately ratify the merger agreement by majority vote in the manner prescribed by the FHFA merger rules.
The voting process for both banks is expected to begin in mid-January and conclude in late February. In early January, all eligible voting members will receive disclosure materials with detailed information about the potential merger. Additionally, both the Des Moines and Seattle banks will hold member meetings in their respective districts during the voting period to respond to member questions regarding the merger.
"The disclosure materials are designed to provide the members of both Banks with a comprehensive view of the combined cooperative," said FHLB Seattle President and CEO Mike Wilson.
"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."
Under the merger agreement, the combined Bank would be headquartered in Des Moines and maintain a regional office in Seattle. Dick Swanson would serve as chief executive officer and Mike Wilson would serve as president.