NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/
For the period ended May 31, 2025. Filed Aug 5, 2025.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Aug 5, 2025
NRUC$19.91+0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-05-31; filed 2024-08-01.
0000070502-24-000045
IntroductionNon-GAAP Finan cial MeasuresExecutive SummaryConsolidated Results of OperationsConsolidated Balance Sheet AnalysisEnterprise Risk ManagementCredit RiskLiquidity RiskMarket RiskOperational RiskCritical Accounting EstimatesRecent Accounting Changes and Other DevelopmentsNon-GAAP Financial Measures and ReconciliationsCurrent report: 10-K
Period ended 2025-05-31; filed 2025-08-05.
0000070502-25-000211
IntroductionNon-GAAP Financial MeasuresExecutive SummaryConsolidated Results of OperationsConsolidated Balance Sheet AnalysisEnterprise Risk ManagementCredit RiskLiquidity RiskMarket RiskOperational RiskCritical Accounting EstimatesRecent Accounting Changes and Other DevelopmentsNon-GAAP Financial Measures and ReconciliationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 471 previous paragraphs and 474 current paragraphs.
266 unchanged; 151 reworded; 52 added; 50 removed; 4 previous and 5 current paragraphs rearranged.
Tables are not compared: 36 previous and 36 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (52)
Current report
Table 2 below presents a reconciliation of net income between FY2025 and FY2024.
Current report
•A shift to losses from gains was recorded on our derivatives portfolio of $398 million, as we recorded derivative losses of $6 million for FY2025, primarily attributable to decreases in interest rates across the swap curve, with the exception of the 30-year swap rate, which increased slightly during FY2025. In comparison, we recorded derivative gains of $392 million for FY2024, primarily due to increases in the medium- and longer-term swap interest rates during FY2024.
Current report
•Operating and other expenses increased by $21 million for FY2025 compared with FY2024, primarily driven by higher expenses recorded for salaries and employee benefits, general and administrative, and an impairment loss of $8 million on an equity investment.
Current report
•Net interest income increased by $7 million, attributable to an increase in average interest-earning assets of $1,772 million, or 5%, partially offset by a decrease in the net interest yield of 2 basis points, or 3%, to 0.72%.
Current report
During FY2025, we refined our methodology for calculating the debt-to-equity ratio to revise from total liabilities divided by total equity to total debt outstanding divided by total equity. This change was driven by a change in our methodology for calculating the adjusted debt-to-equity ratio, which is discussed in more detail under the section “Non-GAAP Financial Measures and Reconciliations” in this Report. The debt-to-equity ratio under the revised methodology was 11.20 and 10.86 as of May 31, 2025 and 2024, respectively. The increase in the debt-to-equity ratio during FY2025 was due to an increase in debt to fund loan growth, partially offset by an increase in total equity. The increase in total equity was primarily driven byour reported net income of$140 million for FY2025, partially offset by the CFC Board of Directors’ authorized patronage capital retirement of $47 million in July 2024.
Current report
Table 4 below presents a reconciliation of adjusted net income between FY2025 and FY2024.
Current report
•Adjusted net interest income decreased by $21 million for FY2025 compared with FY2024, driven by a decrease in the adjusted net interest yield of 11 basis points, or 10%, to 1.00%, partially offset by an increase in average interest-earning assets of $1,772 million, or 5%.
Current report
•We discuss the variances in the other components above under our net income key highlights.
Current report
•The decrease in adjusted TIER for FY2025 compared with FY2024 was primarily driven by the increased adjusted interest expense and operating and other expenses during FY2025.
Current report
During FY2025, we refined our methodology for calculating the adjusted debt-to-equity ratio. Consequently, we revised our internally established adjusted debt-to-equity threshold from 6-to-1 to 8.5-to-1. The adjusted debt-to-equity ratio under the revised methodology was 7.39 and 7.27 as of May 31, 2025 and 2024, respectively. The increase in the adjusted debt-to-equity ratio during FY2025 was due to an increase in adjusted total debt outstanding resulting from additional borrowings to fund growth in our loan portfolio, partially offset by an increase in adjusted total equity. The increase in adjusted total equity was primarily due to a combined impact of our adjusted net income of $245 million for FY2025 and issuances of subordinated deferrable debt during FY2025, partially offset by a decrease in equity of $47 million attributable to the CFC Board of Directors’ authorized patronage capital retirement in July 2024, as discussed above.
Current report
We provide a more detailed discussion of the revised methodology for calculating the adjusted debt-to-equity ratio and a reconciliation of our non-GAAP adjusted measures to the most directly comparable U.S. GAAP measures under the section “Non-GAAP Financial Measures and Reconciliations” in this Report.
Current report
Our allowance for credit losses and allowance coverage ratio decreased to $41 million and 0.11%, respectively, as of May 31, 2025, from $49 million and 0.14%, respectively, as of May 31, 2024. The $8 million decrease in the allowance for credit losses was attributable to a reduction in the asset-specific allowance due to higher actual than expected payments received on a nonperforming loan during FY2025.
Current report
Total debt outstanding increased by $2,051 million, or 6%, to $34,769 million as of May 31, 2025, compared with May 31, 2024, primarily due to borrowings to fund the increase in loans to our members. During FY2025, we issued:
Current report
•Secured long-term debt totaling $1,450 million at a weighted average fixed interest rate of 4.94% with an average term of 16 years.
Current report
In addition, during FY2025, we issued a total of$44 million of 30-year subordinated deferrable interest notes (“subordinated notes”) under a new subordinated debt program that was launched in November 2024. Subsequent to FY2025, we issued $525 million ofdealer medium-term notes at a floating interest rate with a term of 18 months.
Current report
Following the 2024 election, the new Administration and Congress are changing policies related to the electric utility industry. Congress previously created various funding opportunities that electric cooperatives may take advantage of when deploying renewable energy and other clean energy technologies through the 2022 Inflation Reduction Act (“IRA”), Congress recently passed the One Big Beautiful Bill Act, which significantly reduces federal incentives for renewable energy development. These changes are expected to make it more challenging for electric cooperatives to affordably expand renewable energy generation within their portfolios. In contrast, incentives for technologies such as battery storage and carbon capture remain largely unchanged. Congress is also attempting to pass permitting reform, which will streamline the permitting process and reduce costs of grid infrastructure improvements.
Current report
Following its meeting held in June 2025, the Federal Open Market Committee (“FOMC”) of the Federal Reserve kept its target for the federal funds rate unchanged at a range of 4.25%–4.50%. The FOMC reiterated that (i) the U.S. economy continues to expand at a solid pace, (ii) the unemployment rate remains low and (iii) inflation remains somewhat elevated. The Federal Reserve’s June 2025 median projection for gross domestic product (“GDP”) annual growth rate in 2025 is 1.4%, down from 1.7% in March 2025. Its median projection for Personal Consumption Expenditures (“PCE”) inflation in 2025 is at 3.0%, up from 2.7% in March 2025, and for U.S. unemployment in 2025 is 4.5%, up from 4.4% in March 2025. As of June 2025, federal funds futures markets anticipated three 25 basis point rate cuts: one in the fourth quarter of 2025, another in the first quarter of 2026 and a final one in the second quarter of 2026. This would bring the target rate range to 3.50%–3.75% by mid-2026. Overall, the market expects interest rates to decline, with a steepening yield curve ahead.
