Financial Analysis

NOTE 14FAIR VALUE MEASUREMENT Fair value, also referred to as an exit price, is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The fair value accounting guidance provides a three-level fair value hierarchy for classifying financial instruments. This hierarchy is based on the markets in which the assets or liabilities trade and whether the inputs to the valuation techniques used to measure fair value are observable or unobservable. The fair value measurement of a financial asset or liability is assigned a level based on the lowest level of any input that is significant to the fair value measurement in its entirety. The levels, in priority order based on the extent to which observable inputs are available to measure fair value, are Level 1, Level 2 and Level 3. The accounting guidance for fair value measurements requires that we maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. We describe the valuation technique for each level in Note 1Summary of Significant Accounting Policies. The following table presents the carrying value and estimated fair value of all of our financial instruments, including those carried at amortized cost, as of May 31, 2026 and 2025. The table also displays the classification level within the fair value hierarchy based on the degree of observability of the inputs used in the v …

FairValueDisclosuresTextBlock · excerpt; the full note is in the filing

NOTE 7LONG-TERM DEBT The following table displays, by debt product type, long-term debt outstanding, the weighted-average interest rates and the maturity date as of May 31, 2026 and 2025. Long-term debt outstanding totaled $28,346 million and $27,164 million as of May 31, 2026 and 2025, respectively, and accounted for 79% and 78% of total debt outstanding as of each respective date. Long-term debt with fixed and variable interest rates accounted for 90% and 10%, respectively, of our total long-term debt outstanding as of May 31, 2026, compared with 94% and 6%, respectively, of our total long-term debt outstanding as of May 31, 2025. Table 7.1: Long-Term DebtDebt Product Types and Weighted-Average Interest Rates May 31, 2026 2025 (Dollars in thousands) Amount Weighted- Average Interest Rate Maturity (1) Amount Weighted- Average Interest Rate Maturity (1) Secured long-term debt: Collateral trust bonds (2) $ 6,670,191 3.70 % 2026-2049 $ 7,082,711 3.68 % 2025-2049 Unamortized premium (discount), net (140,322) (155,393) Debt issuance costs (27,466) (31,616) Total collateral trust bonds 6,502,403 6,895,702 Guaranteed Underwriter Program notes payable 5,338,722 3.38 2027-2055 6,456,852 3.31 2025-2055 Farmer Mac notes payable 3,911,993 3.86 2026-2055 3,780,461 4.00 2025-2049 Total secured notes payable 9,250,715 10,237,313 Total secured long-term debt 15,753,118 3.63 17,133,015 3.61 Unsecured long-term debt: Medium-term notes sold through dealers (3) 12,242,476 4.44 2026-2037 9,637,5 …

LongTermDebtTextBlock · excerpt; the full note is in the filing

New Accounting Standards Adopted in Fiscal Year 2026 Income Taxes (Topic 740)Improvements to Income Tax Disclosures In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (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. The guidance also requires entities to disclose, on an annual basis, income taxes paid (net of refunds received), disaggregated by federal, state and foreign jurisdictions, and further disaggregated by individual jurisdiction when quantitative thresholds are met. 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 adopted the guidance effective May 31, 2026 on a prospective basis. The adoption of the guidance did not have an impact on our financial position, results of operations, or cash flows as the guidance pertains to disclosure only. We evaluated the disclosure requirements under ASU 2023-09 for the fiscal year en …

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NOTE 12EMPLOYEE BENEFITS National Rural Electric Cooperative Association (NRECA) Retirement Security Plan CFC is a participant in the NRECA Retirement Security Plan (the Retirement Security Plan), a multiple-employer defined benefit pension plan. The employer identification number of the Retirement Security Plan is 53-0116145, and the plan number is 333. Plan information is available publicly through the annual Form 5500, including attachments. The Retirement Security Plan is a qualified plan in which all employees are eligible to participate upon completion of one year of service. Under this plan, participating employees are entitled to receive annually, under a 50% joint and surviving spouse annuity, 1.70% of the average of their five highest base salaries during their participation in the plan, multiplied by the number of years of participation in the plan. The risks of participating in the multiple-employer plan are different from the risks of single-employer plans due to the following characteristics of the plan: Assets contributed to the multiple-employer plan by one participating employer may be used to provide benefits to employees of other participating employers. If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by the remaining participating employers. If CFC chooses to stop participating in the plan, CFC may be required to pay a withdrawal liability representing an amount based on the underfunded status o …

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NOTE 16BUSINESS SEGMENTS Our operating segments consist of CFC and NCSC which also represent our reportable segments. CFCs principal purpose is to provide its members with financing to supplement the loan programs of RUS. CFC makes loans to its rural electric members so they can acquire, construct and operate electric distribution systems, electric 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. NCSCs principal purpose is to provide financing to its members and associates. NCSC makes loans to electric cooperatives and their subsidiaries that provide non-electric services in the energy and telecommunication industries as well as to entities that provide substantial benefit to CFC members, including eligible solar energy providers and investor-owned utilities. NCSC also provides its members and associates with equipment financing for leased assets, institutional debt placement services through its wholly owned subsidiary Cooperative Securities and credit enhancements in the form of letters of credit. Basis of Presentation We present the results of our business segments on the basis in which management internally evaluates operating performance to establish short- and long-term performance goals, develop budgets and forecasts, identify potential trends, allocate resources and make compensation decisions. This presentation is aligned with how res …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 1SUMMARY 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. CFCs 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), doing business as Utility Capital Solutions, is a taxable cooperative incorporated in 1981 in the District of Columbia as a member-owned cooperative association. NCSCs 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 …

