UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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FORM 10-Q

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☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~November~~February 3028, ~~2025~~2026


¨			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-7102

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NATIONAL RURAL UTILITIES

COOPERATIVE FINANCE CORPORATION

(Exact name of registrant as specified in its charter)

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District of Columbia						52-0891669
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


20701 Cooperative Way,	Dulles,	Virginia,	20166
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (703) 467-1800

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Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
7.35% Collateral Trust Bonds, due 2026	NRUC 26	New York Stock Exchange
5.50% Subordinated Notes, due 2064	NRUC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ¨ Accelerated filer ¨ Non-accelerated filer x Smaller reporting company ¨ Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

The Registrant is a tax-exempt cooperative and therefore does not issue capital stock.

TABLE OF CONTENTS

		Page
PART I—FINANCIAL INFORMATION		1
Item 1.	Financial Statements	4849
	Consolidated Statements of Operations (Unaudited)	4950
	Consolidated Statements of Comprehensive Income (Loss) (Unaudited)	5051
	Consolidated Balance Sheets (Unaudited)	5152
	Consolidated Statements of Changes in Equity (Unaudited)	5253
	Consolidated Statements of Cash Flows (Unaudited)	5354
	Notes to Consolidated Financial Statements (Unaudited)	5556
	Note 1 — Summary of Significant Accounting Policies	5556
	Note 2 — Interest Income and Interest Expense	5759
	Note 3 — Investment Securities	5859
	Note 4 — Loans	5960
	Note 5 — Allowance for Credit Losses	7071
	Note 6 — Short-Term Borrowings	7273
	Note 7 — Long-Term Debt	7475
	Note 8 — Subordinated Deferrable Debt	7677
	Note 9 — Derivative Instruments and Hedging Activities	7677
	Note 10 — Equity	8081
	Note 11 — Guarantees	8182
	Note 12 — Fair Value Measurement	8384
	Note 13 — Variable Interest Entities	8687
	Note 14 — Business Segments	8788
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)	1
	Forward-Looking Statements	1
	Introduction	1
	Non-GAAP Financial Measures	2
	Executive Summary	3
	Consolidated Results of Operations	10
	Consolidated Balance Sheet Analysis	1920
	Enterprise Risk Management	2425
	Credit Risk	2526
	Liquidity Risk	3132
	Market Risk	4243
	Critical Accounting Estimates	4445
	Recent Accounting Changes and Other Developments	4445
	Non-GAAP Financial Measures and Reconciliations	4446
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	9495
Item 4.	Controls and Procedures	9495
PART II—OTHER INFORMATION		9495
Item 1.	Legal Proceedings	9495
Item 1A.	Risk Factors	9495
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	9495
Item 3.	Defaults Upon Senior Securities	9495
Item 4.	Mine Safety Disclosures	9495
Item 5.	Other Information	9596
Item 6.	Exhibits	9596
SIGNATURES		9697

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CROSS REFERENCE INDEX OF MD&A TABLES

Table	Description	Page
1	Net Income ~~(Loss)~~ and TIER	3
2	Reconciliation of Net Income—Quarter	4
3	Reconciliation of Net Income ~~(Loss)~~—YTD	5
4	Adjusted Net Income and Adjusted TIER	6
5	Reconciliation of Adjusted Net Income—Quarter	6
6	Reconciliation of Adjusted Net Income—YTD	7
7	Average Balances, Interest Income/Interest Expense and Average Yield/Cost	11
8	Rate/Volume Analysis of Changes in Interest Income/Interest Expense	14
9	Non-Interest Income (Loss)	17
10	Derivative Gains (Losses)	18
11	Comparative Swap Curves	1819
12	Non-Interest Expense	19
13	Debt—Total Debt Outstanding	2122
14	Debt—Member Investments	2223
15	Equity	2324
16	Loans—Loan Portfolio Security Profile	2627
17	Loans—Loan Exposure to 20 Largest Borrowers	2728
18	Allowance for Credit Losses by Borrower Member Class and Evaluation Methodology	2930
19	Available Liquidity	3233
20	Liquidity Coverage Ratios	3334
21	Committed Bank Revolving Line of Credit Agreements	3536
22	Short-Term Borrowings—Funding Sources	3637
23	Long-Term and Subordinated Debt—Issuances and Repayments	3738
24	Long-Term and Subordinated Debt—Scheduled Principal Maturities and Amortization	3839
25	Collateral Pledged	3940
26	Loans—Unencumbered Loans	3940
27	Projected Long-Term Sources and Uses of Funds	4041
28	Credit Ratings	4142
29	Interest Rate Sensitivity Analysis	4344
30	Adjusted Net Income	4546
31	TIER and Adjusted TIER	4546
32	Adjusted Total Debt Outstanding and Equity	4647
33	Debt-to-Equity Ratio and Adjusted Debt-to-Equity Ratio	4748
34	Members’ Equity	4748

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PART I—FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)


FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the quarterly period ended ~~November~~February 3028, ~~2025~~2026 (“this Report”) contains certain statements that are considered “forward-looking statements” as defined in and within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not represent historical facts or statements of current conditions. Instead, forward-looking statements represent management’s current beliefs and expectations, based on certain assumptions and estimates made by, and information available to, management at the time the statements are made, regarding our future plans, strategies, operations, financial results or other events and developments, many of which, by their nature, are inherently uncertain and outside our control. Forward-looking statements are generally identified by the use of words such as “intend,” “plan,” “may,” “should,” “will,” “project,” “estimate,” “anticipate,” “target,” “believe,” “expect,” “forecast,” “continue,” “potential,” “opportunity,” “outlook” and similar expressions, whether in the negative or affirmative. All statements about future expectations or projections, including statements about loan volume, the adequacy of the allowance for credit losses, operating income and expenses, leverage and debt-to-equity ratios, borrower financial performance, impaired loans, and sources and uses of liquidity, are forward-looking statements. Although we believe the expectations reflected in our forward-looking statements are based on reasonable assumptions, actual results and performance may differ materially from our forward-looking statements. Therefore, you should not place undue reliance on any forward-looking statement and should consider the risks and uncertainties that could cause our current expectations to vary from our forward-looking statements, including, but not limited to, legislative changes that could affect our tax status and other matters, demand for our loan products, lending competition, changes in the quality or composition of our loan portfolio, changes in our ability to access external financing, fluctuations in interest rates and market volatility, changes in the credit ratings on our debt, valuation of collateral supporting impaired loans, charges associated with our operation or disposition of foreclosed assets, nonperformance of counterparties to our derivative agreements, economic conditions and regulatory or technological changes within the rural electric industry, the costs and impact of legal or governmental proceedings involving us or our members, general economic conditions, governmental monetary and fiscal policies, the occurrence and effect of natural disasters, including severe weather events or public health emergencies, and the factors listed and described under “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended May 31, 2025 (“2025 Form 10-K”), as well as any risk factors identified under “Part II—Item 1A. Risk Factors” in this Report. Forward-looking statements speak only as of the date they are made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect the impact of events, circumstances or changes in expectations that arise after the date any forward-looking statement is made.


INTRODUCTION

Our financial statements include the consolidated accounts of National Rural Utilities Cooperative Finance Corporation (“CFC”) and National Cooperative Services Corporation (“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, which are discussed below.

CFC is a member-owned, nonprofit finance cooperative association with a principal purpose of providing financing to its members to supplement the loan programs of the Rural Utilities Service (“RUS”) of the United States Department of Agriculture (“USDA”). CFC extends loans to its rural electric members for construction, acquisitions, system and facility repairs and maintenance, enhancements and ongoing operations to support the goal of electric distribution and generation and transmission (“power supply”) systems of providing reliable, affordable power to the customers they serve. CFC also provides its members and associates with credit enhancements in the form of letters of credit and guarantees of debt obligations. As a Section 501(c)(4) tax-exempt, member-owned cooperative, CFC’s objective is not to maximize profit, but rather to offer members cost-based financial products and services. The interest rates on lending products offered to our member borrowers reflect our funding costs plus a spread to cover operating expenses and estimated credit losses, while also generating sufficient earnings to cover interest owed on our debt obligations and achieve certain financial target goals.

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CFC’s primary funding sources consist of a combination of public and private issuances of debt securities, member investments and retained equity. As a tax-exempt cooperative, CFC cannot issue equity securities as a source of funding.

NCSC is a member-owned taxable cooperative that is permitted to provide financing to two types of members: NCSC electric and NCSC telecommunication. NCSC electric members and associates consist of members of CFC, entities eligible to be members of CFC, government or quasi-government entities that own electric utility systems that meet the Rural Electrification Act definition of “rural,” and for-profit and nonprofit entities that are owned, operated or controlled by, or provide significant benefits to certain members of CFC. NCSC telecommunication (“telecom”) members and associates consist of rural telecommunications members and their affiliates.

Cooperative Securities LLC (“Cooperative Securities”) is a limited liability company and a wholly owned subsidiary of NCSC. Cooperative Securities is a broker-dealer registered with the U.S. Securities and Exchange Commission (“SEC”), and is a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. Cooperative Securities provides institutional debt placement services, which may include advising, arranging and structuring private debt financing transactions, for NCSC’s members, and for-profit and not-for-profit entities that are owned, operated or controlled by, or provide a significant benefit to certain rural utility providers.

See “Item 1. Business” in our 2025 Form 10-K for additional information on the business structure, mission, principal purpose, members and core business activities of each of these entities. Unless stated otherwise, references to “we,” “our” or “us” relate to CFC and its consolidated entities. All references to members within this document include members, associates and affiliates of CFC and its consolidated entities, except where indicated otherwise.

The following MD&A is intended to enhance the understanding of our consolidated financial statements by providing information that we believe is relevant in evaluating our results of operations, financial condition and liquidity and the potential impact of material known events or uncertainties that, based on management’s assessment, are reasonably likely to cause the financial information included in this Report not to be necessarily indicative of our future financial performance. Management monitors a variety of key indicators and metrics to evaluate our business performance. We discuss these key measures and factors influencing changes from period to period. Our MD&A is provided as a supplement to, and should be read in conjunction with, the unaudited consolidated financial statements included in this Report, our audited consolidated financial statements and related notes for the fiscal year ended May 31, 2025 (“fiscal year 2025”) included in our 2025 Form 10-K and additional information, including the risk factors discussed under “Item 1A. Risk Factors,” contained in our 2025 Form 10-K, as well as additional information contained elsewhere in this Report.

Our fiscal year begins on June 1 and ends on May 31. References to “Q2Q3 FY2026” and “YTD FY2026” refer to three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, respectively. References to “Q2Q3 FY2025” and “YTD FY2025” refer to three and ~~six~~nine months ended ~~November~~February 3028, ~~2024~~2025, respectively.


NON-GAAP FINANCIAL MEASURES

Our reported financial results are determined in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) and are subject to period-to-period volatility due to changes in market conditions and differences in the way our financial assets and liabilities are accounted for under U.S. GAAP. Our financial assets and liabilities expose us to interest-rate risk, therefore we use derivatives, primarily interest rate swaps, to economically hedge and manage the interest-rate sensitivity mismatch between our financial assets and liabilities. We are required under U.S. GAAP to carry derivatives at fair value on our consolidated balance sheets; however, the financial assets and liabilities for which we use derivatives to economically hedge are carried at amortized cost. Changes in interest rates and the shape of the swap curve result in periodic fluctuations in the fair value of our derivatives, which may cause volatility in our earnings because we do not apply hedge accounting for our interest rate swaps. As a result, the mark-to-market changes in our interest rate swaps are recorded in earnings. The majority of our derivative portfolio consists of pay-fixed swaps with longer maturities, leading to derivative losses when interest rates decline and derivative gains when interest rates rise. This earnings volatility generally is not indicative of the underlying economics of our business, as the derivative forward fair value gains or losses recorded each period may or may not be realized over time, depending on the terms of our derivative instruments and future changes in market conditions that impact the periodic cash settlement amounts of our interest rate swaps.

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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 times interest earned ratio (“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 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.

We believe our non-GAAP financial measures, which should not be considered in isolation or as a substitute for measures determined in conformity with U.S. GAAP, provide meaningful information and are useful to investors because management evaluates performance based on these metrics for purposes of (i) establishing short- and long-term performance goals; (ii) budgeting and forecasting; (iii) comparing period-to-period operating results, analyzing changes in results and identifying potential trends; and (iv) making compensation decisions. In addition, certain of the financial covenants in our committed bank revolving line of credit agreements and debt indentures are based on non-GAAP financial measures, as the forward fair value gains and losses related to our interest rate swaps that are excluded from our non-GAAP financial measures do not affect our cash flows, liquidity or ability to service our debt. Our non-GAAP financial measures may not be comparable to similarly titled measures reported by other companies due to differences in the way these measures are calculated. We provide a reconciliation of our non-GAAP adjusted measures to the most directly comparable U.S. GAAP measures in the section “Non-GAAP Financial Measures and Reconciliations.”


EXECUTIVE SUMMARY

Reported Results

Net Income ~~(Loss)~~ and TIER

Table 1 below shows our net income ~~(loss)~~ 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 ~~(Loss)~~ and TIER

(Dollars in thousands)	Q2Q3 FY2026		Q2Q3 FY2025		Variance		YTD FY2026		YTD FY2025		Variance
Net income (loss)	$	19,558	$	144,803	$	(125,245)	$	24,240	$	(19,523)	$	43,763
Net income	$	22,737	$	86,136	$	(63,399)	$	46,977	$	66,613	$	(19,636)
TIER(1)	1.0506		1.4124		(0.3618)		1.0304		01.9706		(0.0602)

__________________________

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

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Table 2 below presents a reconciliation of net income between Q2Q3 FY2026 and Q2Q3 FY2025.

Table 2: Reconciliation of Net Income—Quarter

Q2Q3 FY2026 versus Q2Q3 FY2025—Key Highlights

•~~Net~~We ~~interest~~experienced ~~income~~a ~~increased~~shift from gains to losses on our derivatives portfolio of $773 million. ~~from~~We Q2recorded ~~FY2025~~derivative losses of $32 million for Q3 FY2026, driven by andeclines ~~increase~~ in interest rates across the ~~net~~entire ~~interest~~swap ~~yield~~curve ofduring 3Q3 ~~basis~~FY2026. ~~points~~In comparison, orwe ~~4%,~~recorded toderivative ~~0.77%~~gains ~~and~~of an$40 ~~increase~~million for Q3 FY2025, attributable to increases in ~~average~~the ~~interest~~longer-~~earning~~term ~~assets~~swap ofinterest ~~$2,109~~rates ~~million,~~during orQ3 6%FY2025.

•WeNet ~~experienced~~interest aincome ~~shift~~increased ~~from gains to losses on our derivatives portfolio of~~ $~~128~~13 million. Wefrom ~~recorded~~Q3 ~~derivative losses of $19 million for Q2 FY2026~~FY2025, ~~primarily~~driven ~~attributable~~by toan ~~declines~~increase in the ~~short-term~~net ~~and longer-term swap~~ interest ~~rates~~yield ~~during~~of Q210 ~~FY2026.~~basis ~~In comparison~~points, weor ~~recorded~~14%, ~~derivative~~to ~~gains~~0.84% ofand ~~$109~~an ~~million~~increase ~~for Q2 FY2025, attributable to increases~~ in ~~the~~average ~~medium~~interest-earning ~~and~~assets ~~longer-term~~of ~~swap~~$1,831 ~~interest~~million, ~~rates~~or ~~during Q2 FY2025~~5%.

•WeOperating ~~recorded~~and aother ~~shift~~expenses ~~from~~increased ~~gains~~by to$5 ~~losses~~million onfrom ~~our~~Q3 ~~investment~~FY2025, ~~securities~~driven ~~totaling~~by $3higher ~~million,~~expenses ~~primarily~~for ~~driven~~salaries byand ~~period-to-period~~employee ~~market~~benefits ~~fluctuations~~and inhigher ~~fair~~other ~~value~~non-interest ~~and~~expenses ~~lower~~mainly ~~debt~~from ~~security~~losses ~~balance~~on ~~due~~extinguishment toof ~~maturities~~debt.

•~~Operating~~We ~~and~~recorded ~~other~~a ~~expenses~~benefit ~~increased~~for bycredit losses of $27 million ~~from~~and Q2$6 million for Q3 FY2026 and Q3 FY2025, respectively, primarily driven by ~~higher~~decreases ~~expenses~~in ~~recorded~~the asset-specific allowance for ~~salaries~~a nonperforming and ~~employee~~nonaccrual ~~benefits~~CFC power supply loan due to higher actual and expected payments on this loan during both periods.

•We recorded a ~~provision~~shift ~~for~~from ~~credit~~gains to losses ofon our investment securities totaling $1 million, ~~for~~primarily Q2driven ~~FY2026,~~by aperiod-to-period ~~slight~~market ~~increase~~fluctuations ~~from~~in Q2fair ~~FY2025~~value, ~~primarily~~including ~~driven~~both byrealized anand ~~increase~~unrealized ingains ~~the~~(loss), ~~collective~~and ~~allowance~~lower ~~due~~debt tosecurity ~~the~~balance ~~growth~~due into ~~our loan portfolio~~maturities.

•The decrease in TIER for Q2Q3 FY2026 compared with Q2Q3 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.

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Table 3 below presents a reconciliation of net income ~~(loss)~~ between YTD FY2026 and YTD FY2025.

Table 3: Reconciliation of Net Income ~~(Loss)~~—YTD

YTD FY2026 versus YTD FY2025—Key Highlights

•~~Net~~Losses ~~interest~~on ~~income~~our derivatives portfolio increased $1634 million ~~from~~compared to YTD FY2025. We recorded derivative losses of $83 million for YTD FY2026, driven by andeclines ~~increase~~ in interest rates across the ~~net~~entire ~~interest~~swap ~~yield~~curve. In comparison, we recorded derivative losses of 5$49 ~~basis~~million ~~points,~~for orYTD 7%FY2025, todriven ~~0.76%~~by ~~and~~declines anin ~~increase~~interest inrates ~~average~~across ~~interest-earning~~the ~~assets~~swap curve, with the exception of ~~$2,166~~the ~~million~~30-year swap rate, orwhich 6%increased slightly during YTD FY2025.

•~~Losses~~Net oninterest ~~our~~income ~~derivatives~~increased ~~portfolio decreased~~ $3829 million ~~compared~~from to YTD FY2025~~. We recorded derivative losses of $51 million for YTD FY2026 compared with $89 million for YTD FY2025~~, driven by ~~declines~~an increase in ~~interest~~the ~~rates~~net ~~across~~interest ~~the~~yield ~~entire~~of ~~swap~~6 ~~curve~~basis inpoints, ~~both~~or ~~periods~~8%, ~~with~~to ~~the~~0.78% ~~rate~~and ~~declines~~an increase in ~~YTD~~average ~~FY2026~~interest-earning ~~being~~assets ~~less~~of ~~pronounced~~$2,055 ~~than~~million, inor ~~YTD FY2025~~6%.

•~~Gains~~Operating onand ~~our~~other ~~investment~~expenses ~~securities~~increased ~~decreased~~by $611 million from YTD FY2025, ~~primarily~~ driven by ~~period-to-period~~higher ~~market~~operating ~~fluctuations~~expense infor ~~fair~~salaries ~~value~~and employee benefits and ~~lower~~other ~~debt~~general ~~security~~and ~~balance~~administrative, as well as higher other non-interest expenses, primarily due to ~~maturities~~losses on extinguishment of debt.

•~~Operating~~Gains ~~and~~on ~~other~~our ~~expenses~~investment ~~increased~~securities bydecreased $67 million from YTD FY2025, primarily driven by ~~higher~~period-to-period ~~expenses~~market ~~recorded~~fluctuations ~~for~~in ~~salaries~~fair ~~and~~value, ~~employee~~including ~~benefits~~both realized and ~~other~~unrealized ~~general~~gains (loss), and ~~administrative~~lower debt security balance due to maturities.

•We recorded a ~~provision~~benefit for credit losses of $35 million and $24 million for YTD FY2026 and YTD FY2025, respectively, primarily driven by decreases in the asset-specific allowance for a nonperforming and nonaccrual CFC power supply loan, partially offset by increases in the collective allowance due to ~~the~~ growth in our loan portfolio ~~for~~in both ~~the~~ periods.

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

Debt-to-Equity Ratio

The debt-to-equity ratio was 11.5874 and 11.20 as of ~~November~~February 3028, ~~2025~~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 $2447 million for YTD FY2026.

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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

(Dollars in thousands)	Q2Q3 FY2026		Q2Q3 FY2025		Variance		YTD FY2026		YTD FY2025		Variance
Adjusted net income	$	5567,~~784~~699	$	6266,~~171~~303	$	(61,~~387)~~396	$	~~112~~180,~~937~~636	$	~~128~~194,~~231~~534	$	(1513,~~294~~898)
Adjusted TIER	1.1619		1.19		~~(0.03)~~—		1.1617		1.20		(0.0403)

Table 5 below presents a reconciliation of adjusted net income between Q2Q3 FY2026 and Q2Q3 FY2025.

Table 5: Reconciliation of Adjusted Net Income—Quarter

Q2Q3 FY2026 versus Q2Q3 FY2025—Key Highlights

•Adjusted net interest income ~~decreased~~increased by $25 million from Q2Q3 FY2025, driven byprimarily ~~a decrease in the adjusted net interest yield of 8 basis points, or 8%, to 0.95%, partially offset~~ by an increase in average interest-earning assets of $21,~~109~~831 million, or 65%.

•We discuss the variances in the other components above under ~~our~~the ~~net~~section ~~income~~“Reported ~~(loss)~~Results—Net ~~key~~Income ~~highlights~~and TIER— Q3 FY2026 versus Q3 FY2025—Key Highlights.”

•~~The~~Adjusted ~~decrease in adjusted~~ TIER for Q2Q3 FY2026 ~~compared~~was ~~with~~unchanged Q2from Q3 FY2025, ~~was~~as ~~driven~~the ~~by an~~ increase in adjusted ~~interest~~net ~~expense~~income ~~and~~was aoffset ~~decrease~~by the increase in adjusted ~~net~~interest ~~income during Q2 FY2026~~expense.

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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 ~~decreased~~increased byslightly ~~$5 million~~ from YTD FY2025, driven by aan ~~decrease~~increase in ~~the~~average ~~adjusted net~~ interest-earning ~~yield~~assets of 8$2,055 ~~basis points~~million, or 86%, tolargely ~~0.96%, partially~~ offset by ana ~~increase~~decrease in ~~average~~the adjusted net interest~~-earning~~ ~~assets~~yield of ~~$2,166~~6 ~~million~~basis points, or 6%, to 0.96%,

•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 7.5976 and 7.39 as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively. The increase in the adjusted debt-to-equity ratio during YTD FY2026 was primarily ~~due~~driven toby 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 $3738,~~842~~750 million as of ~~November~~February 3028, ~~2025~~2026, an increase of $~~762~~1,670 million, or 25%, from May 31, 2025, reflecting net increases in long-term and line of credit loans of $~~582~~1,076 million and $~~180~~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 ~~November~~February 3028, ~~2025~~2026.

The overall credit quality of our loan portfolio remained strong as of November 30, 2025. We had no loan charge-offs during YTD FY2026 and YTD FY2025. We had one loan totaling $24 million and $26 million classified as nonperforming as of November 30, 2025 and May 31, 2025, respectively. The reduction in the nonperforming loan outstanding was due to a

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~~payment~~The ~~received~~overall ~~from~~credit ~~the~~quality ~~borrower~~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 ~~November~~February 3028, ~~2025~~2026, we received an $11 5 million ~~payment~~payments on this ~~nonperforming~~ loan which reduced its outstanding balance to $13 8 million.

Our allowance for credit losses ~~was~~and allowance coverage ratio were $4336 million and 0.09%, respectively, as of ~~November~~February 3028, ~~2025~~2026, compared with $41 million and 0.11%, respectively, as of May 31, 2025. The ~~increase~~$5 million decrease in the allowance for credit losses ~~was~~reflected ~~attributable~~a to$9 anmillion ~~increase~~reduction in the ~~collective~~asset-specific allowance ~~primarily~~attributable ~~driven~~to byhigher-than-expected ~~the~~payments ~~growth~~received inon ~~our~~a ~~loan~~nonperforming ~~portfolio.~~and ~~Our~~nonaccrual ~~allowance~~CFC ~~coverage~~power ~~ratio~~supply ~~remained~~loan, ~~steady~~partially atoffset ~~0.11%~~by asa of$4 ~~both~~million ~~November 30,~~increase ~~2025~~in ~~and~~the ~~May 31~~collective allowance, ~~2025~~primarily due to growth in our loan portfolio.

Financing and Liquidity

Total debt outstanding increased $~~827~~1,578 million, or 25%, to $3536,~~596~~347 million as of ~~November~~February 3028, 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 totaling $1,725 million, of which $700 million was at a fixed interest rate of 4.15% with a term of three years and $1,025 million was at floating interest rates with an average term of 15 months. In November 2025, we priced a $600 million private placement of fixed-to-fixed reset rate subordinated notes due 2056, consisting of two tranches: $150 million notes that are noncallable for five years and $450 million notes that are noncallable for ten years. We intend to fund $150 million in the third quarter and the remaining $450 million in the fourth quarter of our fiscal year ended May 31, 2026. Subsequent to the quarter ended November 30, 2025, we issued an aggregate principal amount of dealer medium-term notes totaling $1,050 million at an average fixed interest rate of 4.08% with an average term of three years and borrowed $250 million in long-term notes payable under our revolving note purchase agreement with the Federal Agricultural Mortgage Corporation (“Farmer Mac”).

On•Unsecured ~~June~~long-term 2,dealer ~~2025,~~medium-term atnotes ~~our~~to ~~request~~institutional investors totaling $3,975 ~~S&P~~million, ~~withdrew~~of ~~its~~which ~~“A-~~$2”,350 ~~short-term~~million ~~issue~~was ~~ratings~~at ona ~~CFC’s~~weighted ~~commercial~~average ~~paper~~fixed ~~program~~interest rate of 4.09% ~~During~~and ~~YTD~~an ~~FY2026,~~average ~~Fitch~~term ~~Ratings~~of ~~(“Fitch”)~~three years and ~~S&P~~$1,625 ~~Global~~million ~~Inc.~~was ~~(“S&P”)~~at ~~affirmed~~floating ~~CFC’s~~interest ~~credit~~rates ~~ratings~~with ~~and~~an ~~stable~~average ~~outlook.~~term of 16 months;

In•Unsecured ~~September~~subordinated ~~2025,~~notes weof ~~executed~~$150 million at a ~~commitment~~fixed ~~letter~~interest rate of 5.75%, due 2056 and noncallable for ~~the~~five ~~guarantee~~years, byrepresenting ~~RUS~~the offirst antranche ~~additional~~of ~~$450~~a $600 million ~~loan~~private ~~facility~~placement ~~from~~of ~~the~~subordinated ~~U.S.~~notes ~~Treasury~~priced ~~Department’s~~in ~~Federal~~November ~~Financing~~2025; ~~Bank~~the ~~(“FFB”)~~remaining ~~under~~$450 million ~~the~~is ~~Guaranteed~~scheduled ~~Underwriter~~to ~~Program.~~fund in April 2026; and

In•Secured ~~October~~long-term ~~2025,~~notes weunder ~~redeemed $50 million in principal amount of our $300 million subordinated deferrable debt due 2043 (~~the ~~“2043~~Farmer ~~Notes”),~~Mac atrevolving ~~par~~note ~~plus~~purchase ~~accrued~~agreement ~~interest.~~of ~~In December 2025, we redeemed the remaining~~ $250 million ~~of the 2043 Notes at par plus accrued interest~~.

