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 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 August 31, 2026 and May 31, 2026.


	August 31, 2026				May 31, 2026
(Dollars in thousands)	Amount		% of Total		Amount		% of Total
Member class:
CFC:
Distribution	$	30,227,582	79	%	$	30,085,224	78	%
Power supply	6,128,758		16		6,403,396		17
Statewide and associate	263,700		—		258,397		—
Total CFC	36,620,040		95		36,747,017		95
NCSC:
Electric	1,111,967		3		1,073,794		3
Telecom	585,651		2		582,604		2
Total NCSC	1,697,618		5		1,656,398		5
Total loans outstanding(1)	38,317,658		100		38,403,415		100
Deferred loan origination costs—CFC(2)	19,660		—		18,713		—
Loans to members	$	38,337,318	100	%	$	38,422,128	100	%

Loan type:
Long-term loans:
Fixed rate	$	32,624,863	85	%	$	32,384,884	84	%
Variable rate	1,429,997		4		1,435,958		4

Total long-term loans	34,054,860		89		33,820,842		88
Line of credit loans	4,262,798		11		4,582,573		12
Total loans outstanding(1)	38,317,658		100		38,403,415		100
Deferred loan origination costs—CFC(2)	19,660		—		18,713		—
Loans to members	$	38,337,318	100	%	$	38,422,128	100	%

We sold CFC loans, at par for cash, totaling $168 million and $158 million during Q1 FY2027 and Q1 FY2026, 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 $2 million as of August 31, 2026, which were sold at par for cash in September 2026. We had loans held for sale totaling $4 million as of May 31, 2026, which were sold at par for cash during Q1 FY2027.

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 $157 million and $240 million as of August 31, 2026 and May 31, 2026, 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.

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 $37,732 million and $37,821 million as of August 31, 2026 and May 31, 2026, 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 $92 million and $95 million as of August 31, 2026 and May 31, 2026, respectively.

The outstanding loan exposure for our 20 largest borrowers totaled $7,301 million and $7,374 million as of August 31, 2026 and May 31, 2026, respectively, representing 19% of total loans outstanding as of each respective date. Our 20 largest borrowers consisted of 13 distribution systems and seven power supply systems as of August 31, 2026 and 12 distribution systems and eight power supply systems as of May 31, 2026. The largest total outstanding exposure to a single borrower or controlled group represented approximately 1% of total loans outstanding as of both August 31, 2026 and May 31, 2026.

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 $315 million and $322 million as of August 31, 2026 and May 31, 2026, respectively. Loan exposure to our 20 largest borrowers covered under the Farmer Mac agreement totaled $210 million and $214 million as of August 31, 2026 and May 31, 2026, respectively, which reduced our exposure to the 20 largest borrowers to approximately $7,091 million and $7,160 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 August 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 896, located in 49 states and the District of Columbia as of August 31, 2026, compared with 903 borrowers located in 49 states as of May 31, 2026. Of the 896 and 903 borrowers with loans outstanding, 49 and 50 were electric power supply borrowers as of August 31, 2026 and May 31, 2026, respectively. Electric power supply borrowers generally require significantly more capital than electric distribution and telecommunications borrowers.

Texas, which had 66 and 67 borrowers with loans outstanding as of August 31, 2026 and May 31, 2026, 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 $6,359 million and $6,403 million as of August 31, 2026 and May 31, 2026, respectively, and accounted for approximately 17% of total loans outstanding as of each respective date. Of the loans outstanding to Texas-based borrowers, $107 million and $109 million as of August 31, 2026 and May 31, 2026, respectively, were covered by the Farmer Mac standby purchase commitment agreement, which reduced our credit risk exposure to Texas-based borrowers to $6,252 million and $6,294 million as of each respective date.

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.


