CFC Reports Significant Decline in Net Income for Q3 FY2026

National Rural Utilities Cooperative Finance Corporation (CFC) reported a significant decline in net income for the third quarter of fiscal year 2026, with figures dropping to $22.7 million from $86.1 million in the same period last year. Year-to-date net income also fell to $47 million compared to $66.6 million in the previous year. The decrease in profitability was primarily attributed to a shift from gains to losses on the company's derivatives portfolio, which resulted in a $73 million negative impact. CFC recorded derivative losses of $32 million for the quarter, contrasting with gains of $40 million in Q3 FY2025.

Despite the decline in net income, CFC's net interest income increased by $13 million year-over-year to $80 million for Q3 FY2026, driven by a 14% rise in net interest yield and a 5% increase in average interest-earning assets. The company reported total loans to members of $38.75 billion as of February 28, 2026, reflecting a 5% increase from the previous fiscal year. The overall credit quality of the loan portfolio remained strong, with a slight decrease in the allowance for credit losses to $36 million, representing 0.09% of total loans outstanding.

CFC's total assets grew by 4% to $39.89 billion, while total liabilities also increased by 4% to $36.8 billion, primarily due to the issuance of debt to fund loan growth. The debt-to-equity ratio rose to 11.74 from 11.20, driven by increased debt levels and a decrease in total equity, which was impacted by a $53 million retirement of patronage capital authorized by the Board of Directors. The adjusted debt-to-equity ratio also increased to 7.76 from 7.39, reflecting similar trends.

Looking ahead, CFC anticipates continued growth in its loan portfolio, projecting net loan growth of approximately $1.63 billion over the next 12 months. The company expects increases in reported net interest income and net interest yield, driven by projected loan growth and a lower average cost of funding. However, CFC remains cautious about potential impacts from geopolitical tensions and macroeconomic conditions, which could affect borrowing costs and operational expenses for its members. The company continues to monitor these developments closely as part of its risk management strategy.