Current report
•An increase in our adjusted net interest income over the next 12 months relative to the 12-month period ended May 31, 2025, primarily driven by an increase in interest-earning assets due to projected loan growth.
Current report
•A slight decrease in adjusted net interest yield over the next 12 months, primarily due to the current shape of the yield curve, our baseline interest rates forecast and that our interest-earning assets, primarily lines of credit, are repricing faster than our interest-bearing liabilities. Additionally, lower-cost debt maturing in the near term will need to be refinanced at a forecasted higher interest rate. See “Market Risk—Interest Rate Risk Assessment” in this Report for an additional discussion.
Current report
•A decrease in our adjusted net income over the next 12 months, primarily due to an increase in projected operating expenses.
Current report
Based on our current forecast assumptions, we anticipate net loan growth of $2,059 million over the next 12 months. Historically line of credit loans activity has been fairly unpredictable due to the short-term and dynamic usage patterns of these facilities. Our baseline forecast scenario takes into account known likely near-term activity as well as historical analysis.
Current report
(5)Collateral trust bonds represent secured obligations sold to investors in the capital markets including also those issued in a private placement transaction.
Current report
Adjusted net interest income of $360 million for FY2025 decreased by$21 million, or 6%, from FY2024, driven by a decrease in the adjusted net interest yield of 11 basis points, or 10%, to 1.00%, partially offset by an increase in average interest-earning assets of $1,772 million, or 5%.
Current report
The decrease inderivative cash settlements interest income between FY2025 and FY2024 was due to the lower net interest rates received on our pay-fixed swapsin FY2025, compared with FY2024, due to the federal funds rate cuts during FY2025 and an $8 million gain related to treasury locks recorded in FY2024. See “Note 10—Derivative Instruments and Hedging Activities” in this Report for additional information on our treasury locks activity.
Current report
Provision (Benefit) for Credit Losses
Current report
Table 7 presents the components of non-interest income recorded in our consolidated statements of operations.
Current report
Non-interest expense of $152 million for FY2025, increased by $23 million, or 18%, from FY2024, primarily attributable to an increase in operating expenses, driven by higher expenses recorded for salaries and employee benefits, consulting, depreciation and amortization, member relations and board expenses. In addition, during FY2025, we recorded an $8 million non-interest expense from an impairment loss on our equity investment in Riesel HoldCo, LLC obtained in FY2023 as part of the Brazos Sandy Creek Electric Cooperative Inc. bankruptcy filing. See “Note 4—Loans” in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023 for a detailed discussion of this equity investment.
Current report
The increase in loans to members of $2,538 million, or 7%, from May 31, 2024, was primarily attributable to net increases in long-term and line of credit loans of $1,405 million and $1,130 million, respectively. Of the increase in line of credit loans, 78% was attributable to borrowings under emergency line of credit loans by our members primarily for Hurricane Helene recovery costs. The remaining 22% was primarily attributable to funding provided for member working capital and NCSC renewable project financing.
Current report
We had a loan to one CFC electric power supply borrower of $26 million and $49 million classified as nonperforming, which represented 0.07% and 0.14% of total loans outstanding as of May 31, 2025 and 2024, respectively. The reduction in the nonperforming loan was due to payments received on this nonperforming loan during FY2025.
Current report
The allowance for credit losses and allowance coverage ratio decreased to $41 million and 0.11%, respectively, as of May 31, 2025, from $49 million and 0.14%, respectively, as of May 31, 2024. The $8 million decrease in the allowance for credit losses was attributable to a reduction in the asset-specific allowance due to higher actual than expected payments received on a nonperforming loan during FY2025. Our collective allowance decreased slightly during FY2025, primarily due to an improved recovery rate on our power supply loan portfolio, partially offset by an increase attributable to loan portfolio growth.
Current report
On November 1, 2024, we entered into an agency agreement with InspereX LLC, Citigroup Global Markets Inc., RBC Capital Markets, LLC and Wells Fargo Clearing Services, LLC, as agents, to launch a program through which we may offer and sell, from time to time, an unlimited aggregate principal amount of our subordinated deferrable interest notes. On November 1, 2024, we filed a prospectus supplement with the U.S. Securities and Exchange Commission (“SEC”) related to these subordinated notes, which are issued under our effective shelf registration statement filed with the SEC in October 2023.
Current report
These subordinated notes are unsecured and rank subordinate in right of payment to all of our current and future senior indebtedness. The subordinated notes are senior to our members’ subordinated certificates and rank equal in right of payment and upon liquidation to our outstanding subordinated deferrable debt and any other equally ranked subordinated notes we may issue. During FY2025, we issued an aggregate principal amount of $44 million in subordinated notes that mature in 30 years under this new program.
Current report
In addition to issuances of unlimited debt in the public capital markets under our shelf registrations discussed above, we also have access to private debt facilities. In January 2025, we settled $300 million of collateral trust bonds at a fixed rate of 5.23% with a weighted average term of 13.3 years in a private placement transaction, which is an unregistered debt offering.
Current report
(2)Amount also includes the collateral trust bonds issued in a private placement transaction.
Current report
(2)In December 2024, our committed bank revolving line of credit agreements were amended to exclude collateral pledged under the collateral trust bonds 1994 indenture from the maximum coverage ratio required under the agreements. The required maximum coverage ratio was 150% prior to the amendments.
Showing the first 40 of 52 passages. Open the source sections for the rest.
Removed paragraphs (50)
Previous report
•An increase in derivative gains of $106 million, primarily from an increase in the net interest rate received on our pay-fixed swaps, which drove the higher derivative cash settlements income for FY2024;
Previous report
•A decrease in net interest income of $61 million, attributable to a decrease in the net interest yield of 24 basis points, or 24%, to 0.74%, partially offset by an increase in average interest-earning assets of $2,138 million, or 7%; and
Previous report
•An increase in operating and other expenses of $19 million.
Previous report
Our debt-to-equity ratio decreased to 11.01 as of May 31, 2024, from 12.14 as of May 31, 2023, primarily due to an increase in equity resulting from our reported net income of$554 million for FY2024, which was partially offset by a decrease in equity of $10 million from CFC’s deconsolidation of RTFC and $113 million from the CFC Board of Directors’ authorized patronage capital retirements, of which $72 million was paid to members in September 2023 and$41 million was paid from CFC to RTFC in December 2023 in connection with the RTFC sale transaction, which is discussed further under “Note 1—Summary of Significant Accounting Policies.”
Previous report
The increase in adjusted net income was primarily driven by:
Previous report
•An increase in adjusted net interest income of $32 million, driven by the combined impact of an increase in average interest-earning assets of $2,138 million, or 7%, and an increase in the adjusted net interest yield of 3 basis points, or 3%, to 1.11%;
Previous report
•A favorable shift from losses to gains recorded on our investment securities of $16 million;
Previous report
•A favorable shift from provision to benefit for credit losses of $6 million; and
Previous report
•An increase in operating and other expenses of $19 million.
Previous report
Our allowance for credit losses and allowance coverage ratio decreased to $49 million and 0.14%, respectively, as of May 31, 2024, from $53 million and 0.16%, respectively, as of May 31, 2023. The $4 million decrease in the allowance for credit losses reflected a reduction in the asset-specific allowance of $8 million, partially offset by an increase in the collective allowance of $4 million.
