What changed in this filing

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Item 1A. Risk Factors

2025-08-05 compared with 2024-08-01 · 28 added, 24 removed, 182 unchanged (22% of the section changed)

10 unchanged sentences

Our loan portfolio, which represents the largest component of assets on our balance sheet, accounts for the substantial majority of our credit risk exposure.

Loans outstanding to electric utility organizations represented approximately 98% of our total loans outstanding as of May 31, 2024.

outstanding to electric utility organizations represented approximately 98% of our total loans outstanding as of May 31, 2025.

We had 899 borrowers with loans outstanding as of May 31, 2025, and our 20 largest borrowers accounted for 19% of total loans outstanding as of May 31, 2025.

29 unchanged sentences

and extreme weather conditions leading to events such as hurricanes, tornadoes and wildfires, including weather conditions related to climate change.

The factors listed above, individually or in combination, could result in declining sales or increased power supply and operating

costs and could potentially cause a deterioration in the financial performance of our members and the value of the collateral securing their loans.

The factors listed above, individually or in combination, could result in declining sales or increased power supply and operating costs and could potentially cause a deterioration in the financial performance of our members and the value of the collateral securing their loans.

This could impair their ability to repay us in accordance with the terms of their loans.

In such case, it may lead to risk rating downgrades, which may result in an increase in our allowance for credit losses and a decrease in our net income.

In such cases, it may lead to risk rating downgrades, which may result in an increase in our allowance for credit losses and a decrease in our net income.

The threat of weather-related events or shifts in climate patterns resulting from climate change, including, but not limited to, increases in storm intensity, number of intense storms and temperature extremes in areas in which our member rural electric cooperatives operate, could result in increased power supply and operating costs, adversely impacting our members’ results of operations, liquidity and ability to make payments to us.

While we believe our members would largely be reimbursed by Federal Emergency Management Agency (“FEMA”) relief programs for eligible storm-related damages, such programs may not be implemented in their current forms or payments may not be received on a timely basis.

While our members have traditionally largely been reimbursed by Federal Emergency Management Agency (“FEMA”) relief programs for eligible storm-related damages, in January 2025, an executive order established the FEMA Review Council with the intent of implementing significant reforms to FEMA and

its reimbursement programs.

Ongoing organizational and policy reforms at FEMA, including leadership changes, staffing reductions and evolving federal and state roles, may present a risk to the eligibility and timing of disaster cost reimbursements.

As a result, the programs on which our members have relied upon may not be implemented in their current forms or payments may not be received on a timely basis.

Further, FEMA does not provide relief for events caused by human error and, as a result, the majority of wildfires may not be covered events.

17 unchanged sentences

We assess foreclosed assets, if any, for impairment periodically as required under generally accepted accounting principles in the U.S.

GAAP.”) Impairment charges, if required, represent a reduction to earnings in the period of the charge.

Impairment charges, if required, represent a reduction to earnings in the period of the charge.

There may be substantial judgment used in the determination of whether such assets are impaired and in the calculation of the amount of the impairment.

4 unchanged sentences

The nonperformance of a counterparty on an agreement would result in the derivative no longer being an effective risk-management tool, which could negatively affect our overall interest rate risk position.

In addition, if a counterparty fails to perform on a derivative obligation, we could incur

a financial loss to replace the derivative with another counterparty and/or a loss through the failure of the counterparty to pay us amounts owed.

In addition, if a counterparty fails to perform on a derivative obligation, we could incur a financial loss to replace the derivative with another counterparty and/or a loss through the failure of the counterparty to pay us amounts owed.

After taking into consideration master netting agreements for our interest rate swaps, we were in a net receivable position of $506 million and a net payable position of $2 million as of May 31, 2025.

8 unchanged sentences

If we are unable to access the capital markets or other external sources for funding, our liquidity position may be negatively affected and we may not have sufficient funds to meet all of our financial obligations as they become due.