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 ~~November~~March 1220, ~~2025~~2026, notice was provided to investors that we ~~amended~~will redeem all $350 million in principal amount of our ~~three~~5.25% fixed-~~year~~to-floating ~~and~~rate ~~four-year~~subordinated ~~committed~~deferrable ~~bank~~debt ~~revolving~~due ~~line~~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 ~~credit~~losses ~~agreements~~on early extinguishment of debt related to unamortized debt issuance costs of the 2046 Notes in our consolidated statements of operations.

~~extend~~Subsequent to the ~~maturity~~quarter ~~date~~ended ofFebruary 28, ~~each~~2026, ~~facility~~we byredeemed ~~one~~all ~~year~~$600 ~~and~~million toof ~~increase~~our ~~the~~4.45% ~~total~~fixed-rate ~~commitments~~dealer bymedium-term ~~$200~~notes ~~million,~~due ~~resulting~~March in2026 aat ~~total~~par ~~commitment~~plus ~~amount~~accrued ~~under the two facilities of $3,500 million~~interest.

~~Our~~In ~~available~~November ~~liquidity consists of cash and cash equivalents~~2025, ~~investments~~we inamended ~~debt~~our ~~securities,~~three-year ~~availability~~and ~~under~~four-year committed bank revolving line of credit agreements, ~~committed~~to ~~loan~~extend ~~facilities under~~ the ~~USDA~~maturity ~~Guaranteed~~date ~~Underwriter~~of ~~Program~~each ~~(“Guaranteed~~facility ~~Underwriter~~by ~~Program”),~~one year and ato ~~revolving~~increase ~~note~~the ~~purchase~~total ~~agreement~~commitments ~~with~~by ~~Farmer Mac. As of November 30, 2025, our available liquidity totaled~~ $~~7,975~~200 million ~~and was $2~~,~~515 million~~ ~~less~~resulting ~~than~~in ~~our~~a total ~~scheduled~~commitment ~~debt~~amount ~~obligations~~under ~~over~~ the ~~next~~two 12facilities ~~months~~ of $~~10,490 million, of which $~~3,~~358~~500 million~~, or 32%, represented member short-term investments~~. ~~In addition to our existing available liquidity, we expect to receive $1,849 million from scheduled long-term loan principal payments over the next 12 months.~~

WeIn ~~believe~~January 2026, we ~~can~~closed ~~continue to roll over our member short-term investments based~~ on ~~our~~a ~~expectation~~$450 ~~that~~million ~~our~~Series ~~members~~W ~~will~~committed ~~continue~~loan tofacility ~~reinvest~~with ~~their~~the ~~excess cash primarily in short-term investment products offered by CFC~~U. ~~Our members historically have maintained a relatively stable level of short-term investments in CFC~~S.Treasury ~~Member~~Department’s ~~short-term~~Federal ~~investments~~Financing inBank ~~CFC~~(“FFB”) ~~have~~under ~~averaged $3,250 million over~~ the ~~last~~USDA 12Guaranteed ~~fiscal~~Underwriter ~~quarter-end~~Program ~~reporting~~(“Guaranteed ~~periods~~Underwriter Program”). ~~Our~~As ~~available~~a ~~liquidity~~result as of ~~November 30,~~this ~~2025 was $843 million in excess of~~transaction, ~~or 1.1 times over, our~~ total ~~$7,132~~borrowing ~~million~~capacity ~~scheduled~~available ~~debt~~to ~~obligations~~us ~~over~~under the ~~next~~Guaranteed 12Underwriter ~~months,~~Program ~~excluding~~increased ~~member~~to ~~short-term~~$1,800 ~~investments~~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

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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

~~Following~~Geopolitical ~~its~~tensions, ~~meeting~~including ~~held~~the inongoing ~~December~~conflict ~~2025~~involving Iran, have contributed to uncertainty in the ~~Federal~~broader ~~Open~~macroeconomic ~~Market~~environment, ~~Committee~~including ~~(“FOMC”)~~volatility ofin ~~the~~energy ~~Federal~~markets ~~Reserve~~and ~~cut~~continued ~~its~~concerns ~~target~~regarding ~~range~~inflation ~~for~~and ~~the~~interest ~~federal~~rates. ~~funds~~Although ~~rate~~CFC byhas 25not ~~basis~~identified ~~points~~a tomaterial ~~3.50%–3.75%.~~direct ~~The~~impact ~~FOMC~~of ~~reaffirmed~~these ~~its~~developments ~~strong~~on ~~commitment~~its tofinancial ~~supporting~~condition, ~~maximum~~results ~~employment~~of ~~and~~operations ~~returning~~or ~~inflation~~liquidity toas of the 2date ~~percent~~of ~~level.~~this Itreport, ~~also~~a ~~noted~~prolonged ~~that~~period ~~reserve~~of ~~balances~~geopolitical ~~have~~instability ~~declined~~could contribute to ~~ample~~higher ~~levels~~borrowing ~~and~~costs, ~~indicated~~increased ~~that~~operating itand ~~will~~capital ~~initiate~~costs ~~purchases~~for ofCFC’s ~~shorter-term~~members, ~~U.S.~~and ~~Treasury~~broader ~~securities~~market asvolatility. ~~necessary~~CFC continues to ~~maintain~~monitor anthese ~~adequate~~developments ~~supply~~and ofthe ~~reserves~~potential effects on anthe ~~ongoing~~interest ~~basis.~~rate environment, capital markets and member operating conditions.

~~The~~Following ~~Federal~~its ~~Reserve’s~~meeting ~~December~~held ~~2025~~in ~~median~~March ~~projection~~2026, ~~for~~ the ~~annual~~Federal ~~growth~~Open ~~rate~~Market Committee (“FOMC”) of ~~real~~the ~~gross~~Federal ~~domestic~~Reserve ~~product~~announced ~~(“GDP”)~~that init ~~2026~~would ishold ~~2.3%,~~the upfederal ~~from~~funds ~~1.8%~~rate in ~~its~~the ~~September~~range ~~2025~~of ~~projection~~3.50%–3.75%. The ~~median~~FOMC ~~projection~~noted ~~for~~that ~~Personal~~uncertainty ~~Consumption~~about ~~Expenditures~~the ~~(“PCE”)~~economic ~~inflation~~outlook inremains ~~2026~~elevated, ~~has~~while ~~declined~~reaffirming its commitment to ~~2.4%~~achieving ~~from~~inflation at 2~~.6%~~ ~~previously~~percent over the longer run. The ~~U.S.~~Committee ~~unemployment~~stated ~~rate~~that init ~~2026~~continues to monitor developments and is ~~projected~~prepared to ~~average~~adjust 4monetary policy as new risks emerge.4% The Committee’s future assessments will take into account labor market conditions, ~~unchanged~~inflation ~~from~~pressures, ~~its~~and ~~September~~financial ~~projection.~~and international developments.

The Federal ~~funds~~Reserve’s ~~futures~~March ~~markets~~2026 ~~anticipate~~median ~~two~~projection ~~additional~~for 25the ~~basis~~annual ~~point~~growth rate ~~cuts~~of inreal ~~calendar~~gross ~~year~~domestic ~~2026:~~product ~~one~~(“GDP”) in ~~the~~2026 ~~second~~is ~~quarter~~2.4%, ~~and~~up ~~another~~from 2.3% in ~~the~~its ~~third~~December ~~quarter~~2025 projection. IfThe ~~these~~median ~~rate~~projection ~~cuts~~for ~~occur~~Personal asConsumption ~~expected,~~Expenditures ~~the~~(“PCE”) ~~federal~~inflation ~~funds~~in ~~target~~2026 ~~rate~~increased ~~would decline~~ to a2.7% ~~range~~from ~~of 3~~2.004%–3 previously.~~25%~~ byThe ~~the end of 2026~~U.S. ~~Overall~~unemployment ~~the~~rate ~~market~~in ~~expects~~2026 ~~short-term~~is ~~interest~~projected ~~rates~~ to ~~decline~~average 4.4%, ~~with~~unchanged afrom ~~steepening~~its ~~yield~~December ~~curve~~2025 ~~ahead~~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 ~~November~~February 3028, ~~2025~~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:

•AnIncreases ~~increase~~ in our adjusted net interest income and ~~a slight increase in our~~ adjusted net interest yield over the next 12 months relative to the 12-month period ended ~~November~~February 3028, ~~2025~~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 ~~lower~~decline in adjusted average cost of funding isreflects ~~driven~~changes byin ~~the~~funding ~~expected~~mix ~~decrease~~and inlower ~~the~~ variable rate debt cost, partially offset by lower expected ~~average yield earned on our~~ interest rate swaps derivative cash settlements and bythe refinancing of maturing lower-cost long-term debt ~~maturing in the near term that will need to be refinanced~~ at a forecasted higher interest ~~rate~~rates. See “Market Risk—Interest Rate Risk Assessment” in this Report for additional information.

•A decrease in our adjusted net income over the next 12 months, primarily due to an increase in projected operating expenses.

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

•An increase in our adjusted debt-to-equity ratio, primarily due to the projected increase in total 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 14 years as of November 30, 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.

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•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 $21,~~095~~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.


CONSOLIDATED RESULTS OF OPERATIONS

This section provides a comparative discussion of our consolidated results of operations between Q2Q3 FY2026 and Q2Q3 FY2025, and between YTD FY2026 and YTD FY2025. Following this section, we provide a discussion and analysis of material changes between amounts reported on our consolidated balance sheets as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025. You should read these sections together with our “Executive Summary—Outlook” in this Report where we discuss trends and other factors that we expect will affect our future results of operations.

Net Interest Income

Net interest income, which is our largest source of revenue, represents the difference between the interest income earned on our interest-earning assets and the interest expense on our interest-bearing liabilities. Our net interest yield represents the difference between the yield on our interest-earning assets and the cost of our interest-bearing liabilities plus the impact of non-interest bearing funding. We expect net interest income and our net interest yield to fluctuate based on changes in interest rates and changes in the amount and composition of our interest-earning assets and interest-bearing liabilities, and term structures our members select on their loans. We do not fund each individual loan with specific debt. Rather, we attempt to minimize costs and maximize efficiency by proportionately funding large aggregated amounts of loans.

Table 7 presents average balances for Q2Q3 FY2026, Q2Q3 FY2025, YTD FY2026 and YTD FY2025, and for each major category of our interest-earning assets and interest-bearing liabilities, the interest income earned or interest expense incurred, and the average yield or cost. Table 7 also presents non-GAAP adjusted interest expense, adjusted net interest income and adjusted net interest yield, which reflect the inclusion of net accrued periodic derivative cash settlements income (expense) in interest expense. We provide reconciliations of our non-GAAP financial measures to the most comparable U.S. GAAP financial measures under the section “Non-GAAP Financial Measures and Reconciliations” in this Report.

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Table 7: Average Balances, Interest Income/Interest Expense and Average Yield/Cost

	Q2 FY2026						Q2 FY2025
	Q3 FY2026						Q3 FY2025
(Dollars in thousands)	Average Balance		Interest Income/Expense		Average Yield/Cost		Average Balance		Interest Income/Expense		Average Yield/Cost
Assets:
Long-term fixed-rate loans(1)	$	31,~~630~~958,~~812~~745	$	~~360~~365,~~790~~720	4.5864	%	$	30,~~663~~953,~~486~~865	$	~~341~~347,~~595~~021	4.4755	%
Long-term variable-rate loans	1,~~280~~374,~~315~~199		18,~~312~~202		5.7437		~~890~~889,~~552~~537		1413,~~999~~699		6.7625
Line of credit loans	4,~~584~~878,~~362~~978		6564,~~705~~911		5.7540		34,~~594~~404,~~857~~359		5965,~~918~~998		6.6908
Other, net(2)	—		(~~563~~597)		—		—		(~~488~~502)		—
Total loans	3738,~~495~~211,~~489~~922		~~444~~448,~~244~~236		4.7576		3536,~~148~~247,~~895~~761		~~416~~426,~~024~~216		4.7577
Cash, time deposits and investment securities	~~221~~246,~~849~~798		1,~~430~~334		2.5919		~~459~~380,~~876~~206		32,~~853~~644		32.3682
Total interest-earning assets	$	3738,~~717~~458,~~338~~720	$	~~445~~449,~~674~~570	4.74	%	$	3536,~~608~~627,~~771~~967	$	~~419~~428,~~877~~860	4.7375	%
Other assets, less allowance for credit losses(3)	1,~~114~~260,~~788~~478						1,~~048~~237,~~600~~658
Total assets(3)	$	3839,~~832~~719,~~126~~198					$	3637,~~657~~865,~~371~~625
Liabilities:
Commercial paper	$	23,~~672~~288,~~242~~937	$	2831,~~171~~262	43.2385	%	$	12,~~737~~752,~~639~~959	$	2132,~~687~~073	54.0172	%
Other short-term borrowings	1,~~824~~690,~~911~~822		1714,~~805~~926		3.9158		1,~~702~~583,~~857~~025		2016,~~560~~923		4.8434
Short-term borrowings(4)	4,~~497~~979,~~153~~759		4546,~~976~~188		43.1076		34,~~440~~335,~~496~~984		4248,~~247~~996		4.9358
Medium-term notes	1112,~~299~~117,~~768~~876		~~134~~139,~~434~~541		4.7767		10,~~365~~416,~~137~~775		~~120~~122,~~679~~412		4.6777
Collateral trust bonds(5)	6,~~773~~496,~~746~~519		6966,~~054~~847		4.0917		7,~~088~~029,~~811~~299		6970,~~905~~000		34.9604
Guaranteed Underwriter Program notes payable	6,~~348~~020,~~402~~647		5249,~~750~~692		3.3335		6,~~288~~267,~~254~~281		50,~~515~~503		3.2227
Farmer Mac notes payable	3,~~730~~930,~~501~~427		3738,~~021~~069		3.9893		3,~~536~~578,~~128~~692		3635,~~266~~373		4.1101
Other(6)	7,~~195~~070		91		5.0722		35,~~904~~579		5871		5.9616
Subordinated deferrable debt	1,~~324~~090,~~668~~163		2116,~~377~~875		6.4728		1,~~286~~314,~~923~~467		21,~~518~~449		6.7162
Subordinated certificates	1,~~151~~130,~~734~~529		12,~~963~~707		4.5156		1,~~196~~188,~~168~~408		13,~~255~~114		4.4448
Total interest-bearing liabilities	$	35,~~133~~772,~~167~~990	$	~~373~~370,~~666~~010	4.2719	%	$	3334,~~205~~136,~~821~~485	$	~~354~~361,~~443~~918	4.2830	%
Other liabilities(3)	~~617~~844,~~101~~267						~~580~~733,~~434~~390
Total liabilities(3)	3536,~~750~~617,~~268~~257						3334,~~786~~869,~~255~~875
Total equity(3)	3,~~081~~101,~~858~~941						2,~~871~~995,~~116~~750
Total liabilities and equity(3)	$	3839,~~832~~719,~~126~~198					$	3637,~~657~~865,~~371~~625
Net interest spread(7)					0.4755	%					0.45	%
Impact of non-interest bearing funding(8)					0.3029						0.29
Net interest income/net interest yield(9)			$	7279,~~008~~560	0.7784	%			$	6566,~~434~~942	0.74	%
Adjusted net interest income/adjusted net interest yield:
Interest income			$	~~445~~449,~~674~~570	4.74	%			$	~~419~~428,~~877~~860	4.7375	%
Interest expense			~~373~~370,~~666~~010		4.2719				~~354~~361,~~443~~918		4.2830
Add: Net periodic derivative cash settlements interest income(10)			(1712,~~585~~592)		(10.0079)				(2620,~~406~~309)		(1.4615)
Adjusted interest expense/adjusted average cost(11)			$	~~356~~357,~~081~~418	4.0705	%			$	~~328~~341,~~037~~609	34.9606	%
Adjusted net interest spread(7)					0.6769						0.7769
Impact of non-interest bearing funding(8)					0.28						0.2628
Adjusted net interest income/adjusted net interest yield(12)			$	8992,~~593~~152	0.9597	%			$	9187,~~840~~251	10.0397	%

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	YTD FY2026						YTD FY2025
(Dollars in thousands)	Average Balance		Interest Income/Expense		Average Yield/Cost		Average Balance		Interest Income/Expense		Average Yield/Cost
Assets:
Long-term fixed-rate loans(1)	$	31,~~520~~664,~~259~~815	$	~~718~~1,~~218~~083,938	4.5458	%	$	30,~~609~~722,~~005~~695	$	~~679~~1,~~203~~026,224	4.4347	%
Long-term variable-rate loans	1,~~239~~284,~~974~~224		3654,~~375~~577		5.8568		~~881~~884,~~523~~165		3044,~~733~~432		6.9572
Line of credit loans	4,~~645~~722,~~011~~143		~~136~~201,~~332~~243		5.8570		3,~~540~~825,~~305~~158		~~121~~187,~~746~~744		6.8656
Other, net(2)	—		(1,~~109~~706)		—		—		(~~958~~1,460)		—
Total loans	37,~~405~~671,~~244~~182		~~889~~1,~~816~~338,052		4.7475		35,~~030~~432,~~833~~018		~~830~~1,~~724~~256,940		4.7374
Cash and investment securities	~~241~~243,~~535~~270		34,~~304~~638		2.7355		~~449~~426,~~945~~954		79,~~272~~916		3.2211
Total interest-earning assets	$	37,~~646~~914,~~779~~452	$	~~893~~1,~~120~~342,690	4.73	%	$	35,~~480~~858,~~778~~972	$	~~837~~1,~~996~~266,856	4.7172	%
Other assets, less allowance for credit losses(3)	1,~~141~~180,~~277~~574						1,~~141~~173,~~569~~247
Total assets(3)	$	3839,~~788~~095,~~056~~026					$	3637,~~622~~032,~~347~~219
Liabilities:
Commercial paper	$	2,~~769~~940,~~005~~411	$	6091,~~654~~916	4.3718	%	$	12,~~885~~171,~~447~~440	$	4981,~~712~~785	5.2604	%
Other short-term borrowings	1,~~777~~748,~~150~~691		3550,~~648~~574		43.0087		1,~~696~~659,~~942~~387		4259,~~518~~441		54.0079
Short-term borrowings(4)	4,~~546~~689,~~155~~102		96142,~~302~~490		4.2306		3,~~582~~830,~~389~~827		$	92141,~~230~~226	54.1493
Medium-term notes	11,~~025~~385,~~354~~526		~~263~~403,~~802~~343		4.7774		10,~~095~~201,~~697~~547		~~234~~356,~~088~~500		4.6267
Collateral trust bonds(5)	6,~~835~~723,~~069~~459		~~139~~206,~~223~~070		4.0610		6,~~938~~968,~~657~~539		~~135~~205,542		3.9094
Guaranteed Underwriter Program notes payable	6,~~388~~267,~~627~~315		~~106~~156,~~645~~337		3.3334		6,~~344~~318,~~215~~852		~~102~~153,~~873~~376		3.2325
Farmer Mac notes payable	3,~~748~~808,~~406~~413		74112,~~688~~757		3.9796		3,~~628~~612,~~885~~338		76111,~~203~~576		4.1913
Other(6)	7,~~218~~168		~~184~~275		5.0813		34,~~513~~194		~~102~~173		5.7952
Subordinated deferrable debt	1,~~327~~249,~~646~~355		4359,~~048~~923		6.4741		1,~~286~~295,~~900~~988		4364,~~256~~705		6.7068
Subordinated certificates	1,~~167~~155,~~472~~293		2638,~~243~~950		4.4851		1,~~196~~193,~~552~~867		2639,~~609~~723		4.4445
Total interest-bearing liabilities	$	35,~~045~~285,~~947~~631	$	~~750~~1,~~135~~120,145	4.2724	%	$	33,~~076~~426,~~808~~152	$	~~710~~1,~~903~~072,821	4.29	%
Other liabilities(3)	~~656~~718,~~976~~721						~~635~~667,~~811~~980
Total liabilities(3)	3536,~~702~~004,~~923~~352						3334,~~712~~094,~~619~~132
Total equity(3)	3,~~085~~090,~~133~~674						2,~~909~~938,~~728~~087
Total liabilities and equity(3)	$	3839,~~788~~095,~~056~~026					$	3637,~~622~~032,~~347~~219
Net interest spread(7)					0.4649	%					0.4243	%
Impact of non-interest bearing funding(8)					0.3029						0.29
Net interest income/net interest yield(9)			$	~~142~~222,~~985~~545	0.7678	%			$	~~127~~194,~~093~~035	0.7172	%
Adjusted net interest income/adjusted net interest yield:
Interest income			$	~~893~~1,~~120~~342,690	4.73	%			$	~~837~~1,~~996~~266,856	4.7172	%
Interest expense			~~750~~1,~~135~~120,145		4.2724				~~710~~1,~~903~~072,821		4.29
Add: Net periodic derivative cash settlements interest income(10)			(3750,~~852~~444)		(10.0697)				(5878,~~467~~776)		(1.5945)
Adjusted interest expense/adjusted average cost(11)			$	~~712~~1,~~283~~069,701	4.05	%			$	~~652~~994,~~436~~045	3.9398	%
Adjusted net interest spread(7)					0.68						0.7874
Impact of non-interest bearing funding(8)					0.28						0.2628
Adjusted net interest income/adjusted net interest yield(12)			$	~~180~~272,~~837~~989	0.96	%			$	~~185~~272,~~560~~811	1.0402	%

___________________________

(1)Interest income on long-term, fixed-rate loans includes loan conversion fees, which are generally deferred and recognized as interest income using the effective interest method.

(2)Consists of late payment fees and net amortization of deferred loan fees and loan origination costs.

(3)The average balance represents average monthly balances, which is calculated based on the month-end balance as of the beginning of the reporting period and the balances as of the end of each month included in the specified reporting period.

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(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 7 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 are reported in the respective category for presentation purposes in Table 7. The period-end amounts reported as short-term borrowings on our consolidated balance sheets, which are excluded from the calculation of average short-term borrowings presented in Table 7, totaled $~~440~~367 million and $~~486~~449 million as of ~~November~~February 3028, ~~2025~~2026 and ~~November~~February 3028, ~~2024~~2025, respectively.

(5)Collateral trust bonds represent secured obligations sold to investors in the capital markets, including those issued through both public offerings and private placement transactions.

(6)Other represents the average balance of lease liabilities and the interest expense for our finance leases.

(7)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.

(8)Includes other liabilities and equity.

(9)Net interest yield is calculated based on the annualized net interest income for the period divided by total average interest-earning assets for the period.

(10)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 the annualized 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 $76,~~088~~469 million and $7,~~270~~141 million for Q2Q3 FY2026 and Q2Q3 FY2025, respectively. The average outstanding notional amount of interest rate swaps was $76,~~153~~927 million and $7,~~332~~269 million for YTD FY2026 and YTD FY2025, respectively.

(11)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 annualized adjusted interest expense for the period divided by total average interest-bearing liabilities during the period.

(12)Adjusted net interest yield is calculated based on the annualized adjusted net interest income for the period divided by total average interest-earning assets for the period.

Table 8 displays the change in net interest income between periods and the extent to which the variance for each category of interest-earning assets and interest-bearing liabilities is attributable to (i) changes in volume, which represents the change in the average balances of our interest-earning assets and interest-bearing liabilities or volume, and (ii) changes in the rate, which represents the change in the average interest rates of these assets and liabilities. The table also presents the change in adjusted net interest income between periods.

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Table 8: Rate/Volume Analysis of Changes in Interest Income/Interest Expense

Q2 FY2026

versus

Q2 FY2025

YTD FY2026

versus

YTD FY2025

Q3 FY2026

versus

Q3 FY2025

YTD FY2026

versus

YTD FY2025

Total

Variance Due To:(1)

Total

Variance Due To:(1)

(Dollars in thousands)

Variance

Volume

Rate

Variance

Volume

Rate

Interest income:

Long-term fixed-rate loans

1918,~~195~~699

1011,~~776~~266

87,~~419~~433

3957,~~015~~714

2031,~~220~~469

1826,~~795~~245

Long-term variable-rate loans

34,~~313~~503

67,~~565~~464

(32,~~252~~961)

510,~~642~~145

1220,~~497~~104

(69,~~855~~959)

Line of credit loans

5(1,~~787~~087)

167,~~493~~112

(108,~~706~~199)

1413,~~586~~499

3744,~~989~~025

(2330,~~403~~526)

Other, net

(7595)

—

(7595)

(~~151~~246)

—

(~~151~~246)

Total loans

2822,~~220~~020

3325,~~834~~842

(53,~~614~~822)

5981,~~092~~112

7095,~~706~~598

(1114,~~614~~486)

Cash and investment securities

(21,~~423~~310)

(~~1,994~~928)

(~~429~~382)

(35,~~968~~278)

(34,~~368~~266)

(~~600~~1,012)

Total interest income

2520,~~797~~710

3124,~~840~~914

(64,~~043~~204)

5575,~~124~~834

6791,~~338~~332

(1215,~~214~~498)

Interest expense:

Commercial paper

~~6,484~~(811)

116,~~665~~244

(57,~~181~~055)

10,~~942~~131

2328,~~296~~962

(1218,~~354~~831)

Other short-term borrowings

(21,~~755~~997)

1,~~474~~152

(43,~~229~~149)

(68,~~870~~867)

23,~~010~~199

(812,~~880~~066)

Short-term borrowings

3(2,~~729~~808)

137,~~139~~396

(910,~~410~~204)

41,~~072~~264

2532,~~306~~161

(2130,~~234~~897)

Medium-term notes

1317,~~755~~129

1019,~~882~~990

(2,~~873~~861)

2946,~~714~~843

2141,~~556~~375

85,~~158~~468

Collateral trust bonds

(~~851~~3,153)

(35,~~107~~306)

2,~~256~~153

~~3,681~~528

(27,~~024~~229)

57,~~705~~757

Guaranteed Underwriter Program notes payable

~~2,235~~(811)

~~483~~(1,987)

1,~~752~~176

32,~~772~~961

~~720~~(1,251)

34,~~052~~212

Farmer Mac notes payable

~~755~~2,696

13,~~993~~477

(~~1,238~~781)

(1,~~515)~~181

26,~~510~~056

(4,~~025~~875)

Other

3320

4919

~~(16)~~1

82102

~~108~~123

(2621)

Subordinated deferrable debt

(~~141~~4,574)

~~631~~(3,660)

(~~772~~914)

(~~208~~4,782)

1(2,~~370~~328)

(12,~~578~~454)

Subordinated certificates

(~~292~~407)

(~~492~~639)

~~200~~232

(~~366~~773)

(~~647~~1,283)

~~281~~510

Total interest expense

198,~~223~~092

2319,~~578~~290

(411,~~355~~198)

3947,~~232~~324

4867,~~899~~624

(920,~~667~~300)

Net interest income

612,~~574~~618

85,~~262~~624

(16,~~688)~~994

1528,~~892~~510

1823,~~439~~708

(24,~~547)~~802

Adjusted net interest income:

Interest income

2520,~~797~~710

3124,~~840~~914

(64,~~043~~204)

5575,~~124~~834

6791,~~338~~332

(1215,~~214~~498)

Interest expense

198,~~223~~092

2319,~~578~~290

(411,~~355~~198)

3947,~~232~~324

4867,~~899~~624

(920,~~667~~300)

Net periodic derivative cash settlements interest income(2)

87,~~821~~717

~~663~~1,912

85,~~158~~805

2028,~~615~~332

13,~~428~~703

1924,~~187~~629

Adjusted interest expense(3)

2815,~~044~~809

2421,~~241~~202

3(5,~~803~~393)

5975,~~847~~656

5071,327

94,~~520~~329

Adjusted net interest income(3)

(24,~~247)~~901

73,~~599~~712

(91,~~846)~~189

~~(4,723)~~178

1720,~~011~~005

(2119,~~734~~827)

____________________________

(1)The changes for each category of interest income and interest expense represent changes in either average balances (volume) or average rates for both interest-earning assets and interest-bearing liabilities. We allocate the amount attributable to the combined impact of volume and rate to the rate variance.