Previous report
The federal government has created various funding opportunities that electric cooperatives may take advantage of when deploying renewable energy and other clean energy technologies. The 2022 Inflation Reduction Act (“IRA”) included programs such as the USDA Empowering Rural American (“New ERA”) program, the Powering Affordable Clean Energy (“PACE”) program and a direct-pay tax credits for electric cooperatives. The New ERA program currently provides $9.7 billion specifically for electric cooperatives to build new clean energy systems.
Previous report
Increased Focus on Enhancing Electric System Resiliency and Reliability
Previous report
Evolving Cooperative Focus on Clean Energy Supply Investments
Previous report
Many electric power supply and electric distribution cooperatives are increasingly focused on efforts to identify potential opportunities to increase investments in renewable power supply, transmission and storage. This includes both on-balance sheet construction of renewable generation and off-balance sheet acquisition of renewable power through power purchase agreements. According to a report published in April 2024 by NRECA, electric cooperatives have nearly doubled their renewable capacity from 8.2 gigawatts to 15.8 gigawatts since 2016, including adding over 1.3 gigawatts of renewable capacity in 2023 alone.
Previous report
As further described below in the “Liquidity Risk—Projected Near-Term Sources and Uses of Funds” section, we currently anticipate net long-term loan growth of $1,628 million over the next 12 months. We also expect that our variable-rate line of credit loans outstanding will remain at approximately the current level over the same period.
Previous report
In June 2024, the Federal Open Market Committee (“FOMC”) of the Federal Reserve signaled the expectation of no additional increases in the federal funds rate. The FOMC expects the U.S. economy to remain strong in 2024, with the median projected gross domestic product (“GDP”) growth rate at 2.1%, unchanged from its March 2024 projection. In addition, the Federal Reserve revised higher its inflation expectations again, with the Personal Consumption Expenditures(“PCE”) inflation for December 2024 now expected at +2.6% (up from +2.4% in March). The FOMC projection for U.S. unemployment in 2024 remains unchanged at 4%. Despite a fairly positive economic outlook and inflation remaining above the 2% long-term target, the FOMC projects 25 basis points of federal funds rate cuts in 2024, bringing the target rate to 5.00% - 5.25% by December 31, 2024, down from 75 basis points in federal funds rate cuts in 2024 that the committee projected in March. Further, the FOMC projects additional federal funds rate cuts in 2025, bringing the target rate to 4.00% - 4.25% by December 2025. Consensus market outlook for interest rates indicates declining interest rates across the yield curve in 2024 and 2025. Although the yield curve is expected to remain inverted throughout calendar year 2024, given the expected drop in short-term interest rates, the yield curve inversion is expected to narrow in 2024 and end in 2025.
Previous report
•Decreases in our adjusted net interest income and adjusted net interest yield over the next 12 months relative to the 12-month period ended May 31, 2024, primarily due to the current yield curve assumptions and our balance sheet position. See “Market Risk—Interest Rate Risk Assessment” for an additional discussion.
Previous report
Reported net interest income of $254 million for FY2024 decreased $61 million, or 19%, from FY2023, driven by a decrease in the net interest yield of 24 basis points, or 24%, to 0.74%, partially offset by an increase in average interest-earning assets of $2,138 million, or 7%.
Previous report
Table 5 presents the components of non-interest income (loss) recorded in our consolidated statements of operations.
Previous report
During FY2023, we executed two Treasury lock agreements with an aggregate notional amount of $300 million to hedge interest rate risk on anticipated debt issuances. The Treasury locks were designated as a cash flow hedge of a forecasted transaction. We recorded a settlement gain of $8 million in AOCI upon the termination of the Treasury locks during FY2023. As the hedged forecasted transaction did not occur in the time period specified in the hedge documentation, we reclassified the $8 million gain from AOCI to earnings as a component of derivative gains (losses) in our consolidated statements of operations during FY2024. We did not have any derivatives designated as accounting hedges as of May 31, 2024 or May 31, 2023.
Previous report
Non-interest expense of $130 million for FY2024, increased $18 million, or 16%, from FY2023, primarily attributable to an increase in operating expenses, driven by higher expenses recorded for salaries and benefits, information technology, and depreciation and amortization expenses. During FY2024, we redeemed $100 million of our $400 million subordinated deferrable debt due 2043, at par plus accrued interest. As a result, we recognized $1 million of losses on early extinguishment of debt related to the unamortized debt issuance costs.
Previous report
Loans to members totaled $34,542 million and $32,532 million as of May 31, 2024 and 2023, respectively. Loans to CFC distribution, power supply, and statewide and associate borrowers accounted for 95% and 96% of total loans to members as of May 31, 2024 and 2023, respectively. The increase in loans to members of $2,010 million, or 6%, from May 31, 2023, was primarily attributable to net increases in long-term and line of credit loans of $1,710 million and $299 million, respectively. The increase in line of credit loans was primarily attributable to funding provided for higher working capital requirements from our members and bridge loan financing. We experienced increases in CFC distribution loans, CFC power supply loans, CFC statewide and associate loans and NCSC telecom loans of $1,667 million, $205 million, $37 million and $111 million, respectively, partially offset by a decrease in NCSC electric loans of $11 million.
Previous report
(4)Other notes payable consisted of unsecured and secured Clean Renewable Energy Bonds as of May 31, 2023. We are required to pledge eligible mortgage notes from distribution and power supply system borrowers in an amount at least equal to the outstanding principal amount under the Clean Renewable Energy Bonds Series 2009A note purchase agreement, which matured and was paid off in full during FY2024.
Previous report
Prior to the Adoption of ASU 2022-02, Financial Instruments – Credit Losses (Topic 326) – Troubled Debt Restructurings (“TDR”) and Vintage Disclosures, andas of May 31, 2023, we had loans outstanding totwo borrowers totaling$8 million classified as performing TDR loans and on accrual status, and loans outstanding to Brazos totaling $23 million classified as nonperforming TDR loans which were on non-accrual status. During FY2024, we received the remaining payment of Brazos’ loans outstanding of $23 million in accordance with the provisions of Brazos’ plan of reorganization to repay its loans in full. Prior to the Brazos loan restructuring, we had not had any loan modifications that were required to be accounted for as TDRs since fiscal year 2016.
Previous report
See “Note 4—Loans” for additional information on loan modifications to borrowers experiencing financial difficulty and TDR loans prior to the adoption of ASU 2022-02. Also refer to “Note 1—Summary of Significant Accounting Policies” for information on the adoption of ASU 2022-02.
Previous report
(1)Represents the unpaid principal balance net of charge-offs and recoveries as of the end of each period.
Previous report
Nonperforming loans totaled$49 million as of May 31, 2024, a decrease of $40 million from May 31, 2023, due tothe receipts of $4 million in loan payments from Brazos Sandy Creek to pay off its nonperforming loan outstanding and a $36 million payment on the outstanding nonperforming loan during FY2024.
Previous report
The allowance for credit losses and allowance coverage ratio decreased to $49 million and 0.14%, respectively, as of May 31, 2024, from $53 million and 0.16%, respectively, as of May 31, 2023. The $4 million decrease in the allowance for credit losses reflected a reduction in the asset-specific allowance of $8 million, partially offset by an increase in collective allowance of $4 million. The decrease in theasset-specific allowance was primarily attributable to an increase in the actual and expected payments on a nonperforming CFC power supply loan. The increase in the collective allowance was primarily due to loan portfolio growth, a slight decline in the overall credit quality of our loan portfolio, and slightly higher expected default rates derived from a third-party utility sector default data used in estimating the allowance for credit losses.