We depend on access to the capital markets and other sources of financing, such as repurchase agreements, bank revolving credit agreements, investments from our members, private debt issuances through Farmer Mac and the Guaranteed Underwriter Program, to fund new loan advances, refinance our long- and short-term debt and, if necessary, to fulfill our obligations under our guarantee and repurchase agreements.

We depend on access to the capital markets and other sources of financing, such as bank revolving credit agreements, investments from our members, private debt issuances through Farmer Mac and the Guaranteed Underwriter Program, to fund new loan advances, refinance our long- and short-term debt and, if necessary, to fulfill our obligations under our guarantee and repurchase agreements.

Prolonged market disruptions, downgrades to our long-term and/or short-term debt ratings, adverse changes in our business or performance, downturns in the electric industry and other events over which we have no control may deny or limit our access to the capital markets and/or subject us to higher costs for such funding.

5 unchanged sentences

We currently contract with three nationally recognized statistical rating organizations to receive ratings for our secured and unsecured debt and our commercial paper.

In order to access the commercial paper markets at current levels, we believe that we need to maintain our short-term ratings at the current level from Moody’s, S&P and Fitch Ratings (“Fitch”).

In order to access the commercial paper markets at current levels, we believe that we need to maintain our short-term ratings at the current level from Moody’s and Fitch Ratings (“Fitch”).

Changes in rating agencies’ rating methodology, actions by governmental entities or others, deterioration in the credit quality of our loan portfolios, increased leverage and other factors could adversely affect the credit ratings on our debt.

4 unchanged sentences

We are required to maintain a minimum average adjusted times interest earned ratio (“TIER”) for the six most recent fiscal quarters of 1.025 and an adjusted leverage ratio of no more than 10-to-1.

In addition, we must maintain loans pledged as collateral for various debt issuances at or below 150% of the related secured debt outstanding as a condition to

borrowing under our revolving credit agreements.

In addition, we must maintain loans pledged as collateral for various debt issuances at or below 150% of the related secured debt outstanding as a condition to borrowing under our revolving credit agreements.

If we were unable to borrow under the revolving credit agreements, our short-term debt ratings would likely decline, and our ability to issue commercial paper could become significantly impaired.

Our revolving credit agreements also require that we earn a minimum annual adjusted TIER of 1.05 in order to retire patronage capital to members.

MD&A—Non-GAAP Financial Measures and Reconciliations” for additional information on our non-GAAP financial measures and a reconciliation to the most comparable U.S.

MD&A—Non-GAAP Financial Measures and Reconciliations” for additional

information on our non-GAAP financial measures and a reconciliation to the most comparable U.S.

GAAP financial measures.

26 unchanged sentences

Cybersecurity incidents pose a risk to the security of our members’ strategic business information and the confidentiality and integrity of our data, which include strategic and proprietary information.

This risk continues to increase and attack methods continue to evolve in sophistication, velocity and frequency.

Cybersecurity incidents may occur from a variety of sources, such as foreign governments, hacktivists or other well-financed entities, and may originate from less regulated and remote areas of the world.

This risk continues to increase and cyberattack methods continue to evolve in sophistication, velocity and frequency.

The use of new and emerging technologies through artificial intelligence and machine learning may intensify this risk as adversaries may leverage artificial intelligence to craft more sophisticated phishing schemes, automate social engineering attacks or generate malware with increased speed.

Cybersecurity incidents may occur from a variety of sources, such as foreign governments, hackers or other well-financed entities, and may originate from less regulated and remote areas of the world.

Employee errors, malfeasance, technology failures and other irregularities may also contribute to these events.

14 unchanged sentences

In accordance with our charter documents and the purpose for which we were formed, we lend only to our members and associates.

CFC’s directors are elected or appointed from our membership, with 10 director positions filled by directors of members, 10 director positions filled by general managers or chief executive officers of members, two positions appointed by NRECA and one at-large position that must, among other things, be a director, financial officer, general manager or chief executive of one of our members.

