View From The Top

Author: Tiziana Barghini

CoBank: 14 Years of Consecutive Earnings Growth

Engel, CoBank: We serve rural America, and we do so as a cooperative, which gives us the ability to look at the long term.
Robert Engel, Chief Executive

Global Finance: What makes CoBank a safe bank?

Engel: Being part of a government-sponsored enterprise and part of the Farm Credit System gives us a leap on the ratings. We also have an incredible credit portfolio, and since 2000, we have announced 14 consecutive years of earning growth. Irrespective of market environments, financial crisis or no financial crisis, good or bad economic conditions, low or high interest rates, good or bad private cultures, we have a long track record of delivering those strong results. Even more important, we are delivering strong dividends.

GF: How have you achieved that?

Engel: We are a mission-based organization that is very focused on the industry we know. We serve rural America, and we do so as a cooperative, looking at the long term. We look at performance and value—not only for today and tomorrow, but for the next generation. Compared to the environment I came from at HSBC, where quarterly earnings and share prices were much more important, here at CoBank we give more value to the long-term horizon. Our ability to do that, to know our business, the industry, and to demonstrate real value to them is key to our success—we know more and care more about our customers, than anybody else.

GF: What are CoBank’s capital and liquidity levels?

Engel: At 17%, the bank’s permanent capital ratio is well above the required regulatory minimum of 7%, although the latter will be increased to match Basel III’s levels. We tend to distribute around 15% of our earnings as dividends, so we remain with a solid level of capital. Liquidity is even more important, because that is what could put a financial organization in trouble. Our regulatory minimum is 90 days of liquidity without placing any debt, and at the end of the second quarter it was 162 days. Having these long-term horizons puts us in a position to manage the organization in a more conservative way. If you look at our results, you can tell that looking at customers’ needs and long-term business is a strong recipe for success.

Jump To Interview: