Striving for a Stronger Rural America, for Today and the Future November 19, 2014 Kansas Accountants’ Association Seth Hart Vice President Electric Distribution Banking Group CoBank October 28, 2016
Cooperative Strength: Safety & Soundness for Rural America A broad-based cooperative financial services organization with a mission to serve as a dependable credit provider to vital AA- industries across rural America: Rated by S&P and Fitch Agribusiness (standalone basis) Energy Communications Water Community Facilities CoBank maintains a financially strong and growing capital base 16 consecutive years of increased earnings and record patronage payout of $514.1 million for 2015 • YTD June 30, 2015 – average loan volume up 13% to $91.1 billion and net income up 5% to $486.6 million One of America’s Top 100 Coops
Your Bank’s Profitability CoBank recorded its 16 th consecutive year of growth in profitability $1,000 $936 $904 $854 $856 $800 $707 $614 $600 $565 $533 Millions $416 $400 $335 $298 $275 $261 $233 $220 $185 $200 $121 $0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Formula Based Patronage Patronage Distributions Patronage Formula Patronage paid is 1% of average loan balance; 75% of that 1% is paid in cash.
New CoBank Center On December 16, 2015, CoBank celebrated the grand opening of its new headquarters building in Greenwood Village, CO $300,000 in gifts to 3 Colorado nonprofits During 2015, CoBank donated $8 million to nonprofits across America. The bank took the occasion of the grand opening to announce gifts to three, locally- based charities, each receiving a $100,000 contribution.
New CoBank CEO Bob Engel Tom Halverson 6
CoBank Initiatives – Sharing Success Program
CoBank Initiatives – Research & Education
CoBank Initiatives - Solar Leasing at CoBank Farm Credit Leasing (FCL) 2007 1 st solar lease • • California: 15% of electricity must come from renewable sources by 2010 • Federal: 30% Investment Tax Credit (ITC) through 2016 • Agricultural co-ops and farmers 2014 • 1 st solar lease to an electric co-op
CoBank Initiatives - Proven Track Record in Solar Leasing Total Financing # of Leases 2007 12,333,333 5 2008 31,396,000 7 2009 44,182,000 12 2010 16,638,000 3 2011 27,454,000 14 2012 35,000,000 18 2013 45,379,000 24 2014 25,029,000 16 2015 46,963,000 28 Projects range from $250 thousand to $16 million, and 250KW to 3MW.
CoBank Initiatives - Reasons to Lease Your Solar Array Optimize Tax Benefit 30% federal solar tax credit Accelerated depreciation Used by CoBank and returned to co-op in form of negative financing rate Limited Effect on Other Finances No guarantee from the parent co-op to its taxable subsidiary Doesn’t impact other credit lines, ratios, mortgage Ease of Execution Utilize Master Lease Agreement Access to Other Incentives Renewable energy credits and carbon credits may be available to pass-through to the co-op Retain Control Co-op controls the solar facility
CoBank Initiatives – Assets FCL Can Finance Solar Bucket Trucks and Diggers Service Trucks Generators/Sub-stations Office Buildings Shops and Buildings AMI Equipment Office Equipment ??? 12
CoBank Initiatives - Commitment to Financial Support CoBank Lines of Credit Unsecured Committed, funds available the same day Simple documentation Can be used for general operating purposes (ie power bill, capex, payroll, interim broadband expenditures, storm damage, etc.) No zero-out provision No capex tracking Competitive rates, with the ability to fix short-term No equity contribution required beyond initial $1,000 member investment No fees Patronage eligible, as are all CoBank loans
CoBank Initiatives – There for the Long Run Refinancing Rates remain low, evaluate all lenders debt and their structure and prepayment terms. Are you in a pair of “golden handcuffs”? Work Plan Support Less red-tape than other lenders, while providing patronage vs. non-patronage options Solar Leasing Strong history with an easy to understand financing model Broadband Industry knowledge and history of communications lending 14
History of 30 Year U.S. Treasury Rates The average 30 year U.S. Treasury benchmark since 1980 is 6.94% and we hit a new all-time low of 2.11% on July 8, 2016. 2.50% as of October 20 th . 15
Webinars CoBank Webinar Series for Directors & Management – Considerations for Mergers & Acquisitions April 19, 2016 CoBank Webinar Series for Directors & Management – The Board & CEO Relationship May 24, 2016 Let’s Make a Deal: Preparing Your System for New Debt June 21, 2016 Creating a Culture for the Generations September 20, 2016 Stategic Planning: A Board’s Role in Planning and Evaluating November 15, 2016 16
CoBank in Kansas
Supporting the State of Kansas
CoBank 2017 Customer Meeting Schedule
CoBank - Proud Member of the Farm Credit System
Thank You! Seth Hart Vice President harts@cobank.com 303-740-4076
Confidentiality Agreement This presentation is being furnished solely to members of the Kansas Accountants Association (the “Association”) and is not intended for distribution outside the Association. This presentation is based on information for the Association and is being furnished through CoBank, ACB (“CoBank”). The Association agrees that all of the information contained in this presentation is of a confidential nature, that it will treat it in a confidential manner, and will not, directly or indirectly, permit agents or affiliates to disclose any of such information without prior written consent of CoBank. Further, the Association acknowledges that information contained herein does not constitute a commitment to lend. 22
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