CFC’s directors are elected or appointed from our membership, with 10 director positions filled by directors of members, 10 director positions filled by general managers or chief executive officers of members, two positions appointed by NRECA until June 2027 and one at-large position that must, among other things, be a director, financial officer, general manager or chief executive of one of our members.

Upon the termination of the two positions appointed by NRECA in June 2027, two at-large positions will be filled by an executive staff member of our Class B members and a director of our Class D members.

CFC currently has loans outstanding to members that are affiliated with CFC directors and may periodically extend new loans to such members.

1 unchanged sentence

See “Item 13.

Certain Relationships and Related Transactions, and Director Independence—Review and Approval of Transactions with Related Persons” for a description of our policies with regard to approval of loans to members affiliated with CFC directors.

Certain Relationships and Related Transactions, and Director Independence—

Review and Approval of Transactions with Related Persons” for a description of our policies with regard to approval of loans to members affiliated with CFC directors.

Natural or man-made disasters, including widespread health emergencies, or other external events beyond our control such as acts of terrorism or war, could disrupt our business and adversely affect our results of operations and financial condition.

Our operations may be subject to disruption due to the occurrence of natural disasters, acts of terrorism or war, public health emergencies, such as a reemergence of the COVID-19 pandemic, or other unexpected or disastrous conditions, events or emergencies beyond our control, some of which may be intensified by the effects of a government response to the event, or climate change.

Labor shortages and supply chain complications exacerbated by, among other things, the invasion of Ukraine by Russia and subsequent sanctions and export controls against Russia, has contributed to rising inflationary pressures.

General inflation in the United States has risen to levels not experienced in recent decades.

Rising energy prices, interest rates and wages, among other things, may increase our operating costs as well as both the operating and borrowing costs of our members and disrupt our business.

Our operations may be subject to disruption due to the occurrence of natural disasters, acts of terrorism or war, public health emergencies, or other unexpected or disastrous conditions, events or emergencies beyond our control, some of which may be intensified by the effects of a government response to the event, or climate change.

Labor shortages and supply chain complications exacerbated by, among other things, the invasion of Ukraine by Russia and subsequent sanctions and export controls against Russia and increased geopolitical tensions between the United States and Canada, China and Mexico, has contributed to continuing inflationary pressures.

While general inflation in the United States has decreased from peak levels in 2022, it remains at levels not experienced in recent decades.

Certain utility assets of our members, such as transformers and solar panels, are highly sensitive to supply chain complications.

Rising energy prices, interest rates and wages, and the pending tariffs to be imposed by the United States on imported goods may increase our operating costs, as well as both the operating and borrowing costs of our members, potentially disrupting our business.

Although we have implemented a business continuity management program that we enhance on an ongoing basis, there can be no assurance that the program will adequately mitigate the risks of business disruptions.

18 unchanged sentences

Loss of our tax-exempt status could adversely affect our earnings.

CFC has been recognized by the Internal Revenue Service as an organization for which income is exempt from federal taxation under Section 501(c)(4) of the Internal Revenue Code (other than any net income from an unrelated trade or business).

and services consistent with sound financial management, and no part of CFC’s net earnings may inure to the benefit of any private shareholder or individual other than the allocation or return of net earnings or capital to its members in accordance with CFC’s bylaws and incorporating statute in effect in 1996.

In order to maintain CFC’s tax-exempt status, it must continue to operate exclusively for the promotion of social welfare by operating on a cooperative basis for the benefit of its members by providing them cost-based financial products and services consistent with sound financial management, and no part of CFC’s net earnings may inure to the benefit of any private shareholder or individual other than the allocation or return of net earnings or capital to its members in accordance with CFC’s bylaws and incorporating statute in effect in 1996.

If CFC were to lose its status as a 501(c)(4) organization, it would become a taxable cooperative and would be required to pay income tax based on its taxable income.

19 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors