CoBank Enhances Capital Position through Issuance of $425 Million in Preferred Stock

Proceeds of issuance will be used in part to redeem its Series G preferred stock in January 2022

DENVER (December 7, 2021) — CoBank, a cooperative bank serving agribusinesses, rural infrastructure providers and Farm Credit System associations throughout the United States, announced today that it has enhanced its capital position with the issuance of $425 million in preferred stock in a transaction exempt from registration under the Securities Act of 1933, as amended.

The new Series J non-cumulative perpetual preferred stock has a fixed dividend rate of 4.25 percent to, but excluding, January 1, 2027, and from, and including January 1, 2027, the dividend rate will reset every five years to a rate equal to the five-year U.S. Treasury rate plus a spread of 3.049 percent. J.P. Morgan and Morgan Stanley served as joint bookrunners on the Series J preferred stock transaction. The proceeds from this issuance, in part, will be used to redeem Series G preferred stock. CoBank previously announced that it will redeem all of its issued and outstanding 6.125% Series G preferred stock on January 1, 2022.

"This transaction delivers cost-effective, long-term capital that lowers the overall cost of capital to the benefit of the bank and its customer-owners," said David P. Burlage, CoBank's chief financial officer. "Third-party capital supplements our member stock and unallocated retained earnings, and it provides the bank with enhanced capacity to serve the borrowing needs of our customers. We're pleased to have been able to take advantage of favorable conditions in the capital markets for high-quality corporate issuers."

With the Series J preferred stock issuance CoBank’s total outstanding preferred stock is $1.9 billion. Once the upcoming January 1, 2022 redemption of Series G preferred stock is completed, the bank’s total outstanding preferred stock will be $1.7 billion.

"We design our capital strategy to maximize the financial strength and flexibility of the bank and meet the present and future needs of our customers, while minimizing the overall cost of capital," said Burlage. “This issuance and subsequent redemption positions us well to meet the ongoing funding needs of our customers and serve our collective mission to support rural America.”

Forward-Looking Statements

This news release contains projections and statements that are not historical facts but instead represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside our control. These projections and statements may address, among other things, business strategy, competitive strengths, goals, market and industry developments, and the growth of our businesses and operations. It is possible that our actual results and financial condition may differ, possibly materially, from the anticipated results and financial condition indicated in these projections and statements. Factors that could cause our actual results to differ, possibly materially, from those in the specific projections and statements include, but are not limited to: uncertainty of the extent, duration and effects of the COVID-19 pandemic and any related business or supply chain disruptions; government trade policies in the United States and other countries, including tariffs and other restrictions that impact markets for agricultural and other products; changes in the economic environment that negatively impact the agricultural, power, communications, water and leasing industries; changes in inflation, the level of interest rates and relationships between various interest rate indices and actions taken by the Federal Reserve to manage the monetary policy of the United States; replacement of the London Interbank Offered Rate (“LIBOR”) and the implementation of the Secured Overnight Financing Rate (“SOFR”) or another benchmark rate index; currency fluctuations that impact the value of the U.S. dollar in global markets; adverse food safety and weather events, disease, and other unfavorable conditions that periodically occur and impact agricultural productivity and income; adverse effect of wildfires, floods and other natural disasters which may have a direct or indirect impact on certain of our borrowers; adverse effect of climate change, or measures to address climate change; changes in levels of global crop production, exports, usage and inventories; credit performance of the loan portfolio; performance of underlying collateral, including farmland values and specialized property that secures rural infrastructure credits; loan portfolio growth and seasonal factors; weakening domestic and global economic conditions, including oil and other fuel prices; volatility in energy commodity prices; geopolitical uncertainties and government policy developments in the United States and throughout the world that may impact the industries we lend to, or, economic, fiscal or monetary conditions; changes in the U.S. government’s support of the Farm Credit System, the agricultural industry, agricultural exports, rural infrastructure and rural economies; legislative or regulatory actions that affect current and ongoing operations of the Farm Credit System or the banking, financial services, agricultural, power, communications, water and leasing industries; legislative or regulatory actions that affect our relationships with our employees; actions taken by the U.S. Congress relative to other government-sponsored enterprises; actions taken by the U.S. government to manage U.S. immigration or fiscal policies; changes to tax laws; a decrease in the credit outlook or ratings of U.S. government debt and agency debt, including Systemwide Debt Securities; cybersecurity risks, including a failure or breach of our operational or security systems or infrastructure, that could adversely affect our business, financial performance and reputation; disruptive technologies impacting the banking and financial services industries or implemented by our competitors which negatively impact our ability to compete in the marketplace; changes in assumptions underlying the valuations of financial instruments; changes in estimates underlying the allowance for credit losses, including the implementation of the current expected credit losses accounting standard; failure of our investment portfolio to perform as expected or deterioration in the credit quality of such investments; legal proceedings, judgments, settlements and related matters; environmental-related conditions or laws impacting our lending activities; nonperformance by counterparties under our derivative and vendor contracts; success of business model solutions focused on strengthening our ability to fulfill the Farm Credit System’s collective mission, including through the more efficient use of capital; and our ability to continue to partner with various Farm Credit System and other entities in light of ongoing consolidation within the Farm Credit System and the industries we serve. Consequently, all of the projections, statements and other information about future events are qualified by these cautionary statements and we cannot assure you that the results or developments anticipated by us or the projections will be realized or, even if realized, will have the expected consequences to or effects on us or our business, financial condition or results of operations. You should not place undue reliance on this information in making your investment decision. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to this information to reflect events or circumstances that occur or arise or are anticipated to occur or arise after the date hereof. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

The list of factors is not all-inclusive because it is not possible to predict all factors. Additional factors that should be considered are located in CoBank's 2020 Annual Report as well as CoBank’s 3rd quarter 2021 Quarterly Report. CoBank undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

About CoBank

CoBank is a $155 billion cooperative bank serving vital industries across rural America. The bank provides loans, leases, export financing and other financial services to agribusinesses and rural power, water and communications providers in all 50 states. The bank also provides wholesale loans and other financial services to affiliated Farm Credit System associations serving more than 75,000 farmers, ranchers and other rural borrowers in 23 states around the country.

CoBank is a member of the Farm Credit System, a nationwide network of banks and retail lending associations chartered to support the borrowing needs of U.S. agriculture, rural infrastructure and rural communities. Headquartered outside Denver, Colorado, CoBank serves customers from regional banking centers across the U.S. and also maintains an international representative office in Singapore.

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