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.

We offer loans under secured long-term facilities with terms generally up to 35 years and line of credit loans. Under secured long-term facilities, borrowers have the option of selecting a fixed or variable rate for a period of one to 35 years for each long-term loan advance. When a selected fixed interest rate term expires, the borrower may select another fixed-rate term or a variable rate. Line of credit loans are revolving loan facilities that typically have a variable interest rate and are generally unsecured. Collateral and security requirements for advances on loan commitments are identical to those required at the time of the initial loan approval.

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 May 31, 2026 and 2025.


	May 31,
	2026				2025
(Dollars in thousands)	Amount		% of Total		Amount		% of Total
Member class:
CFC:
Distribution	$	30,085,224	78	%	$	29,262,495	79	%
Power supply	6,403,396		17		5,895,500		16
Statewide and associate	258,397		—		251,325		—
Total CFC	36,747,017		95		35,409,320		95
NCSC:
Electric	1,073,794		3		1,078,763		3
Telecom	582,604		2		575,465		2
Total NCSC	1,656,398		5		1,654,228		5
Total loans outstanding(1)	38,403,415		100		37,063,548		100
Deferred loan origination costs—CFC(2)	18,713		—		16,430		—
Loans to members	$	38,422,128	100	%	$	37,079,978	100	%

Loan type:
Long-term loans:
Fixed rate	$	32,384,884	84	%	$	31,388,313	85	%
Variable rate	1,435,958		4		1,122,250		3
Total long-term loans	33,820,842		88		32,510,563		88
Lines of credit	4,582,573		12		4,552,985		12
Total loans outstanding(1)	38,403,415		100		37,063,548		100
Deferred loan origination costs—CFC(2)	18,713		—		16,430		—
Loans to members	$	38,422,128	100	%	$	37,079,978	100	%

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. Therefore, we remove the transferred loans or participating interests from our consolidated balance sheets when control has been surrendered and recognize a gain or loss on the sale, if any. We retain a servicing performance obligation on the transferred loans and recognize related servicing fees on an accrual basis over the period for which servicing is provided, as we believe the servicing fee represents adequate compensation. Other than the servicing performance obligation, we have not retained any interest in the loans sold to date. In addition, we have no obligation to repurchase loans that are sold, except in the case of breaches of representations and warranties.

We sold CFC and NCSC loans, at par for cash, totaling $671 million, $424 million and $324 million in FY2026, FY2025 and FY2024, 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 $4 million and $21 million as of May 31, 2026 and 2025, respectively, which were sold at par for cash subsequent to the respective year end.

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 a tax-exempt, member-owned finance cooperative, CFC’s principal focus is to provide funding to its rural electric utility cooperative members to assist them in acquiring, constructing and operating electric distribution systems, power supply systems and related facilities.

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 $37,821 million and $36,488 million as of May 31, 2026 and 2025, respectively, accounted for 98% of total loans outstanding as of both dates. 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 $95 million and $105 million as of May 31, 2026 and 2025, respectively.

The outstanding loan exposure for our 20 largest borrowers totaled $7,374 million and $7,149 million as of May 31, 2026 and 2025, respectively, representing 19% of total loans outstanding as of each respective date. Our 20 largest borrowers consisted of 12 distribution systems and eight power supply systems as of May 31, 2026, compared with 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 May 31, 2026 and 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 $322 million and $346 million as of May 31, 2026 and 2025, respectively. Loan exposure to our 20 largest borrowers covered under the Farmer Mac agreement totaled $214 million and $155 million as of May 31, 2026 and 2025, respectively, which reduced our exposure to the 20 largest borrowers to $7,160 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 May 31, 2026.

Although our organizational structure and mission result in single-industry concentration, we serve a geographically diverse group of electric and telecommunications borrowers throughout the United States. The consolidated number of borrowers with loans outstanding totaled 903 and 899 borrowers as of May 31, 2026 and 2025, respectively, located in 49 states. Of the 903 and 899 borrowers with loans outstanding, 50 were electric power supply borrowers as of both May 31, 2026 and 2025. Electric power supply borrowers generally require significantly more capital than electric distribution and telecommunications borrowers.