(2)For the net periodic derivative cash settlements interest amount, the variance due to average volume represents the change in the net periodic derivative cash settlements interest amount resulting from the change in the average notional amount of derivative contracts outstanding. The variance due to average rate represents the change in the net periodic derivative cash settlements amount resulting from the net difference between the average rate paid and the average rate received for interest rate swaps during the period.

(3)See “Non-GAAP Financial Measures and Reconciliations” in this Report for additional information on our adjusted non-GAAP financial measures.

Reported Net Interest Income

Reported net interest income of $7280 million for Q2Q3 FY2026 increased $713 million from Q2Q3 FY2025, driven by the combined impact of an increase in the net interest yield of 310 basis points, or 414%, to 0.7784%, and an increase in average interest-earning assets of $21,~~109~~831 million, or 65%.

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•Average Interest-Earning Assets: The increase in average interest-earning assets of $21,~~109~~831 million, or 65%, was attributable to a growth in average total loans of $21,~~347~~964 million, or 75%, partially offset by a decrease of $~~238~~133 million in our average total investments, which include cash and investment securities. The average loans increase was driven by increases in average ~~line~~long-term offixed-rate ~~credit~~ loans of $~~990~~1,005 million, average long-term ~~fixed~~variable-rate loans of $~~967~~485 million and average ~~long-term~~line ~~variable-rate~~of credit loans of $~~390~~474 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 between Q2Q3 FY2026 and Q2Q3 FY2025 was also attributable to ~~additional~~ borrowings under emergency line of credit loans by our members, primarily for recovery costs ~~for~~related ~~Hurricane~~to ~~Helene, which impacted~~ the ~~Southeastern~~Michigan ~~United~~ice ~~States~~storm in ~~September~~March ~~2024~~2025.

•Net Interest Yield: The increase in the net interest yield of 310 basis points, or 414%, was primarily attributable to ana ~~increase~~decrease in our average cost of borrowings of 11 basis points to 4.19%, partially offset by a decrease in the average yield on interest-earning assets of 1 basis point to 4.74%,. anThe ~~increase in the~~ benefit from non-interest bearing funding ofremained 1unchanged ~~basis~~at ~~point to~~ 0.3029%,. ~~and~~The a decrease in our average cost of borrowings ofwas 1driven ~~basis~~by ~~point~~lower toaverage ~~4.27%.~~cost ~~The~~of ~~increase~~short-term inborrowings ~~average~~and ~~yields~~variable-rate on long-term ~~fixed-rate~~debt ~~loans~~due ~~was~~to the ~~primary~~federal ~~driver~~funds ~~for~~rate ~~the~~cuts ~~increase~~since inFebruary 28, ~~the average yield on interest-earning assets~~2025, ~~while~~as ~~the~~well ~~interest~~as ~~rates for variable~~fixed-rate ~~and~~long-term ~~line~~debt ofissued ~~credit~~at ~~loans~~lower ~~decreased~~interest ~~due~~rates ~~to the federal funds rate cuts~~ since ~~November~~February 3028, ~~2024~~2025. The decrease in ~~our~~ average ~~cost~~yields ofon ~~borrowings~~interest-earning asset was primarily driven by the lower ~~average~~interest ~~cost~~rates offor ~~our short~~variable-~~term~~rate ~~borrowings~~ and ~~variable-rate~~line ~~long-term~~of ~~debt~~credit loans due to the federal funds rate cuts since ~~November~~February 3028, ~~2024, partially offset by fixed-rate long-term debt issued at higher interest rates since November 30, 2024~~2025.

Reported net interest income of $~~143~~223 million for YTD FY2026 increased $1629 million from YTD FY2025, driven by the combined impact of an increase in the net interest yield of 56 basis points, or 78%, to 0.7678%, and an increase in average interest-earning assets of $2,~~166~~055 million, or 6%.

•Average Interest-Earning Assets: The increase in average interest-earning assets of $2,~~166~~055 million, or 6%, was attributable to a growth in average total loans of $2,~~374~~239 million, or 76%, partially offset by a decrease of $~~208~~184 million in our average total investments, which include cash and investment securities. The average loans increase was driven by increases in average ~~line~~long-term offixed-rate ~~credit~~ loans of $~~1,105~~942 million, average ~~long-term~~line ~~fixed-rate~~of credit loans of $~~911~~897 million and average long-term variable-rate loans of $~~358~~400 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 between YTD FY2026 and YTD FY2025 was also attributable to ~~additional~~ borrowings under emergency line of credit loans by our members, primarily for recovery costs ~~for~~related ~~Hurricane~~to ~~Helene, which impacted~~ the ~~Southeastern~~Michigan ~~United~~ice ~~States~~storm in ~~September~~March ~~2024~~2025.

•Net Interest Yield: The increase in the net interest yield of 56 basis points, or 78%, was primarily attributable to a decrease in our average cost of borrowings of 5 basis points to 4.24% and an increase in the average yield on interest-earning assets of 21 basis ~~points~~point to 4.73%,. anThe ~~increase in the~~ benefit from non-interest bearing funding ofremained 1unchanged ~~basis~~at ~~point to~~ 0.3029%,. ~~and~~The a decrease in our average cost of borrowings was driven by the lower average cost of 2short-term ~~basis~~borrowings ~~points~~and variable-rate long-term debt due to 4the federal funds rate cuts since February 28, 2025.~~27%.~~ 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 since ~~November~~February 3028, ~~2024~~2025. The decrease in our average cost of borrowings was driven by the lower average cost of our short-term borrowings and variable-rate long-term debt due to the federal funds rate cuts since November 30, 2024, partially offset by fixed-rate long-term debt issued at higher interest rates since November 30, 2024.

Adjusted Net Interest Income

Adjusted net interest income of $9092 million for Q2Q3 FY2026 ~~decreased~~increased $25 million from Q2Q3 FY2025, driven byprimarily ~~a decrease in the adjusted net interest yield of 8 basis points, or 8%, to 0.95%, partially offset~~ by an increase in average interest-earning assets of $21,~~109~~831 million, or 65%.

•Average Interest-Earning Assets: The increase in average interest-earning assets was primarily driven by the growth in average total loans, as discussed above.

•Adjusted Net Interest Yield: The ~~decrease in the~~ adjusted net interest yield ofwas 80.97% ~~basis~~for ~~points~~Q3 FY2026, orunchanged ~~8%,~~from ~~was~~Q3 ~~attributable~~FY2025, toas anthe ~~increase~~decrease in ~~our~~the ~~adjusted~~ average ~~cost~~yield ofon ~~borrowings~~interest-earning assets of 111 basis ~~points~~point to 4.0774%, ~~which~~ was ~~partially~~ offset by ~~the~~a ~~combined~~decrease ~~impact of an increase~~ in ~~the~~our adjusted average ~~yield~~cost onof ~~interest-earning~~borrowings ~~assets~~ of 1 basis point to 4.7405%. ~~and~~The ~~an increase in the~~ benefit from non-interest bearing funding ofremained 2unchanged ~~basis~~at ~~points to~~ 0.28%. We discussed above the primary drivers for the increase in the average yield on interest-earning assets. ~~and~~The ~~the~~1 basis point decrease in the adjusted average cost of borrowings. ~~However,~~was driven by lower average cost of short-term borrowings and variable-rate long-term debt resulting from the federal funds rate cuts since February 28, 2025, as well as fixed-rate long-term debt issued at lower rates since February 28, 2025. These decreases were largely offset by

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~~primary driver of the increase in adjusted average cost of borrowings in Q2 FY2026 compared with Q2 FY2025 was the~~ lower average yield earned on our interest rate swaps derivative cash settlements in Q2Q3 FY2026 compared with Q3 FY2025, as discussed below.

Adjusted net interest income ofwas $~~181~~273 million for YTD FY2026, ~~decreased~~a $5slight ~~million~~increase from YTD FY2025, ~~driven~~as bythe aincrease ~~decrease~~ in ~~the~~average ~~adjusted net~~ interest-earning ~~yield~~assets of 8$2,055 ~~basis points~~million, or 86%, towas ~~0.96%,~~largely ~~partially~~ offset by ana ~~increase~~decrease in ~~average~~the adjusted net interest~~-earning~~ ~~assets~~yield of ~~$2,166~~6 ~~million~~basis points, or 6%, to 0.96%.

•Average Interest-Earning Assets: The increase in average interest-earning assets was primarily driven by the growth in average total loans, as discussed above.

•Adjusted Net Interest Yield: The decrease in the adjusted net interest yield of 86 basis points, or 86%, was attributable to an increase in our adjusted average cost of borrowings of 127 basis points to 4.05%, ~~which was~~ partially offset by ~~the combined impact of~~ an increase in the average yield on interest-earning assets of 21 basis ~~points~~point to 4.73%. ~~and~~The ~~an increase in the~~ benefit from non-interest bearing funding ofremained 2unchanged ~~basis~~at ~~points to~~ 0.28%. We discussed above the primary drivers for the increase in the average yield on interest-earning assets and the decrease in the average cost of borrowings. However, the primary driver of the increase in adjusted average cost of borrowings in YTD FY2026 compared with YTD FY2025 was the lower average yield earned on our interest rate swaps derivative cash settlements in YTD FY2026, as discussed below.

Derivative Cash Settlements

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~~rates, ~~received~~as ~~each~~the ~~period~~benchmark variable rate for the floating rate payments is based on daily compounded Secured Overnight Financing Rate (“SOFR”). 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 $1813 million for Q2Q3 FY2026 compared with $2620 million for Q2Q3 FY2025, and net periodic derivative cash settlements interest income of $3850 million for YTD FY2026 compared with $5879 million for YTD FY2025. The decreases for both the quarterly and year-to-date periods primarily reflected lower net interest rates received on our pay-fixed swaps during the current periods compared to the prior-year periods, due to the federal funds rate cuts since ~~November~~February 3028, ~~2024~~2025.

See “Non-GAAP Financial Measures and Reconciliations” in this Report for additional information on our non-GAAP financial measures, including a reconciliation of these measures to the most comparable U.S. GAAP financial measures.

Provision (Benefit) for Credit Losses

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 ~~increased~~and allowance coverage ratio decreased to $4336 million and 0.09%, respectively, as of ~~November~~February 3028, ~~2025~~2026, compared with $41 million asand ~~of May 31, 2025. Our allowance coverage ratio remained steady at~~ 0.11%, respectively, as of ~~both November 30, 2025 and~~ May 31, 2025.

We recorded a ~~provision~~benefit for credit losses of $17 million ~~for both Q2 FY2026~~ and ~~Q2 FY2025, and a provision for credit losses of~~ $36 million ~~and $2 million~~ for ~~YTD~~Q3 FY2026 and ~~YTD~~Q3 FY2025, respectively., ~~The~~primarily ~~provision~~driven ~~for~~by ~~credit~~decreases ~~losses~~in ~~was~~the ~~driven~~asset-specific ~~primarily~~allowance ~~from~~for ~~increases~~a innonperforming ~~the~~and ~~collective~~nonaccrual ~~allowance~~CFC ~~due~~power tosupply ~~the~~loan ~~growth~~due into ~~our~~higher ~~loan~~actual ~~portfolio~~and ~~for~~expected ~~both~~payments ~~the~~on ~~quarterly~~this ~~and~~loan ~~year-to-date~~during both periods.

We ~~discuss~~recorded ~~our~~a ~~methodology~~benefit for ~~estimating~~credit ~~the~~losses ~~allowance~~of $5 million and $4 million for ~~credit~~YTD ~~losses~~FY2026 inand ~~“Note~~YTD ~~1—Summary~~FY2025, ofrespectively. ~~Significant~~The ~~Accounting~~$5 ~~Policies—Allowance~~million benefit for ~~Credit~~credit ~~Losses—Loan~~losses ~~Portfolio”~~for inYTD ~~our~~FY2026 ~~2025~~was ~~Form~~primarily 10driven by a $9 million decrease in the asset-K.specific Weallowance ~~also~~resulting ~~provide~~from ~~additional~~higher-than-expected ~~information~~payments received on ~~our~~a nonperforming and nonaccrual CFC power supply loan, partially offset by a $4 million increase in the collective allowance attributable to growth in our loan portfolio. The $4 million benefit for credit losses ~~below~~for ~~under~~YTD ~~section~~FY2025 ~~“Credit~~was ~~Risk—Allowance~~primarily from a decrease of $7 million in the asset specific allowance for ~~Credit~~a ~~Losses”~~nonperforming and ~~“Note~~nonaccrual ~~5—Allowance~~CFC ~~for~~power ~~Credit~~supply ~~Losses”~~loan attributable to an increase in ~~this~~the ~~Report.~~expected payments on the loan, partially offset by a $3 million increase in the collective allowance due to loan portfolio growth.

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We discuss our methodology for estimating the allowance for credit losses in “Note 1—Summary of Significant Accounting Policies—Allowance for Credit Losses—Loan Portfolio” in our 2025 Form 10-K. We also provide additional information on our allowance for credit losses below under section “Credit Risk—Allowance for Credit Losses” and “Note 5—Allowance for Credit Losses” in this Report.

Non-Interest Income (Loss)

Non-interest income (loss) consists of fee and other income, gains and losses on derivatives not accounted for in hedge accounting relationships and gains and losses on equity and debt investment securities, which consist of both unrealized and realized gains and losses.

Table 9 presents the components of non-interest income (loss) recorded in our consolidated statements of operations.

Table 9: Non-Interest Income (Loss)

(Dollars in thousands)

Q2Q3 FY2026

Q2Q3 FY2025

YTD FY2026

YTD FY2025

Non-interest income (loss) components:

Fee and other income

6,~~687~~796

5,~~424~~982

1320,~~762~~558

1117,~~092~~074

Derivative gains (losses)

(1832,~~641~~370)

~~109~~40,~~038~~142

(5083,~~845~~215)

(8949,~~287~~145)

Investment securities gains (losses)

(~~1,027~~142)

~~2,097~~663

~~418~~276

6,~~228~~891

Total non-interest income (loss)

(1225,~~981~~716)

~~116~~46,~~559~~787

(3662,~~665~~381)

(7125,~~967~~180)

The variances in non-interest income (loss) were primarily attributable to changes in the derivative gains (losses) recognized in our consolidated statements of operations. In addition, we experienced a shift from gains to losses recorded on our debt and equity investment securities of $31 million for Q2Q3 FY2026, compared with Q2Q3 FY2025, and a decrease in gains on these investment securities of $67 million for YTD FY2026, compared with YTD FY2025. The variances for the quarterly and year-to-date periods were driven by period-to-period market fluctuations in fair value, ~~and~~including ~~lower~~both ~~debt~~realized ~~security balance due to maturities. We expect period-to-period market fluctuations in the fair value of our equity~~ and ~~debt~~unrealized ~~investment~~gains ~~securities~~(loss), ~~which we report together with realized gains~~ and ~~losses~~lower ~~from~~debt ~~the~~security ~~sale~~balance ofdue ~~investment~~to ~~securities in our consolidated statements of operations~~maturities.

Derivative Gains (Losses)

As of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, our derivatives portfolio included interest rate swap agreements not designated for hedge accounting, composed of pay-fixed swaps and receive-fixed swaps, with benchmark variable rate for the floating rate payments based on daily compounded ~~Secured Overnight Financing Rate (“~~SOFR”). 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 ~~November~~February 3028, ~~2025~~2026 and May 31, 2025.

The total notional amount for our interest rate swaps was $6,~~736~~257 million and $7,252 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively. The portfolio was primarily composed of longer-dated pay-fixed swaps, which accounted for approximately 86% and 80% of the outstanding notional amount as of ~~both November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively. Consequently, changes in medium- and longer-term swap rates generally have a more pronounced impact on the net fair value of our swap portfolio. As of ~~November~~February 3028, ~~2025~~2026, the average remaining maturity of our pay-fixed and receive-fixed swaps was 17 years and one year, respectively, compared with 16 years and two years, respectively, as of May 31, 2025.

Table 10 presents the components of net derivative gains (losses) recorded in our consolidated statements of operations. Derivative cash settlements interest income (expense) represents the net periodic contractual interest amount for our interest rate swaps during the reporting period. Derivative forward value gains (losses) represent the change in fair value of our interest rate swaps during the applicable reporting period due to changes in expected future interest rates over the remaining life of our derivative contracts.

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Table 10: Derivative Gains (Losses)

(Dollars in thousands)

Q2Q3 FY2026

Q2Q3 FY2025

YTD FY2026

YTD FY2025

Derivative gains (losses) attributable to:

Derivative cash settlements interest income(1)

1712,~~585~~592

2620,~~406~~309

3750,~~852~~444

5878,~~467~~776

Derivative forward value gain (losses)

(3644,~~226~~962)

8219,~~632~~833

(88133,~~697~~659)

(~~147~~127,~~754~~921)

Derivative gains (losses)

(1832,~~641~~370)

~~109~~40,~~038~~142

(5083,~~845~~215)

(8949,~~287~~145)

___________________________

(1) During Q2YTD FY2026, in connection with the redemption of the 2043 Notes, we terminated $300 million in notional amount of our pay-fixed interest rate swaps hedging the 2043 Notes. The termination resulted in an immaterial amount of settlement gains recorded in derivative gains (losses) in our consolidated statements of operations. See “Note 8—Subordinated Deferrable Debt” for details on the redemption of the 2043 Notes.

We recorded derivative losses of $1932 million for Q2Q3 FY2026, ~~primarily~~driven ~~attributable~~by to declines in ~~the~~interest ~~short-term~~rates ~~and~~across ~~longer-term~~the entire swap ~~interest~~curve ~~rates~~ during Q2Q3 FY2026. In comparison, we recorded derivative gains of $~~109~~40 million for Q2Q3 FY2025, primarily attributable to increases in the ~~medium- and~~ longer-term swap interest rates during Q2Q3 FY2025.

We recorded derivative losses of $5183 million for YTD FY2026, ~~compared~~driven ~~with~~by declines in interest rates across the entire swap curve. In comparison, we recorded derivative losses of $8949 million for YTD FY2025, driven by declines in interest rates across the ~~entire~~ swap curve ~~in both periods~~, with the ~~rate~~exception ~~declines~~of inthe ~~YTD~~30-year ~~FY2026~~swap ~~being~~rate, ~~less~~which ~~pronounced~~increased ~~than~~slightly induring YTD FY2025.

We present comparative swap curves, which depict the relationship between swap rates at varying maturities, for our reported periods in Table 11 below.

Comparative Swap Curves

Table 11 provides comparative swap curves as of ~~November~~February 3028, ~~2025~~2026, ~~August~~November 3130, 2025, May 31, 2025, ~~November~~February 3028, ~~2024~~2025, ~~August~~November 3130, 2024 and May 31, 2024.

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Table 11: Comparative Swap Curves

____________________________

Benchmark rates obtained from Bloomberg.

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See “Note 9—Derivative Instruments and Hedging Activities” in this Report for additional information on our derivative instruments. Also refer to “Note 14—Fair Value Measurement” to the Consolidated Financial Statements in our 2025 Form 10-K for information on how we measure the fair value of our derivative instruments.

Non-Interest Expense

Non-interest expense consists of salaries and employee benefit expense, general and administrative expenses and other miscellaneous expenses. Table 12 presents the components of non-interest expense recorded in our consolidated statements of operations.

Table 12: Non-Interest Expense

(Dollars in thousands)

Q2Q3 FY2026

Q2Q3 FY2025

YTD FY2026

YTD FY2025

Non-interest expense components:

Salaries and employee benefits

(1920,~~262~~036)

(1718,~~439~~123)

(3959,~~238~~274)

(3452,~~627~~750)

Other general and administrative expenses

(1815,~~221~~936)

(1815,~~488~~167)

(3954,~~014~~950)

(3752,~~592~~759)

Operating expenses

(3735,~~483~~972)

(3533,~~927~~290)

(78114,~~252~~224)

(72105,~~219~~509)

Other non-interest expense

(~~759~~2,378)

(~~247~~330)

(13,~~034~~412)

(~~565~~895)

Total non-interest expense

(38,~~242~~350)

(3633,~~174~~620)

(79117,~~286~~636)

(72106,~~784~~404)

Non-interest expense increased $25 million for Q2Q3 FY2026, or 614%, from Q2Q3 FY2025, primarily attributable to an increase in operating expenses, driven by higher ~~expenses recorded for~~ salaries and employee benefits, and ~~information~~an ~~technology,~~increase ~~partially~~in ~~offset~~other ~~by lower consulting expense. Non~~non-interest expense ~~increased $7 million for YTD FY2026~~, ~~or 9%, from YTD FY2025, primarily~~ attributable to anlosses ~~increase~~on inearly ~~operating~~extinguishment ~~expenses,~~of ~~driven~~our bysubordinated ~~higher~~deferrable ~~expenses~~debt ~~recorded~~in ~~for~~Q3 ~~salaries~~FY2026. ~~and~~See ~~employee~~“Note ~~benefits,~~8—Subordinated ~~member~~Deferrable ~~relations,~~Debt” ~~information~~in ~~technology,~~this ~~and~~Report ~~depreciation~~for ~~and~~more ~~amortization, partially offset by lower consulting expense~~information.

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Non-interest expense increased $11 million for YTD FY2026, or 11%, from YTD FY2025, reflecting increases in operating expenses and other non-interest expense. The increase in operating expenses was primarily driven by higher expenses for salaries and employee benefits, member relations, information technology, and depreciation and amortization, partially offset by lower consulting expense. The increase in other non-interest expense was attributable to losses on early extinguishment of our subordinated deferrable debt, as discussed above.

Net Income (Loss) Attributable to Noncontrolling Interests

WeNet ~~recorded~~income ~~a net loss~~ attributable to noncontrolling interests ofwas less than $1 million for Q2each ~~FY2026 compared with a net income attributable to noncontrolling interests~~ of ~~less~~Q3 ~~than~~FY2026, $1Q3 ~~million for Q2~~ FY2025., ~~We recorded a net loss attributable to noncontrolling interests of less than $1 million for both~~ YTD FY2026, and YTD FY2025. The net income ~~(loss)~~ attributable to noncontrolling interests represented 100% of the results of operations of NCSC, as the members of NCSC own or control 100% of the interest in its company. The fluctuations in net income (loss) attributable to noncontrolling interests are primarily due to changes in the fair value of NCSC’s derivative instruments recognized in NCSC’s earnings.


CONSOLIDATED BALANCE SHEET ANALYSIS

Total assets increased $~~782~~1,568 million, or 24%, to $39,~~107~~893 million as of ~~November~~February 3028, ~~2025~~2026 compared with May 31, 2025, primarily due to growth in our loan portfolio. We experienced an increase in total liabilities of $~~811~~1,575 million, or 24%, to $36,~~033~~796 million as of ~~November~~February 3028, ~~2025~~2026 compared with May 31, 2025, largely due to the issuances of debt to fund the growth in our loan portfolio. Total equity decreased $297 million to $3,~~074~~097 million as of ~~November~~February 3028, ~~2025~~2026, primarily attributable to the CFC Board of Directors’ authorized patronage capital retirement of $53 million in YTD FY2026, partially offset by our reported net income of $2447 million for the period.

Below is a discussion of changes in the major components of our assets and liabilities during YTD FY2026. Period-end balance sheet amounts may vary from average balance sheet amounts due to liquidity and balance sheet management activities that are intended to manage our liquidity requirements and market risk exposure in accordance with our risk appetite framework.

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Loan Portfolio

We segregate our loan portfolio into segments, by legal entity, based on the borrower member class, which consists of CFC distribution, CFC power supply, CFC statewide and associate, NCSC electric and NCSC telecom. We offer both long-term and line of credit loans to our borrowers. Under our long-term loan facilities, a borrower may select a fixed interest rate or a variable interest rate at the time of each loan advance. Line of credit loans are revolving loan facilities and generally have a variable interest rate. We describe and provide additional information on our member classes under “Item 1. Business—Members” and information about our loan programs and loan product types under “Item 1. Business—Loan and Guarantee Programs” in our 2025 Form 10-K.

Loans Outstanding

Loans to members totaled $3738,~~842~~750 million and $37,080 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively. Loans to CFC distribution and power supply borrowers accounted for 94% and 95% of total loans to members as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively. The increase in loans to members of $~~762~~1,670 million, or 25%, from May 31, 2025, was primarily attributable to net increases in long-term and line of credit loans of $~~582~~1,076 million and $~~180~~594 million, respectively. We experienced increases in CFC distribution loans, CFC power supply loans, CFC statewide and associate loans, NCSC electric and NCSC telecom loans of $~~428~~1,125 million, $~~237~~393 million, $922 million, $6884 million and $1944 million, respectively during YTD FY2026.

Long-term loan advances totaled $12,~~412~~404 million during YTD FY2026, of which approximately 97% was provided to members for capital expenditures, 1% was provided for bridge financing, 1% was provided for the refinancing of loans made by other lenders, and 1% was provided for other purposes. In comparison, long-term loan advances totaled $12,~~281~~083 million during YTD FY2025, of which approximately 9597% was provided to members for capital expenditures, 42% was provided for the refinancing of loans made by other lenders and 1% was provided for other purposes. Of the $12,~~412~~404 million total long-term loans advanced during YTD FY2026, $12,~~160~~014 million were fixed-rate loan advances with a weighted average fixed-rate term of seven years. In comparison, of the $1,281 million total long-term loans advanced during YTD FY2025, $1,162 million were fixed-rate loan advances with a weighted average fixed-rate term of eight years.

Our aggregate loans outstanding to CFC electric distribution cooperative members relating to broadband projects, which we started tracking in October 2017, increased to an estimated $3,505 million as of November 30, 2025, from approximately $3,441 million as of May 31, 2025. 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 years and is expected to increase at a slower rate.20

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weighted average fixed-rate term of seven years. In comparison, of the $2,083 million total long-term loans advanced during YTD FY2025, $1,911 million were fixed-rate loan advances with a weighted average fixed-rate term of eight years.

Our aggregate loans outstanding to CFC electric distribution cooperative members relating to broadband projects, which we started tracking in October 2017, increased to an estimated $3,483 million as of February 28, 2026, from approximately $3,441 million as of May 31, 2025. 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 recent years and is expected to increase at a slower rate. As a result, we expect broadband related loan advances to moderate.

We provide information on the credit performance and risk profile of our loan portfolio below under the section “Credit Risk—Loan Portfolio Credit Risk” in this Report. Also refer to “Note 4—Loans” in this Report for addition information on our loans to members.

Debt

We utilize both secured and unsecured short-term borrowings and long-term debt as part of our funding strategy and asset/liability interest rate risk management. We seek to maintain diversified funding sources, including our members, affiliates, the capital markets and other private funding sources. Our funding strategy consists of various products and programs across markets to manage funding concentrations and reduce our liquidity or debt rollover risk.

Debt Outstanding

Table 13 displays the composition, by product type, of our outstanding debt as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025. Table 13 also displays the composition of our debt based on several additional selected attributes.