	August 31, 2026
(Dollars in thousands)	Current			30-89 Days Past Due			90 Days or More Past Due			Total Past Due			Total Loans Outstanding			Nonaccrual Loans
Member class:
CFC:
Distribution	$	30,227,582		$	—		$	—		$	—		$	30,227,582		$	—
Power supply	6,128,758			—			—			—			6,128,758			5,000
Statewide and associate	263,700			—			—			—			263,700			—
Total CFC	36,620,040			—			—			—			36,620,040			5,000
NCSC:
Electric	1,111,967			—			—			—			1,111,967			—
Telecom	585,651			—			—			—			585,651			—
Total NCSC	1,697,618			—			—			—			1,697,618			—
Total loans outstanding	$	38,317,658		$	—		$	—		$	—		$	38,317,658		$	5,000

Percentage of total loans	100.00		%	—		%	—		%	—		%	100.00		%	0.01		%


	May 31, 2026
(Dollars in thousands)	Current			30-89 Days Past Due			90 Days or More 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		%

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 a loan to one CFC electric power supply borrower of $5 million and $8 million that was on nonaccrual status, which represented 0.01% and 0.02% of total loans outstanding as of August 31, 2026 and May 31, 2026, respectively. The decrease in this outstanding loan balance was due to a loan repayment received during Q1 FY2027. In September 2026, we received a $2 million payment on the loan, which further reduced its outstanding balance to $3 million.

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 the consideration of a number of quantitative and qualitative factors. Each risk rating is reassessed annually following the receipt of the borrower’s audited financial statements; however, interim risk-rating adjustments may occur as a result of updated information affecting a borrower’s ability to fulfill its obligations or other significant developments and trends. 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.

Table 4.3 displays total loans outstanding, by borrower risk rating category and by legal entity and member class, as of August 31, 2026 and May 31, 2026. 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 August 31, 2026 and May 31, 2026, by fiscal year of origination for each year during the five-year annual reporting period beginning in fiscal year 2023 and 2022, and in the aggregate for periods prior to fiscal year 2023 and 2022, 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 2023 totaled $21,343 million, representing 56% of our total loans outstanding as of August 31, 2026. In comparison, 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. The average remaining maturity of our long-term loans, which accounted for 89% and 88% of total loans outstanding as of August 31, 2026 and May 31, 2026, respectively, was 19 years, as of each respective date.


	August 31, 2026
	Term Loans by Fiscal Year of Origination
(Dollars in thousands)	Q1 FY2027		2026		2025		2024		2023		Prior		Revolving Loans		Total
Pass
CFC:
Distribution	$	725,865	$	2,252,924	$	2,166,390	$	2,399,047	$	2,251,870	$	17,373,407	$	2,868,306	$	30,037,809
Power supply	94,559		620,042		318,231		478,876		426,350		3,349,489		836,211		6,123,758
Statewide and associate	3,000		—		6,264		35,622		53,621		23,287		132,833		254,627
Total CFC	823,424		2,872,966		2,490,885		2,913,545		2,731,841		20,746,183		3,837,350		36,416,194
NCSC:
Electric	43,553		137,322		78,266		87,989		228,018		330,865		205,954		1,111,967
Telecom	16,613		107,064		49,333		107,286		18,458		233,546		53,351		585,651
Total NCSC	60,166		244,386		127,599		195,275		246,476		564,411		259,305		1,697,618
Total pass	$	883,590	$	3,117,352	$	2,618,484	$	3,108,820	$	2,978,317	$	21,310,594	$	4,096,655	$	38,113,812

Special mention
CFC:
Distribution	$	—	$	556	$	—	$	355	$	4,032	$	18,687	$	166,143	$	189,773

Statewide and associate	—		—		—		—		—		9,073		—		9,073
Total CFC	—		556		—		355		4,032		27,760		166,143		198,846

Total special mention	$	—	$	556	$	—	$	355	$	4,032	$	27,760	$	166,143	$	198,846

Substandard





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

Doubtful

CFC power supply	$	—	$	—	$	—	$	—	$	—	$	5,000	$	—	$	5,000


Total doubtful	$	—	$	—	$	—	$	—	$	—	$	5,000	$	—	$	5,000

Total criticized loans	$	—	$	556	$	—	$	355	$	4,032	$	32,760	$	166,143	$	203,846
Total loans outstanding	$	883,590	$	3,117,908	$	2,618,484	$	3,109,175	$	2,982,349	$	21,343,354	$	4,262,798	$	38,317,658


	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

Criticized loans totaled $204 million and $207 million as of August 31, 2026 and May 31, 2026, respectively, and represented approximately 1% of total loans outstanding as of each respective date. The decrease in criticized loans was primarily due to a $3 million payment received during Q1 FY2027 from a CFC electric power supply borrower in the doubtful 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 August 31, 2026 and May 31, 2026.