Previous report
We have a revolving note purchase agreement with Farmer Mac, under which we can borrow up to $6,000 million from Farmer Mac, at any time, subject to market conditions through June 30, 2027. The agreement has successive automatic one-year renewals beginning June 30, 2026, unless Farmer Mac provides 425 days’ written notice of nonrenewal. Pursuant to this revolving note purchase agreement, we can borrow, repay and re-borrow funds at any time through maturity, as market conditions permit, provided that the outstanding principal amount at any time does not exceed the total available under the agreement. Each borrowing under the revolving note purchase agreement is evidenced by a pricing agreement setting forth the interest rate, maturity date and other related terms as we may negotiate with Farmer Mac at the time of each such borrowing. We may select a fixed rate or variable rate at the time of each advance with a maturity as determined in the applicable pricing agreement.
Previous report
Our intent is to manage our short-term wholesale funding risk by maintaining the dealer commercial paper outstanding at each quarter-end within a range of $1,000 million to $1,500 million, although the intra-period amount of dealer commercial paper outstanding may fluctuate based on our liquidity requirements. Dealer commercial paper outstanding was $505 million and $1,293 million as of May 31, 2024 and 2023, respectively.
Previous report
(2)Collateral includes cash pledged. Clean renewable energy bonds series 2009A matured and was paid off in full as of May 31, 2024.
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Reworded paragraphs (151)
Previous wording
As of May 31, 2024, our financial statements included the consolidated accounts of CFC and NCSC. Our principal operations are currently organized for management reporting purposes into two business segments, which are based on the accounts of each of the legal entities included in our consolidated financial statements: CFC and NCSC. We provide information on the business structure, mission, principal purpose and core business activities of each of these entities under “Item 1. Business.” Unless stated otherwise, references to “we,” “our” or “us” relate to CFC and its consolidated entities.
Current wording
Our financial statements include the consolidated accounts of CFC and NCSC. Our principal operations are currently organized for management reporting purposes into two business segments, which are based on the accounts of each of the legal entities included in our consolidated financial statements: CFC and NCSC. We provide information on the business structure, mission, principal purpose and core business activities of each of these entities under “Item 1. Business.” Unless stated otherwise, references to “we,” “our” or “us” relate to CFC and its consolidated entities.
Previous wording
Therefore, management uses non-GAAP financial measures, which we refer to as “adjusted” measures, to evaluate financial performance. Our key non-GAAP financial measures are adjusted net income, adjusted net interest income, adjusted interest expense, adjusted net interest yield, adjusted TIER, adjusted debt-to-equity ratio and members’ equity. The most comparable U.S. GAAP financial measures are net income, net interest income, interest expense, net interest yield, TIER, debt-to-equity ratio and CFC equity, respectively. The primary adjustments we make to calculate these non-GAAP financial measures consist of (i) adjusting interest expense and net interest income to include the impact of net periodic derivative cash settlements income (expense) amounts; (ii) adjusting net income, total liabilities and total equity to exclude the non-cash impact of the accounting for derivative financial instruments; (iii) adjusting total liabilities to exclude the amount that funds CFC member loans guaranteed by RUS, subordinated deferrable debt and members’ subordinated certificates; (iv) adjusting total equity to include subordinated deferrable debt and members’ subordinated certificates and exclude cumulative derivative forward value gains and losses and amounts of changes in the fair value included in accumulated other comprehensive income (“AOCI”) related to derivatives; and (v) adjusting CFC equity to exclude derivative forward value gains and losses and AOCI.
Current wording
U.S. GAAP financial measures are net income, net interest income, interest expense, net interest yield, TIER, debt-to-equity ratio and CFC equity, respectively. The primary adjustments we make to calculate these non-GAAP financial measures consist of (i) adjusting interest expense and net interest income to include the impact of net periodic derivative cash settlements income (expense) amounts; (ii) adjusting net income and total equity to exclude the non-cash impact of the accounting for derivative financial instruments; (iii) adjusting total debt outstanding to exclude members’ subordinated certificates and 50% of the subordinated deferrable debt; (iv) adjusting total equity to include members’ subordinated certificates and 50% of the subordinated deferrable debt, and exclude cumulative derivative forward value gains (losses) and the amounts of accumulated other comprehensive income (loss) (“AOCI”); and (v) adjusting CFC equity to exclude derivative forward value gains (losses) and AOCI.
Previous wording
The table below shows our net income and TIER for the periods presented and the variance between these periods. We provide a more detailed discussion of our reported results under the section “Consolidated Results of Operations.” See “Item 7. MD&A—Consolidated Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended May 31, 2023 (“2023 Form 10-K”) for a comparative discussion of our consolidated results of operations between FY2023 and FY2022.
Current wording
Table 1 below shows our net income and TIER for the periods presented and the variance between these periods. We provide a more detailed discussion of our reported results under the section “Consolidated Results of Operations.” See “Item 7. MD&A—Consolidated Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended May 31, 2024 (“2024 Form 10-K”) for a comparative discussion of our consolidated results of operations between FY2024 and FY2023.
Previous wording
•A favorable shift from losses to gains recorded on our investment securities of $16 million, primarily due to period-to-period market fluctuations in fair value;
Current wording
•Gains recorded on our investment securities decreased by $5 million, primarily due to period-to-period market fluctuations in fair value.
Previous wording
•A favorable shift from provision to benefitfor credit losses of$6 million. We recorded a benefit for credit losses of$5 million for FY2024, resulting primarily from a decrease in the asset-specific allowance, partially offset by an increase in the collective allowance due to loan portfolio growth. In comparison, we recorded a provision for credit losses of$1 million for FY2023, driven primarily by an increase in the asset-specific allowance; and
Current wording
•We recorded a benefit for credit losses of $8 million for FY2025, resulting primarily from a decrease in the asset-specific allowance for a nonperforming loan attributable to higher actual than expected payments received on this loan during FY2025. In comparison, we recorded a benefit for credit losses of $5 million for FY2024, resulting primarily from a decrease in the asset-specific allowance, partially offset by an increase in the collective allowance due to loan portfolio growth.
Previous wording
The decrease in TIER for FY2024 compared with FY2023 were primarily driven by increased interest expense during FY2024.
Current wording
•The decrease in TIER for FY2025 compared with FY2024 was driven by the combined impact of a decrease in net income primarily attributable to our derivative portfolio forward value change as discussed above and an increase in interest expense during FY2025.
Previous wording
The table below shows our adjusted net income and adjusted TIER for the periods presented and the variance between these periods. Our financial goals focus on earning an annual minimum adjusted TIER of 1.10. We provide a more detailed discussion of our non-GAAP adjusted results under the section “Consolidated Results of Operations.” See “Item 7. MD&A—Consolidated Results of Operations” in our 2023 Form 10-K for a comparative discussion of our consolidated results of operations between FY2023 and FY2022.