Texas, which had 67 and 68 borrowers with loans outstanding as of May 31, 2026 and 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 $6,403 million and $6,105 million as of May 31, 2026 and 2025, respectively, and accounted for approximately 17% and 16% of total loans outstanding as of each respective date. Of the loans outstanding to Texas-based borrowers, $109 million and $118 million as

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, nonaccrual 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.

Table 4.2: Payment Status of Loans Outstanding


	May 31, 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	$	30,085,224		$	—		$	—		$	—		$	30,085,224		$	—
Power supply	6,403,396			—			—			—			6,403,396			7,500
Statewide and associate	258,397			—			—			—			258,397			—
Total CFC	36,747,017			—			—			—			36,747,017			7,500
NCSC:
Electric	1,073,794			—			—			—			1,073,794			—
Telecom	582,604			—			—			—			582,604			—
Total NCSC	1,656,398			—			—			—			1,656,398			—
Total loans outstanding	$	38,403,415		$	—		$	—		$	—		$	38,403,415		$	7,500

Percentage of total loans	100.00		%	—		%	—		%	—		%	100.00		%	0.02		%


	May 31, 2025
(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	$	29,262,495		$	—		$	—		$	—		$	29,262,495		$	—
Power supply	5,895,500			—			—			—			5,895,500			26,099
Statewide and associate	251,325			—			—			—			251,325			—
Total CFC	35,409,320			—			—			—			35,409,320			26,099
NCSC:
Electric	1,078,763			—			—			—			1,078,763			—
Telecom	575,465			—			—			—			575,465			—
Total NCSC	1,654,228			—			—			—			1,654,228			—
Total loans outstanding	$	37,063,548		$	—		$	—		$	—		$	37,063,548		$	26,099

Percentage of total loans	100.00		%	—		%	—		%	—		%	100.00		%	0.07		%

We actively monitor problem loans and, from time to time, attempt to work with borrowers to manage such exposures through loan workouts or modifications that better align with the borrower’s current ability to pay. Therefore, as part of our loss-mitigation efforts, we may provide modifications to a borrower experiencing financial difficulty to improve long-term collectability of the loan and to avoid the need for exercising remedies. We consider the impact of all loan modifications when estimating the credit quality of our loan portfolio and establishing the allowance for credit losses.

We had one loan to a CFC electric power supply borrower of $8 million and $26 million that was on nonaccrual status, which represented 0.02% and 0.07% of total loans outstanding as of May 31, 2026 and 2025, respectively. The decrease in this outstanding loan balance primarily reflected $18 million of payments received during FY2026. Subsequent to FY2026, we received a $3 million payment on this loan, which reduced its outstanding balance to $5 million.

Charge-offs represent the amount of a loan that has been removed from our consolidated balance sheet when the loan is deemed uncollectible. Generally the amount of a charge-off is the recorded investment in excess of the discounted expected cash flows from the loan or, if the loan is collateral dependent, the fair value of the underlying collateral securing the loan. We report charge-offs net of amounts recovered on previously charged-off loans.

We recorded an immaterial charge-off of $0.3 million related to a CFC electric power supply loan during FY2026. We had no charge-offs during FY2025. Over the past five years, we had three borrower defaults resulting in $14 million of charge-offs. Our electric utility loan portfolio has historically experienced low levels of credit losses, as discussed below.

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. Additional information regarding our borrower risk rating methodology is provided in “Note 1—Summary of Significant Accounting Policies.” 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.