2021

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Table 13: Debt—Total Debt Outstanding

(Dollars in thousands)	~~November~~February 3028, ~~2025~~2026		May 31, 2025		Change
Debt product type:
Commercial paper:
Members, at par	$	1945,~~061,495~~435	$	785,608	$	~~275~~159,~~887~~827
Dealer, net of discounts	2,~~457~~192,~~142~~686		2,206,451		~~250~~(13,~~691~~765)
Total commercial paper	3,~~518~~138,~~637~~121		2,992,059		~~526~~146,~~578~~062
Select notes to members	1,~~437~~301,~~847~~078		1,304,240		~~133~~(3,~~607~~162)
Daily liquidity fund notes to members	~~418~~294,~~830~~776		343,916		74(49,~~914~~140)
Medium-term notes:
Members, at par	~~818~~732,~~875~~680		870,849		(51138,~~974~~169)
Dealer(1)	10,444,505		9,611,038		833,467
Dealer(1)(2)	12,372,710		9,611,038		2,761,672
Total medium-term notes	1113,~~263~~105,~~380~~390		10,481,887		~~781~~2,~~493~~623,503
Collateral trust bonds(1)(2)	6,496,486		6,895,702		(399,216)
Collateral trust bonds(1)(3)	6,497,499		6,895,702		(398,203)
Guaranteed Underwriter Program notes payable	65,~~297~~743,~~899~~393		6,456,852		(~~158~~713,~~953~~459)
Farmer Mac notes payable	3,~~719~~929,~~828~~086		3,780,461		~~(60~~148,~~633)~~625
Subordinated deferrable debt(1)	1,306,608		1,329,485		(22,877)
Subordinated deferrable debt(1)(4)	1,209,713		1,329,485		(119,772)
Members’ subordinated certificates:
Membership subordinated certificates	627,266		628,637		(1,371)
Loan and guarantee subordinated certificates	~~262~~253,~~625~~843		309,914		(4756,~~289~~071)
Member capital securities	246,~~697~~797		246,163		~~534~~634
Total members’ subordinated certificates	1,~~136~~127,~~588~~906		1,184,714		(4856,~~126~~808)
Total debt outstanding	$	3536,~~596~~346,~~103~~962	$	34,769,316	$	~~826~~1,~~787~~577,646

Security type:
Secured debt	4644	%	49	%
Unsecured debt	5456		51
Total	100	%	100	%
Funding source:
Members	1412	%	13	%
Other non-capital markets:
Guaranteed Underwriter Program notes payable	1816		18
Farmer Mac notes payable	1011		11
Total other non-capital markets	2827		29
Capital markets	5861		58
Total	100	%	100	%
Interest rate type:
Fixed-rate debt	7779	%	81	%
Variable-rate debt	2321		19
Total	100	%	100	%
Interest rate type including swaps impact:
Fixed-rate debt(3)	88	%	94	%
Fixed-rate debt(5)	91	%	94	%
Variable-rate debt(4)	12		6
Variable-rate debt(6)	9		6
Total	100	%	100	%
Maturity classification:(5)
Maturity classification:(7)
Short-term borrowings	1614	%	15	%
Long-term and subordinated debt(6)	84		85
Long-term and subordinated debt(8)	86		85
Total	100	%	100	%

____________________________

(1)Amount is presented net of unamortized discounts, premium and issuance costs as applicable.

(2)Amount includes ~~collateral~~medium-term ~~trust~~notes ~~bonds~~ issued to ~~investors~~both ~~through~~institutional ~~both~~and ~~public~~retail ~~offerings~~investors ~~and~~in ~~private~~the ~~placement~~capital ~~transactions~~markets.

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(3)~~Includes~~Amount ~~variable-rate~~includes ~~debt~~collateral ~~that~~trust ~~has~~bonds ~~been~~issued ~~swapped~~ to ainvestors ~~fixed~~through ~~rate,~~both ~~net~~public ofofferings ~~any~~and ~~fixed-rate~~private ~~debt~~placement ~~that has been swapped to a variable rate~~transactions.

(4)~~Includes~~Amount ~~fixed-rate~~includes ~~debt~~subordinated ~~that~~deferrable ~~has~~debt ~~been~~issued ~~swapped~~ to ainstitutional ~~variable~~and ~~rate,~~retail ~~net~~investors ofthrough ~~any~~public ~~variable-rate~~offerings ~~debt~~transactions. ~~that~~Amount ~~has~~as ~~been~~of ~~swapped~~February 28, to2026 aalso ~~fixed rate. Also~~ includes ~~commercial~~subordinated ~~paper~~deferrable ~~notes,~~debt ~~which~~issued ~~generally~~to ~~have~~investors ~~maturities~~through ofprivate ~~less~~placement ~~than 90 days~~transactions. ~~The~~See ~~interest~~“Note ~~rate~~8—Subordinated onDeferrable ~~commercial~~Debt” ~~paper~~for ~~notes~~details ~~does~~on ~~not change once~~ the ~~note~~private ~~has~~placement ~~been~~of ~~issued;~~subordinated ~~however,~~deferrable ~~the interest rate for new commercial paper issuances changes daily~~debt.

(5)~~Borrowings~~Includes ~~with~~variable-rate andebt ~~original~~that ~~contractual~~has ~~maturity~~been ofswapped ~~one~~to ~~year~~a orfixed ~~less~~rate, ~~are~~net ~~classified~~of asany ~~short~~fixed-~~term~~rate ~~borrowings.~~debt ~~Borrowings~~that ~~with~~has anbeen ~~original~~swapped ~~contractual~~to ~~maturity~~a ofvariable ~~greater than one year are classified as long-term debt~~rate.

(6)~~Consists~~Includes ~~of long~~fixed-~~term~~rate debt, ~~subordinated~~that ~~deferrable~~has ~~debt~~been ~~and~~swapped ~~total~~to ~~members’~~a ~~subordinated~~variable rate, net of any variable-rate debt ~~reported~~that onhas ~~our~~been ~~consolidated~~swapped ~~balance~~to ~~sheets~~a fixed rate. ~~Maturity~~Also ~~classification~~includes iscommercial ~~based~~paper notes, which generally have maturities of less than 90 days. The interest rate on ~~the~~commercial ~~original~~paper ~~contractual~~notes ~~maturity~~does asnot ofchange once the ~~date~~note ofhas ~~issuance~~been ofissued; however, the ~~debt~~interest rate for new commercial paper issuances changes daily.

We(7)Borrowings ~~issue~~with ~~debt~~an ~~primarily~~original tocontractual ~~fund~~maturity ~~growth~~of inone ~~our~~year ~~loan portfolio. As such, our debt outstanding generally increases and decreases in response to member loan demand. Total debt outstanding increased $827 million,~~ or ~~2%,~~less toare ~~$35,596~~classified ~~million~~ as ofshort-term ~~November 30, 2025 compared with May 31, 2025, due to~~ borrowings ~~to fund the increase in loans to members~~. WeBorrowings ~~provide~~with ~~additional~~an ~~information~~original oncontractual ~~our~~maturity ~~financing~~of ~~activities~~greater ~~during~~than ~~YTD~~one ~~FY2026~~year inare ~~the~~classified ~~below~~as ~~section~~long-term ~~“Liquidity Risk” of this Report~~debt.

(8)Consists of long-term debt, subordinated deferrable debt and total members’ subordinated certificates reported on our consolidated balance sheets. Maturity classification is based on the original contractual maturity as of the date of issuance of the debt.

We issue debt primarily to fund growth in our loan portfolio. As such, our debt outstanding generally increases and decreases in response to member loan demand. Total debt outstanding increased $1,578 million, or 5%, to $36,347 million as of February 28, 2026 compared with May 31, 2025, due to borrowings to fund the increase in loans to members. We provide additional information on our financing activities during YTD FY2026 in the below section “Liquidity Risk” of this Report.

Member Investments

Debt securities issued to our members represent an important, stable source of funding. Table 14 displays member debt outstanding, by product type, as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025.

Table 14: Debt—Member Investments

	November 30, 2025					May 31, 2025					Change
	February 28, 2026					May 31, 2025					Change
(Dollars in thousands)	Amount			% of Total(1)		Amount			% of Total(1)
Member investment product type:
Commercial paper	$	1945,~~061,495~~435		30	%	$	785,608		26	%	$	~~275~~159,~~887~~827
Select notes	1,~~437~~301,~~847~~078			100		1,304,240			100		~~133~~(3,~~607~~162)
Daily liquidity fund notes	~~418~~294,~~830~~776			100		343,916			100		74(49,~~914~~140)
Medium-term notes	~~818~~732,~~875~~680			76		870,849			8		(51138,~~974~~169)
Members’ subordinated certificates	1,~~136~~127,~~588~~906			100		1,184,714			100		(4856,~~126~~808)
Total member investments	$	4,~~873~~401,~~635~~875				$	4,489,327				$	~~384~~(87,~~308~~452)
Percentage of total debt outstanding	1412		%			13		%

____________________________

(1)Represents outstanding debt attributable to members for each debt product type as a percentage of the total outstanding debt for each debt product type.

Member investments accounted for 1412% and 13% of total debt outstanding as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively. Over the last twelve fiscal quarters, our member investments, including both short-term and long-term investments, have averaged $4,~~813~~786 million, calculated based on outstanding member investments as of the end of each fiscal quarter.

Short-Term Borrowings

Short-term borrowings consist of borrowings with an original contractual maturity of one year or less and do not include the current portion of long-term debt. Short-term borrowings increased $9 million to $5,~~815~~101 million as of ~~November~~February 3028, ~~2025~~2026, ~~from~~compared ~~$5,091~~with ~~million as of~~ May 31, 2025, primarily driven by an increase in ~~outstanding~~short-term ~~dealer~~member ~~commercial~~investments ~~paper~~ of $~~251~~23 million, ~~and~~partially anoffset ~~increase~~by a decrease in ~~short-term~~dealer ~~member~~commercial ~~investments~~paper of $~~473~~14 million during YTD FY2026. Short-term borrowings accounted for 1614% and 15% of total debt outstanding as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively.

See “Liquidity Risk” below and “Note 6—Short-Term Borrowings” for information on the composition of our short-term borrowings.

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Long-Term and Subordinated Debt

Long-term debt, defined as debt with an original contractual maturity term of greater than one year, primarily consists of medium-term notes, collateral trust bonds, notes payable under the Guaranteed Underwriter Program and notes payable under the Farmer Mac revolving note purchase agreement. Subordinated debt consists of subordinated deferrable debt and members’ subordinated certificates. Our subordinated deferrable debt and members’ subordinated certificates have original contractual maturity terms of greater than one year.

Long-term and subordinated debt was $2931,~~781~~246 million as of ~~November~~February 3028, ~~2025~~2026, compared with $29,678 million as of May 31, 2025. The increase ~~primarily~~of $1,568 million reflects ~~the~~net issuances of $12,~~738~~763 million and $149 million in dealer medium-term notes, ~~partially~~and ~~offset~~long-term bynotes ~~$906~~payable ~~million~~under inthe ~~repayments.~~Farmer ~~The~~Mac ~~balance~~revolving ~~was~~note ~~further~~purchase ~~reduced~~agreement, respectively. These were partially offset by ~~aggregate~~net repayments of $~~628~~713 million, on$413 ~~secured debt~~million, ~~including~~$121 ~~notes~~million, ~~payable~~$57 ~~under~~million, ~~the~~and ~~Guaranteed~~$54 ~~Underwriter~~million ~~Program,~~in notes payable under the ~~Farmer~~Guaranteed ~~Mac~~Underwriter ~~revolving purchase agreement~~Program, ~~and~~ collateral trust bonds, ~~as well as net repayments of $71 million on~~ subordinated deferrable debt, ~~and~~ members’ subordinated certificates, ~~during~~and ~~YTD~~member ~~FY2026~~medium-term notes, respectively. Long-term and subordinated debt accounted for 8486% and 85% of total debt outstanding as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively.

We provide additional information on our long-term debt below under the section “Liquidity Risk” and “Note 7—Long-Term Debt” and “Note 8—Subordinated Deferrable Debt” in this Report.

Equity

Table 15 presents the components of total CFC equity and total equity as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025.

Table 15: Equity

(Dollars in thousands)

~~November~~February 3028, ~~2025~~2026

May 31, 2025

Equity components:

Membership fees and educational fund:

Membership fees

967

966

Educational fund

1,~~972~~917

2,658

Total membership fees and educational fund

2,~~939~~884

3,624

Patronage capital allocated

~~895~~894,~~548~~736

948,526

Members’ capital reserve

1,~~631~~632,~~609~~421

1,631,609

Total allocated equity

2,530,~~096~~041

2,583,759

Unallocated net income (loss):

Prior fiscal year-end cumulative derivative forward value gains(1)

501,663

606,215

Year-to-date derivative forward value losses(1)

(88133,~~560~~532)

(104,552)

Period-end cumulative derivative forward value gains(1)

~~413~~368,~~103~~131

501,663

Other unallocated net income (loss)

~~112~~179,~~214~~574

(709)

Unallocated net income

~~525~~547,~~317~~705

500,954

CFC retained equity

3,~~055~~077,~~413~~746

3,084,713

Accumulated other comprehensive loss

(2,~~233~~231)

(2,236)

Total CFC equity

3,~~053~~075,~~180~~515

3,082,477

Noncontrolling interests

2021,~~864~~214

20,989

Total equity

3,~~074~~096,~~044~~729

3,103,466

____________________________

(1)Represents derivative forward value gains (losses) for CFC only, as total CFC equity does not include the noncontrolling interests of the variable interest entities, which we are required to consolidate. We present the consolidated total derivative forward value gains (losses) in Table 32 in the “Non-GAAP Financial Measures and Reconciliations” section below. Also, see “Note 14—Business Segments” in this Report for the statements of operations for CFC.

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~~The~~Total ~~decrease in total~~ equity ofdecreased $297 million to $3,~~074~~097 million as of ~~November~~February 3028, ~~2025~~2026, compared with May 31, 2025, ~~was~~ attributable primarily to the CFC Board of Directors’ authorized patronage capital retirement of $53 million in YTD FY2026, partially offset by our reported net income of $2447 million for the period.

Allocation and Retirement of Patronage Capital

We are subject to District of Columbia law governing cooperatives, under which CFC is required to make annual allocations of net earnings, if any, in accordance with the provisions of the District of Columbia statutes. We describe the allocation requirements under “Item 7. MD&A—Consolidated Balance Sheet Analysis—Equity—Allocation and Retirement of Patronage Capital” in our 2025 Form 10-K. The amount of patronage capital allocated each year by CFC’s Board of Directors is based on non-GAAP adjusted net income, which excludes the impact of derivative forward value gains (losses). We provide a reconciliation of our adjusted net income to our reported net income and an explanation of the adjustments below in “Non-GAAP Financial Measures and Reconciliations.”

In May 2025, the CFC Board of Directors authorized the allocation of $1 million of net earnings for fiscal year 2025 to the cooperative educational fund. In July 2025, the CFC Board of Directors authorized the allocation of fiscal year 2025 adjusted net income as follows: $67 million to members in the form of patronage capital and $176 million to the members’ capital reserve.

In July 2025, the CFC Board of Directors also authorized the retirement of patronage capital totaling $53 million, of which $34 million represented 50% of the patronage capital allocation for fiscal year 2025, and $19 million represented the portion of the allocation from fiscal year 2000 net earnings that has been held for 25 years pursuant to the CFC Board of Directors’ policy. This amount was returned to members in cash in September 2025. The remaining portion of the patronage capital allocation for fiscal year 2025 will be retained by CFC for 25 years pursuant to the guidelines adopted by the CFC Board of Directors in June 2009.


ENTERPRISE RISK MANAGEMENT

Overview

CFC has an Enterprise Risk Management (“ERM”) framework that is designed to identify, assess, monitor and manage the risks we assume in conducting our activities to serve the financial needs of our members. We face a variety of potential internal and external risks that can significantly affect our financial condition, liquidity position, reputation and ability to meet the expectations of our members, investors and other stakeholders. As a financial services company, the major categories of risk exposures inherent in our business activities include credit risk, liquidity risk, market risk and operational risk. These risk categories are summarized below.

•Credit risk is the risk that a borrower or other counterparty will be unable to meet its obligations in accordance with agreed-upon terms.

•Liquidity risk is the risk that we will be unable to fund our operations and meet our contractual financial obligations or that we will be unable to fund new loans to borrowers at a reasonable cost and tenor in a timely manner.

•Market risk is the risk that changes in market variables, such as movements in interest rates, may adversely affect the match between the timing of the contractual maturities, repricing and prepayments of our financial assets and the related financial liabilities funding those assets.

•Operational risk is the risk of loss resulting from inadequate or failed internal controls, processes, systems, human error or external events, including natural disasters or public health emergencies. Operational risk also includes cybersecurity risk, compliance risk, fiduciary risk, reputational risk and litigation risk.

Effective risk management is critical to our overall operations and to achieving our primary objective of providing cost-based financial products to our rural electric members while maintaining the sound financial results required to retain our investment-grade credit ratings on our rated debt instruments. In line with this, we have established a risk-management

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framework designed to oversee the key risks encountered in our operations and the maximum level of risk we are prepared to undertake, known as risk tolerance. This also includes risk limits and guidelines that are in alignment with CFC’s mission and strategic objectives. We provide a discussion of our risk management framework in our 2025 Form 10-K under “Item 7. MD&A—Enterprise Risk Management” and describe how we manage these risks under each respective MD&A section in our 2025 Form 10-K.


CREDIT RISK

Our loan portfolio, which represents the largest component of assets on our balance sheet, accounts for the substantial majority of our credit risk exposure. We also engage in certain ~~nonlending~~non-lending activities that may give rise to counterparty credit risk, such as entering into derivative transactions to manage interest rate risk and investment in debt and equity securities. We provide additional information on our credit risk-management framework under “Item 7. MD&A—Credit Risk—Credit Risk Management” in our 2025 Form 10-K.

Loan Portfolio Credit Risk

Our primary credit exposure is loans to rural electric cooperatives, which provide essential electric services to end-users, the majority of which are residential customers. We also have a limited portfolio of loans to not-for-profit and for-profit telecommunication companies. The substantial majority of loans to our borrowers are long-term fixed-rate loans with terms of up to 35 years. Long-term fixed-rate loans accounted for 8483% and 85% of total loans outstanding as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively.

Because we lend primarily to our rural electric utility cooperative members, we have had a loan portfolio inherently subject to single-industry and single-obligor credit concentration risk since our inception in 1969. We historically, however, have experienced limited defaults and losses in our electric utility loan portfolio due to several factors. First, the majority of our electric cooperative borrowers operate in states where electric cooperatives are not subject to rate regulation. Thus, they are able to make rate adjustments to pass along increased costs to the end customer without first obtaining state regulatory approval, allowing them to cover operating costs and generate sufficient earnings and cash flows to service their debt obligations. Second, electric cooperatives face limited competition, as they tend to operate in exclusive territories not serviced by public investor-owned utilities. Third, electric cooperatives typically are consumer-owned, not-for-profit entities that provide an essential service to end-users, the majority of which are residential customers. As not-for-profit entities, rural electric cooperatives, unlike investor-owned utilities, generally are eligible to apply for assistance from federal and/or state agencies to help recover from major disasters or emergencies. Fourth, electric cooperatives tend to adhere to a conservative core business strategy model that has historically resulted in a relatively stable, resilient operating environment and overall strong financial performance and credit strength for the electric cooperative network. Finally, we generally lend to our members on a senior secured basis, which reduces the risk of loss in the event of a borrower default.

Below we provide information on the credit risk profile of our loan portfolio, including security provisions, credit concentration, credit quality indicators and our allowance for credit losses.

Security Provisions

Except when providing line of credit loans, we generally lend to our members on a senior secured basis. Table 16 presents, by legal entity and member class and by loan type, secured and unsecured loans in our loan portfolio as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025. Of our total loans outstanding, 88% and 89% were secured as of ~~both November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively.

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Table 16: Loans—Loan Portfolio Security Profile

November 30, 2025

February 28, 2026

(Dollars in thousands)

Secured

% of Total

Unsecured

% of Total

Total

Member class:

CFC:

Distribution

2627,~~889~~220,~~038~~589

9190

23,~~801~~166,~~676~~697

910

2930,~~690~~387,~~714~~286

Power supply

4,~~920~~910,~~955~~422

8078

1,~~211~~378,~~256~~415

2022

6,~~132~~288,~~211~~837

Statewide and associate

~~242~~241,~~879~~563

9388

1731,~~167~~614

712

~~260~~273,~~046~~177

Total CFC

32,~~052~~372,~~872~~574

8988

4,~~030~~576,~~099~~726

1112

36,~~082~~949,~~971~~300

NCSC:

Electric

1,~~142~~159,~~264~~144

100

4,~~743~~247

—

1,~~147~~163,~~007~~391

Telecom

~~566~~584,~~912~~393

9594

2734,~~834~~595

~~594~~618,~~746~~988

Total NCSC

1,~~709~~743,~~176~~537

3238,~~577~~842

1,~~741~~782,~~753~~379

Total loans outstanding(1)

3334,~~762~~116,~~048~~111

8988

4,~~062~~615,~~676~~568

1112

3738,~~824~~731,~~724~~679

Loan type:

Long-term loans:

Fixed rate

31,~~651~~957,~~206~~015

~~100~~99

~~111~~188,~~403~~461

—1

3132,~~762~~145,~~609~~476

Variable rate

1,~~008~~073,~~632~~432

7675

~~320~~365,~~557~~497

2425

1,~~329~~438,~~189~~929

Total long-term loans

3233,~~659~~030,~~838~~447

9998

~~431~~553,~~960~~958

33,~~091~~584,~~798~~405

Line of credit loans

1,~~102~~085,~~210~~664

2321

34,~~630~~061,~~716~~610

7779

45,~~732~~147,~~926~~274

Total loans outstanding(1)

3334,~~762~~116,~~048~~111

8988

4,~~062~~615,~~676~~568

1112

3738,~~824~~731,~~724~~679



	May 31, 2025
(Dollars in thousands)	Secured		% of Total		Unsecured		% of Total		Total
Member class:
CFC:
Distribution	$	26,376,425	90	%	$	2,886,070	10	%	$	29,262,495
Power supply	4,771,255		81		1,124,245		19		5,895,500
Statewide and associate	238,596		95		12,729		5		251,325
Total CFC	31,386,276		89		4,023,044		11		35,409,320
NCSC:
Electric	1,064,125		99		14,638		1		1,078,763
Telecom	561,132		98		14,333		2		575,465
Total NCSC	1,625,257		98		28,971		2		1,654,228
Total loans outstanding(1)	$	33,011,533	89		$	4,052,015	11		$	37,063,548

Loan type:
Long-term loans:
Fixed rate	$	31,269,102	100	%	$	119,211	—	%	$	31,388,313
Variable rate	911,573		81		210,677		19		1,122,250

Total long-term loans	32,180,675		99		329,888		1		32,510,563
Line of credit loans	830,858		18		3,722,127		82		4,552,985
Total loans outstanding(1)	$	33,011,533	89		$	4,052,015	11		$	37,063,548

____________________________

(1)Represents the unpaid principal balance, net of discounts, charge-offs and recoveries, of loans as of the end of each period. Excludes unamortized deferred loan origination costs of $18 million and $16 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively.

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Credit Concentration

Concentrations of credit may exist when a lender has large credit exposures to single borrowers, large credit exposures to borrowers in the same industry sector or engaged in similar activities or large credit exposures to borrowers in a geographic region that would cause the borrowers to be similarly impacted by economic or other conditions in the region. As discussed above under “Credit Risk—Loan Portfolio Credit Risk,” because we lend primarily to our rural electric utility cooperative members, our loan portfolio is inherently subject to single-industry and single-obligor credit concentration risk. Loans outstanding to electric utility organizations totaled $3738,~~230~~113 million and $36,488 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively, and represented 98% of our total loans outstanding as of each respective date. Our credit exposure is partially mitigated by long-term loans guaranteed by RUS, which totaled $~~100~~97 million and $105 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively.

Single-Obligor Concentration

Table 17 displays the outstanding loan exposure for our 20 largest borrowers, by legal entity and member class, as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025. Our 20 largest borrowers consisted of 1413 distribution systems and ~~six~~seven power supply systems as of ~~both November~~February 3028, ~~2025~~2026 and 14 distribution systems and six power supply systems as of May 31, 2025. The largest total exposure to a single borrower or controlled group represented approximately 1% of total loans outstanding as of both ~~November~~February 3028, ~~2025~~2026 and May 31, 2025.

Table 17: Loans—Loan Exposure to 20 Largest Borrowers

	November 30, 2025				May 31, 2025
	February 28, 2026				May 31, 2025
(Dollars in thousands)	Amount		% of Total		Amount		% of Total
Member class:
CFC:
Distribution	$	54,~~017~~834,~~011~~697	1412	%	$	5,054,345	14	%
Power supply	12,~~930~~238,~~455~~117		56		1,926,448		5
Total CFC	67,~~947~~072,~~466~~814		1918		6,980,793		19
NCSC Electric	~~163~~174,~~397~~842		—1		168,063		—
Total loan exposure to 20 largest borrowers	7,~~110~~247,~~863~~656		19		7,148,856		19
Less: Loans covered under Farmer Mac standby purchase commitment(1)	(~~181~~205,~~101~~209)		(1)		(155,078)		—
Net loan exposure to 20 largest borrowers	$	67,~~929~~042,~~762~~447	18	%	$	6,993,778	19	%

____________________________

(1)We entered into a long-term standby purchase commitment agreement with Farmer Mac during fiscal year 2016. Under this agreement, we may designate certain long-term loans to be covered under the commitment, subject to approval by Farmer Mac, and in the event any such loan later goes into payment default for at least 90 days, upon request by us, Farmer Mac must purchase such loan at par value. See “Note 4—Loans” in this Report for additional information on this agreement with Farmer Mac.

Geographic Concentration

Although our organizational structure and mission result in single-industry concentration, we serve a geographically diverse group of electric and telecommunications borrowers throughout the U.S. The consolidated number of borrowers with loans outstanding totaled ~~913~~908, located in 49 states ~~and the District of Columbia~~ as of ~~November~~February 3028, ~~2025~~2026, compared with 899 borrowers located in 49 states as of May 31, 2025, of which 5149 and 50 were electric power supply borrowers as of each respective date. Electric power supply borrowers generally require significantly more capital than electric distribution and telecommunications borrowers.

Texas had the largest number of borrowers with loans outstanding in any one state as of each respective date, as well as the largest concentration of loan exposure in any one state with loans totaling $6,~~048~~147 million and $5,987 million, net of the loans covered by the Farmer Mac standby repurchase agreement, as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively, which represented approximately 16% of total loans outstanding as of each period. See “Note 4—Loans” in this Report for additional information on the Texas-based number of borrowers and loans outstanding.

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Credit Quality Indicators

Assessing the overall credit quality of our loan portfolio and measuring our credit risk is an ongoing process that involves tracking payment status, modifications to borrowers experiencing financial difficulty, nonperforming loans, charge-offs, the internal risk ratings of our borrowers and other indicators of credit risk. We monitor and subject each borrower and loan facility in our loan portfolio to an individual risk assessment based on quantitative and qualitative factors. Payment status trends and internal risk ratings are indicators, among others, of the probability of borrower default and overall credit quality of our loan portfolio. We believe the overall credit quality of our loan portfolio remained strong as of ~~November~~February 3028, ~~2025~~2026.

Loan Modifications to Borrowers Experiencing Financial Difficulty

We had no loan modifications to borrowers experiencing financial difficulty entered during YTD FY2026 and YTD FY2025.