Current wording
Table 3 below shows our adjusted net income and adjusted TIER for the periods presented and the variance between these periods. Our financial goals focus on earning an annual minimum adjusted TIER of 1.10. We provide a more detailed discussion of our non-GAAP adjusted results under the section “Consolidated Results of Operations.” See “Item 7. MD&A—Consolidated Results of Operations” in our 2024 Form 10-K for a comparative discussion of our consolidated results of operations between FY2024 and FY2023.
Previous wording
We segregate our loan portfolio into segments based on the borrower member class, which consists of CFC distribution, CFC power supply, CFC statewide and associate, NCSC electric and NCSC telecom. Prior to the RTFC sale transaction on December 1, 2023, NCSC electric and NCSC telecom were referred to as NCSC and RTFC, respectively.
Current wording
We segregate our loan portfolio into segments based on the borrower member class, which consists of CFC distribution, CFC power supply, CFC statewide and associate, NCSC electric and NCSC telecom.
Previous wording
Loans to members totaled $34,542 million as of May 31, 2024, an increase of $2,010 million, or 6%, from May 31, 2023, reflecting net increases in long-term and line of credit loans of $1,710 million and $299 million, respectively. Our loan portfolio composition remained largely unchanged from May 31, 2023 with 78% of loans outstanding to CFC distribution borrowers,16% to CFC power supply borrowers,3%to NCSC electric borrowers,2% to NCSC telecom borrowers, and 1% to CFC statewide and associate borrowers as of May 31, 2024.
Current wording
Loans to members totaled $37,080 million as of May 31, 2025, an increase of $2,538 million, or 7%, from May 31, 2024, reflecting net increases in long-term and line of credit loans of $1,405 million and $1,130 million, respectively. Of the increase in line of credit loans, 78% was attributable to borrowings under emergency line of credit loans by our members primarily for recovery costs for Hurricane Helene, which impacted the Southeastern United States in September 2024. The remaining 22% was primarily attributable to funding provided for member working capitaland NCSC renewable project financing. Our loan portfolio composition remained largely unchanged from May 31, 2024 with 79% of loans outstanding to CFC distrib ution borrowers,16% to CFC power supply borrowers,3%to NCSC electric borrowers and 2% to NCSC telecom borrowers as of May 31, 2025.
Previous wording
We believe the overall credit quality of our loan portfolio remained strong as of May 31, 2024. We had no loan charge-offs during FY2024. We recorded $1 million in net loan recoveries to previously charged-off loan amounts during FY2024. In comparison, we experienced net charge-offs totaling $15 million during FY2023, which resulted in an annualized net charge-off rate of 0.05% for FY2023.
Current wording
The overall credit quality of our loan portfolio remained strong as of May 31, 2025. We had no loan charge-offs during FY2025 and FY2024. We recorded $1 million in net loan recoveries to previously charged-off loan amounts during FY2024.
Previous wording
We had one loan totaling $49 million classified as nonperforming as of May 31, 2024. In comparison, we had two loans totaling $89 million classified as nonperforming as of May 31, 2023. The reduction was due to the receipts of$40 million inpayments on nonperforming loans.
Current wording
We had one loan totaling $26 million and $49 million classified as nonperforming as of May 31, 2025 and 2024, respectively. The reduction in the nonperforming loan was due to payments received on this loan during FY2025.
Previous wording
Total debt outstanding increased by $1,719 million, or 6%, to $32,718 million as of May 31, 2024, primarily due to borrowings to fund the increase in loans to our members. We issued an aggregate principal amount of long-term dealer medium-term notes totaling $3,750 million during FY2024, of which $3,150 million was at an average fixed interest rate of 5.05% with an average term of four years and $600 million was at floating interest rates with an average term of two years. We also issued $100 million of 7.125% subordinated deferrable debt due in 2053 during FY2024. Outstanding dealer commercial paper was $505 million as of May 31, 2024.
Current wording
•Unsecured long-term dealer medium-term notes totaling approximately $2,400 million, of which $1,800 million was at a weighted average fixed interest rate of 4.65% with an average term of four years, and $600 million was at floating interest rates with an average term of two years; and
Previous wording
During FY2024, Fitch Ratings (“Fitch”), S&P Global Inc.(“S&P”) and Moody’s Investors Service (“Moody’s”) affirmed CFC’s credit ratings and stable outlook.
Current wording
During FY2025, Moody’s Investors Service (“Moody’s”), Fitch Ratings (“Fitch”) and S&P Global Inc.(“S&P”) affirmed CFC’s credit ratings and stable outlook. On June 2, 2025, at our request, S&P withdrew its “A-2” short-term issue ratings on CFC’s commercial paper program. The “A-” long-term issuer credit rating, the stable outlook and the long-term issue ratings are unchanged as of the date of this Report.
Previous wording
Our available liquidity consists of cash and cash equivalents, investments in debt securities and availability under committed bank revolving line of credit agreements, committed loan facilities under the USDA Guaranteed Underwriter Program and a revolving note purchase agreement with Farmer Mac. As of May 31, 2024, our available liquidity totaled $6,695 million andwas $314 million below our total scheduled debt obligations over the next 12 months of $7,009 million. In addition to our existing available liquidity, we expect to receive $1,552 million from scheduled long-term loan principal payments over the next 12 months.
Current wording
States Department of Agriculture (“USDA”) (the “Guaranteed Underwriter Program”), and a revolving note purchase agreement with Federal Agricultural Mortgage Corporation (“Farmer Mac”). As of May 31, 2025, our available liquidity totaled $7,612 million andwas $1,158 million less than our total scheduled debt obligations over the next 12 months of $8,770 million. In addition to our existing available liquidity, we expect to receive $1,668 million from scheduled long-term loan principal payments over the next 12 months.
Previous wording
We believe we can continue to roll over our member short-term investments of $3,328 million based on our expectation that our members will continue to reinvest their excess cash primarily in short-term investment products offered by CFC. Our members historically have maintained a relatively stable level of short-term investments in CFC. Member short-term investments in CFC have averaged $3,530 million over the last 12 fiscal quarter-end reporting periods. Our available liquidity as of May 31, 2024 was $3,014 million in excess of, or 1.8 times, our total scheduled debt obligations, excluding member short-term investments, over the next 12 months of $3,681 million.
Current wording
We believe we can continue to roll over our member short-term investments of $2,885 million based on our expectation that our members will continue to reinvest their excess cash primarily in short-term investment products offered by CFC. Our members historically have maintained a relatively stable level of short-term investments in CFC. Member short-term investments in CFC have averaged $3,363 million over the last 12 fiscal quarter-end reporting periods. Our available liquidity as of May 31, 2025 was $1,727 million in excess of, or 1.3 times, our total scheduled debt obligations, excluding member short-term investments, over the next 12 months of $5,885 million.
Previous wording
Emerging developments and trends in the electric cooperative sector continue to present opportunities as well as challenges for our electric cooperative members. These trends include (i) increased federal government programs and policies for electric utilities; (ii) increased electricity demand; (iii) grid reliability risk; (iv) increased focus on enhancing electric system resiliency and reliability; (v) evolving cooperative focus on clean energy supply investments; and (vi) expanded investments by many electric cooperatives to deploy broadband services.
Current wording
Emerging developments and trends in the electric cooperative sector continue to present opportunities as well as challenges for our electric cooperative members. These trends include (i) changing federal government programs and policies for electric utilities; (ii) increased electricity demand; (iii) grid reliability risk; and (iv) expanded investments by many electric cooperatives to deploy broadband services.