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NOTE 11EQUITY Total equity increased by $209 million to $3,312 million as of May 31, 2026, compared with $3,103 million as of May 31, 2025. The increase was attributable primarily to our reported net income of $263 million for FY2026, partially offset by a decrease in equity of $53 million from the CFC Board of Directors authorized patronage capital retirements during the period, as discussed below. Table 11.1: Equity May 31, (Dollars in thousands) 2026 2025 Membership fees and educational fund: Membership fees $ 969 $ 966 Educational fund 2,800 2,658 Total membership fees and educational fund 3,769 3,624 Patronage capital allocated 966,253 948,526 Members capital reserve 1,804,161 1,631,609 Unallocated net income: Prior fiscal year-end cumulative derivative forward value gains (1) 501,663 606,215 Current fiscal year derivative forward value gains (losses) (1) 17,756 (104,552) Current fiscal year-end cumulative derivative forward value gains (1) 519,419 501,663 Other unallocated net loss (709) (709) Unallocated net income 518,710 500,954 CFC retained equity 3,292,893 3,084,713 Accumulated other comprehensive loss (2,369) (2,236) Total CFC equity 3,290,524 3,082,477 Noncontrolling interests 21,612 20,989 Total equity $ 3,312,136 $ 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 consolidated variable interest entities. The cumulative amounts also …

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NOTE 7LONG-TERM DEBT The following table displays, by debt product type, long-term debt outstanding as of February 28, 2026 and May 31, 2025. Long-term debt outstanding totaled $28,909 million and $27,164 million as of February 28, 2026 and May 31, 2025, respectively, and accounted for 80% and 78% of total debt outstanding as of each respective date. Table 7.1: Long-Term Debt by Debt Product Type (Dollars in thousands) February 28, 2026 May 31, 2025 Secured long-term debt: Collateral trust bonds (1) $ 6,670,191 $ 7,082,711 Unamortized premium (discount), net (144,219) (155,393) Debt issuance costs (28,473) (31,616) Total collateral trust bonds 6,497,499 6,895,702 Guaranteed Underwriter Program notes payable 5,743,393 6,456,852 Farmer Mac notes payable 3,929,086 3,780,461 Total secured notes payable 9,672,479 10,237,313 Total secured long-term debt 16,169,978 17,133,015 Unsecured long-term debt: Medium-term notes sold through dealers (2) 12,400,586 9,637,577 Medium-term notes sold to members 365,827 419,648 Medium term notes sold through dealers and to members 12,766,413 10,057,225 Unamortized premium (discount), net 624 2,641 Debt issuance costs (28,500) (29,180) Total unsecured long-term debt 12,738,537 10,030,686 Total long-term debt $ 28,908,515 $ 27,163,701 ____________________________ (1) Collateral trust bonds represent secured obligations sold to investors in the capital markets, including those issued through both public offerings and private placement transactions. ( …

LongTermDebtTextBlock · excerpt; the full note is in the filing

New Accounting Standards Issued But Not Yet Adopted Financial InstrumentsCredit Losses (Topic 326): Purchased Loans In November 2025, the FASB issued Accounting Standards Update (ASU) 2025-08, Financial InstrumentsCredit 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, IntangiblesGoodwill and OtherInternal-Use Software (Subtopic 350-40): Targeted …

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NOTE 14BUSINESS SEGMENTS Our operating segments consist of CFC and NCSC, which also represent our reportable segments. CFCs principal purpose is to provide its members with financing to supplement the loan programs of RUS. CFC makes loans to its rural electric members so they can acquire, construct and operate electric distribution systems, electric 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. NCSCs principal purpose is to provide financing to its members and associates. NCSC makes loans to electric cooperatives and their subsidiaries that provide non-electric services in the energy and telecommunication industries as well as to entities that provide substantial benefit to CFC members, including eligible solar energy providers and investor-owned utilities. NCSC also provides its members and associates with equipment financing for leased assets, institutional debt placement services thought its wholly owned subsidiary Cooperative Securities and credit enhancements in the form of letters of credit. Basis of Presentation We present the results of our business segments on the basis in which management internally evaluates operating performance to establish short- and long-term performance goals, develop budgets and forecasts, identify potential trends, allocate resources and make compensation decisions. This presentation is aligned with how re …

SegmentReportingDisclosureTextBlock · excerpt; the full note is in the filing

NOTE 1SUMMARY 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. CFCs 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. NCSCs 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 …

SignificantAccountingPoliciesTextBlock · excerpt; the full note is in the filing

NOTE 10EQUITY Total equity decreased to $3,097 million as of February 28, 2026, compared with $3,103 million as of May 31, 2025. The decrease was attributable primarily to the CFC Board of Directors authorized patronage capital retirements of $53 million during YTD FY2026, partially offset by our reported net income of $47 million during the period. Allocation of Net Earnings and Retirement of Patronage Capital The amount of patronage capital allocated each year by CFCs Board of Directors is based on adjusted net income, which excludes the impact of derivative forward value gains (losses). See MD&ANon-GAAP Financial Measures and Reconciliations in this Report for information on adjusted net income. 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 net earnings for fiscal year 2025 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 allocated net earnings 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 net earnings for fiscal year 2000 that had been held for 25 years pursuant to the CFC Board of Directors polic y. The authorized patrona …

StockholdersEquityNoteDisclosureTextBlock · excerpt; the full note is in the filing