Nonperforming Loans

We classify loans as nonperforming at the earlier of the date when we determine: (i) interest or principal payments on the loan are past due 90 days or more; (ii) as a result of court proceedings, the collection of interest or principal payments based on the original contractual terms is not expected; or (iii) the full and timely collection of interest or principal is otherwise uncertain. Once a loan is classified as nonperforming, we generally place the loan on nonaccrual status. Interest accrued but not collected at the date a loan is placed on nonaccrual status is reversed against earnings.

We had a loan to one CFC electric power supply borrower of $2413 million and $26 million classified as nonperforming and nonaccrual, which represented 0.0603% and 0.07% of total loans outstanding as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively. The ~~reduction~~decrease in ~~the~~this ~~nonperforming~~outstanding loan ~~outstanding~~balance ~~was~~reflected ~~due~~$13 tomillion apayments ~~payment~~ received ~~from~~during ~~the~~YTD ~~borrower~~FY2026 and an immaterial charge-off during ~~YTD~~Q3 FY2026, as discussed below. Subsequent to the quarter ended ~~November~~February 3028, ~~2025~~2026, we received an $11 5 million ~~payment~~payments on this ~~nonperforming~~ loan which reduced its outstanding balance to $13 8 million.

Net Charge-Offs

We ~~had~~recorded noa charge-~~offs~~off of $0.3 million related to a CFC electric power supply loan during ~~YTD~~Q3 FY2026 and YTD FY2026. We had no charge-offs during YTD FY2025. Prior to ~~the~~this charge-off and two CFC electric power supply loan defaults in fiscal years 2021 and 2022, we had not experienced any defaults or charge-offs in our electric utility loan portfolios since fiscal year 2013, ~~and~~or in our telecommunications loan portfolios since fiscal year 2017.

Borrower Risk Ratings

As part of our management of credit risk, we maintain a credit risk rating framework under which we employ a consistent process for assessing the credit quality of our loan portfolio. We evaluate each borrower and loan facility in our loan portfolio and assign internal borrower and loan facility risk ratings based on consideration of a number of quantitative and qualitative factors. We categorize loans in our portfolio based on our internally assigned borrower risk ratings, which are intended to assess the general creditworthiness of the borrower and probability of default. Our borrower risk ratings align with the U.S. federal banking regulatory agencies’ credit risk definitions of pass and criticized categories, with the criticized category further segmented among special mention, substandard and doubtful. Pass ratings reflect relatively low probability of default, while criticized ratings have a higher probability of default. Our internally assigned borrower risk ratings serve as the primary credit quality indicator for our loan portfolio. Because our internal borrower risk ratings provide important information on the probability of default, they are a key input in determining our allowance for credit losses.

Criticized loans totaled $~~231~~224 million and $219 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively, and represented approximately 1% of total loans outstanding as of each respective date. The increase of $125 million in criticized loans was primarily driven by a net increase of $14 18 million in loans outstanding in the special mention category, partially offset by a $2 13 million ~~payment~~payments received from a CFC electric power supply borrower in the doubtful category during YTD FY2026. Each of the borrowers with loans outstanding in the criticized category was current with regard to all principal and interest amounts due to us as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025.

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We provide additional information on our borrower risk rating framework in our 2025 Form 10-K under “Item 7. MD&A Credit Risk—Loan Portfolio Credit Risk—Credit Quality Indicators.” See “Note 4—Loans” of this Report for detail, by member class, on loans outstanding in each borrower risk rating category.

Allowance for Credit Losses

We are required to maintain an allowance based on a current estimate of credit losses that are expected to occur over the remaining contractual term of the loans in our portfolio. Our allowance for credit losses consists of a collective allowance and an asset-specific allowance. The collective allowance is established for loans in our portfolio that share similar risk characteristics and are therefore evaluated on a collective, or pool, basis in measuring expected credit losses. The asset-specific allowance is established for loans in our portfolio that do not share similar risk characteristics with other loans in our portfolio and are therefore evaluated on an individual basis in measuring expected credit losses.

Table 18 presents, by legal entity and member class, loans outstanding and the related allowance for credit losses and allowance coverage ratio as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025 and the allowance components as of each date.

Table 18: Allowance for Credit Losses by Borrower Member Class and Evaluation Methodology

	November 30, 2025						May 31, 2025
	February 28, 2026						May 31, 2025
(Dollars in thousands)	Loans Outstanding(1)		Allowance for Credit Losses		Allowance Coverage Ratio(2)		Loans Outstanding(1)		Allowance for Credit Losses		Allowance Coverage Ratio(2)
Member class:
CFC:
Distribution	$	2930,~~690~~387,~~714~~286	$	20,~~102~~376	0.07	%	$	29,262,495	$	18,473	0.06	%
Power supply	6,~~132~~288,~~211~~837		157,~~593~~015		0.2511		5,895,500		15,456		0.26
Statewide and associate	~~260~~273,~~046~~177		1,~~113~~069		0.4339		251,325		1,100		0.44
Total CFC	36,~~082~~949,~~971~~300		3628,~~808~~460		0.1008		35,409,320		35,029		0.10
NCSC:
Electric	1,~~147~~163,~~007~~391		45,~~576~~202		0.4045		1,078,763		3,818		0.35
Telecom	~~594~~618,~~746~~988		2,~~039~~050		0.3433		575,465		1,768		0.31
Total NCSC	1,~~741~~782,~~753~~379		67,~~615~~252		0.3841		1,654,228		5,586		0.34
Total	$	3738,~~824~~731,~~724~~679	$	4335,~~423~~712	0.1109		$	37,063,548	$	40,615	0.11
Allowance components:
Collective allowance	$	3738,~~797~~715,~~160~~421	$	3435,~~546~~515	0.09	%	$	37,031,238	$	31,313	0.08	%
Asset-specific allowance	2716,~~564~~258		~~8,877~~197		321.21		32,310		9,302		28.79
Total	$	3738,~~824~~731,~~724~~679	$	4335,~~423~~712	0.1109		$	37,063,548	$	40,615	0.11
Allowance coverage ratios:
Nonaccrual loans(3)	$	2412,~~193~~887			~~179~~277.4912	%	$	26,099			155.62	%

___________________________

(1)Represents the unpaid principal balance, net of discounts, charge-offs and recoveries, of loans as of each period end. Excludes unamortized deferred loan origination costs of $18 million and $16 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively.

(2)Calculated based on the allowance for credit losses attributable to each member class and allowance components at period end divided by the related loans outstanding at period end.

(3)Calculated based on the total allowance for credit losses at period end divided by loans outstanding on nonaccrual status at period end. Nonaccrual loans represented 0.0603% and 0.07% of total loans outstanding as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively. We provide additional information on our nonaccrual loans in “Note 4—Loans” in this Report.

~~The~~Our allowance for credit losses ~~was~~and allowance coverage ratio were $4336 million and 0.09%, respectively, as of ~~November~~February 3028, ~~2025~~2026, compared with $41 million and 0.11%, respectively, as of May 31, 2025. The ~~increase~~$5 million decrease in the allowance for credit losses was attributable to a $39 million ~~increase~~decrease in the ~~collective~~asset-specific allowance, ~~primarily~~partially ~~driven~~offset by ~~the~~a ~~growth~~$4 million increase in ~~our~~the ~~loan~~collective ~~portfolio~~allowance. The decrease in the asset-specific allowance ~~decreased~~was ~~slightly~~primarily asdue ofto ~~November 30,~~higher-than-expected ~~2025,~~

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~~compared with May 31, 2025, primarily due to a timing change in the expected~~ payments received on a nonperforming and nonaccrual CFC power supply loan. ~~Our~~during ~~allowance~~YTD ~~coverage~~FY2026. ~~ratio~~The ~~remained~~increase ~~steady~~in atthe ~~0.11%~~collective asallowance ofwas ~~both~~primarily ~~November 30,~~due ~~2025~~to ~~and~~growth ~~May 31,~~of ~~2025~~our loan portfolio.

We discuss our methodology for estimating the allowance for credit losses under the current expected credit loss (“CECL”) model in “Note 1—Summary of Significant Accounting Policies—Allowance for Credit Losses—Loan Portfolio” and provide information on management’s judgment and the uncertainties involved in our determination of the allowance for credit losses in “MD&A—Critical Accounting Estimates” in our 2025 Form 10-K. We provide additional information on our loans and allowance for credit losses under “Note 4—Loans” and “Note 5—Allowance for Credit Losses” of this Report.

Counterparty Credit Risk

In addition to credit exposure from our borrowers, we enter into other types of financial transactions in the ordinary course of business that expose us to counterparty credit risk, primarily related to transactions involving our cash and cash equivalents, securities held in our investment securities portfolio and derivatives. We mitigate our risk by only entering into these transactions with counterparties with investment-grade ratings, establishing operational guidelines and counterparty exposure limits and monitoring our counterparty credit risk position. We evaluate our counterparties based on certain quantitative and qualitative factors and periodically assign internal risk rating grades to our counterparties.

Cash and Investments Securities Counterparty Credit Exposure

Our cash and cash equivalents and investment securities totaled $~~304~~241 million and $5953 million, respectively, as of ~~November~~February 3028, ~~2025~~2026. The primary credit exposure associated with investments held in our investment portfolio is that issuers will not repay principal and interest in accordance with the contractual terms. Our cash and cash equivalents with financial institutions generally have an original maturity of less than one year and pursuant to our investment policy guidelines, all fixed-income debt securities, at the time of purchase, must be rated at least investment grade based on external credit ratings from at least two of the leading global credit rating agencies, when available, or the corresponding equivalent, when not available. We therefore believe that the risk of default by these counterparties is low. As of ~~November~~February 3028, ~~2025~~2026, our overall counterparty credit risk was deemed to be satisfactory and not materially changed compared with May 31, 2025.

We provide additional information on the holdings in our investment securities portfolio below under “Liquidity Risk—Investment Securities Portfolio” and in “Note 3—Investment Securities.”

Derivative Counterparty Credit Exposure

Our derivative counterparty credit exposure relates principally to interest rate swap contracts. We generally engage in over-the-counter (“OTC”) derivative transactions, which expose us to individual counterparty credit risk because these transactions are executed and settled directly between us and each counterparty. We are exposed to the risk that an individual derivative counterparty defaults on payments due to us, which we may not be able to collect or which may require us to seek a replacement derivative from a different counterparty. This replacement may be at a higher cost, or we may be unable to find a suitable replacement.

We manage our derivative counterparty credit exposure through diversification of our derivative positions among various counterparties and by executing derivative transactions with financial institutions that have investment-grade credit ratings and maintaining enforceable master netting arrangements with these counterparties, which allow us to net derivative assets and liabilities with the same counterparty. We also manage the credit risk associated with our derivative counterparties by using internal credit risk analysis, limits and a monitoring process. We had 12 active derivative counterparties with credit ratings ranging from Aa1 to Baa1 by Moody’s as of both ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, and from AA- to BBB+ by S&P as of both ~~November~~February 3028, ~~2025~~2026 and May 31, 2025. The total outstanding notional amount of derivatives with these counterparties was $6,~~736~~257 million and $7,252 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively. The highest single derivative counterparty concentration, by outstanding notional amount, accounted for approximately 27% and 25% of the total outstanding notional amount of our derivatives as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively.

While our derivative agreements include netting provisions that allow for offsetting of all contracts with a given counterparty in the event of default by one of the two parties, we report the fair value of our derivatives on a gross basis by

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individual contract as either a derivative asset or derivative liability on our consolidated balance sheets. The fair value of our derivatives includes credit valuation adjustments reflecting counterparty credit risk. We estimate our exposure to credit loss on our derivatives by calculating the replacement cost to settle at current market prices, as defined in our derivative agreements, of all outstanding derivatives in a net gain position at the counterparty level where a right of legal offset exists. We provide information on the impact of netting provisions under our master swap agreements and collateral pledged, if any, in “Note 9—Derivative Instruments and Hedging Activities—Impact of Derivatives on Consolidated Balance Sheets.” We believe our exposure to derivative counterparty risk, at any point in time, is equal to the amount of our outstanding derivatives in a net gain position, at the individual counterparty level, which totaled $~~417~~372 million and $506 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively.

We provide additional detail on our derivative agreements, including a discussion of derivative contracts with credit rating triggers and settlement amounts that would be required in the event of a ratings trigger, in “Note 9—Derivative Instruments and Hedging Activities” in this Report.

See “Item 1A. Risk Factors” in our 2025 Form 10-K and “Item 1A. Risk Factors” of this Report for additional information about credit risks related to our business.


LIQUIDITY RISK

We define liquidity as the ability to convert assets into cash quickly and efficiently, maintain access to available funding and roll-over or issue new debt under normal operating conditions and periods of CFC-specific and/or market stress, to ensure that we can meet borrower loan requests, pay current and future obligations and fund our operations in a cost-effective manner. We provide additional information on our liquidity risk-management framework under “Item 7. MD&A—Liquidity Risk—Liquidity Risk Management” in our 2025 Form 10-K.

In addition to cash on hand and investment securities, our primary sources of funds include member loan principal and interest payments, committed bank revolving lines of credit, committed loan facilities under the Guaranteed Underwriter Program, a revolving note purchase agreement with Farmer Mac and proceeds from debt issuances to members and in the public capital markets. Our primary uses of funds include loan advances to members, principal and interest payments on borrowings, periodic interest settlement payments related to our derivative contracts and operating expenses.

Available Liquidity

As part of our strategy in managing liquidity risk and meeting our liquidity objectives, we seek to maintain various committed sources of funding that are available to meet our near-term liquidity needs. Table 19 presents a comparison between our available liquidity, which consists of cash and cash equivalents, our debt securities investment portfolio and amounts under committed credit facilities, as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025.

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Table 19: Available Liquidity

	November 30, 2025						May 31, 2025
	February 28, 2026						May 31, 2025
(Dollars in millions)	Total		Accessed		Available		Total		Accessed		Available
Liquidity sources:
Cash and investment debt securities:
Cash and cash equivalents	$	~~304~~241	$	—	$	~~304~~241	$	135	$	—	$	135
Debt securities investment portfolio(1)	4843		—		4843		114		—		114
Total cash and investment debt securities	~~352~~284		—		~~352~~284		249		—		249
Committed credit facilities:
Committed bank revolving line of credit agreements—unsecured(2)	3,500		7		3,493		3,300		7		3,293
Guaranteed Underwriter Program committed facilities—secured(3)	10,~~373~~823		9,023		1,~~350~~800		10,373		9,023		1,350
Farmer Mac revolving note purchase agreement—secured(4)	6,500		3,~~720~~929		2,~~780~~571		6,500		3,780		2,720
Total committed credit facilities	20,~~373~~823		12,~~750~~959		7,~~623~~864		20,173		12,810		7,363
Total available liquidity	$	2021,~~725~~107	$	12,~~750~~959	$	78,~~975~~148	$	20,422	$	12,810	$	7,612

____________________________

(1)Represents the aggregate fair value of our portfolio of debt securities as of period end. Our portfolio of equity securities consists of Farmer Mac Class A common stock, which we exclude from our available liquidity.

(2)The committed bank revolving line of credit agreements consist of a three-year and a four-year revolving line of credit agreement. The accessed amount of $7 million as of both ~~November~~February 3028, ~~2025~~2026 and May 31, 2025 relates to letters of credit issued pursuant to the four-year revolving line of credit agreement.

(3)The committed facilities under the Guaranteed Underwriter Program are not revolving.

(4)Availability subject to market conditions.

Although as a nonbank financial institution we are not subject to regulatory liquidity requirements, our liquidity management framework includes monitoring our liquidity and funding positions on an ongoing basis and assessing our ability to meet our scheduled debt obligations and other cash flow requirements based on point-in-time metrics as well as forward-looking projections. Our liquidity and funding assessment takes into consideration amounts available under existing liquidity sources, the expected rollover of member short-term investments and scheduled loan principal payment amounts, as well as our continued ability to access the capital markets and other non-capital market related funding sources.

Liquidity Risk Assessment

We utilize several measures to assess our liquidity risk and ensure we have adequate coverage to meet our liquidity needs. Our primary liquidity measures indicate the extent to which we have sufficient liquidity to cover the payment of scheduled debt obligations over the next 12 months. We calculate our liquidity coverage ratios under several scenarios that take into consideration various assumptions about our near-term sources and uses of liquidity, including the assumption that maturities of member short-term investments will not have a significant impact on our anticipated cash outflows. Our members have historically maintained a relatively stable level of short-term investments in CFC in the form of daily liquidity fund notes, commercial paper, select notes and medium-term notes. As such, we expect that our members will continue to reinvest their excess cash in short-term investment products offered by CFC.

Table 20 presents our primary liquidity coverage ratios as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025 and displays the calculation of each ratio as of these respective dates based on the assumptions discussed above.

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Table 20: Liquidity Coverage Ratios

(Dollars in millions)	~~November~~February 3028, ~~2025~~2026		May 31, 2025
Liquidity coverage ratio:(1)
Total available liquidity(2)	$	78,~~975~~148	$	7,612
Debt scheduled to mature over next 12 months:
Short-term borrowings(3)	5,~~815~~101		5,091
Long-term and subordinated debt scheduled to mature over next 12 months(4)	45,~~675~~069		3,679
Total debt scheduled to mature over next 12 months	10,~~490~~170		8,770
Deficit in available liquidity over debt scheduled to mature over next 12 months	$	(2,~~515~~022)	$	(1,158)
Liquidity coverage ratio	0.7680		0.87
Liquidity coverage ratio, excluding expected maturities of member short-term investments(5)
Total available liquidity(2)	$	78,~~975~~148	$	7,612
Total debt scheduled to mature over next 12 months	10,~~490~~170		8,770
Exclude: Member short-term investments(6)	(32,~~358~~908)		(2,885)
Total debt, excluding member short-term investments, scheduled to mature over next 12 months	7,~~132~~262		5,885
Excess in available liquidity over total debt, excluding member short-term investments, scheduled to mature over next 12 months	$	~~843~~886	$	1,727
Liquidity coverage ratio, excluding expected maturities of member short-term investments	1.12		1.29

___________________________

(1)Calculated based on available liquidity at period end divided by total debt scheduled to mature over the next 12 months at period end.

(2)Total available liquidity is presented above in Table 19.

(3)The short-term borrowings scheduled maturity amount consists of member investments of $32,~~358~~908 million and dealer commercial paper of $2,~~457~~193 million as of ~~November~~February 3028, ~~2025~~2026, and member investments of $2,885 million and dealer commercial paper of $2,206 million as of May 31, 2025, respectively.

(4) The long-term and subordinated scheduled debt obligations over the next 12 months consist of debt maturities and scheduled debt payment amounts, of which, $~~125~~107 million and $206 million was from member investments as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively.

(5)Calculated based on available liquidity at period end divided by debt, excluding member short-term investments, scheduled to mature over the next 12 months.

(6)Member short-term investments include commercial paper sold directly to members, select notes, daily liquidity fund notes and short-term medium-term notes sold to members. See Table 22: Short-Term Borrowings—Funding Sources below for additional information.

As presented in Tables 19 and 20 above, as of ~~November~~February 3028, ~~2025~~2026, our available liquidity increased by $~~363~~536 million, or 57%, compared with May 31, 2025. The increase was driven by a $450 million increase in Guaranteed Underwriter Program committed facilities, a $200 million increase resulting from amendments to our committed bank revolving line of credit agreements, a $~~103~~35 million net increase in cash and investment debt securities balances, ~~and~~partially offset by a $60 149 million ~~increase~~decrease in available amount under the Farmer Mac revolving note purchase agreement. However, the increase in available liquidity was outweighed by a larger increase in debt scheduled to mature within the next 12 months, resulting in a decline in our liquidity coverage ratio from 0.87 as of May 31, 2025 to 0.7680 as of ~~November~~February 3028, ~~2025,~~2026.

We believe we can continue to roll over our member short-term investments of $32,~~358~~908 million as of ~~November~~February 3028, ~~2025~~2026, based on our expectation that our members will continue to reinvest their excess cash in short-term investment products offered by CFC. As mentioned above, our members historically have maintained a relatively stable level of short-term investments in CFC. Member short-term investments in CFC have averaged $3,~~250~~227 million over the last 12 fiscal quarter-end reporting periods. Our available liquidity as of ~~November~~February 3028, ~~2025~~2026 was $~~843~~886 million in excess of, or 1.112 times over, our total $7,~~132~~262 million scheduled debt obligations over the next 12 months, excluding member short-term investments. In addition, we expect to receive $12,~~849~~060 million from ~~scheduled~~ long-term loan principal payments over the next 12 months.

We expect to continue accessing the dealer commercial paper market as a cost-effective means of satisfying our incremental short-term liquidity needs. To mitigate commercial paper rollover risk, we expect to continue to maintain our committed

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bank revolving line of credit agreements and be in compliance with the covenants of these agreements so we can draw on these facilities, if necessary, to repay commercial paper that cannot be refinanced with similar debt.

The issuance of long-term debt, which represents the most significant component of our funding, allows us to reduce our reliance on short-term borrowings, as well as effectively manage our refinancing and interest rate risk. We expect to continue to issue long-term debt in the public capital markets and under our other non-capital market debt arrangements to meet our funding needs and believe that we have sufficient sources of liquidity to meet our debt obligations and support our operations over the next 12 months.

Investment Securities Portfolio

We have an investment portfolio of debt securities classified as trading and equity securities, both of which are reported on our consolidated balance sheets at fair value. This portfolio was initially intended to provide an additional source of liquidity. Our debt securities investment portfolio totaled $4843 million and $114 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively, reflecting the continued wind-down of this portfolio as we reduce our holdings over time. Our investment portfolio also included equity securities with a fair value of $1110 million and $11 million as of ~~both November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively, consisting of Farmer Mac Class A common stock, which we exclude from our available liquidity.

We provide additional information on our investment securities portfolio in “Note 3—Investment Securities” of this Report.

Borrowing Capacity Under Various Credit Facilities

The aggregate borrowing capacity under our committed bank revolving line of credit agreements, committed loan facilities under the Guaranteed Underwriter Program and revolving note purchase agreement with Farmer Mac totaled $20,~~373~~823 million and $20,173 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively, and the aggregate amount available for access totaled $7,~~623~~864 million and $7,363 million as of each respective date. The following is a discussion of our borrowing capacity and key terms and conditions under each of these credit facilities.

Committed Bank Revolving Line of Credit Agreements—Unsecured

Our committed bank revolving lines of credit may be used for general corporate purposes; however, we generally rely on them as a backup source of liquidity for our commercial paper.

On November 12, 2025, we amended ~~the~~our three-year and four-year committed bank revolving line of credit agreements to (i) extend the maturity dates to November 28, 2028 and November 28, 2029, respectively, (ii) remove the credit spread adjustment in Term SOFR tenors as described in each agreement and (iii) increase commitments by $150 million under the three-year revolving credit agreement and $50 million under the four-year revolving credit agreement. Under the three-year revolving credit agreement, commitments of $50 million will continue to expire at the prior maturity date of November 28, 2027.

As of ~~November~~February 3028, ~~2025~~2026, the total commitment amount under the three-year facility and the four-year facility was $1,745 million and $1,755 million, respectively, resulting in a combined total commitment amount under the two facilities of $3,500 million. Under our current committed bank revolving line of credit agreements, we have the ability to request up to $300 million of letters of credit, which, if requested, would result in a reduction in the remaining available amount under the facilities.

Table 21 presents the total commitment amount under our committed bank revolving line of credit agreements, outstanding letters of credit and the amount available for access as of ~~November~~February 3028, ~~2025~~2026.

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Table 21: Committed Bank Revolving Line of Credit Agreements

	November 30, 2025
	February 28, 2026
(Dollars in millions)	Total Commitment		Letters of Credit Outstanding		Amount Available for Access		Maturity	Annual Facility Fee (1)
Bank revolving agreements:
3-year agreement	$	50	$	—	$	50	November 28, 2027	7.5 bps
3-year agreement	1,695		—		1,695		November 28, 2028	7.5 bps
Total 3-year agreement	1,745		—		1,745
4-year agreement	1,755		7		1,748		November 28, 2029	10.0 bps
Total 4-year agreement	1,755		7		1,748
Total	$	3,500	$	7	$	3,493

____________________________

(1)Facility fee based on CFC’s senior unsecured credit ratings in accordance with the established pricing schedules at the inception of the related agreement.

We did not have any outstanding borrowings under our committed bank revolving line of credit agreements as of ~~November~~February 3028, ~~2025~~2026; however, we had letters of credit outstanding of $7 million under the four-year committed bank revolving agreement as of this date.

Although our committed bank revolving line of credit agreements do not contain a material adverse change clause or rating triggers that would limit the banks’ obligations to provide funding under the terms of the agreements, we must be in compliance with the covenants to draw on the facilities. We have been and expect to continue to be in compliance with the covenants under our committed bank revolving line of credit agreements. As such, we could draw on these facilities to repay commercial paper that cannot be rolled over.

Guaranteed Underwriter Program Committed Facilities—Secured

Under the Guaranteed Underwriter Program, we can borrow from the FFB and use the proceeds to extend new loans to our members and refinance existing member debt. As part of the program, we pay fees, based on our outstanding borrowings, that are intended to help fund the USDA Rural Economic Development Loan and Grant program and thereby support additional investment in rural economic development projects. The borrowings under this program are guaranteed by RUS. Each advance is subject to quarterly amortization and a final maturity not longer than 30 years from the date of the advance.

InOn ~~September~~January ~~2025~~29, 2026, we ~~executed~~closed on a ~~commitment letter for the guarantee by RUS of an additional~~ $450 million Series W committed loan facility ~~from~~with the FFB under the Guaranteed Underwriter Program. Pursuant to this facility, we may borrow any time before July 15, 2030. Each advance is subject to

Asquarterly ~~displayed~~amortization ~~in Table 19, we had accessed $9,023 million under the Guaranteed Underwriter Program~~ and upa tofinal ~~$1,350~~maturity ~~million~~not ~~was~~longer ~~available~~than ~~for borrowing as of November~~ 30, ~~2025.~~years Offrom the ~~$1,350~~date ~~million~~of ~~available~~the ~~borrowing amount, $450 million is available for~~ advance ~~through July 15, 2027, $450 million is available for advance through July 15, 2028 and $450 million is available for advance through July 15, 2029~~. We are required to pledge eligible distribution system loans or power supply system loans as collateral in an amount at least equal to our total outstanding borrowings under the Guaranteed Underwriter Program committed loan facilities, which totaled $6,298 million as of November 30, 2025.

As displayed in Table 19, we had accessed $9,023 million under the Guaranteed Underwriter Program and up to $1,800 million was available for borrowing as of February 28, 2026. Of the $1,800 million available borrowing amount, $450 million is available for advance through July 15, 2027, $450 million is available for advance through July 15, 2028, $450 million is available for advance through July 15, 2029, and $450 million is available for advance through July 15, 2030. We are required to pledge eligible distribution system loans or power supply system loans as collateral in an amount at least equal to our total outstanding borrowings under the Guaranteed Underwriter Program committed loan facilities, which totaled $5,743 million as of February 28, 2026.

Farmer Mac Revolving Note Purchase Agreement—Secured

We have a revolving note purchase agreement with Farmer Mac under which we can borrow up to $6,500 million from Farmer Mac at any time, subject to market conditions, through January 14, 2030., ~~The~~after which the agreement ~~has~~allows successive one-year renewals of the draw period upon sixty days’ notice by CFC, subject to approval by Farmer Mac and Farmer Mac Mortgage Securities Corporation. 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 the outstanding principal does not exceed the total available under the agreement. Under this agreement, we had outstanding secured notes payable totaling ~~$3,720 million and $3,780 million as of November 30, 2025 and May 31, 2025, respectively. As displayed in Table 19, the amount available for borrowing~~

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~~under~~$3,929 ~~this~~million ~~agreement~~and ~~was~~ $23,780 million as of ~~November~~February 3028, ~~2025.~~2026 ~~Subsequent~~and ~~to the quarter ended November~~May 3031, 2025, werespectively. ~~borrowed~~As ~~$250~~displayed ~~million~~ in ~~long-term~~Table ~~notes~~19, ~~payable~~the ~~under~~amount ~~the~~available ~~revolving~~for ~~note~~borrowing ~~purchase~~under this agreement ~~with~~was ~~Farmer~~$2,571 ~~Mac~~million as of February 28, 2026.

