NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/

Reported Results

Net Income and TIER

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.”

Table 1: Net Income and TIER

(1)Calculated based on net income (loss) plus interest expense for the period divided by interest expense for the period.

Table 2 below presents a reconciliation of net income between Q3 FY2026 and Q3 FY2025.

Table 2: Reconciliation of Net Income—Quarter

Q3 FY2026 versus Q3 FY2025—Key Highlights

•We experienced a shift from gains to losses on our derivatives portfolio of $73 million. We recorded derivative losses of $32 million for Q3 FY2026, driven by declines in interest rates across the entire swap curve during Q3 FY2026. In comparison, we recorded derivative gains of $40 million for Q3 FY2025, attributable to increases in the longer-term swap interest rates during Q3 FY2025.

•Net interest income increased $13 million from Q3 FY2025, driven by an increase in the net interest yield of 10 basis points, or 14%, to 0.84% and an increase in average interest-earning assets of$1,831 million, or 5%.

•Operating and other expenses increased by $5 million from Q3 FY2025, driven by higher expenses for salaries and employee benefits and higher other non-interest expenses mainly from losses on extinguishment of debt.

•We recorded a benefit for credit losses of $7 million and $6 million for Q3 FY2026 and Q3 FY2025, respectively, primarily driven bydecreases in theasset-specific allowance for a nonperforming and nonaccrual CFC power supply loan due to higher actual and expected payments on this loan during both periods.

•We recorded a shift from gains to losses on our investment securities totaling$1 million, primarily driven by period-to-period market fluctuations in fair value, including both realized and unrealized gains (loss), and lower debt security balance due to maturities.

•The decrease in TIER for Q3 FY2026 compared with Q3 FY2025 was driven by the lower net income and higher interest expense. The decline in net income was primarily attributable to our derivative portfolio forward value change as discussed above.

Table 3 below presents a reconciliation of net income between YTD FY2026 and YTD FY2025.

Table 3: Reconciliation of Net Income—YTD

YTD FY2026 versus YTD FY2025—Key Highlights

•Losses on our derivatives portfolio increased $34 million compared to YTD FY2025. We recorded derivative losses of $83 million for YTD FY2026, driven by declines in interest rates across the entire swap curve. In comparison, we recorded derivative losses of $49 million for YTD FY2025, driven by declines in interest rates across the swap curve, with the exception of the 30-year swap rate, which increased slightly during YTD FY2025.

•Net interest income increased $29 million from YTD FY2025, driven by an increase in the net interest yield of 6 basis points, or 8%, to 0.78% and an increase in average interest-earning assets of $2,055 million, or 6%.

•Operating and other expe nses increased by $11 million from YTD FY2025, driven by higher operating expense for salaries and employee benefits and other general and administrative, as well as higher other non-interest expenses, primarily due to losses on extinguishment of debt.

•Gains on our investment securities decreased $7 million from YTD FY2025, primarily driven by period-to-period market fluctuations in fair value, including both realized and unrealized gains (loss), and lower debt security balance due to maturities.

•We recorded a benefit for credit losses of $5 million and $4 million for YTD FY2026 and YTD FY2025, respectively, primarily driven by decreases in theasset-specific allowance for a nonperforming and nonaccrual CFC power supply loan, partially offset by increases in the collective allowance due to growth in our loan portfolio in both periods.

•The decrease in TIER for YTD FY2026 compared with YTD FY2025 was driven by the lower net income, primarily attributable to our derivative portfolio forward value change as discussed above, and the increase in interest expense during YTD FY2026.

Debt-to-Equity Ratio

The debt-to-equity ratio was 11.74 and 11.20 as of February 28, 2026 and May 31, 2025, respectively. The increase in the debt-to-equity ratio during YTD FY2026 was due to the combined impact of an increase in debt to fund loan growth and a decrease in total equity. The decrease in total equity was primarily driven by the CFC Board of Directors’ authorized patronage capital retirement of $53 million in July 2025, partially offset by our reported net income of $47 million for YTD FY2026.

Non-GAAP Adjusted Results

Adjusted Net Income and Adjusted TIER

Table 4 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.”

Table 4: Adjusted Net Income and Adjusted TIER

Table 5 below presents a reconciliation of adjusted net income between Q3 FY2026 and Q3 FY2025.

Table 5: Reconciliation of Adjusted Net Income—Quarter

Q3 FY2026 versus Q3 FY2025—Key Highlights

•Adjusted net interest income increased by $5 million from Q3 FY2025, driven primarily by an increase in average interest-earning assets of $1,831 million, or 5%.

•We discuss the variances in the other components above under the section “Reported Results—Net Income and TIER— Q3 FY2026 versus Q3 FY2025—Key Highlights.”

•Adjusted TIER for Q3 FY2026 was unchanged from Q3 FY2025, as the increase in adjusted net income was offset by the increase in adjusted interest expense.

Table 6 below presents a reconciliation of adjusted net income between YTD FY2026 and YTD FY2025.

