The Federal Home Loan Bank of Des Moines and the Federal Home Loan Bank of Seattle announced today that they have entered into an exclusivity arrangement regarding a potential merger of the two banks.

Both banks are on solid financial footing, but a merger could result in a stronger entity, the banks' chief executives said. Should the banks pursue a merger, the combined bank is expected to be based in Des Moines.

"Our organizations share similar values, member characteristics and corporate cultures," FHLB Des Moines President and CEO Richard Swanson said in a release. "We believe that the members of both institutions stand to benefit from the financial strength and geographic reach of a combined institution, which would enable it to better fulfill its mission of funding the housing, economic and business development needs of its members and their communities."

The combined institution would provide funding solutions for more than 1,500 member financial institutions in 13 states, as well as the U.S. territories of American Samoa and Guam and the Commonwealth of the Northern Mariana Islands.

There are 12 Federal Home Loan Banks currently, each of which is a cooperative owned by member financial institutions.

A merger of the Des Moines and Seattle banks would require approval from the Federal Housing Finance Agency, as well as member-owners of FHLB Des Moines and FHLB Seattle, the institutions said.

FHLB Des Moines recorded net income of $27 million for the quarter that ended June 30, compared with $15.7 million in the year-ago period. The Seattle bank reported $14.8 million in net income for the second quarter, compared with $10.4 million in the second quarter of 2013.