We are required to pledge eligible electric distribution system or electric power supply system loans as collateral in an amount at least equal to the total principal amount of notes outstanding under this agreement.

We provide additional information on pledged collateral below under “Pledged Collateral” in this section and in “Note 3—Investment Securities” and “Note 4—Loans.”

Short-Term Borrowings

Our short-term borrowings, which we rely on to meet our daily, near-term funding needs, consist of commercial paper, which we offer to members and dealers, select notes and daily liquidity fund notes offered to members, and medium-term notes offered to members and dealers.

Short-term borrowings increased to $5,~~815~~101 million as of ~~November~~February 3028, ~~2025~~2026, from $5,091 million as of May 31, 2025, and accounted for 1614% and 15% of total debt outstanding as of each respective period. Table 22 displays the composition, by funding source, of our short-term borrowings as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025. As indicated in Table 22, members’ investments represented ~~58% and~~ 57% of our outstanding short-term borrowings as of ~~November~~both February 3028, ~~2025~~2026 and May 31, 2025~~, respectively~~. See “Note 6—Short-Term Borrowings” in this Report for additional information on our short-term borrowings.

Table 22: Short-Term Borrowings—Funding Sources

	November 30, 2025				May 31, 2025
	February 28, 2026				May 31, 2025
(Dollars in thousands)	Amount Outstanding		% of Total Short-Term Borrowings		Amount Outstanding		% of Total Short-Term Borrowings
Funding source:
Members	$	32,~~357~~908,~~805~~142	5857	%	$	2,884,965	57	%
Capital markets	2,~~457~~192,~~142~~686		4243		2,206,451		43
Total	$	5,~~814~~100,~~947~~828	100	%	$	5,091,416	100	%

Long-Term and Subordinated Debt

Long-term and subordinated debt, which represents the most significant source of our funding, totaled $2931,~~781~~246 million and $29,678 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively, and accounted for 8486% and 85% of total debt outstanding as of each respective date. See Table 23 below for a summary of our long-term and subordinated debt issuances and repayments during YTD FY2026.

In October 2025, we redeemed $50 million in principal amount of our $300 million 2043 Notes, at par plus accrued interest. In December 2025, we redeemed the remaining $250 million of the 2043 Notes at par plus accrued interest. InAs ~~November~~a ~~2025~~result, we ~~priced~~recognized a $~~600~~2 million ~~private placement of fixed-to-fixed reset rate subordinated notes due 2056, consisting of two tranches: $150 million notes that are noncallable for five years~~ and $~~450~~3 million ~~notes~~of ~~that~~losses ~~are~~on ~~noncallable~~early ~~for~~extinguishment ~~ten~~of ~~years.~~debt Werelated ~~intend~~ to ~~fund~~unamortized ~~$150 million~~debt inissuance ~~the~~costs ~~third quarter and the remaining $450 million~~ in ~~the~~our ~~fourth~~consolidated ~~quarter~~statements of ~~our~~operations ~~fiscal~~for ~~year~~Q3 ~~ended~~FY2026 ~~May~~and 31YTD FY2026, ~~2026~~respectively.

In November 2025, we priced a $600 million private placement of fixed-to-fixed reset rate subordinated notes due 2056, consisting of two tranches: $150 million notes that are noncallable for five years and $450 million notes that are noncallable for 10 years. We funded $150 million at a fixed rate of 5.75% in February 2026 and intend to fund the remaining $450 million in April 2026.

On March 20, 2026, notice was provided to investors that we will redeem all $350 million in principal amount of our 5.25% 2046 Notes on April 20, 2026, 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.

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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 and recognized an immaterial amount of losses on early extinguishment of debt related to unamortized debt issuance costs and discount in our consolidated statements of operations.

The issuance of long-term debt allows us to reduce our reliance on short-term borrowings and effectively manage our refinancing and interest rate risk, due in part to the multi-year contractual maturity structure of long-term debt. Pursuant to Rule 405 of the Securities Act, we are classified as a “well-known seasoned issuer.” Under our effective shelf registration statements filed with the SEC, we may offer and issue the following debt securities:

•an unlimited amount of collateral trust bonds and senior and subordinated debt securities, including medium-term notes, member capital securities and subordinated deferrable debt, until October 2026; and

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•daily liquidity fund notes up to $20,000 million in the aggregate—with a $3,000 million limit on the aggregate principal amount outstanding at any time—until March 2028.

Although we register member capital securities and the daily liquidity fund notes with the SEC, these securities are not available for sale to the general public. Medium-term notes are available for sale to both the general public and members. Notwithstanding the foregoing, we have contractual limitations with respect to the amount of senior indebtedness we may incur.

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 private placement transactions through unregistered debt offerings. We had an outstanding balance of $~~294~~291 million and $298 million of collateral trust bonds issued in a private placement transaction as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively,. ~~which~~We ~~was~~also had an ~~unregistered~~outstanding ~~debt~~balance ~~offering~~of $150 million of subordinated notes issued in a private placement transaction as of February 28, 2026, as discussed above.

Long-Term Debt and Subordinated Debt—Issuances and Repayments

Table 23 summarizes long-term and subordinated debt issuances and repayments during YTD FY2026.

Table 23: Long-Term and Subordinated Debt— Issuances and Repayments

YTD FY2026

(Dollars in thousands)

Issuances

Repayments(1)

Debt product type:

Collateral trust bonds(2)

—

~~408~~412,~~711~~520

Guaranteed Underwriter Program notes payable

—

~~158~~713,~~953~~459

Farmer Mac notes payable

—250,000

60101,~~633~~375

Medium-term notes sold to members

2859,~~168~~052

68112,~~574~~873

Medium-term notes sold to dealers

1,737,669

906,382

Medium-term notes sold to dealers(3)

3,991,036

1,228,027

Subordinated deferrable debt

27,454

50,000

Subordinated deferrable debt (4)

179,381

300,150

Members’ subordinated certificates

~~540~~640

4857,~~666~~448

Total

14,~~793~~480,~~831~~109

12,~~701~~925,~~919~~852

____________________________

(1)Repayments include principal maturities, scheduled amortization payments, repurchases and redemptions.

(2)Amount includes the collateral trust bonds issued to investors through both public offerings and private placement transactions.

~~Long~~(3)Amount includes medium-~~Term~~term ~~and~~notes ~~Subordinated~~issued ~~Debt—Principal~~to ~~Maturity~~both institutional and ~~Amortization~~retail investors in the capital markets.

~~Table~~(4)Amount 24includes ~~summarizes~~the ~~scheduled principal maturity and amortization of our long-term debt,~~ subordinated deferrable debt ~~and~~issued ~~members’~~to ~~subordinated~~investors ~~certificates~~through ~~outstanding~~both aspublic ofofferings ~~November 30,~~and ~~2025,~~private inplacement ~~each fiscal year during the five-year period ending May 31, 2030, and thereafter~~transactions.

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Long-Term and Subordinated Debt—Principal Maturity and Amortization

Table 24 summarizes scheduled principal maturity and amortization of our long-term debt, subordinated deferrable debt and members’ subordinated certificates outstanding as of February 28, 2026, in each fiscal year during the five-year period ending May 31, 2030, and thereafter.

Table 24: Long-Term and Subordinated Debt—Scheduled Principal Maturities and Amortization(1)

(Dollars in thousands)	Scheduled Amortization(2)		% of Total
Fiscal year ending May 31:
2026 (3)	$	2,278,809	8	%
2026	$	1,062,943	3	%
2027	4,~~583~~596,~~278~~293		15
2028	35,~~727~~006,~~908~~944		1216
2029	34,~~540~~152,~~053~~002		1213
2030	2,~~610~~618,~~115~~089		98
Thereafter	1314,~~257~~023,~~511~~747		4445
Total	$	2931,~~997~~460,~~674~~018	100	%

____________________________

(1)Amounts presented are based on the face amount of debt outstanding as of ~~November~~February 3028, ~~2025~~2026, and therefore does not include related debt issuance costs and premiums (discounts).

(2)In addition, member loan subordinated certificates totaling $~~123~~114 million amortize annually based on the unpaid principal balance of the related loan.

(3)Amount included $250 million payments in December 2025 to redeem our 2043 Notes. See “Note 8—Subordinated Deferrable Debt” for details on the redemption of the 2043 Notes.

We provide additional information on our financing activities under the above section “Consolidated Balance Sheet Analysis—Debt” and in “Note 7—Long-Term Debt” and “Note 8—Subordinated Deferrable Debt” of this Report.

Pledged Collateral

Under our secured borrowing agreements, we are required to pledge loans, investment debt securities or other collateral and maintain certain pledged collateral ratios. Of our total debt outstanding of $3536,~~596~~347 million as of ~~November~~February 3028, ~~2025~~2026, $16,~~514~~170 million, or 4644%, was secured by pledged loans totaling $1920,~~763~~104 million. In comparison, of our total debt outstanding of $34,769 million as of May 31, 2025, $17,133 million, or 49%, was secured by pledged loans totaling $20,516 million. The following provides additional information on the collateral pledging requirements for our secured borrowing agreements.

Secured Borrowing Agreements—Pledged Loan Requirements

We are required to pledge loans or other collateral in transactions under our collateral trust bond indentures, bond agreements under the Guaranteed Underwriter Program and note purchase agreement with Farmer Mac. ~~Total debt outstanding is presented on our consolidated balance sheets net of unamortized discounts and issuance costs.~~ Our collateral pledging requirements are based, ~~however,~~ on the face amount of secured outstanding debt, which excludes net unamortized discounts and issuance costs. ~~However,~~As as discussed below, we typically maintain pledged collateral in excess of the required percentage. Under the provisions of our committed bank revolving line of credit agreements, the excess collateral that we are allowed to pledge cannot exceed 150% of the outstanding borrowings under our collateral trust bond 2007 indenture, the Guaranteed Underwriter Program or the Farmer Mac note purchase agreements as of ~~November~~February 3028, ~~2025~~2026.

Table 25 displays the collateral coverage ratios pursuant to these secured borrowing agreements as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025.

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Table 25: Collateral Pledged

	Requirement Coverage Ratios
			Maximum Committed Bank Revolving Line of Credit Agreements	Actual Coverage Ratios(1)
	Minimum Debt Indentures			~~November~~February 3028, ~~2025~~2026		May 31, 2025
Secured borrowing agreement type:
Collateral trust bonds 1994 indenture	100	%	N/A	~~269~~258	%	146	%
Collateral trust bonds 2007 indenture	100		150	~~119~~117		116
Guaranteed Underwriter Program notes payable	100		150	~~119~~129		118
Farmer Mac notes payable	100		150	~~117~~125		123

___________________________

(1)Calculated based on the amount of collateral pledged divided by the face amount of outstanding secured debt.

Table 26 displays the unpaid principal balance of loans pledged for secured debt, the excess collateral pledged and unencumbered loans as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025.

Table 26: Loans—Unencumbered Loans

(Dollars in thousands)	~~November~~February 3028, ~~2025~~2026		May 31, 2025
Total loans outstanding(1)	$	3738,~~824~~731,~~724~~679	$	37,063,548
Less: Loans required to be pledged under secured debt agreements(2)	(16,~~691~~342,~~727~~670)		(17,320,024)
Loans pledged in excess of required amount(2)(3)	(3,~~070~~761,~~920~~724)		(3,195,994)
Total pledged loans	(1920,~~762~~104,~~647~~394)		(20,516,018)
Unencumbered loans	$	18,~~062~~627,~~077~~285	$	16,547,530


Unencumbered loans as a percentage of total loans outstanding						48		%				45		%

____________________________

(1)Represents the unpaid principal balance of loans as of the end of each period. Excludes unamortized deferred loan origination costs of $18 million and $16 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively.

(2)Reflects unpaid principal balance of pledged loans.

(3)If there is an event of default under most of our indentures, we can only withdraw the excess collateral if we substitute cash or permitted investments of equal value.

As displayed above in Table 26, we had excess loans pledged as collateral totaling $3,~~071~~762 million and $3,196 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively. To ensure that we do not fall below the minimum collateral coverage ratio requirement, we typically pledge loans in excess of the required amount for the following reasons: (i) our distribution and power supply loans are typically amortizing loans that require scheduled principal payments over the life of the loan, whereas the debt securities issued under secured indentures and agreements typically have bullet maturities; (ii) distribution and power supply borrowers have the option to prepay their loans; and (iii) individual loans may become ineligible for various reasons, some of which may be temporary.

We provide additional information on our borrowings, including the maturity profile, below in “Liquidity Risk” and additional information on pledged loans in “Note 4—Loans” in this Report. For additional detail on each of our debt product types, refer to “Note 6—Short-Term Borrowings,” “Note 7—Long-Term Debt,” “Note 8—Subordinated Deferrable Debt” and “Note 9—Members’ Subordinated Certificates” in our 2025 Form 10-K.

Off-Balance Sheet Arrangements

In the ordinary course of business, we engage in financial transactions that are not presented on our consolidated balance sheets or may be recorded on our consolidated balance sheets in amounts that are different from the full contract or notional amount of the transaction. Our off-balance sheet arrangements consist primarily of unadvanced loan commitments intended to meet the financial needs of our members and guarantees of member obligations, which may affect our liquidity and funding requirements based on the likelihood that borrowers will advance funds under the loan commitments or we will be

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required to perform under the guarantee obligations. We provide information on our unadvanced loan commitments in “Note 4—Loans” and information on our guarantee obligations in “Note 11—Guarantees.”

Projected Near-Term Sources and Uses of Funds

Table 27 below displays a projection of our primary long-term sources and uses of funds, by quarter, over each of the next six fiscal quarters. Our projection is based on the following, which includes several assumptions: (i) the estimated issuance of long-term debt, including capital market and other non-capital market term debt, is based on our market-risk management goal of minimizing the mismatch between the cash flows from our financial assets and our financial liabilities; (ii) long-term loan scheduled amortization repayment amounts represent scheduled loan principal payments for long-term loans outstanding as of ~~November~~February 3028, ~~2025~~2026 and estimated loan principal payments for long-term loan advances, plus estimated prepayment amounts on long-term loans; (iii) long-term and subordinated debt maturities consist of both scheduled principal maturity and amortization amounts and projected principal maturity and amortization amounts on term debt outstanding in each period presented; and (iv) long-term loan advances are based on our current projection of member demand for loans. In addition, amounts available under our committed bank revolving lines of credit, net increases in dealer commercial paper and short-term member investments are intended to serve as a backup source of liquidity.

Table 27: Projected Long-Term Sources and Uses of Funds(1)

	Projected Long-Term Sources of Funds				Projected Long-Term Uses of Funds
(Dollars in millions)	Long-Term Debt Issuance		Anticipated Long-Term Loan Repayments(2)		Total Projected Long-Term Sources ofFunds		Long-Term and Subordinated Debt Maturities(3)		Long-Term Loan Advances		Total ProjectedLong-Term Uses ofFunds
Q3 FY2026	$	2,950	$	414	$	3,364	$	1,795	$	902	$	2,697

Q4 FY2026	~~450~~$	1,250	~~439~~$	501	~~889~~$	1,751	~~781~~$	1,381	~~739~~$	885	~~1,520~~$	2,266
Q1 FY2027	~~1,220~~650		~~436~~438		1,~~656~~088		~~721~~725		~~787~~697		1,~~508~~422
Q2 FY2027	1,~~874~~506		~~560~~561		2,~~434~~067		1,630		~~910~~636		2,~~540~~266
Q3 FY2027	12,~~746~~044		~~546~~560		2,~~292~~604		1,~~239~~244		~~897~~941		2,~~136~~185
Q4 FY2027	1,~~172~~086		~~430~~433		1,~~602~~519		1,011		~~781~~709		1,~~792~~720
Total	$	9,412	$	2,825	$	12,237	$	7,177	$	5,016	$	12,193
Q1 FY2028	1,388		459		1,847		1,219		810		2,029
Total	$	7,924	$	2,952	$	10,876	$	7,210	$	4,678	$	11,888

____________________________

(1)The dates presented represent the end of each quarterly period through the quarter ended ~~May~~August 31, 2027.

(2)Anticipated long-term loan repayments include scheduled long-term loan amortizations and anticipated cash repayments at repricing date.

(3)Long-term debt maturities also include expected early redemptions of debt and exclude long-term member medium-term notes maturing over the next 12 months totaling $~~121~~103 million, as we expect we can continue to roll over our member medium-term notes investments based on our expectation that our members will continue to reinvest their excess cash with us.

As displayed in Table 27, we currently project long-term advances of $3,~~338~~159 million over the next 12 months, which we project will exceed anticipated long-term loan repayments over the same period of $12,~~849~~060 million, resulting in net long-term loan growth of approximately $1,~~489~~099 million over the next 12 months.

The estimates presented above are developed at a particular point in time based on our expected future business growth and funding. Our actual results and future estimates may vary, perhaps significantly, from the current projections, as a result of changes in market conditions, management actions or other factors. In addition to the long-term sources of funds, we have access to short-term funding sources such as member and dealer commercial paper, select notes and daily liquidity fund notes offered to members, and medium-term notes offered to members and dealers, as discussed above.

Credit Ratings

Our funding and liquidity, borrowing capacity, ability to access capital markets and other sources of funds and the cost of these funds are partially dependent on our credit ratings.

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On June 2, 2025, at our request, S&P withdrew its “A-2” short-term ~~issue~~issuer ~~ratings~~rating on CFC~~’s commercial paper program~~. During YTD FY2026, Fitch, ~~and~~ S&P and Moody’s affirmed CFC’s credit ratings and stable outlook. Table 28 displays our credit ratings as of ~~November~~February 3028, ~~2025~~2026, which remain unchanged as of the date of this Report.

Table 28: Credit Ratings

November 30, 2025

February 28, 2026

Moody’s

S&P

Fitch

CFC credit ratings and outlook:

Long-term issuer credit rating(1)

A-

Senior secured debt(2)

A-

A+

Senior unsecured debt(3)

A-

Subordinated debt

BBB

BBB+

Commercial paper

P-1

N/A

Short-term issuer credit rating

P-1

N/A

Outlook

Stable

Rating agency credit opinion/report date

February 2124, ~~2025~~2026

November 24, 2025

September 23, 2025

___________________________

(1)Based on our senior unsecured debt rating.

(2)Applies to our collateral trust bonds.

(3)Applies to our medium-term notes.

See “Credit Risk—Counterparty Credit Risk—Derivative Counterparty Credit Exposure” above for information on credit rating provisions related to our derivative contracts.

Financial Ratios

Our debt-to-equity ratio was 11.5874 and 11.20 as of ~~November~~February 3028, ~~2025~~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 $2447 million for YTD FY2026.

Our adjusted debt-to-equity ratio was 7.5976 and 7.39 as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively. The increase in the adjusted debt-to-equity ratio during YTD FY2026 was primarily ~~due~~driven toby 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 debt-to-equity ratio and adjusted debt-to-equity ratio under the section “Non-GAAP Financial Measures and Reconciliations” in this Report.

Debt Covenants

As part of our short-term and long-term borrowing arrangements, we are subject to various financial and operational covenants. If we fail to maintain specified financial ratios, such failure could constitute a default by CFC of certain covenants under our committed bank revolving line of credit agreements and senior debt indentures. We were in compliance with all covenants and conditions under our committed bank revolving line of credit agreements and senior debt indentures as of ~~November~~February 3028, ~~2025~~2026.

As discussed above in “Non-GAAP Financial Measures,” the financial covenants set forth in our committed bank revolving line of credit agreements and senior debt indentures are based on adjusted financial measures, including adjusted TIER. We provide a reconciliation of adjusted TIER and other non-GAAP financial measures disclosed in this Report to the most comparable U.S. GAAP financial measures below in “Non-GAAP Financial Measures and Reconciliations.” See “Item 7. ~~MD&A—Non-GAAP Financial Measures and Reconciliations” in our 2025 Form 10-K for a discussion of each of our non-GAAP measures and an explanation of the adjustments to derive these measures.~~

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MD&A—Non-GAAP Financial Measures and Reconciliations” in our 2025 Form 10-K for a discussion of each of our non-GAAP measures and an explanation of the adjustments to derive these measures.


MARKET RISK

Interest rate risk represents our primary source of market risk, as interest rate-volatility or changes in interest rates can have a significant impact on our earnings and overall financial condition as a financial institution. We are exposed to interest rate risk primarily from the differences in the timing between the maturity or repricing of our loans and the liabilities funding our loans. We seek to generate stable adjusted net interest yield on a sustained and long-term basis by minimizing the mismatch between the cash flows from our interest rate-sensitive financial assets and our financial liabilities. We use derivatives as a tool in matching the duration and repricing characteristics of our interest rate-sensitive assets and liabilities. We provide additional information on our management of interest rate risk in our 2025 Form 10-K under “Item 7. MD&A—Market Risk—Interest Rate Risk Management.” Below we discuss how we manage and measure interest rate risk.

Interest Rate Risk Assessment

Our Asset Liability Management (“ALM”) framework includes the use of analytic tools and capabilities, enabling CFC to generate a comprehensive profile of our interest rate risk exposure. We routinely measure and assess our interest rate risk exposure using various methodologies through the use of ALM models that enable us to accurately measure and monitor our interest rate risk exposure under multiple interest rate scenarios using several different techniques. Below we present two measures used to assess our interest rate risk exposure: (i) the interest rate sensitivity of projected net interest income and adjusted net interest income; and (ii) duration gap.

Interest Rate Sensitivity Analysis

We regularly evaluate the sensitivity of our interest-earning assets and the interest-bearing liabilities funding those assets and our net interest income and adjusted net interest income projections under multiple interest rate scenarios. Each month we update our ALM models to reflect our existing balance sheet position and incorporate different assumptions about forecasted changes in our balance sheet position over the next 12 months. Based on the forecasted balance sheet changes, we generate various projections of net interest income and adjusted net interest income over the next 12 months. Management reviews and assesses these projections and underlying assumptions to identify a baseline scenario of projected net interest income and adjusted net interest income over the next 12 months, which reflects what management considers, at the time, as the most likely scenario. As discussed under “Non-GAAP Financial Measures,” we derive adjusted net interest income by adjusting our reported interest expense and net interest income to include the impact of net derivative cash settlement amounts.

Our interest rate sensitivity analyses take into consideration existing interest rate-sensitive assets and liabilities as of the reported balance sheet date and forecasted changes to the balance sheet over the next 12 months under management’s baseline projection. As discussed in the “Executive Summary—Outlook” section, we currently anticipate net loan growth of $21,~~095~~632 million over the next 12 months and overall, the market expects the yield curve to steepen as short-term interest rates are forecasted to decline and longer-term rates are expected to remain near current levels.

Based on our current baseline forecast assumptions, which include a total of 7525 basis points of federal funds rate cuts from ~~November~~March ~~2025~~2026 through ~~November~~February ~~2026~~2027, 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 ~~November~~February 3028, ~~2025~~2026. We also project anincreases ~~increase~~ in our adjusted net interest income and ~~a slight increase in~~ adjusted net interest yield over the next 12 months relative to the 12-month period ended ~~November~~February 3028, ~~2025~~2026, primarily driven by projected loan growth and projected lower adjusted average cost of funding. The projected ~~lower~~decline in adjusted average cost of funding isreflects ~~driven~~changes byin ~~the~~funding ~~expected~~mix ~~decrease~~and inlower ~~the~~ variable rate debt cost, partially offset by lower expected ~~average yield earned on our~~ interest rate swaps derivative cash settlements and bythe refinancing of maturing lower-cost long-term debt ~~maturing in the near term that will need to be refinanced~~ at a forecasted higher interest ~~rate~~rates.

Table 29 presents the estimated percentage impact that a hypothetical instantaneous parallel shift of additional plus or minus 100 basis points in the interest rate yield curve, relative to our base case forecast yield curve that includes 7525 basis points of federal funds rate cuts, would have on our projected baseline 12-month net interest income and adjusted net interest income as of November 30, 2025 and May 31, 2025. We also present the estimated percentage impact on our projected baseline 12-month net interest income and adjusted net interest income assuming a hypothetical inverted yield curve under which shorter-term interest rates increase by an instantaneous 75 basis points and longer-term interest rates decrease by an instantaneous 75 basis points.

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as of February 28, 2026 and May 31, 2025. We also present the estimated percentage impact on our projected baseline 12-month net interest income and adjusted net interest income assuming a hypothetical inverted yield curve under which shorter-term interest rates increase by an instantaneous 75 basis points and longer-term interest rates decrease by an instantaneous 75 basis points.

Table 29: Interest Rate Sensitivity Analysis

	November 30, 2025						May 31, 2025
	February 28, 2026						May 31, 2025
Estimated Impact(1)	+ 100 Basis Points		– 100 Basis Points		Inverted		+ 100 Basis Points		– 100 Basis Points		Inverted
Net interest income	(63.4404)	%	63.5112	%	(4.5660)	%	(1.68)	%	1.79	%	(5.07)	%
Derivative cash settlements	12.6424	%	(12.6222)	%	9.4340	%	11.33	%	(11.32)	%	9.12	%
Adjusted net interest income(2)	69.20	%	(69.1110)	%	4.8880	%	9.65	%	(9.54)	%	4.04	%

____________________________

(1)The actual impact on our reported and adjusted net interest income may differ significantly from the sensitivity analysis presented.

(2)We include net periodic derivative cash settlement interest amounts as a component of interest expense in deriving adjusted net interest income. See the section “Non-GAAP Financial Measures and Reconciliations” for a reconciliation of the non-GAAP financial measures presented in this Report to the most comparable U.S. GAAP financial measures.

The changes in the sensitivity measures between ~~November~~February 3028, ~~2025~~2026 and May 31, 2025 are primarily attributable to changes in the size and composition of our forecasted balance sheet, as well as changes in current interest rates and forecasted interest rates. As the interest rate sensitivity simulations displayed in Table 29 indicate, we would expect an unfavorable impact on our projected net interest income over a 12-month horizon as of ~~November~~February 3028, ~~2025~~2026, under the hypothetical scenario of an instantaneous parallel shift of plus 100 basis points in the interest rate yield curve and an inverted yield curve. We would expect an unfavorable impact on our adjusted net interest income over a 12-month horizon as of ~~November~~February 3028, ~~2025~~2026, under the hypothetical scenario of an instantaneous parallel shift of minus 100 basis points in the interest rate yield curve.

Duration Gap

The duration gap, which represents the difference between the estimated duration of our interest-earning assets and the estimated duration of our interest-bearing liabilities, summarizes the extent to which the cash flows for assets and liabilities are matched over time. We use derivatives in managing the differences in timing between the maturities or repricing of our interest earning assets and the debt funding those assets. A positive duration gap indicates that the duration of our interest-earning assets is greater than the duration of our debt and derivatives, and therefore denotes an increased exposure to rising interest rates over the long term. Conversely, a negative duration gap indicates that the duration of our interest-earning assets is less than the duration of our debt and derivatives, and therefore denotes an increased exposure to declining interest rates over the long term. While the duration gap provides a relatively concise and simple measure of the interest rate risk inherent on our consolidated balance sheet as of the reported date, it does not incorporate projected changes on our consolidated balance sheets.

