Kansas Accountants Association Seth Hart Vice President Electric - - PowerPoint PPT Presentation

• November 19, 2014

Striving for a Stronger Rural America, for Today and the Future

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 industries across rural America:

• Agribusiness
• 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

AA-

Rated by S&P and Fitch (standalone basis) One of America’s Top 100 Coops

Your Bank’s Profitability

CoBank recorded its 16th consecutive year of growth in profitability

$121 $185 $220 $233 $261 $275 $298 $335 $416 $533 $565 $614 $707 $854 $856 $904 $936 $0 $200 $400 $600 $800 $1,000 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Millions

Formula Based Patronage Patronage Distributions

Patronage paid is 1% of average loan balance; 75% of that 1% is paid in cash.

Patronage Formula

New CoBank Center

• On December 16, 2015,

CoBank celebrated the grand

• pening 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
• ccasion of the grand opening to

announce gifts to three, locally- based charities, each receiving a $100,000 contribution.

New CoBank CEO

6

Bob Engel Tom Halverson

CoBank Initiatives – Sharing Success Program

CoBank Initiatives – Research & Education

• 2007
• 1st 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
• 1st solar lease to an electric co-op

CoBank Initiatives - Solar Leasing at CoBank Farm Credit Leasing (FCL)

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

12

• Solar
• Bucket Trucks and Diggers
• Service Trucks
• Generators/Sub-stations
• Office Buildings
• Shops and Buildings
• AMI Equipment
• Office Equipment
• ???

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

• 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

CoBank Initiatives – There for the Long Run

14

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 20th.

History of 30 Year U.S. Treasury Rates

15

Webinars

16

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

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