Table 4.3 displays total loans outstanding, by borrower risk rating category and by legal entity and member class, as of May 31, 2026 and 2025. The borrower risk rating categories presented below correspond to the borrower risk-rating categories used in calculating our collective allowance for credit losses. If a parent company provides a guarantee of full repayment of loans of a subsidiary borrower and has a better risk rating, we include the loans outstanding in the borrower risk-rating category of the guarantor parent company rather than the risk-rating category of the subsidiary borrower for purposes of calculating the collective allowance.

We present term loans outstanding as of May 31, 2026 and 2025, by fiscal year of origination for each year during the five-year annual reporting period beginning in fiscal year 2022 and 2021, and in the aggregate for periods prior to fiscal year 2022 and 2021, respectively. The origination period represents the date CFC advances funds to a borrower, rather than the execution date of a loan facility for a borrower. Revolving loans are presented separately. The substantial majority of loans in our portfolio represent fixed-rate advances under secured long-term facilities with terms up to 35 years, and as indicated in Table 4.3 below, term loan advances made to borrowers prior to fiscal year 2022 totaled $19,273 million, representing 50% of our total loans outstanding as of May 31, 2026. In comparison, term loan advances made to borrowers prior to fiscal year 2021 totaled $18,537 million, representing 50% of our total loans outstanding as of May 31, 2025. The average remaining maturity of our long-term loans, which accounted for 88% of total loans outstanding as of both May 31, 2026 and 2025, was 19 years, as of each respective date.


	May 31, 2026
	Term Loans by Fiscal Year of Origination
(Dollars in thousands)	2026		2025		2024		2023		2022		Prior		Revolving Loans		Total
Pass
CFC:
Distribution	$	2,267,762	$	2,179,606	$	2,415,406	$	2,269,673	$	2,170,793	$	15,531,739	$	3,060,902	$	29,895,881
Power supply	651,065		435,159		482,656		429,479		270,611		3,145,266		981,660		6,395,896
Statewide and associate	—		6,390		35,761		54,516		2,598		21,929		127,479		248,673
Total CFC	2,918,827		2,621,155		2,933,823		2,753,668		2,444,002		18,698,934		4,170,041		36,540,450
NCSC:
Electric	122,588		79,523		90,059		243,799		15,907		324,006		197,912		1,073,794
Telecom	110,504		50,147		112,776		19,496		26,462		213,734		49,485		582,604
Total NCSC	233,092		129,670		202,835		263,295		42,369		537,740		247,397		1,656,398
Total pass	$	3,151,919	$	2,750,825	$	3,136,658	$	3,016,963	$	2,486,371	$	19,236,674	$	4,417,438	$	38,196,848

Special mention
CFC:
Distribution	$	563	$	—	$	357	$	4,064	$	—	$	19,224	$	165,135	$	189,343

Statewide and associate	—		—		—		—		—		9,724		—		9,724
Total CFC	563		—		357		4,064		—		28,948		165,135		199,067


Total special mention	$	563	$	—	$	357	$	4,064	$	—	$	28,948	$	165,135	$	199,067

Substandard






Total substandard	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Doubtful

CFC Power supply	$	—	$	—	$	—	$	—	$	—	$	7,500	$	—	$	7,500


Total doubtful	$	—	$	—	$	—	$	—	$	—	$	7,500	$	—	$	7,500
Total criticized loans	$	563	$	—	$	357	$	4,064	$	—	$	36,448	$	165,135	$	206,567
Total loans outstanding	$	3,152,482	$	2,750,825	$	3,137,015	$	3,021,027	$	2,486,371	$	19,273,122	$	4,582,573	$	38,403,415


