The Federal Home Loan Bank of Seattle and the much bigger Federal Home Loan Bank of Des Moines announced Thursday that they’ve agreed to merge.
The banks had said in July that they were exploring a merger that would result in the national finance network’s largest cooperative by membership.
The merger agreement was unanimously approved by the boards of directors of both banks, according to a news release from the banks.
If the merger is completed, the combined bank would serve about 1,500 financial institutions across 13 states and three U.S. territories, according to the banks.
Chartered by Congress in the 1930s in response to the Great Depression, the Federal Home Loan Bank system is made up of 12 regional cooperative banks. The system’s primary purpose is to provide stable funding to member institutions that they in turn use to make loans to families, farms and businesses.
As of June 30, the Federal Home Loan Bank of Seattle had $36.5 billion in assets. It is owned by more than 320 financial institutions in eight Western states and several Pacific territories.
The Seattle-based funder of mortgage loans fell short of required capital in 2009 during the recession, its second bout of financial trouble in less than a decade.
The FHLB of Des Moines had $82.2 billion in assets and serves about 1,200 members in five states in the Midwest.
The closing of the merger requires approval by the Federal Housing Finance Agency and ratification by the membership of both banks. A membership vote is expected to take place in the first half of 2015.
If approved, the combined cooperative would be headquartered in Des Moines, with at least one member director from each state on the board of directors “and an ongoing customer-service presence in the Northwest,” Michael Wilson, president and CEO of FHLB Seattle, said in the news release.
The combined bank would maintain a satellite office in the Northwest to support member relationships and community investment activity, while many operational and back office functions would transfer to Des Moines, according to a FHLB Seattle spokeswoman. The transferred positions would likely be staffed by existing Des Moines Bank employees and, potentially, some current Seattle Bank employees.
Under the terms of the merger agreement, Wilson and his counterpart Dick Swanson, president and CEO of FHLB Des Moines, would be co-execuive leaders, serving as president and CEO, respectively.
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Seattle’s Federal Home Loan Bank, Midwest FHLB to merge
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