Table 6: Reconciliation of Adjusted Net Income—YTD

YTD FY2026 versus YTD FY2025—Key Highlights

•Adjusted net interest income increased slightly from YTD FY2025, driven by an increase in average interest-earning assets of $2,055 million, or 6%, largely offset by a decrease in the adjusted net interest yield of 6 basis points, or 6%, to 0.96%,

•We discuss the variances in the other components above under the section “Reported Results—Net Income and TIER— YTD FY2026 versus YTD FY2025—Key Highlights.”

•The decrease in adjusted TIER for YTD FY2026 compared with YTD FY2025 was driven by an increase in adjusted interest expense and a decrease in adjusted net income during YTD FY2026.

Adjusted Debt-to-Equity Ratio

Our financial goals focus on maintaining an adjusted debt-to-equity ratio at approximately 8.5-to-1 or below. The adjusted debt-to-equity ratio was 7.76 and 7.39 as of February 28, 2026 and May 31, 2025, respectively. The increase in the adjusted debt-to-equity ratio during YTD FY2026 was primarily driven by an increase in adjusted total debt outstanding, resulting from additional borrowings to fund growth in our loan portfolio, partially offset by a slight increase in adjusted total equity. The increase in adjusted total equity was primarily attributable to adjusted net income of $181 million for YTD FY2026, partially offset by the net decrease in subordinated debt and the CFC Board of Directors’ authorized patronage capital retirement of $53 million in July 2025.

We provide a more detailed discussion of the 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.

Lending and Credit Quality

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.

Loans to members totaled $38,750 million as of February 28, 2026, an increase of $1,670 million, or 5%, from May 31, 2025, reflecting net increases in long-term and line of credit loans of $1,076 million and $594 million, respectively. Our loan portfolio composition remained largely unchanged from May 31, 2025 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 February 28, 2026.

The overall credit quality of our loan portfolio remained strong as of February 28, 2026. We recorded a charge-off of $0.3 million related to a CFC electric power supply loan during Q3 FY2026 and YTD FY2026. We had no charge-offs during YTD FY2025. We had one loan totaling $13 million and$26 million classified as nonperforming and nonaccrual as of February 28, 2026 and May 31, 2025, respectively. The decrease in this outstanding loan balance reflected $13 million payments received during YTD FY2026 and an immaterial charge-off during Q3 FY2026, as discussed above. Subsequent to the quarter ended February 28, 2026, we received$5 million payments on this loan which reduced its outstanding balance to$8 million.

Our allowance for credit losses and allowance coverage ratio were $36 million and 0.09%, respectively, as of February 28, 2026, compared with $41 million and 0.11%, respectively, as of May 31, 2025. The $5 million decrease in the allowance for credit losses reflected a $9 million reduction in the asset-specific allowance attributable to higher-than-expected payments received on a nonperforming and nonaccrual CFC power supply loan, partially offset by a$4 million increasein the collective allowance, primarily due to growth in our loan portfolio.

Financing and Liquidity

Total debt outstanding increased $1,578 million, or 5%, to $36,347 million as of February 28, 2026, compared with May 31, 2025, primarily due to borrowings to fund the increase in loans to our members. During YTD FY2026, we issued:

•Unsecured long-term dealer medium-term notes to institutional investors totaling $3,975 million, of which $2,350 million was at a weighted average fixed interest rate of 4.09% and an average term of three years and $1,625 million was at floating interest rates with an average term of 16 months;

•Unsecured subordinated notes of $150 million at a fixed interest rate of 5.75%, due 2056 and noncallable for five years, representing the first tranche of a $600 million private placement of subordinated notes priced in November 2025; the remaining $450 million is scheduled to fund in April 2026; and

•Secured long-term notes under the Farmer Mac revolving note purchase agreement of $250 million.

During YTD FY2026, we redeemed all $300 million in principal amount of our subordinated deferrable debt due 2043 (the “2043 Notes”) at par plus accrued interest and recognized $2 million and $3 million of losses on early extinguishment of debt related to unamortized debt issuance costs in our consolidated statements of operations for Q3 FY2026 and YTD FY2026, respectively. On March 20, 2026, notice was provided to investors that we will redeem all $350 million in principal amount of our 5.25% fixed-to-floating rate subordinated deferrable debt due 2046 (the “2046 Notes”) on April 20, 2026. The 2046 Notes will be redeemed at par plus accrued interest. As a result, we expect to recognize an immaterial amount of losses on early extinguishment of debt related to unamortized debt issuance costs of the 2046 Notes in our consolidated statements of operations.

Subsequent to the quarter ended February 28, 2026, we redeemed all$600 million of our 4.45% fixed-rate dealer medium-term notes due March 2026 at par plus accrued interest.

In November 2025, we amended our three-year and four-year committed bank revolving line of credit agreements to extend the maturity date of each facility by one year and to increase the total commitments by $200 million, resulting in a total commitment amount under the two facilities of$3,500 million.