	May 31, 2025
	Term Loans by Fiscal Year of Origination
(Dollars in thousands)	2025		2024		2023		2022		2021		Prior		Revolving Loans		Total
Pass
CFC:
Distribution	$	2,301,736	$	2,471,765	$	2,323,781	$	2,256,706	$	1,541,206	$	15,022,726	$	3,163,495	$	29,081,415
Power supply	442,972		496,642		441,984		296,948		474,074		2,857,029		859,752		5,869,401
Statewide and associate	7,125		36,294		57,101		2,806		1,420		22,257		113,338		240,341
Total CFC	2,751,833		3,004,701		2,822,866		2,556,460		2,016,700		17,902,012		4,136,585		35,191,157
NCSC:
Electric	81,315		122,354		250,610		16,773		4,131		385,564		217,416		1,078,163
Telecom	52,516		129,964		40,642		64,086		49,898		196,307		42,052		575,465
Total NCSC	133,831		252,318		291,252		80,859		54,029		581,871		259,468		1,653,628
Total pass	$	2,885,664	$	3,257,019	$	3,114,118	$	2,637,319	$	2,070,729	$	18,483,883	$	4,396,053	$	36,844,785

Special mention
CFC:
Distribution	$	—	$	361	$	4,126	$	—	$	4,568	$	15,693	$	156,332	$	181,080

Statewide and associate	—		—		—		—		—		10,984		—		10,984
Total CFC	—		361		4,126		—		4,568		26,677		156,332		192,064
NCSC electric	—		—		—		—		—		—		600		600
Total special mention	$	—	$	361	$	4,126	$	—	$	4,568	$	26,677	$	156,932	$	192,664

Substandard





Total substandard	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

Doubtful

CFC Power supply	$	—	$	—	$	—	$	—	$	—	$	26,099	$	—	$	26,099


Total doubtful	$	—	$	—	$	—	$	—	$	—	$	26,099	$	—	$	26,099

Total criticized loans	$	—	$	361	$	4,126	$	—	$	4,568	$	52,776	$	156,932	$	218,763
Total loans outstanding	$	2,885,664	$	3,257,380	$	3,118,244	$	2,637,319	$	2,075,297	$	18,536,659	$	4,552,985	$	37,063,548

Criticized loans totaled $207 million and $219 million as of May 31, 2026 and 2025, respectively, and represented approximately 1% of total loans outstanding as of each respective date. The $12 million decrease in criticized loans was primarily driven by $18 million in payments received during FY2026 from a CFC electric power supply borrower in the doubtful category, partially offset by a $6 million increase in loans outstanding in the special mention category, as discussed below. 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 May 31, 2026 and 2025.

One CFC electric distribution borrower with loans outstanding of $189 million and $181 million as of May 31, 2026 and 2025, respectively, accounted for the substantial majority of loans in the special mention loan category amount of $199 million and $193 million as of each respective date. This borrower experienced an adverse financial impact from restoration costs incurred to repair damage caused by two successive hurricanes. We expect that the borrower will continue to receive grant funds from the Federal Emergency Management Agency and the state where it is located for the full reimbursement of the hurricane damage-related restoration costs.

We had one loan outstanding classified as doubtful totaling $8 million and $26 million to a CFC electric power supply borrower as of May 31, 2026 and 2025, respectively, which was also on nonaccrual status as of each respective date. The reduction in this outstanding loan balance primarily reflected $18 million of payments received during FY2026. Subsequent to FY2026, we received a $3 million payment on this loan which reduced its outstanding balance to $5 million.


	May 31,
(Dollars in thousands)	2026		2025
Member class:
CFC:
Distribution	$	13,576,857	$	11,948,516
Power supply	5,501,553		5,097,398
Statewide and associate	212,108		215,768
Total CFC	19,290,518		17,261,682
NCSC:
Electric	359,203		520,312
Telecom	364,178		437,015
Total NCSC	723,381		957,327
Total unadvanced commitments	$	20,013,899	$	18,219,009



Loan type:(2)
Long-term loans:
Fixed rate	$	—	$	—
Variable rate	8,397,685		7,471,266

Total long-term loans	8,397,685		7,471,266
Lines of credit	11,616,214		10,747,743
Total unadvanced commitments	$	20,013,899	$	18,219,009

(1)Excludes the portion of any commitment to advance funds under swingline loan facilities in excess of CFC’s total commitment amount in a syndicated credit facility. Other syndicate lenders have an absolute obligation to acquire participations in such swingline loans upon CFC’s election, including during a default by the borrower.