Previous wording
The federal government has also finalized rules on the EPA greenhouse gas emission requirements for new and existing coal and natural gas power plants. CFC and electric cooperative partners are monitoring the potential impact to cooperatives. It is highly likely that the rule will be litigated similar to the Obama Administration’s Clean Power Plan.
Current wording
The federal government is undergoing a deregulatory push that seeks to reduce the amount of federal review and other requirements for grid investments. For example, the Environmental Protection Agency (“EPA”) is in the process of revising greenhouse gas emission requirements for new and existing coal and natural gas power plants. This may impact coal plant retirement schedules and provide certainty surrounding building new natural gas plants to meet growing electricity demand. The Administration is assessing the Federal Emergency Management Agency (“FEMA”), including how to improve efficiencies and the appropriate role of federal and state governments in the allocation and distribution of disaster relief. Finally, the Administration is in the process of introducing tariffs on imported goods in order to improve the trade deficit and boost domestic manufacturing. Certain utility assets, such as transformers, solar panels and batteries, are highly sensitive to global supply chain changes. While tariffs may increase short-term costs and lead times for key assets, they may also catalyze long-term supply chain resilience and encourage domestic manufacturing of utility assets. CFC and electric cooperative partners are monitoring the potential impact to cooperatives of these evolving changes in federal policy.
Previous wording
According to S&P, electricity demand is forecasted to grow substantially in all U.S. regions through 2040. Demand growth is driven primarily by new data centers and new manufacturing facilities in the coming decade followed by strong electric vehicle growth and beneficial electrification trends.
Current wording
According to S&P Global Inc., electricity demand is forecasted to grow substantially in all U.S. regions through 2040. Demand growth is driven primarily by new data centers and new manufacturing facilities in the coming decade followed by electric vehicle growth and beneficial electrification trends. The rapid expansion of artificial intelligence and cloud computing technologies is the primary driver of new data center construction, further accelerating electricity demand.
Previous wording
The 2023 Long-Term Reliability Assessment by the North American Electric Reliability Corporation (“NERC”) highlights the key risks to grid reliability. The report emphasizes challenges such as extreme weather events, including hurricanes, winter storms, and heatwaves, which can strain grid infrastructure and cause widespread outages. Additionally, the transition to cleaner energy sources presents reliability concerns due to the intermittent nature of renewable generation and its impact on grid stability. Cybersecurity threats also loom large, with increasing sophistication in attacks targeting critical infrastructure.
Current wording
The 2024 Long-Term Reliability Assessment by the North American Electric Reliability Corporation (“NERC”) highlights the key risks to grid reliability. The report emphasizes challenges such as increased electricity demand and retirements of baseload power plants. It also highlights the risk of the transition to renewable energy sources, which presents reliability concerns due to their intermittent nature during a period of increased electricity demand.
Previous wording
We have observed an increase in capital investments by electric cooperatives to proactively strengthen existing electric systems as well as replace systems in the aftermath of damages from weather-related incidents, including hurricanes, winter storms and wildfires. The adverse impact on electric systems from weather-related incidents has resulted in a heightened awareness by electric cooperatives of the need to focus attention on making infrastructure upgrades to improve both the resiliency and reliability of electric systems.
Current wording
Other grid reliability risks include extreme weather events, including hurricanes, winter storms and heat waves, which can strain grid infrastructure and cause widespread outages. We have observed an increase in capital investments by electric cooperatives to proactively strengthen existing electric systems as well as replace systems in the aftermath of damage from weather-related incidents. The adverse impact on electric systems from weather-related incidents has resulted in a heightened awareness by electric cooperatives of the need to focus attention on making infrastructure upgrades to improve both the resiliency and reliability of electric systems. Cybersecurity threats also loom large, with increasing sophistication in attacks targeting critical infrastructure. Electric cooperatives are investing in operational resilience, including workforce training, cybersecurity preparedness and enhanced situational awareness tools.
Previous wording
Many rural electric distribution cooperatives have made or are making infrastructure investments that include building fiber optic lines to improve electric grid system reliability, efficiency and cost savings, as fiber operations offer enhanced communication to monitor electric systems, identify outages and speed restoration. Some of these electric cooperatives are leveraging these fiber assets to offer access to broadband services to the communities they serve, either directly or by partnering with local telecommunication companies and others. We are currently aware of 212 broadband projects by different CFC member cooperatives, and we financed or are financing 125 of these 212 broadband projects. Capital expenditures for the completion of these 212 broadband projects are expected to total approximately $12,834 million. We believe that the capital expenditures for the completion of the broadband projects that we financed or are financing will total approximately $5,197 million. Our aggregate loans outstanding to CFC electric distribution cooperative members relating to broadband projects, which we started tracking in October 2017, increased to approximately $3,103 million as of May 31, 2024, from approximately $2,355 million as of May 31, 2023. The three states with the largest CFC loans outstanding for broadband projects were Arkansas, Missouri and Indiana, and broadband loans outstanding for these states totaled $396 million, $337 million and $334 million, respectively, as of May 31, 2024. Many of these broadband projects are also financially supported by various states and the federal government through grant programs, which reduces the investment risk for our electric cooperative members. We expect our member electric cooperatives to continue in their efforts to expand broadband access to unserved and underserved communities.
Current wording
Many rural electric distribution cooperatives have made or are making infrastructure investments that include building fiber optic lines to improve electric grid system reliability, efficiency and cost savings, as fiber operations offer enhanced communication to monitor electric systems, identify outages and speed restoration. Some of these electric cooperatives are leveraging these fiber assets to offer access to broadband services to the communities they serve, either directly or by partnering with local telecommunication companies and others. We are currently aware of 216 broadband projects by different CFC member cooperatives, and we have financed or are financing 130 of these 216 broadband projects. Capital expenditures for the completion of these 216 broadband projects are expected to total approximately $13,680 million. We believe that the capital expenditures for the completion of the broadband projects that we have financed or are financing will total approximately $5,537 million. Our aggregate loans outstanding to CFC electric distribution cooperative members relating to broadband projects, which we started tracking in October 2017, increased to approximately $3,441 million as of May 31, 2025, from approximately $3,103 million as of May 31, 2024. The three states with the largest CFC loans outstanding for broadband projects were Arkansas, Indiana and Missouri, and broadband loans outstanding for these states totaled $411 million, $373 million and $356 million, respectively, as of May 31, 2025. Many of these broadband projects are also financially supported by various states and the federal government through grant programs, which reduces the investment risk for our electric cooperative members. Although we expect our member electric cooperatives to continue in their efforts to expand broadband access to unserved and underserved communities, their investment in broadband projects has slowed down in the recent year and is expected to increase at a slower rate.
Previous wording
•Decreases in our adjusted net income and adjusted TIER over the next 12 months, primarily attributable to increased operating expenses and a projected decrease in adjusted net interest income.
Current wording
•A decrease in adjusted TIER over the next 12 months, primarily attributable to increases in projected adjusted interest expense and operating expenses.
Previous wording
•Our adjusted debt-to-equity ratio will remain above our target of 6-to-1, primarily due to the projected increase in total debt outstanding to fund anticipated growth in our loan portfolio.
Current wording
•An increase in our adjusted debt-to-equity, primarily due to the projected increase in total debt outstanding to fund anticipated growth in our loan portfolio.