In January 2026, we closed on a $450 million Series W committed loan facility with the U.S.Treasury Department’s Federal Financing Bank (“FFB”) under the USDA Guaranteed Underwriter Program (“Guaranteed Underwriter Program”). As a result of this transaction, total borrowing capacity available to us under the Guaranteed Underwriter Program increased to $1,800 million.

During YTD FY2026, Fitch Ratings (“Fitch”), S&P Global Inc. (“S&P”) and Moody’s Investors Service (“Moody’s”) affirmed CFC’s credit ratings and stable outlook, and at our request, S&P withdrew its “A-2” short-term issuer rating on CFC in June 2025.

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, and a revolving note purchase agreement with Farmer Mac. As of February 28, 2026, our available liquidity totaled $8,148 million and was $2,022 million less than our total scheduled debt obligations over the next 12 months of $10,170 million, of which $2,908 million, or 29%, represented member short-term investments. In addition to our existing available liquidity, we expect to receive $2,060 million from long-term loan principal payments over the next 12 months.

We believe we can continue to roll over our member short-term investments 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 $3,227 million over the last 12 fiscal quarter-end reporting periods. Our available liquidity as of February 28, 2026 was $886 million in excess of, or 1.1 times over, our total $7,262 million scheduled debt obligations over the next 12 months, excluding member short-term investments.

Outlook

Macroeconomic Outlook

Geopolitical tensions, including the ongoing conflict involving Iran, have contributed to uncertainty in the broader macroeconomic environment, including volatility in energy markets and continued concerns regarding inflation and interest rates. Although CFC has not identified a material direct impact of these developments on its financial condition, results of operations or liquidity as of the date of this report, a prolonged period of geopolitical instability could contribute to higher borrowing costs, increased operating and capital costs for CFC’s members, and broader market volatility. CFC continues to monitor these developments and the potential effects on the interest rate environment, capital markets and member operating conditions.

Following its meeting held in March 2026, the Federal Open Market Committee (“FOMC”) of the Federal Reserve announced that it would hold the federal funds rate in the range of 3.50%–3.75%. The FOMC noted that uncertainty about the economic outlook remains elevated, while reaffirming its commitment to achieving inflation at 2 percent over the longer run. The Committee stated that it continues to monitor developments and is prepared to adjust monetary policy as new risks emerge. The Committee’s future assessments will take into account labor market conditions, inflation pressures, and financial and international developments.

The Federal Reserve’s March 2026 median projection for the annual growth rate of real gross domestic product (“GDP”) in 2026 is 2.4%, up from 2.3% in its December 2025 projection. The median projection for Personal Consumption Expenditures (“PCE”) inflation in 2026 increased to 2.7% from 2.4% previously. The U.S. unemployment rate in 2026 is projected to average 4.4%, unchanged from its December 2025 projection.

Federal funds futures markets anticipate no further rate cuts in calendar year 2026 and one rate cut of 25 basis points in calendar year 2027. If this rate cut occurs, the federal funds target rate would decline to a range of 3.25%–3.50% by the end of 2027. Overall the market expects the yield curve to steepen, as short-term interest rates are forecasted to decline, while longer-term rates are expected to remain near current levels.

Projected Reported Results

Based on our current forecast assumptions, including the yield curve forecast noted above, we project increases in our reported net interest income and net interest yield over the next 12 months compared with the 12-month period ended February 28, 2026. See “Market Risk—Interest Rate Risk Assessment” in this Report for additional information.

Projected Non-GAAP Adjusted Results

Based on our current forecast assumptions, including the yield curve forecast noted above, we project:

•Increases in our adjusted net interest income and adjusted net interest yield over the next 12 months relative to the 12-month period ended February 28, 2026, primarily driven by an increase in interest-earning assets due to projected loan growth and by projected lower adjusted average cost of funding. The projected decline in adjusted average cost of funding reflects changes in funding mix and lower variable rate debt cost, partially offset by lower expected interest rate swaps derivative cash settlements and the refinancing of maturing lower-cost long-term debt at forecasted higher interest rates. See “Market Risk—Interest Rate Risk Assessment” in this Report for additional information.

•A slight increase in our adjusted net income over the next 12 months, primarily driven by higher adjusted net interest income, partially offset by higher projected operating expenses.

•A slight decrease in adjusted TIER over the next 12 months, primarily attributable to increases in projected non-interest expenses, mainly operating expenses.

•A decrease in our adjusted debt-to-equity ratio, primarily due to a projected increase in total adjusted equity driven by an anticipated private placement subordinated debt issuance in April 2026, which outweighs the increase in debt outstanding to fund anticipated growth in our loan portfolio.

As stated above, we exclude the impact of unrealized derivative forward fair value gains (losses) from our non-GAAP financial measures. As the majority of our swaps are long-term with an average remaining life of approximately 15 years as of February 28, 2026, 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.

Projected Loan Portfolio

Based on our current forecast assumptions, we anticipate net loan growth of$1,632 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.