CFC Reports Q2 FY2026 Financial Results with $19.6M Net Income Decline

National Rural Utilities Cooperative Finance Corporation (CFC) reported its financial results for the second quarter of fiscal year 2026, ending November 30, 2025, revealing a net income of $19.6 million, a decrease from $144.8 million in the same period last year. The decline in profitability was primarily attributed to significant losses on derivatives, which amounted to $18.6 million, compared to gains of $109 million in Q2 FY2025. The company’s net interest income increased by $7 million to $72 million, driven by a 4% rise in net interest yield and a 6% increase in average interest-earning assets.

For the year-to-date period, CFC's net income was $24.2 million, a recovery from a loss of $19.5 million in the previous year. The year-to-date net interest income rose by $16 million to $143 million, supported by a 7% increase in net interest yield. However, the company faced a $51 million loss on derivatives for the year-to-date period, a decrease from $89 million in the prior year, indicating a less severe impact from interest rate fluctuations compared to the previous fiscal year.

CFC's total loans to members reached $37.8 billion, reflecting a 2% increase from the previous fiscal year-end, with the loan portfolio primarily composed of long-term fixed-rate loans. The company maintained a strong credit quality, with no charge-offs reported during the year-to-date period and a stable allowance for credit losses of $43 million. The debt-to-equity ratio increased to 11.58 from 11.20, driven by higher debt levels to support loan growth and a decrease in total equity due to a patronage capital retirement of $53 million.

In terms of operational developments, CFC issued $1.7 billion in unsecured long-term dealer medium-term notes during the year-to-date period, while also redeeming $300 million in subordinated deferrable debt. The company amended its bank revolving credit agreements, extending maturity dates and increasing total commitments by $200 million. CFC's available liquidity totaled $7.975 billion, which was sufficient to cover its scheduled debt obligations over the next 12 months.

Looking ahead, CFC anticipates continued loan growth of approximately $2.1 billion over the next year, supported by projected increases in net interest income and a slight rise in net interest yield. However, the company expects a decrease in adjusted net income due to rising operating expenses and an increase in the adjusted debt-to-equity ratio as it continues to fund its loan portfolio growth. The macroeconomic outlook suggests potential interest rate cuts, which could further influence CFC's financial performance in the upcoming quarters.