Previous wording
As stated above, we exclude the impact of unrealized derivative forward fair value gains and losses from our non-GAAP financial measures. As the majority of our swaps are long-term with an average remaining life of approximately 14 years as of May 31, 2024, the unrealized periodic derivative forward value gains and losses are largely based on future expected changes in longer-term interest rates, which we are unable to accurately predict for each reporting period over the next 12 months. Due to the difficulty in predicting these unrealized amounts, we are unable to provide without unreasonable effort a reconciliation of our forward-looking adjusted financial measures to the most directly comparable GAAP financial measures.
Current wording
As stated above, we exclude the impact of unrealized derivative forward fair value gains and losses from our non-GAAP financial measures. As the majority of our swaps are long-term with an average remaining life of approximately 14 years as of May 31, 2025, the unrealized periodic derivative forward value gains (losses) are largely based on future expected changes in longer-term interest rates, which we are unable to accurately predict for each reporting period over the next 12 months. Due to the difficulty in predicting these unrealized amounts, we are unable to provide without unreasonable effort a reconciliation of our forward-looking adjusted financial measures to the most directly comparable GAAP financial measures.
Previous wording
(4)Short-term borrowings reported on our consolidated balance sheets consist of borrowings with an original contractual maturity of one year or less. However, short-term borrowings presented in Table 3 consist of commercial paper, select notes, daily liquidity fund notes and secured borrowings under repurchase agreements. Short-term borrowings presented on our consolidated balance sheets related to medium-term notes, Farmer Mac notes payable and other notes payable are reported in the respective category for presentation purposes in Table 3. The period-end amounts reported as short-term borrowings on our consolidated balances sheets, which are excluded from the calculation of average short-term borrowings presented in Table 3, totaled $1,021 million, $367 million and $417 million as of May 31, 2024, 2023 and 2022, respectively.
Current wording
(4)Short-term borrowings reported on our consolidated balance sheets consist of borrowings with an original contractual maturity of one year or less. However, short-term borrowings presented in Table 5 consist of commercial paper, select notes and daily liquidity fund notes. Short-term borrowings presented on our consolidated balance sheets related to medium-term notes, Farmer Mac notes payable and other notes payable are reported in the respective category for presentation purposes in Table 5. The period-end amounts reported as short-term borrowings on our consolidated balances sheets, which are excluded from the calculation of average short-term borrowings presented in Table 5, totaled $451 million, $1,021 million and $367 million as of May 31, 2025, 2024 and 2023, respectively.
Previous wording
(5)Net interest spread represents the difference between the average yield on total average interest-earning assets and the average cost of total average interest-bearing liabilities. Adjusted net interest spread represents the difference between the average yield on total average interest-earning assets and the adjusted average cost of total average interest-bearing liabilities.
Current wording
(6)Net interest spread represents the difference between the average yield on total average interest-earning assets and the average cost of total average interest-bearing liabilities. Adjusted net interest spread represents the difference between the average yield on total average interest-earning assets and the adjusted average cost of total average interest-bearing liabilities.
Previous wording
(6)Includes other liabilities and equity.
Current wording
(7)Includes other liabilities and equity.
Previous wording
(7)Net interest yield is calculated based on net interest income for the period divided by total average interest-earning assets for the period.
Current wording
(8)Net interest yield is calculated based on net interest income for the period divided by total average interest-earning assets for the period.
Previous wording
(8)Represents the impact of net periodic contractual interest amounts on our interest rate swaps during the period. This amount is added to interest expense to derive non-GAAP adjusted interest expense. The average (benefit)/cost associated with derivatives is calculated based on net periodic swap settlement interest amount during the period divided by the average outstanding notional amount of derivatives during the period. The average outstanding notional amount of interest rate swaps was $7,597 million, $7,668 million and $8,406 million for FY2024, FY2023 and FY2022, respectively.
Current wording
(9)Represents the impact of net periodic contractual interest amounts on our interest rate swaps during the period. This amount is added to interest expense to derive non-GAAP adjusted interest expense. The average (benefit)/cost associated with derivatives is calculated based on net periodic swap settlement interest amount during the period divided by the average outstanding notional amount of derivatives during the period. The average outstanding notional amount of interest rate swaps was $7,274 million, $7,597 million and $7,668 million for FY2025, FY2024 and FY2023, respectively.
Previous wording
(9)Adjusted interest expense consists of interest expense plus net periodic derivative cash settlements interest income (expense) during the period. Net periodic derivative cash settlements interest income (expense) is reported on our consolidated statements of operations as a component of derivative gains (losses). Adjusted average cost is calculated based on the adjusted interest expense for the period divided by total average interest-bearing liabilities during the period.
Current wording
(10)Adjusted interest expense consists of interest expense plus net periodic derivative cash settlements interest income (expense) during the period. Net periodic derivative cash settlements interest income (expense) is reported in our consolidated statements of operations as a component of derivative gains (losses). Adjusted average cost is calculated based on the adjusted interest expense for the period divided by total average interest-bearing liabilities during the period.
Previous wording
(10)Adjusted net interest yield is calculated based on adjusted net interest income for the period divided by total average interest-earning assets for the period.
Current wording
(11)Adjusted net interest yield is calculated based on adjusted net interest income for the period divided by total average interest-earning assets for the period.
Previous wording
(3)See “Non-GAAP Financial Measures and Reconciliations” for additional information on our adjusted non-GAAP financial measures.
Current wording
(3)See “Non-GAAP Financial Measures and Reconciliations” in this Report for additional information on our adjusted non-GAAP financial measures.
Previous wording
Adjusted net interest income of $381 million for FY2024 increased$32 million, or 9%, from FY2023, driven by the combined impact of an increase in average interest-earning assets of $2,138 million, or 7%, and an increase in the adjusted net interest yield of 3 basis points, or 3%, to 1.11%.
Current wording
Reported net interest income of $261 million for FY2025 increased by $7 million, or 3%, from FY2024, driven by an increase in average interest-earning assets of $1,772 million, or 5%, partially offset by a decrease in the net interest yield of 2 basis points, or 3%, to 0.72%.
Previous wording
•Average Interest-Earning Assets: The increase in average interest-earning assets of 7% during FY2024 was primarily attributable to growth in average total loans of $2,222 million, or 7%, from FY2023, driven primarily by an increase in average long-term fixed-rate loans of $1,686 million and an increase in average line of credit loans of $503 million, as members continued to advance loans to fund capital expenditures and for working capital purposes.
Current wording
•Average Interest-Earning Assets: The increase in average interest-earning assets of 5% during FY2025 was primarily attributable to growth in average total loans of $2,082 million, or 6%, partially offset by a decrease of $310 million in our average total investments, which include cash, time deposits and investment securities. The average loans increase was driven primarily by an increase in average long-term fixed-rate loans of $1,407 million and an increase in average line of credit loans of $624 million, as members continued to advance loans to fund capital expenditures and for working capital purposes. In addition, the increase in line of credit loans during FY2025 was also attributable to borrowings under emergency line of credit loans by our members primarily for Hurricane Helene recovery costs.