The duration gap widened to positive 32.2416 months as of ~~November~~February 3028, ~~2025~~2026, from positive 0.27 months as of May 31, 2025 and was within the risk limits and guidelines established by CFC’s Asset Liability Committee as of each respective date. The widening of the positive duration gap is primarily due to shorter duration liabilities funding interest-earning assets.

Limitations of Interest Rate Risk Measures

While we believe that the interest income sensitivities and duration gap measures provided are useful tools in assessing our interest rate risk exposure, there are inherent limitations in any methodology used to estimate the exposure to changes in market interest rates. These measures should be understood as estimates rather than as precise measurements. The interest rate sensitivity analyses only contemplate certain hypothetical movements in interest rates and are performed at a particular point in time based on the existing balance sheet and, in some cases, expected future business growth and funding mix assumptions. The strategic actions that management may take to manage our balance sheet may differ significantly from our projections, which could cause our actual interest income to differ substantially from the above sensitivity analysis. Moreover, as discussed above, we use various other methodologies to measure and monitor our interest rate risk under multiple interest rate scenarios, which, together, provide a comprehensive profile of our interest rate risk.

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Moreover, as discussed above, we use various other methodologies to measure and monitor our interest rate risk under multiple interest rate scenarios, which, together, provide a comprehensive profile of our interest rate risk.


CRITICAL ACCOUNTING ESTIMATES

The preparation of financial statements in conformity with U.S. GAAP requires management to make a number of judgments, estimates and assumptions that affect the reported amount of assets, liabilities, income and expenses in our consolidated financial statements. Understanding our accounting policies and the extent to which we use management’s judgment and estimates in applying these policies is integral to understanding our financial statements. We provide a discussion of our significant accounting policies in “Note 1—Summary of Significant Accounting Policies” in our 2025 Form 10-K.

Certain accounting estimates are considered critical because they involve significant judgments and assumptions about highly complex and inherently uncertain matters, and the use of reasonably different estimates and assumptions could have a material impact on our results of operations or financial condition. The determination of the allowance for expected credit losses over the remaining expected life of the loans in our loan portfolio involves a significant degree of management judgment and level of estimation uncertainty. As such, we have identified our accounting policy governing the estimation of the allowance for credit losses as a critical accounting estimate. We describe our allowance methodology and process for estimating the allowance for credit losses under “Note 1—Summary of Significant Accounting Policies—Allowance for Credit Losses–Loan Portfolio” in our 2025 Form 10-K.

We identify the key inputs used in determining the allowance for credit losses, discuss the assumptions that require the most significant management judgment and contribute to the estimation uncertainty and disclose the sensitivity of our allowance to hypothetical changes in the assumptions underlying the calculation of our reported allowance for credit losses under “Item 7. MD&A—Critical Accounting Estimates” in our 2025 Form 10-K. Management established policies and control procedures intended to ensure that the methodology used for determining our allowance for credit losses, including any judgments and assumptions made as part of such method, are well-controlled and applied consistently from period to period. We regularly evaluate the key inputs and assumptions used in determining the allowance for credit losses and update them, as necessary, to better reflect present conditions, including current trends in credit performance and borrower risk profile, portfolio concentration risk, changes in risk-management practices, changes in the regulatory environment and other factors relevant to our loan portfolio segments. We did not change our allowance methodology or the nature of the underlying key inputs and assumptions used in measuring our allowance for credit losses during the current quarter.

We discuss the risks and uncertainties related to management’s judgments and estimates in applying accounting policies that have been identified as critical accounting estimates under “Item 1A. Risk Factors—Regulatory and Compliance Risks” in our 2025 Form 10-K. We provide additional information on the allowance for credit losses under the sections “Credit Risk—Allowance for Credit Losses” and “Note 5—Allowance for Credit Losses” in this Report.


RECENT ACCOUNTING CHANGES AND OTHER DEVELOPMENTS

Recent Accounting Changes

We provide information on recently adopted accounting standards and the adoption impact on CFC’s consolidated financial statements and recently issued accounting standards not yet required to be adopted and the expected adoption impact in “Note 1—Summary of Significant Accounting Policies.” To the extent we believe the adoption of new accounting standards has had or will have a material impact on our consolidated results of operations, financial condition or liquidity, we discuss the impact in the applicable section(s) of this MD&A.

~~NON-GAAP FINANCIAL MEASURES AND RECONCILIATIONS~~45

As discussed above in the section “Non-GAAP Financial Measures,” in addition to financial measures determined in accordance with U.S. GAAP, management evaluates performance based on certain non-GAAP financial measures, which we refer to as “adjusted” financial measures. Below we provide a reconciliation of our adjusted financial measures presented in this Report to the most comparable U.S. GAAP financial measures. See “Item 7. MD&A—Non-GAAP Financial

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~~Measures and Reconciliations” in our 2025 Form 10~~NON-~~K for a discussion of each of these non-~~GAAP ~~financial~~FINANCIAL ~~measures~~MEASURES ~~and~~AND ~~an explanation of the adjustments to derive these measures.~~RECONCILIATIONS

Net Income and Adjusted Net Income

Table 30 provides a reconciliation of adjusted interest expense, adjusted net interest income, and adjusted net income to the comparable U.S. GAAP financial measures. These adjusted financial measures are used in the calculation of our adjusted net interest yield and adjusted TIER.

Table 30: Adjusted Net Income

(Dollars in thousands)

Q2Q3 FY2026

Q2Q3 FY2025

YTD FY2026

YTD FY2025

Adjusted net interest income:

Interest income

~~445~~449,~~674~~570

~~419~~428,~~877~~860

~~893~~1,~~120~~342,690

~~837~~1,~~996~~266,856

Interest expense

(~~373~~370,~~666~~010)

(~~354~~361,~~443~~918)

(~~750~~1,~~135~~120,145)

(~~710~~1,~~903~~072,821)

Include: Derivative cash settlements interest income(1)

1712,~~585~~592

2620,~~406~~309

3750,~~852~~444

5878,~~467~~776

Adjusted interest expense

(~~356~~357,~~081~~418)

(~~328~~341,~~037~~609)

(~~712~~1,~~283~~069,701)

(~~652~~994,~~436~~045)

Adjusted net interest income

8992,~~593~~152

9187,~~840~~251

~~180~~272,~~837~~989

~~185~~272,~~560~~811

Adjusted net income:

Net income (loss)

19,558

144,803

24,240

(19,523)

Net income

22,737

86,136

46,977

66,613

Exclude: Derivative forward value gains (losses)(2)

(3644,~~226~~962)

8219,~~632~~833

(88133,~~697~~659)

(~~147~~127,~~754~~921)

Adjusted net income

5567,~~784~~699

6266,~~171~~303

~~112~~180,~~937~~636

~~128~~194,~~231~~534

____________________________

(1)Represents primarily the net periodic contractual interest income amount on our interest rate swaps during the reporting period.

(2)Represents the change in fair value of our interest rate swaps during the reporting period due to changes in expected future interest rates over the remaining life of our derivative contracts.

We primarily fund our loan portfolio through the issuance of debt. However, we use derivatives as economic hedges as part of our strategy to manage the interest rate risk associated with funding our loan portfolio. We therefore consider the interest income and expense incurred on our derivatives to be part of our funding cost in addition to the interest expense on our debt. As such, we add net periodic derivative cash settlements interest income and expense amounts to our reported interest expense to derive our adjusted interest expense and adjusted net interest income. We exclude unrealized derivative forward value gains (losses) from our adjusted net income.

TIER and Adjusted TIER

Table 31 displays the calculation of our TIER and adjusted TIER.

Table 31: TIER and Adjusted TIER

	Q2 FY2026	Q2 FY2025	YTD FY2026	YTD FY2025
	Q3 FY2026	Q3 FY2025	YTD FY2026	YTD FY2025
TIER(1)	1.0506	1.4124	1.0304	01.9706
Adjusted TIER(2)	1.1619	1.19	1.1617	1.20

____________________________

(1)TIER is calculated based on our net income (loss) plus interest expense for the period divided by interest expense for the period.

~~(2)Adjusted TIER is calculated based on adjusted net income (loss) plus adjusted interest expense for the period divided by adjusted interest expense for the period.~~46

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(2)Adjusted TIER is calculated based on adjusted net income (loss) plus adjusted interest expense for the period divided by adjusted interest expense for the period.

Debt Outstanding and Equity and Adjusted Debt Outstanding and Equity

Table 32 provides a reconciliation between our total debt outstanding and equity and the adjusted amounts used in the calculation of our adjusted debt-to-equity ratio as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025.

Table 32: Adjusted Total Debt Outstanding and Equity

(Dollars in thousands)

~~November~~February 3028, ~~2025~~2026

May 31, 2025

Adjusted total debt outstanding:

Total debt outstanding(1)

3536,~~596~~346,~~103~~962

34,769,316

Exclude:

50% of Subordinated deferrable debt

~~653~~604,~~304~~857

664,743

Members’ subordinated certificates

1,~~136~~127,~~588~~906

1,184,714

Adjusted total debt outstanding

3334,~~806~~614,~~211~~199

32,919,859

Adjusted total equity:

Total equity

3,~~074~~096,~~044~~729

3,103,466

Exclude:

Prior fiscal year-end cumulative derivative forward value gains(2)

502,899

607,969

Year-to-date derivative forward value losses(2)

(88133,~~697~~659)

(105,070)

Period-end cumulative derivative forward value gains(2)

~~414~~369,~~202~~240

502,899

Accumulated other comprehensive loss

(2,~~233~~231)

(2,236)

Subtotal

~~411~~367,~~969~~009

500,663

Include:

50% of Subordinated deferrable debt

~~653~~604,~~304~~857

664,743

Members’ subordinated certificates

1,~~136~~127,~~588~~906

1,184,714

Subtotal

1,~~789~~732,~~892~~763

1,849,457

Adjusted total equity

4,~~451~~462,~~967~~483

4,452,260

____________________________

(1)Total debt outstanding includes our interest-bearing debt and excludes non-interest bearing liabilities, such as derivative liabilities.

(2)Represents consolidated total derivative forward value gains (losses).

Debt-to-Equity and Adjusted Debt-to-Equity Ratios

Table 33 displays the calculations of our debt-to-equity and adjusted debt-to-equity ratios as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025.

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Table 33: Debt-to-Equity Ratio and Adjusted Debt-to-Equity Ratio

(Dollars in thousands)	~~November~~February 3028, ~~2025~~2026		May 31, 2025
Debt-to equity ratio:
Total debt outstanding	$	3536,~~596~~346,~~103~~962	$	34,769,316
Total equity	3,~~074~~096,~~044~~729		3,103,466
Debt-to-equity ratio(1)	11.5874		11.20
Adjusted debt-to-equity ratio:
Adjusted total debt outstanding(2)	$	3334,~~806~~614,~~211~~199	$	32,919,859
Adjusted total equity(2)	4,~~451~~462,~~967~~483		4,452,260
Adjusted debt-to-equity ratio(3)	7.5976		7.39

____________________________

(1)Calculated based on total debt outstanding at period end divided by total equity at period end.

(2)See Table 32 above for details on the calculation of these non-GAAP financial measures and the reconciliation to the most comparable U.S. GAAP financial measures.

(3)Calculated based on adjusted total debt outstanding at period end divided by adjusted total equity at period end.

Total CFC Equity and Members’ Equity

Members’ equity excludes the noncash impact of derivative forward value gains (losses) and foreign currency adjustments recorded in net income and amounts recorded in AOCI. Because these amounts generally have not been realized, they are not available to members and are excluded by the CFC Board of Directors in determining the annual allocation of adjusted net income to patronage capital, to the members’ capital reserve and to other member funds. Table 34 provides a reconciliation of members’ equity to total CFC equity as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025. We present the components of AOCI in “Note 10—Equity.”

Table 34: Members’ Equity

(Dollars in thousands)

~~November~~February 3028, ~~2025~~2026

May 31, 2025

Members’ equity:

Total CFC equity

3,~~053~~075,~~180~~515

3,082,477

Exclude:

Accumulated other comprehensive loss

(2,~~233~~231)

(2,236)

Period-end cumulative derivative forward value gains attributable to CFC(1)

~~413~~368,~~103~~131

501,663

Subtotal

~~410~~365,~~870~~900

499,427

Members’ equity

2,~~642~~709,~~310~~615

2,583,050

____________________________

(1)Represents period-end cumulative derivative forward value gains for CFC only, as total CFC equity does not include the noncontrolling interest of the variable interest entity, which we are required to consolidate. We report the separate results of operations for CFC in “Note 14—Business Segments.” The period-end cumulative derivative forward value total gain amounts as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025 are presented above in Table 32.

4748

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Item 1. Financial Statements

									Page
			Consolidated Statements of Operations (Unaudited)						4950
			Consolidated Statements of Comprehensive Income (Loss) (Unaudited)						5051
			Consolidated Balance Sheets (Unaudited)						5152
			Consolidated Statements of Changes in Equity (Unaudited)						5253
			Consolidated Statements of Cash Flows (Unaudited)						5354
			Notes to Consolidated Financial Statements (Unaudited)						5556
			Note 1 — Summary of Significant Accounting Policies						5556
			Note 2 — Interest Income and Interest Expense						5759
			Note 3 — Investment Securities						5859
			Note 4 — Loans						5960
			Note 5 — Allowance for Credit Losses						7071
			Note 6 — Short-Term Borrowings						7273
			Note 7 — Long-Term Debt						7475
			Note 8 — Subordinated Deferrable Debt						7677
			Note 9 — Derivative Instruments and Hedging Activities						7677
			Note 10 — Equity						8081
			Note 11 — Guarantees						8182
			Note 12 — Fair Value Measurement						8384
			Note 13 — Variable Interest Entities						8687
			Note 14 — Business Segments						8788

4849

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NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

(Dollars in thousands)	Q2Q3 FY2026		Q2Q3 FY2025		YTD FY2026		YTD FY2025
Interest income	$	~~445~~449,~~674~~570	$	~~419~~428,~~877~~860	$	~~893~~1,~~120~~342,690	$	~~837~~1,~~996~~266,856
Interest expense	(~~373~~370,~~666~~010)		(~~354~~361,~~443~~918)		(~~750~~1,~~135~~120,145)		(~~710~~1,~~903~~072,821)
Net interest income	7279,~~008~~560		6566,~~434~~942		~~142~~222,~~985~~545		~~127~~194,~~093~~035
Provision for credit losses	(1,221)		(870)		(2,808)		(1,823)
Benefit for credit losses	7,405		6,093		4,597		4,270
Net interest income after provision for credit losses	70,787		64,564		140,177		125,270
Net interest income after benefit for credit losses	86,965		73,035		227,142		198,305
Non-interest income (loss):
Fee and other income	6,~~687~~796		5,~~424~~982		1320,~~762~~558		1117,~~092~~074
Derivative gains (losses)	(1832,~~641~~370)		~~109~~40,~~038~~142		(5083,~~845~~215)		(8949,~~287~~145)
Investment securities gains (losses)	(~~1,027~~142)		~~2,097~~663		~~418~~276		6,~~228~~891
Total non-interest income (loss)	(1225,~~981~~716)		~~116~~46,~~559~~787		(3662,~~665~~381)		(7125,~~967~~180)
Non-interest expense:
Salaries and employee benefits	(1920,~~262~~036)		(1718,~~439~~123)		(3959,~~238~~274)		(3452,~~627~~750)
Other general and administrative expenses	(1815,~~221~~936)		(1815,~~488~~167)		(3954,~~014~~950)		(3752,~~592~~759)
Other non-interest expense	(~~759~~2,378)		(~~247~~330)		(13,~~034~~412)		(~~565~~895)
Total non-interest expense	(38,~~242~~350)		(3633,~~174~~620)		(79117,~~286~~636)		(72106,~~784~~404)
Income (loss) before income taxes	19,564		144,949		24,226		(19,481)
Income before income taxes	22,899		86,202		47,125		66,721
Income tax (provision) benefit	(6)		(146)		14		(42)
Income tax provision	(162)		(66)		(148)		(108)
Net income (loss)	19,558		144,803		24,240		(19,523)
Net income	22,737		86,136		46,977		66,613
Less: Net (income) loss attributable to noncontrolling interests	39		(360)		123		122
Less: Net income attributable to noncontrolling interests	(349)		(150)		(226)		(28)
Net income (loss) attributable to CFC	$	19,597	$	144,443	$	24,363	$	(19,401)
Net income attributable to CFC	$	22,388	$	85,986	$	46,751	$	66,585

The accompanying Notes to Consolidated Financial Statements (Unaudited) are an integral part of these statements.

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NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

(Dollars in thousands)	Q2Q3 FY2026		Q2Q3 FY2025		YTD FY2026		YTD FY2025
Net income (loss)	$	19,558	$	144,803	$	24,240	$	(19,523)
Net income	$	22,737	$	86,136	$	46,977	$	66,613
Other comprehensive income (loss):
Changes in unrealized gains on derivative cash flow hedges	—		—		—		803
Reclassification to earnings of realized gains on derivatives	(117)		(~~754~~117)		(~~235~~352)		(~~921~~1,038)
Defined benefit plan adjustments	119		9695		~~238~~357		~~192~~287
Other comprehensive income (loss)	2		(~~658~~22)		35		7452
Total comprehensive income (loss)	19,560		144,145		24,243		(19,449)
Total comprehensive income	22,739		86,114		46,982		66,665
Less: Total comprehensive (income) loss attributable to non-controlling interests	39		(360)		123		122
Less: Total comprehensive income attributable to non-controlling interests	(349)		(150)		(226)		(28)
Total comprehensive income (loss) attributable to CFC	$	19,599	$	143,785	$	24,366	$	(19,327)
Total comprehensive income attributable to CFC	$	22,390	$	85,964	$	46,756	$	66,637

The accompanying Notes to Consolidated Financial Statements (Unaudited) are an integral part of these statements.

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NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

(Dollars in thousands)

~~November~~February 3028, ~~2025~~2026

May 31, 2025

Assets:

Cash and cash equivalents

~~304~~240,~~453~~687

134,712

Restricted cash

8,~~492~~547

8,410

Total cash, cash equivalents and restricted cash

~~312~~249,~~945~~234

143,122

Investment securities:

Debt securities trading, at fair value

4742,~~896~~620

113,663

Equity securities, at fair value

10,~~634~~228

11,252

Total investment securities, at fair value

5852,~~530~~848

124,915

Loans to members

3738,~~842~~749,~~290~~882

37,079,978

Less: Allowance for credit losses

(4335,~~423~~712)

(40,615)

Loans to members, net

3738,~~798~~714,~~867~~170

37,039,363

Accrued interest receivable

~~282~~260,~~749~~735

270,222

Other receivables

2325,~~262~~152

24,377

Fixed assets, net of accumulated depreciation of $95,021 and $91,211 as of November 30, 2025 and May 31, 2025, respectively

79,022

81,667

Fixed assets, net of accumulated depreciation of $96,788 and $91,211 as of February 28, 2026 and May 31, 2025, respectively

77,251

81,667

Derivative assets

~~460~~418,~~980~~984

555,855

Other assets

9094,~~796~~559

85,528

Total assets

39,~~107~~892,~~151~~933

38,325,049

Liabilities:

Accrued interest payable

~~295~~298,~~283~~444

294,917

Debt outstanding:

Short-term borrowings

5,~~814~~100,~~947~~828

5,091,416

Long-term debt

2728,~~337~~908,~~960~~515

27,163,701

Subordinated deferrable debt

1,~~306~~209,~~608~~713

1,329,485

Members’ subordinated certificates:

Membership subordinated certificates

627,266

628,637

Loan and guarantee subordinated certificates

~~262~~253,~~625~~843

309,914

Member capital securities

246,~~697~~797

246,163

Total members’ subordinated certificates

1,~~136~~127,~~588~~906

1,184,714

Total debt outstanding

3536,~~596~~346,~~103~~962

34,769,316

Deferred income

30,~~727~~795

31,596

Derivative liabilities

4548,~~189~~156

51,368

Other liabilities

6571,~~805~~847

74,386

Total liabilities

36,~~033~~796,~~107~~204

35,221,583

Equity:

CFC equity:

Retained equity

3,~~055~~077,~~413~~746

3,084,713

Accumulated other comprehensive loss

(2,~~233~~231)

(2,236)

Total CFC equity

3,~~053~~075,~~180~~515

3,082,477

Noncontrolling interests

2021,~~864~~214

20,989

Total equity

3,~~074~~096,~~044~~729

3,103,466

Total liabilities and equity

39,~~107~~892,~~151~~933

38,325,049

The accompanying Notes to Consolidated Financial Statements (Unaudited) are an integral part of these statements.

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NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(UNAUDITED)

	Q2 FY2026
	Q3 FY2026
(Dollars in thousands)	MembershipFees andEducationalFund		PatronageCapitalAllocated		Members’CapitalReserve		UnallocatedNetIncome		CFCRetainedEquity		AccumulatedOtherComprehensiveIncome (Loss)		TotalCFCEquity		Non-controllingInterests		TotalEquity
Balance as of August 31, 2025	$	3,191	$	895,548	$	1,631,609	$	505,720	$	3,036,068	$	(2,235)	$	3,033,833	$	20,903	$	3,054,736
Net income (loss)	—		—		—		19,597		19,597		—		19,597		(39)		19,558
Other comprehensive income	—		—		—		—		—		2		2		—		2
Other	(252)		—		—		—		(252)		—		(252)		—		(252)
Balance as of November 30, 2025	$	2,939	$	895,548	$	1,631,609	$	525,317	$	3,055,413	$	(2,233)	$	3,053,180	$	20,864	$	3,074,044
Net income	—		—		—		22,388		22,388		—		22,388		349		22,737
Other comprehensive income	—		—		—		—		—		2		2		—		2
Other	(55)		(812)		812		—		(55)		—		(55)		1		(54)
Balance as of February 28, 2026	$	2,884	$	894,736	$	1,632,421	$	547,705	$	3,077,746	$	(2,231)	$	3,075,515	$	21,214	$	3,096,729
	YTD FY2026
Balance as of May 31, 2025	$	3,624	$	948,526	$	1,631,609	$	500,954	$	3,084,713	$	(2,236)	$	3,082,477	$	20,989	$	3,103,466
Net income (loss)	—		—		—		24,363		24,363		—		24,363		(123)		24,240
Net income	—		—		—		46,751		46,751		—		46,751		226		46,977
Other comprehensive income	—		—		—		—		—		35		35		—		35
Patronage capital retirement	—		(52,978)		—		—		(52,978)		—		(52,978)		—		(52,978)
Other	(~~685~~740)		—(812)		—812		—		(~~685~~740)		—		(~~685~~740)		(21)		(~~687~~741)
Balance as of November 30, 2025	$	2,939	$	895,548	$	1,631,609	$	525,317	$	3,055,413	$	(2,233)	$	3,053,180	$	20,864	$	3,074,044
Balance as of February 28, 2026	$	2,884	$	894,736	$	1,632,421	$	547,705	$	3,077,746	$	(2,231)	$	3,075,515	$	21,214	$	3,096,729
	Q2 FY2025
	Q3 FY2025
(Dollars in thousands)	MembershipFees andEducationalFund		PatronageCapitalAllocated		Members’CapitalReserve		UnallocatedNetIncome		CFCRetainedEquity		AccumulatedOtherComprehensive Income (Loss)		TotalCFCEquity		Non-controllingInterests		TotalEquity
Balance as of August 31, 2024	$	3,111	$	881,386	$	1,455,564	$	441,662	$	2,781,723	$	(684)	$	2,781,039	$	20,225	$	2,801,264
Net income	—		—		—		144,443		144,443		—		144,443		360		144,803
Other comprehensive loss	—		—		—		—		—		(658)		(658)		—		(658)
Other	(243)		—		—		—		(243)		—		(243)		2		(241)
Balance as of November 30, 2024	$	2,868	$	881,386	$	1,455,564	$	586,105	$	2,925,923	$	(1,342)	$	2,924,581	$	20,587	$	2,945,168
Net income	—		—		—		85,986		85,986		—		85,986		150		86,136
Other comprehensive loss	—		—		—		—		—		(22)		(22)		—		(22)
Other	(96)		—		—		—		(96)		—		(96)		—		(96)
Balance as of February 28, 2025	$	2,772	$	881,386	$	1,455,564	$	672,091	$	3,011,813	$	(1,364)	$	3,010,449	$	20,737	$	3,031,186
	YTD FY2025
Balance as of May 31, 2024	$	3,576	$	928,232	$	1,455,564	$	605,506	$	2,992,878	$	(1,416)	$	2,991,462	$	20,707	$	3,012,169
Net loss	—		—		—		(19,401)		(19,401)		—		(19,401)		(122)		(19,523)
Net income	—		—		—		66,585		66,585		—		66,585		28		66,613
Other comprehensive income	—		—		—		—		—		7452		7452		—		7452
Patronage capital retirement	—		(46,846)		—		—		(46,846)		—		(46,846)		—		(46,846)
Other	(~~708~~804)		—		—		—		(~~708~~804)		—		(~~708~~804)		2		(~~706~~802)
Balance as of November 30, 2024	$	2,868	$	881,386	$	1,455,564	$	586,105	$	2,925,923	$	(1,342)	$	2,924,581	$	20,587	$	2,945,168
Balance as of February 28, 2025	$	2,772	$	881,386	$	1,455,564	$	672,091	$	3,011,813	$	(1,364)	$	3,010,449	$	20,737	$	3,031,186

The accompanying Notes to Consolidated Financial Statements (Unaudited) are an integral part of these statements.

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NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Dollars in thousands)

YTD FY2026

YTD FY2025

Cash flows from operating activities:

Net income (loss)

24,240

(19,523)

Net income

46,977

66,613

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Amortization of deferred loan fees

(12,~~319~~002)

(12,~~579~~252)

Amortization of debt issuance costs and discounts

1726,~~738~~905

1625,~~440~~249

Amortization of guarantee fee

914,~~732~~251

914,~~745~~621

Depreciation and amortization

610,~~736~~098

69,~~160~~352

Provision for credit losses

2,808

1,823

Benefit for credit losses

(4,597)

(4,270)

Unrealized gains on equity and debt securities

(~~405~~200)

(7,~~070~~902)

Derivative forward value losses

88133,~~697~~659

~~147~~127,~~754~~921

Advances on loans held for sale

(~~280~~442,~~600~~732)

(~~193~~378,~~500~~000)

Proceeds from sales of loans held for sale

~~290~~459,~~300~~932

~~194~~375,~~000~~500

Changes in operating assets and liabilities:

Accrued interest receivable

~~(12~~9,~~527)~~487

~~(77~~2,~~539)~~960

Accrued interest payable

~~366~~3,527

2149,~~128~~872

Deferred income

~~450~~1,201

~~(366)~~539

Other

(2429,~~977~~677)

3(29,~~067~~413)

Net cash provided by operating activities

~~121~~226,~~239~~829

~~100~~250,~~540~~790

Cash flows from investing activities:

Advances on loans held for investment, net

(~~770~~1,~~876~~685,637)

(1,~~070~~932,~~890~~756)

Investments in fixed assets, net

(~~953~~1,438)

(23,~~378~~653)

Proceeds from sales and maturities of trading securities

6672,~~804~~343

99138,~~877~~512

Proceeds from redemption of equity securities

—

25,000

Net cash used in investing activities

(~~705~~1,~~025~~614,732)

(~~948~~1,~~391~~772,897)

Cash flows from financing activities:

Proceeds from short-term borrowings ≤ 90 days, net

~~659~~102,~~627~~291

~~761~~615,~~284~~486

Proceeds from short-term borrowings with original maturity > 90 days

1,~~020~~569,~~577~~885

1,~~014~~565,~~796~~320

Repayments of short-term borrowings with original maturity > 90 days

(~~956~~1,~~673~~662,764)

(12,~~616~~277,~~367~~467)

Payments for issuance costs for revolving bank lines of credit

(45,~~654~~158)

—(3,576)

Proceeds from issuance of long-term debt, net of discounts and issuance costs

14,~~762~~290,~~503~~281

13,~~925~~951,~~084~~287

Payments for retirement of long-term debt

(12,~~603~~568,~~253~~254)

(12,~~120~~338,~~733~~105)

Proceeds from issuance of subordinated debt

27179,~~454~~381

—35,277

Payments for issuance costs for subordinated deferrable debt

(~~869~~1,713)

—(1,117)

Payments for retirement of subordinated deferrable debt

(50300,~~000~~150)

—

Proceeds from issuance of members’ subordinated certificates

~~540~~640

Payments for retirement of members’ subordinated certificates

(4857,~~666~~448)

(212,~~292~~712)

Payments for retirement of patronage capital

(52,978)

(46,846)

Additions for membership fees, net

—

Net cash provided by financing activities

~~753~~1,~~609~~494,015

~~914~~1,~~932~~487,553

Net increase in cash, cash equivalents and restricted cash

~~169~~106,~~823~~112

67(34,~~081~~554)

Beginning cash, cash equivalents and restricted cash

143,122

288,341

Ending cash, cash equivalents and restricted cash

~~312~~249,~~945~~234

~~355~~253,~~422~~787

The accompanying Notes to Consolidated Financial Statements (Unaudited) are an integral part of these statements.

