CoBank, a leading national cooperative bank serving agribusinesses and rural utilities throughout the United States, announced today that shareholders have approved a preferred stock proposal that significantly enhances the bank’s flexibility in raising third-party capital over the next 10 years.

The measure, approved by more than 98 percent of votes cast, authorizes CoBank to have up to $1 billion in preferred stock outstanding at any time through September 2018. The bank currently has a total of $700 million in preferred stock outstanding. Over the next decade, the bank will be able to issue or reissue preferred stock up to $1 billion outstanding in aggregate without the need for additional shareholder approval.

“We’re pleased that our shareholders have endorsed this important plan,” said Bob Engel, CoBank president and chief executive officer. “The volatility we’ve seen in the grain and other commodity markets over the past several quarters has underscored the strategic benefits that non-member capital provides to CoBank in meeting the borrowing needs of its customers.

“With the enhanced authority granted by shareholders, we can now access outside capital more quickly and more efficiently in response to dynamic conditions in the market. We believe that ability will afford real advantages to our customers as we continue to serve as their provider of debt capital and other financial services.”

No additional preferred stock is being issued in conjunction with the approved proposal. The bank’s most recent capital raising occurred in July, when the bank issued $200 million in Series C non-cumulative subordinated perpetual preferred stock. The bank issued $300 million in Series A preferred stock in 2001 and $200 million in Series B preferred stock in 2003.  In addition, the bank has issued a total of $1 billion in subordinated debt, including $500 million in April this year.

“We continue to manage our capital strategy carefully in order to maximize our ability to serve customers and maintain our overall foundation of financial strength and stability,” said Brian Jackson, CoBank’s chief financial and administrative officer. “Any future issuances of third-party capital will be driven by the projected growth and capital needs of the bank as well as overall conditions in the capital markets.”

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