Previous wording
•Net Interest Yield: The decrease in the net interest yield of 24 basis points, or 24%, was primarily attributable to thecombined impact ofan increase in our average cost of borrowings of 73 basis points to 4.17%, which was partially offset by an increase in the average yield on interest-earning assets of 45 basis points to 4.64% and an increase in the benefit from non-interest-bearing funding of 4 basis point to 0.27%. Our average yield on interest-earning assets and average cost of borrowings rose mainly due to the sustained increase in the federal funds rate, which increased 25 basis points since May 31, 2023. The increase in average yields on line of credit and variable-rate loans was the primary driver for the increase in the average yield on interest-earning assets. Meanwhile, our average cost of borrowings increased due to higher interest rates on our short-term and variable-rate borrowings.
Current wording
•Net Interest Yield: The decrease in the net interest yield of 2 basis points, or 3%, was primarily attributable to thecombined impact ofan increase in our average cost of borrowings of 11 basis points to 4.28%, which was partially offset by an increase in the average yield on interest-earning assets of 7 basis points to 4.71% and an increase in the benefit from non-interest-bearing funding of 2 basis point to 0.29%. The increase in average yields on long-term fixed-rate loans was the primary driver for the increase in the average yield on interest-earning assets, while the interest rates for variable-rate and line of credit loans decreased due to the federal funds rate cuts during FY2025. Meanwhile, our average cost of borrowings increased due to the long-term debt issued at higher interest rates after May 31, 2024.
Previous wording
•Average Interest-Earning Assets: The increase in average interest-earning assets of 7% during FY2024 was driven by the growth in average total loans of $2,222 million, or 7%, from FY2023, primarily attributable to an increase in average long-term fixed-rate and line of credit loans as discussed above.
Current wording
•Average Interest-Earning Assets: The increase in average interest-earning assets was driven by the growth in average total loans, as discussed above.
Previous wording
•Adjusted Net Interest Yield: The increase in the adjusted net interest yield of 3 basis points, or 3%, reflected the combined impact of an increase in the average yield on interest-earning assets of 45 basis points to 4.64% and an increase in the benefit from non-interest bearing funding of 2 basis points to 0.24%, partially offset by an increase in our adjusted average cost of borrowings of 44 basis points to 3.77%. The increase in both average yield on interest-earning assets and adjusted average cost of borrowings was attributable to the continued high interest-rate environment during FY2024, as discussed above.
Current wording
•Adjusted Net Interest Yield: The decrease in the adjusted net interest yield of 11 basis points, or 10%, was attributable to an increase in our adjusted average cost of borrowings of 22 basis points to 3.99%, which was partially offset by the combined impact of an increase in the average yield on interest-earning assets of 7 basis points to 4.71% and an increase in the benefit from non-interest-bearing funding of 4 basis points to 0.28%. The increase in adjusted average cost of borrowings was attributable to the long-term debt issued at higher interest rates after May 31, 2024, and a lower average yield earned on our interest rate swaps as discussed below under the “Derivatives Cash Settlements” section. We discussed above the primary drivers for the increases in the average yield on interest-earning assets.
Previous wording
We include the net periodic derivative cash settlements interest income (expense) amounts on our interest rate swaps in the calculation of our adjusted average cost of borrowings, which, as a result, also impacts the calculation of adjusted net interest income and adjusted net interest yield. Because our derivative portfolio consists of a higher proportion of pay-fixed swaps than receive-fixed swaps, the net periodic derivative cash settlements interest income (expense) amounts generally change based on changes in the floating interest amount received each period. When floating rates increase during the period, the floating interest amounts received on our pay-fixed swaps increase and, conversely, when floating rates decrease, the floating interest amounts received on our pay-fixed swaps decrease. We recorded net periodic derivative cash settlements interest income of $127 million and $34 million for FY2024 and FY2023, respectively, compared with derivative cash settlements expense of $101 million for FY2022. The increase inderivative cash settlements interest income between FY2024 and FY2023 was due to thehigher floating rates in FY2024, compared with FY2023, respectively.
Current wording
We include the net periodic derivative cash settlements interest income (expense) amounts on our interest rate swaps in the calculation of our adjusted average cost of borrowings, which, as a result, also impacts the calculation of adjusted net interest income and adjusted net interest yield. Because our derivative portfolio consists of a higher proportion of pay-fixed swaps than receive-fixed swaps, the net periodic derivative cash settlements interest income (expense) amounts generally change based on changes in the floating interest amount received each period. When floating rates increase during the period, the floating interest amounts received on our pay-fixed swaps increase and, conversely, when floating rates decrease, the floating interest amounts received on our pay-fixed swaps decrease. We recorded net periodic derivative cash settlements interest income of $99 million, $127 million and $34 million for FY2025, FY2024 and FY2023, respectively.
Previous wording
Our provision for credit losses each period is driven by changes in our measurement of lifetime expected credit losses for our loan portfolio recorded in the allowance for credit losses. Our allowance for credit losses and allowance coverage ratio was $49 million and 0.14%, respectively, as of May 31, 2024. In comparison, our allowance for credit losses and allowance coverage ratio was $53 million and 0.16%, respectively, as of May 31, 2023.
Current wording
Our provision (benefit) for credit losses for each period is driven by changes in our measurement of lifetime expected credit losses for our loan portfolio recorded in the allowance for credit losses. Our allowance for credit losses and allowance coverage ratio was $41 million and 0.11%, respectively, as of May 31, 2025. In comparison, our allowance for credit losses and allowance coverage ratio was $49 million and 0.14%, respectively, as of May 31, 2024.
Showing the first 40 of 151 pairs. Open the source sections for the rest.
Rearranged current paragraphs (5)
Current report — wording carried from elsewhere
Therefore, management uses non-GAAP financial measures, which we refer to as “adjusted” measures, to evaluate financial performance. Our key non-GAAP financial measures are adjusted net income, adjusted net interest income, adjusted interest expense, adjusted net interest yield, adjusted TIER, adjusted debt-to-equity ratio and members’ equity. The most comparable
Current report — wording carried from elsewhere
Our available liquidity consists of cash and cash equivalents, investments in debt securities, availability under committed bank revolving line of credit agreements, committed loan facilities under the Guaranteed Underwriter Program of the United
Current report — wording carried from elsewhere
Additionally, treasury locks may be used to manage the interest rate risk associated with future debt issuance or repricing and are typically designated as cash flow hedges. We did not have any derivatives designated as accounting hedges as of May 31, 2025 and 2024. See “Note 10—Derivative Instruments and Hedging Activities” in this Report for detailed information on our cash flow hedge activities during FY2025, FY2024 and FY2023.
Current report — wording carried from elsewhere
(1)Represents the unpaid principal balance, net of discounts, charge-offs and recoveries, of loans as of the end of each period.
Current report — wording carried from elsewhere
2024, respectively, 50 were electric power supply borrowers as of both May 31, 2025 and 2024. Electric power supply borrowers generally require significantly more capital than electric distribution and telecommunications borrowers.
Rearranged previous paragraphs (4)
Previous report — wording carried elsewhere
We recorded a net income attributable to noncontrolling interests of $1 million and $3 million for FY2024 and FY2022, respectively. Our net income attributable to noncontrolling interests was less than $1 million for FY2023.
Previous report — wording carried elsewhere
(1) Represents the unpaid principal balance, net of discounts, charge-offs and recoveries, of loans as of the end of each period.
Previous report — wording carried elsewhere
We provide additional information on our investment securities portfolio in “Note 3—Investment Securities” of this Report.
Previous report — wording carried elsewhere
if we substitute cash or permitted investments of equal value.