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NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(Dollars in thousands)

YTD FY2026

YTD FY2025

Supplemental disclosure of cash flow information:

Cash paid for interest

~~729~~1,~~891~~082,314

~~671~~992,~~002~~806

Cash paid for income taxes

~~271~~285

~~432~~533

The accompanying Notes to Consolidated Financial Statements (Unaudited) are an integral part of these statements.

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NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)


NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company

National Rural Utilities Cooperative Finance Corporation (“CFC”) is a tax-exempt, member-owned cooperative association incorporated under the laws of the District of Columbia in April 1969. CFC’s principal purpose is to provide its members with financing to supplement the loan programs of the Rural Utilities Service (“RUS”) of the United States Department of Agriculture (“USDA”). CFC makes loans to its rural electric members so they can acquire, construct and operate electric distribution systems, electric generation and transmission (“power supply”) systems and related facilities. CFC also provides its members and associates with credit enhancements in the form of letters of credit and guarantees of debt obligations. As a cooperative, CFC is owned by and exclusively serves its membership, which consists of not-for-profit entities or subsidiaries or affiliates of not-for-profit entities.

National Cooperative Services Corporation (“NCSC”) is a taxable cooperative incorporated in 1981 in the District of Columbia as a member-owned cooperative association. NCSC’s principal purpose is to provide financing to its members and associates, which consists of two classes: NCSC electric and NCSC telecommunications. NCSC electric members and associates consist of members of CFC, entities eligible to be members of CFC, government or quasi-government entities that own electric utility systems that meet the Rural Electrification Act definition of “rural,” and the for-profit and not-for-profit entities that are owned, operated or controlled by, or provide significant benefit to, certain members of CFC. NCSC telecommunication (“telecom”) members and associates consist of rural telecommunications members and their affiliates.

Cooperative Securities LLC (“Cooperative Securities”) is a limited liability company organized and incorporated in 2021 in Delaware and a wholly owned subsidiary of NCSC. Cooperative Securities is a broker-dealer registered with the U.S. Securities and Exchange Commission (“SEC”), and is a member of the Financial Industry Regulatory Authority and the Securities Investor Protection Corporation. Cooperative Securities provides institutional debt placement services, which may include advising, arranging and structuring private debt financing transactions, for NCSC’s members, and for-profit and not-for-profit entities that are owned, operated or controlled by, or provide a significant benefit to certain rural utility providers.

Basis of Presentation and Use of Estimates

The accompanying unaudited interim consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”). These consolidated financial statements include the accounts of CFC and variable interest entities (“VIEs”) where CFC is the primary beneficiary. NCSC is a VIE that is required to be consolidated by CFC. All intercompany balances and transactions have been eliminated. Unless stated otherwise, references to “we,” “our” or “us” relate to CFC and its consolidated entities.

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and related disclosures during the period. Management’s most significant estimates and assumptions involve determining the allowance for credit losses. These estimates are based on information available as of the date of the consolidated financial statements. While management makes its best judgments, actual amounts or results could differ from these estimates. In the opinion of management, these unaudited interim financial statements reflect all adjustments of a normal, recurring nature that are necessary for the fair statement of results for the periods presented. The results in the interim financial statements included in our Quarterly Report on Form 10-Q for the quarterly period ended ~~November~~February 3028, ~~2025~~2026 (“this Report”) are not necessarily indicative of results that may be expected for

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NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

the full fiscal year, and the unaudited interim consolidated financial statements should be read in conjunction with our audited consolidated financial statements included in our 2025 Form 10-K.

Certain reclassifications and updates have been made to the presentation of information in prior period to conform to the current-period presentation. These reclassifications had no effect on prior period net income (loss) or equity.

Leases

Our lease program is intended to provide equipment financing for leased assets, such as vehicles, to our members. We determine whether an arrangement is a lease and the lease classification under Accounting Standards Codification (“ASC”) Topic 842, Leases, at lease inception for all lease transactions with an initial term greater than one year. We recorded a total finance lease liability of $7 million as of both ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, which were included in other liabilities on the consolidated balance sheets. Interest expenses and variable lease cost from the finance leases were not material for Q2Q3 FY2026, Q2Q3 FY2025, YTD FY2026 and YTD FY2025. We recorded a total net investment in leases for sales-type leases of $7 million as of both ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, which were included in other assets on the consolidated balance sheets. Interest income and variable lease payment income from the sales-type leases were not material for Q2Q3 FY2026, Q2Q3 FY2025, YTD FY2026 and YTD FY2025.

New Accounting Standards Issued But Not Yet Adopted

Financial Instruments—Credit Losses (Topic 326): Purchased Loans

In November 2025, the FASB issued Accounting Standards Update (“ASU”) 2025-08, Financial Instruments—Credit Losses (Topic 326): Purchased Loans. The ASU amends ASC Topic 326 to require entities to apply the gross-up approach to all “purchased seasoned loans.” Purchased seasoned loans are loans (excluding purchased financial assets with credit deterioration, credit card receivables, debt securities and trade receivables) that are (1) acquired in a business combination or (2) obtained through a transfer that is not a business combination or initially recognized through the consolidation of a variable interest entity, if certain seasoning criteria are met. A loan is considered seasoned if it is obtained more than 90 days after its origination date and the transferee was not involved in the origination. ASU 2025-08 is effective for annual reporting periods beginning after December 15, 2026, including interim reporting periods within those annual reporting periods, with early adoption permitted. The ASU must be applied prospectively. We plan to adopt the guidance on June 1, 2027 and are currently evaluating its impact on our consolidated financial statements and related disclosures.

Targeted Improvements to the Accounting for Internal-Use Software

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This ASU updates the accounting guidance for internal-use software by eliminating references to software development project stages, thereby requiring companies to start capitalizing software costs when (i) management has authorized and committed to funding the project, and (ii) it is probable the project will be completed and the software will be used to perform its intended function. ASU 2025-06 is effective for annual periods beginning after December 15, 2027, and for interim reporting periods within those annual reporting periods, with early adoption permitted. The ASU can be applied either (i) prospectively, (ii) through a modified transition approach, or (iii) retrospectively. We expect to adopt the guidance on June 1, 2028 and are currently evaluating the impact of ASU 2025-06 on our consolidated financial statements and related disclosures.

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Income Statement—Expense Disaggregation Disclosures

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments require public entities to disclose, in interim and annual reporting periods, additional information about certain expenses in notes to financial statements, including purchases of inventory, employee compensation, depreciation, intangible asset amortization, and other specific expense categories. ASU 2024-03 is effective for public business entities for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. Upon adoption, ASU 2024-03 should be applied on a prospective basis, while retrospective application is also permitted. We expect to adopt the guidance in our annual report for the fiscal year ended May 31, 2028, and the interim disclosure requirements in the quarterly report for the quarter ended August 31, 2028. We are currently in the process of reviewing the guidance and evaluating its impact on our consolidated financial statements and related disclosures.

Income Taxes (Topic 740)—Improvements to Income Tax Disclosures

In December 2023, The FASB issued ASU 2023-09, Income Taxes (Topic 740)—Improvements to Income Tax Disclosures. The ASU requires public business entities to disclose, on an annual basis, specific categories in the rate reconciliation and provide additional information for reconciling items that meet a specific quantitative threshold. There is a further requirement that public business entities will need to disclose a tabular reconciliation, using both percentages and reporting currency amounts. ASU 2023-09 is effective for fiscal years beginning after December 15, 2024 for public business entities, with early adoption permitted. The ASU should be applied on a prospective basis, while retrospective application is also permitted. We plan to adopt the guidance in our annual report for the fiscal year ended May 31, 2026. The adoption of the amendments is not expected to have a material impact on our consolidated financial statements or related disclosures.

Disclosure Improvements—Codification Amendment in Response to the SEC’s Disclosure Update and Simplification Initiative

In October 2023, the FASB issued ASU 2023-06, Disclosure Improvements—Codification Amendment in Response to the SEC’s Disclosure Update and Simplification Initiative. The amendments in this update modify the disclosure or presentation requirements of a variety of topics in the ASC in response to the SEC’s Release No. 33-10532, Disclosure Update and Simplification Initiative, and align the ASC’s requirements with the SEC’s regulations. For entities subject to the SEC’s existing disclosure requirements, the effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective. Early adoption is prohibited. The adoption of the amendments is not expected to have a material impact on our consolidated financial statements or related disclosures.

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NOTE 2—INTEREST INCOME AND INTEREST EXPENSE

The following table displays the components of interest income, by interest-earning asset type, and interest expense, by debt product type, presented in our consolidated statements of operations.

Table 2.1: Interest Income and Interest Expense

(Dollars in thousands)

Q2Q3 FY2026

Q2Q3 FY2025

YTD FY2026

YTD FY2025

Interest income:

Loans(1)

~~444~~448,~~244~~236

~~416~~426,~~024~~216

~~889~~1,~~816~~338,052

~~830~~1,~~724~~256,940

Cash and investment securities

1,~~430~~334

32,~~853~~644

34,~~304~~638

79,~~272~~916

Total interest income

~~445~~449,~~674~~570

~~419~~428,~~877~~860

~~893~~1,~~120~~342,690

~~837~~1,~~996~~266,856

Interest expense:(2)(3)

Short-term borrowings

4546,~~976~~188

4248,~~247~~996

96142,~~302~~490

96145,~~647~~643

Long-term debt

~~293~~294,~~350~~240

~~277~~278,~~423~~359

~~584~~878,~~542~~782

~~544~~822,~~391~~750

Subordinated debt

3429,~~340~~582

34,~~773~~563

6998,~~291~~873

69104,~~865~~428

Total interest expense

~~373~~370,~~666~~010

~~354~~361,~~443~~918

~~750~~1,~~135~~120,145

~~710~~1,~~903~~072,821

Net interest income

7279,~~008~~560

6566,~~434~~942

~~142~~222,~~985~~545

~~127~~194,~~093~~035

____________________________

(1)Includes loan conversion fees, which are generally deferred and recognized in interest income over the period to maturity using the effective interest method, late payment fees, commitment fees and net amortization of deferred loan fees and loan origination costs.

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(2)Includes amortization of debt discounts and premiums, and debt issuance costs, which are generally deferred and recognized as interest expense over the period to maturity using the effective interest method. Issuance costs related to dealer commercial paper, however, are recognized in interest expense immediately as incurred.

(3)Includes fees related to funding arrangements, such as up-front fees paid to banks participating in our committed bank revolving line of credit agreements. Based on the nature of the fees, the amount is either recognized immediately as incurred or deferred and recognized in interest expense ratably over the term of the arrangement.

Deferred income reported on our consolidated balance sheets of $31 million and $32 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively, consists primarily of deferred loan conversion fees that totaled $2019 million and $21 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively.


NOTE 3—INVESTMENT SECURITIES

Our investment securities portfolio consists of debt securities classified as trading and equity securities with readily determinable fair values. We therefore record changes in the fair value of our debt and equity securities in earnings and report these unrealized changes together with realized gains and losses from the sale of securities as a component of non-interest income in our consolidated statements of operations.

Debt Securities

The following table presents the composition of our investment debt securities portfolio and the fair value as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025., reflecting the continued wind-down of this portfolio as we reduce our holdings over time.

~~Table 3.1: Investments in Debt Securities, at Fair Value~~59

(Dollars in thousands)	November 30, 2025		May 31, 2025
Debt securities, at fair value:
Corporate debt securities	$	46,773	$	107,957
Commercial agency mortgage-backed securities (“MBS”)(1)	453		525
U.S. state and municipality debt securities	—		1,049
Other asset-backed securities(2)	670		4,132
Total debt securities trading, at fair value	$	47,896	$	113,663

____________________________

(1)Consists of securities backed by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”).

(2)Consists primarily of securities backed by auto lease loans, equipment-backed loans, auto loans and credit card loans.

We recognized net unrealized gains on our debt securities of less than $1 million and $1 million for Q2 FY2026 and YTD FY2026, respectively. We recognized net unrealized gains on our debt securities of $2 million and $6 million for Q2 FY2025 and YTD FY2025, respectively.

We sold $16 million in principal amount of debt securities during Q2 FY2026 and YTD FY2026, and realized an immaterial gain on the sale of these securities during these periods. We sold $14 million in principal amount of debt securities during YTD FY2025 and realized gains on the sale of these securities of less than $1 million during the period. We did not sell any debt securities during Q2 FY2025.

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Table 3.1: Investments in Debt Securities, at Fair Value


(Dollars in thousands)	February 28, 2026		May 31, 2025
Debt securities, at fair value:



Corporate debt securities	$	42,093	$	107,957

Commercial agency mortgage-backed securities (“MBS”)(1)	417		525


U.S. state and municipality debt securities	—		1,049

Other asset-backed securities(2)	110		4,132
Total debt securities trading, at fair value	$	42,620	$	113,663

____________________________

(1)Consists of securities backed by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”).

(2)Consists primarily of securities backed by auto lease loans, equipment-backed loans, auto loans and credit card loans.

We recognized net unrealized gains on our debt securities of less than $1 million and $1 million for Q3 FY2026 and YTD FY2026, respectively. We recognized net unrealized gains on our debt securities of $1 million and $7 million for Q3 FY2025 and YTD FY2025, respectively.

We sold $16 million in principal amount of debt securities during YTD FY2026, and realized immaterial gains on the sale of these securities during the period. We sold $14 million in principal amount of debt securities during YTD FY2025 and realized gains on the sale of these securities of less than $1 million during the period. We did not sell any debt securities during Q3 FY2026 and Q3 FY2025.

Equity Securities

Our equity securities consisted of Farmer Mac Class A common stock recorded at fair value of $10 million and $11 million as of ~~both November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively.

We recognized net unrealized losses on our equity securities of ~~approximatively~~less than $1 million ~~for~~and ~~both~~$1 Q2million for Q3 FY2026 and YTD FY2026, respectively. We recognized net unrealized ~~gains~~losses on our equity securities of less than $1 million and net unrealized gains of $2 1 million for Q2Q3 FY2025 and YTD FY2025, respectively.


NOTE 4—LOANS

Our loan portfolio is segregated into segments by borrower member class, which is based on the utility sector of the borrowers because the key operational, infrastructure, regulatory, environmental, customer and financial risks of each sector are similar in nature. Total loan portfolio member class consists of CFC distribution, CFC power supply, CFC statewide and associate, NCSC electric and NCSC telecom. We offer both long-term and line of credit loans to our borrowers. Under our long-term loan facilities, a borrower may select a fixed interest rate or a variable interest rate at the time of each loan advance. Line of credit loans are generally revolving loan facilities and have a variable interest rate.

Loans to Members

Loans to members consist of loans held for investment and loans held for sale. The outstanding amount of loans held for investment is recorded based on the unpaid principal balance, net of discounts, net charge-offs and recoveries, of loans and deferred loan origination costs. The outstanding amount of loans held for sale is recorded based on the lower of cost or fair ~~value. The following table presents loans to members by legal entity, member class and loan type, as of November 30, 2025 and May 31, 2025.~~

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value. The following table presents loans to members by legal entity, member class and loan type, as of February 28, 2026 and May 31, 2025.

Table 4.1: Loans to Members by Member Class and Loan Type

	November 30, 2025				May 31, 2025
	February 28, 2026				May 31, 2025
(Dollars in thousands)	Amount		% of Total		Amount		% of Total
Member class:
CFC:
Distribution	$	2930,~~690~~387,~~714~~286	78	%	$	29,262,495	79	%
Power supply	6,~~132~~288,~~211~~837		16		5,895,500		16
Statewide and associate	~~260~~273,~~046~~177		1		251,325		—
Total CFC	36,~~082~~949,~~971~~300		95		35,409,320		95
NCSC:
Electric	1,~~147~~163,~~007~~391		3		1,078,763		3
Telecom	~~594~~618,~~746~~988		2		575,465		2
Total NCSC	1,~~741~~782,~~753~~379		5		1,654,228		5
Total loans outstanding(1)	3738,~~824~~731,~~724~~679		100		37,063,548		100
Deferred loan origination costs—CFC(2)	1718,~~566~~203		—		16,430		—
Loans to members	$	3738,~~842~~749,~~290~~882	100	%	$	37,079,978	100	%
Loan type:
Long-term loans:
Fixed rate	$	3132,~~762~~145,~~609~~476	8483	%	$	31,388,313	85	%
Variable rate	1,~~329~~438,~~189~~929		34		1,122,250		3
Total long-term loans	33,~~091~~584,~~798~~405		87		32,510,563		88
Lines of credit	45,~~732~~147,~~926~~274		13		4,552,985		12
Total loans outstanding(1)	3738,~~824~~731,~~724~~679		100		37,063,548		100
Deferred loan origination costs—CFC(2)	1718,~~566~~203		—		16,430		—
Loans to members	$	3738,~~842~~749,~~290~~882	100	%	$	37,079,978	100	%

___________________________

(1)Represents the unpaid principal balance, net of discounts, charge-offs and recoveries, of loans as of the end of each period.

(2)Deferred loan origination costs are recorded at CFC segment.

Loan Sales

We may transfer whole loans and participating interests to third parties. These transfers are typically made concurrently or within a short period of time with the closing of the loan sale or participation agreement at par value and meet the accounting criteria required for sale accounting.

We sold CFC and NCSC loans, at par for cash, totaling $~~290~~460 million and $~~194~~376 million during YTD FY2026 and YTD FY2025, respectively. We recorded immaterial losses on the sale of these loans attributable to the unamortized deferred loan origination costs associated with the transferred loans. We had loans held for sale totaling $124 million as of ~~November~~February 3028, ~~2025~~2026, which were sold at par for cash in ~~December~~March ~~2025~~2026. We had loans held for sale totaling $21 million as of May 31, 2025, which were sold at par for cash during YTD FY2026.

~~Accrued Interest Receivable~~ 61

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~~three~~Accrued ~~months~~Interest orReceivable less of accrued interest on loans outstanding. Because our policy is to write off past-due accrued interest receivable in a timely manner, we elected not to measure an allowance for credit losses for accrued interest receivable on loans outstanding. We also elected to exclude accrued interest receivable from the credit quality disclosures required under CECL.

We report accrued interest on loans separately on our consolidated balance sheets as a component of the line item accrued interest receivable rather than as a component of loans to members. Accrued interest on loans totaled $238 million and $237 million as of February 28, 2026 and May 31, 2025, respectively. Accrued interest receivable amounts generally represent three months or less of accrued interest on loans outstanding. Because our policy is to write off past-due accrued interest receivable in a timely manner, we elected not to measure an allowance for credit losses for accrued interest receivable on loans outstanding. We also elected to exclude accrued interest receivable from the credit quality disclosures required under CECL.

Credit Concentration

Because we lend primarily to our rural electric utility cooperative members, we have had a loan portfolio subject to single-industry and single-obligor concentration risks since our inception in 1969. Loans outstanding to electric utility organizations of $3738,~~230~~113 million and $36,488 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively, accounted for 98% of total loans outstanding as of each respective date. The remaining loans outstanding in our portfolio were to members, affiliates and associates in the telecommunications industry. Our credit exposure is partially mitigated by long-term loans guaranteed by RUS, which totaled $~~100~~97 million and $105 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively.

Single-Obligor Concentration

The outstanding loan exposure for our 20 largest borrowers totaled $7,~~111~~248 million and $7,149 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively, representing 19% of total loans outstanding as of each respective date. Our 20 largest borrowers consisted of 1413 distribution systems and ~~six~~seven power supply systems as of ~~both November~~February 3028, ~~2025~~2026 and 14 distribution systems and six power supply systems as of May 31, 2025. The largest total outstanding exposure to a single borrower or controlled group represented approximately 1% of total loans outstanding as of both ~~November~~February 3028, ~~2025~~2026 and May 31, 2025.

We entered into a long-term standby purchase commitment agreement with Farmer Mac during fiscal year 2016. Under this agreement, we may designate certain long-term loans to be covered under the commitment, subject to approval by Farmer Mac, and in the event any such loan later goes into payment default for at least 90 days, upon request by us, Farmer Mac must purchase such loan at par value. We are required to pay Farmer Mac a monthly fee based on the unpaid principal balance of loans covered under the purchase commitment. The aggregate unpaid principal balance of designated and Farmer Mac approved loans was $~~333~~327 million and $346 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively. Loan exposure to our 20 largest borrowers covered under the Farmer Mac agreement totaled $~~181~~205 million and $155 million as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively, which reduced our exposure to the 20 largest borrowers to approximately $67,~~930~~043 million and $6,994 million of our total loans outstanding as of each respective date. We have had no loan defaults for loans covered under this agreement; therefore, no loans have been put to Farmer Mac for purchase pursuant to the standby purchase agreement as of ~~November~~February 3028, ~~2025~~2026.

~~Geographic Concentration~~62

Although our organizational structure and mission result in single-industry concentration, we serve a geographically diverse group of electric and telecommunications borrowers throughout the U.S. The consolidated number of borrowers with loans outstanding totaled 913, located in 49 states and the District of Columbia as of November 30, 2025, compared with 899 borrowers located in 49 states as of May 31, 2025. Of the 913 and 899 borrowers with loans outstanding, 51 and 50 were

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~~electric~~Geographic power supply borrowers as of November 30, 2025 and May 31, 2025, respectively. Electric power supply borrowers generally require significantly more capital than electric distribution and telecommunications borrowers. Concentration

~~Texas,~~Although ~~which~~our ~~had~~organizational 67structure and 68mission ~~borrowers~~result ~~with~~in ~~loans~~single-industry ~~outstanding as of November 30~~concentration, ~~2025~~we ~~and~~serve ~~May 31,~~a ~~2025,~~geographically ~~respectively,~~diverse ~~accounted~~group ~~for~~of ~~the~~electric ~~largest~~and ~~number~~telecommunications of borrowers ~~with~~throughout ~~loans~~the ~~outstanding~~U.S. inThe ~~any~~consolidated ~~one~~number ~~state as~~ of ~~each~~borrowers ~~respective~~with ~~date,~~loans ~~as well as the largest concentration of loan exposure in any one state. Loans~~ outstanding ~~to Texas-based borrowers~~ totaled ~~$6,160~~908 ~~million~~ and ~~$6,105~~899 ~~million~~borrowers as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively, ~~and~~located ~~accounted~~in ~~for~~49 ~~approximately~~states. ~~16%~~Of ofthe ~~total~~908 ~~loans~~and ~~outstanding~~899 asborrowers ofwith ~~each respective date. Of the~~ loans outstanding, to49 ~~Texas-based~~and ~~borrowers,~~50 ~~$112~~were ~~million~~electric ~~and~~power ~~$118~~supply ~~million~~borrowers as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, respectively,. ~~were~~Electric ~~covered~~power bysupply ~~the~~borrowers ~~Farmer~~generally ~~Mac~~require ~~standby~~significantly ~~repurchase~~more ~~agreement,~~capital ~~which~~than ~~reduced~~electric ~~our~~distribution ~~credit risk exposure to Texas-based borrowers to $6,048 million~~ and ~~$5,987~~telecommunications ~~million as of each respective date~~borrowers.

Texas, which had 67 and 68 borrowers with loans outstanding as of February 28, 2026 and May 31, 2025, respectively, accounted for the largest number of borrowers with loans outstanding in any one state as of each respective date, as well as the largest concentration of loan exposure in any one state. Loans outstanding to Texas-based borrowers totaled $6,258 million and $6,105 million as of February 28, 2026 and May 31, 2025, respectively, and accounted for approximately 16% of total loans outstanding as of each respective date. Of the loans outstanding to Texas-based borrowers, $111 million and $118 million as of February 28, 2026 and May 31, 2025, respectively, were covered by the Farmer Mac standby repurchase agreement, which reduced our credit risk exposure to Texas-based borrowers to $6,147 million and $5,987 million as of each respective date.

Credit Quality Indicators

Payment Status of Loans

Loans are considered delinquent when contractual principal or interest amounts become past due 30 days or more following the scheduled payment due date. Loans are placed on nonaccrual status when payment of principal or interest is 90 days or more past due or management determines that the full collection of principal and interest is doubtful. The following table presents the payment status, by legal entity and member class, of loans outstanding as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025.

~~Table 4.2: Payment Status of Loans Outstanding~~63

	November 30, 2025
(Dollars in thousands)	Current			30-89 Days Past Due			> 90 DaysPast Due			TotalPast Due			Total Loans Outstanding			Nonaccrual Loans
Member class:
CFC:
Distribution	$	29,690,714		$	—		$	—		$	—		$	29,690,714		$	—
Power supply	6,132,211			—			—			—			6,132,211			24,193
Statewide and associate	260,046			—			—			—			260,046			—
Total CFC	36,082,971			—			—			—			36,082,971			24,193
NCSC:
Electric	1,147,007			—			—			—			1,147,007			—
Telecom	594,746			—			—			—			594,746			—
Total NCSC	1,741,753			—			—			—			1,741,753			—
Total loans outstanding	$	37,824,724		$	—		$	—		$	—		$	37,824,724		$	24,193
Percentage of total loans	100.00		%	—		%	—		%	—		%	100.00		%	0.06		%

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Table 4.2: Payment Status of Loans Outstanding


	February 28, 2026
(Dollars in thousands)	Current			30-89 Days Past Due			> 90 Days Past Due		Total Past Due		Total Loans Outstanding		Nonaccrual Loans
Member class:
CFC:
Distribution	$	30,387,286		$	—		$	—	$	—	$	30,387,286	$	—
Power supply	6,288,837			—			—		—		6,288,837		12,887
Statewide and associate	273,177			—			—		—		273,177		—
Total CFC	36,949,300			—			—		—		36,949,300		12,887
NCSC:
Electric	1,163,391			—			—		—		1,163,391		—
Telecom	618,988			—			—		—		618,988		—
Total NCSC	1,782,379			—			—		—		1,782,379		—
Total loans outstanding	$	38,731,679		$	—		$	—	$	—	$	38,731,679	$	12,887

Percentage of total loans	100.00		%	—		%

Filing Compare · NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/