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Top Company 2010: CoBank


It's hard to sense the national recession at CoBank. Then again, 
it was hard to sense the past economic boom, too.

The Denver-based national lender to agribusiness and rural utilities posted record profits in 2008 and 2009 - something it consistently has done this past decade with steady growth during 
a roller-coaster economy.

At year's close 2009, CoBank reported total assets at $58.1 billion with annual net income at $565.4 million - both about double the bank's figures in 2004. CoBank employs about 700 people, 500 of whom are in Denver, and it plans to increase total employment by 
10 percent this year.

There's no boom, nor bust with CoBank, now in its 94th year - it's the slow and steady ship winning the race.

"Our mission is to provide our customers a dependable source of financing in good times and bad," said CoBank President and Chief Executive Officer Robert Engel. "We're not in the transaction business; we're in the relationship business. It's kind of like an old-fashioned bank."

Much of CoBank's financial health is attributable to its setup as a cooperative, owned by its 2,100 customers who do business out of 11 banking centers nationwide. When an agribusiness or rural utility obtains a loan from CoBank, it's required to buy stock in the company. That investment then grows for the customer/owner through cash and stock dividend payments throughout the life of the loan.

"It creates a vested interest for both parties," Engel said.

The required stock purchases are set at $1,000 each - no more, no less. It's another steady increase of assets, along with the bank's consistent income and sale of securities, without the need for deposits.

CoBank also is unique as it's one of only five banks overseen by the national Farm Credit System, rather than the Federal Deposit Insurance Corp. Established in 1916, the Farm Credit System helped set up the co-op structure for CoBank and the others. The system regulates, insures and helps sell consolidated debt securities on banks' behalf.

The co-op and steady-growth philosophy has kept CoBank away from many of the souring loans that are now haunting the larger commercial banking industry. CoBank recently reported that its adverse assets fell to just 1.74 percent of its total $42 billion loan portfolio as of June 30, 2010. That compares to an average of 5.34 percent of loans in trouble within the nation's FDIC-insured banks.

Despite CoBank's strong balance sheet, Engel said there are signs of the national recession. Overall loan demand remains weak in 2010, primarily from a sense of uncertainty from the economic, regulatory and legislative ends, he said.

It's a time when the bank gains more attention for its charitable contributions within the community. In 2009, CoBank gave more than $1.2 million and volunteer time to charity, including the Mile High United Way, Denver Susan G. Komen Race for the Cure, Food Bank of the Rockies, Colorado Symphony Orchestra, Big Brothers Big Sisters of Colorado, Girls Inc. and ACDI/VOCA.
CoBank provides more than $50,000 annually in scholarships to selected universities to help students working toward degrees in finance, agribusiness and cooperatives. It also gives associates $200 a year to direct to any charity.

Ahead for CoBank might be more growth through a possible merger addition of Wichita, Kan.-based U.S. AgBank, also in the Farm Credit System. Engel supports the deal and said it would widen CoBank's reach to lend directly to farmers and ranchers, beyond agribusiness and rural utilities. CoBank headquarters would remain and grow in Denver, with a substantial presence in Wichita.
The merger needs approval from executives, owners, investors and regulators and likely is still a year away.
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David Clucas

David Clucas is a freelance writer in the Denver, Boulder and Northern Colorado metro areas. For six years, he covered real estate and banking for the Boulder County Business Report, winning state and national awards for his reporting. He is graduate of DePauw University and can be reached at clucas.work@gmail.com

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