CEO Monthly April 2017

CEO MONTHLY / APRIL 2017 5 , Bob Engel reflects on 16 years of growth, mission service and efforts to give back to the community, as CEO of CoBank. From Success to Significance In the year 2000, when Bob Engel made the decision to join Denver-based CoBank after serving as chief banking officer at HSBC Bank USA in New York, a lot of professional colleagues told him he was crazy. After all, HSBC was one of the world’s largest, strongest and most prestigious financial institutions, with over a trillion dollars in assets and operations all over the world. CoBank, meanwhile, was an obscure B2B lender focused on the agribusiness and rural utilities sectors. With only a little over $20 billion in assets, it was short on both capital and earnings, to the point where it was regularly selling off loans in order to stay in compliance with regulatory capital requirements. But Engel saw a diamond in the rough – one with a lot of unique positive attributes and potential. One plus was CoBank’s cooperative ownership structure, through which borrowers built equity in the bank over time in proportion to the amount of business they did. Another was its mission: CoBank was focused exclusively on serving industries that are essential to the U.S. rural economy. Yet another was its board of directors, composed mainly of farmers, ranchers and executives of rural businesses from around the country who cared more about keeping the bank relevant and valuable for the next generation of customer- owners than quarterly earnings. “I often say that rural America is one of the country’s most under-appreciated assets,” Engel recalled. “It is where the vast majority of the food we eat comes from and an increasingly large share of our energy as well. I was passionate about coming to work for a bank that had a higher purpose, one that would support our customers in all market conditions – to enhance the quality of life for all Americans.” Fast forward to 2016, and Engel says he has never once regretted his decision. Since Engel signed on, first as President & Chief Operating Officer and then as CEO beginning in 2006, the bank has recorded 16 consecutive years of record profits. In 2015 the bank generated $937 million in net income, despite having only about 900 employees. (On a per-employee basis, that was five times more profitable than Goldman Sachs.) The bank has also grown substantially, to over $120 billion in assets, and is now one of the nation’s top commercial/industrial lenders. “It has been extremely gratifying to see this bank reach its full potential,” Engel said. “I’d love to tell you there is a secret sauce that I brought to the table. But we have achieved success simply by focusing on having people that believe in our mission and on delivering exceptional value to customers. I constantly remind people here that our job is to know more and care more about our customers than any other financial institution. By and large we’ve been able to do that, and the financial performance of the bank has pretty much taken care of itself.” Engel, who is stepping down from the CEO role at the end of 2016, takes genuine pride in the fact that CoBank is “an old-fashioned relationship lender.” While many commercial banks focus on generating fee income from deals and then sell off the loans they “The bank has also grown substantially, to over $120 billion in assets.”