	Available Balance		Notional Maturities of Unadvanced Loan Commitments
(Dollars in thousands)			2027		2028		2029		2030		2031		Thereafter
Line of credit loans	$	11,616,214	$	4,767,815	$	2,332,625	$	1,855,129	$	1,419,149	$	1,241,496	$	—
Long-term loans	8,397,685		930,157		1,095,051		1,913,020		1,840,806		2,521,682		96,969
Total	$	20,013,899	$	5,697,972	$	3,427,676	$	3,768,149	$	3,259,955	$	3,763,178	$	96,969

Unadvanced line of credit commitments accounted for 58% of total unadvanced loan commitments as of May 31, 2026. Unadvanced line of credit commitments are typically revolving facilities for periods not to exceed five years and generally serve as supplemental back-up liquidity to our borrowers. Historically, borrowers have not drawn the full commitment amount for line of credit facilities, and we have experienced a very low utilization rate on line of credit loan facilities regardless of whether or not we are obligated to fund the facility when a material adverse change has occurred.

Because we historically have experienced a very low utilization rate on line of credit loan facilities, which account for the majority of our total unadvanced loan commitments, we believe the unadvanced loan commitment total of $20,014 million as of May 31, 2026 is not necessarily representative of our future funding requirements.

The substantial majority of our line of credit commitments and all of our unadvanced long-term loan commitments include material adverse change clauses. Unadvanced loan commitments subject to material adverse change clauses totaled $16,288 million and $14,629 million as of May 31, 2026 and 2025, respectively. Prior to making an advance on these facilities, we confirm that there has been no material adverse change in the business or condition, financial or otherwise, of the borrower since the time the loan was approved and confirm that the borrower is currently in compliance with loan terms and conditions. In some cases, the borrower’s access to the full amount of the facility is further constrained by the designated purpose, imposition of borrower-specific restrictions or by additional conditions that must be met prior to advancing funds.

Unadvanced loan commitments not subject to material adverse change clauses at the time of each advance consisted of unadvanced committed lines of credit totaling $3,726 million and $3,590 million as of May 31, 2026 and 2025, respectively. We are required to advance amounts on these committed facilities as long as the borrower is in compliance with the terms and conditions of the facility. The following table summarizes the available balance under unconditional committed lines of credit as of May 31, 2026, and the related maturity amounts in each fiscal year during the five-year period ending May 31, 2031.

We are required to pledge eligible mortgage notes or other collateral in an amount at least equal to the outstanding balance of our secured debt. Table 4.7 displays the borrowing amount under each of our secured borrowing agreements and the corresponding loans outstanding pledged as collateral as of May 31, 2026 and 2025. See “Note 6—Short-Term Borrowings” and “Note 7—Long-Term Debt” in this Report for information on our secured borrowings and other borrowings.


	May 31,
(Dollars in thousands)	2026		2025
Collateral trust bonds:
2007 indenture:
Collateral trust bonds outstanding	$	6,665,191	$	7,072,711
Pledged collateral:
Distribution system mortgage notes pledged	7,597,147		8,107,921
RUS-guaranteed loans qualifying as permitted investments pledged	95,152		104,628
Total pledged collateral	7,692,299		8,212,549

1994 indenture:
Collateral trust bonds outstanding	$	5,000	$	10,000
Pledged collateral:
Distribution system mortgage notes pledged	7,155		14,575

Guaranteed Underwriter Program:
Notes payable outstanding	$	5,338,722	$	6,456,852
Pledged collateral:
Distribution and power supply system mortgage notes pledged	6,744,950		7,640,203

Farmer Mac:
Notes payable outstanding	$	3,911,993	$	3,780,461
Pledged collateral:
Distribution and power supply system mortgage notes pledged	4,837,570		4,648,691