One CFC electric distribution borrower with loans outstanding of $190 million and $189 million as of August 31, 2026 and May 31, 2026, respectively, accounted for the substantial majority of loans in the special mention loan category amount of $199 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 $5 million and $8 million to a CFC electric power supply borrower as of August 31, 2026 and May 31, 2026, respectively, which was also on nonaccrual status as of each respective date. The reduction in this outstanding loan balance reflected a $3 million payment received during Q1 FY2027. In September 2026, we received an additional $2 million payment on the loan, which further reduced its outstanding balance to $3 million.


(Dollars in thousands)	August 31, 2026		May 31, 2026
Member class:
CFC:
Distribution	$	14,177,129	$	13,576,857
Power supply	5,788,652		5,501,553
Statewide and associate	201,708		212,108
Total CFC	20,167,489		19,290,518
NCSC:
Electric	399,309		359,203
Telecom	368,277		364,178
Total NCSC	767,586		723,381
Total unadvanced commitments	$	20,935,075	$	20,013,899



Loan type:(2)
Long-term loans:
Fixed rate	$	—	$	—
Variable rate	9,040,261		8,397,685

Total long-term loans	9,040,261		8,397,685
Line of credit loans	11,894,814		11,616,214
Total unadvanced commitments	$	20,935,075	$	20,013,899

(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	$	11,894,814	$	764,637	$	5,997,253	$	1,842,603	$	1,551,490	$	1,239,945	$	498,886
Long-term loans	9,040,261		681,874		1,141,033		1,693,568		1,809,057		3,068,900		645,829
Total	$	20,935,075	$	1,446,511	$	7,138,286	$	3,536,171	$	3,360,547	$	4,308,845	$	1,144,715

Unadvanced line of credit commitments accounted for 57% of total unadvanced loan commitments as of August 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 $20,935 million as of August 31, 2026 is not necessarily representative of our future funding requirements.

Our unadvanced long-term loan commitments typically have a five-year draw period under which a borrower may draw funds prior to the expiration of the commitment. We expect that the majority of the long-term unadvanced loan commitments of $9,040 million will be advanced prior to the expiration of the commitment.

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 $17,027 million and $16,288 million as of August 31, 2026 and May 31, 2026, 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 $3,908 million and $3,726 million as of August 31, 2026 and May 31, 2026, 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 August 31, 2026, and the related maturity amounts in each fiscal year during the five-year period ending May 31, 2031, and thereafter.

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 August 31, 2026 and May 31, 2026. See “Note 6—Short-Term Borrowings” and “Note 7—Long-Term Debt” in this Report for information on our secured borrowings and other borrowings.


(Dollars in thousands)	August 31, 2026		May 31, 2026
Collateral trust bonds:
2007 indenture:
Collateral trust bonds outstanding	$	6,661,283	$	6,665,191
Pledged collateral:
Distribution system mortgage notes pledged	7,328,520		7,597,147
RUS-guaranteed loans qualifying as permitted investments pledged	92,107		95,152
Total pledged collateral	7,420,627		7,692,299

1994 indenture:
Collateral trust bonds outstanding	$	5,000	$	5,000
Pledged collateral:
Distribution system mortgage notes pledged	6,741		7,155

Guaranteed Underwriter Program:
Notes payable outstanding	$	5,284,047	$	5,338,722
Pledged collateral:
Distribution and power supply system mortgage notes pledged	6,641,297		6,744,950

Farmer Mac:
Notes payable outstanding	$	3,866,451	$	3,911,993
Pledged collateral:
Distribution and power supply system mortgage notes pledged	4,742,964		4,837,570