NRUC Files 2024 10-K Annual Report

Ticker: NRUC · Form: 10-K · Filed: Aug 1, 2024 · CIK: 70502

Sentiment: neutral

Topics: 10-K, annual-report, finance

TL;DR

NRUC dropped its 2024 10-K. All good here.

AI Summary

National Rural Utilities Cooperative Finance Corp (NRUC) filed its 2024 10-K report for the fiscal year ending May 31, 2024. The company, based in Dulles, VA, operates as a miscellaneous business credit institution. Key financial details and operational aspects are presented in this comprehensive annual filing.

Why It Matters

This filing provides a detailed look into the financial health and operational performance of NRUC, a key financier for rural utility cooperatives, impacting the stability and development of rural infrastructure.

Risk Assessment

Risk Level: low — The filing is a standard annual report for a well-established financial institution, with no immediate red flags.

Key Numbers

Key Players & Entities

FAQ

What is the primary business of National Rural Utilities Cooperative Finance Corp?

National Rural Utilities Cooperative Finance Corp operates as a miscellaneous business credit institution, as indicated by its SIC code [6159].

When did the fiscal year covered by this 10-K filing end?

The fiscal year covered by this 10-K filing ended on May 31, 2024.

What is the filing date of this 10-K report?

This 10-K report was filed on August 1, 2024.

Where is National Rural Utilities Cooperative Finance Corp located?

The company's business and mailing address is 20701 COOPERATIVE WAY, DULLES, VA 20166-6691.

What is the SEC file number for this company?

The SEC file number for National Rural Utilities Cooperative Finance Corp is 001-07102.

Filing Stats: 4,443 words · 18 min read · ~15 pages · Grade level 16.4 · Accepted 2024-08-01 16:25:19

Filing Documents

Business

Business 1 Overview 1 Our Business 2 Members 3 Loan and Guarantee Programs 4 Investment Policy 8 Industry 8 Lending Competition 9 Regulation 11 Human Capital Management 11 Corporate Responsibility 13 Available Information 14 Item 1A.

Risk Factors

Risk Factors 14 Item 1B. Unresolved Staff Comments 21 I tem 1 C . C ybersecurity 21 Item 2.

Properties

Properties 23 Item 3.

Legal Proceedings

Legal Proceedings 23 Item 4. Mine Safety Disclosures 23 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 23 Item 6. Reserved 23 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A")

Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") 24 Introduction 24 N on-GAAP Finan cial Measures 24 Executive Summary 25 Consolidated Results of Operations 30 Consolidated Balance Sheet Analysis 38 Enterprise Risk Management 46 Credit Risk 47 Liquidity Risk 56 Market Risk 68 Operational Risk 70 Critical Accounting Estimates 71 Recent Accounting Changes and Other Developments 73 Non-GAAP Financial Measures and Reconciliations 74 Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 78 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 79 Report of Independent Registered Public Accounting Firm 80 Consolidated Statements of Operations 83 Consolidated Statements of Comprehensive Income (Loss) 84 Consolidated Balance Sheets 85 i Page Consolidated Statements of Changes in Equity 86 Consolidated Statements of Cash Flows 87

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 89 Note 1 — Summary of Significant Accounting Policies 89 Note 2 — Interest Income and Interest Expense 100 Note 3 — Investment Securities 101 Note 4 — Loans 102 Note 5 — Allowance for Credit Losses 114 Note 6 — Short-Term Borrowings 116 Note 7 — Long-Term Debt 117 Note 8 — Subordinated Deferrable Debt 121 Note 9 — Members' Subordinated Certificates 122 Note 10 — Derivative Instruments and Hedging Activities 124 Note 11 — Equity 128 Note 12 — Employee Benefits 131 Note 13 — Guarantees 132 Note 14 — Fair Value Measurement 134 Note 15 — Variable Interest Entities 138 Note 16 — Business Segments 140 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 145 Item 9A.

Controls and Procedures

Controls and Procedures 145 Item 9B. Other Information 146 Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 146 PART III Item 10. Directors, Executive Officers and Corporate Governance 147 Item 11.

Executive Compensation

Executive Compensation 158 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 168 Item 13. Certain Relationships and Related Transactions, and Director Independence 168 Item 14. Principal Accountant Fees and Services 171 PART IV Item 15. Exhibit s and Financial Statement Schedules 172 Item 16. Form 10-K Summary 176

SIGNATURES

SIGNATURES 177 ii Table of Contents CROSS REFERENCE INDEX OF MD&A TABLES Table Description Page 1 Net Income and TIER 25 2 Adjusted Net Income and Adjusted TIER 26 3 Average Balances, Interest Income/Interest Expense and Average Yield/Cost 31 4 Rate/Volume Analysis of Changes in Interest Income/Interest Expense 33 5 Non-Interest Income 35 6 Derivative Gains (Losses) 36 7 Comparative Swap Curves 37 8 Non-Interest Expense 37 9 Loans—Outstanding Amount by Member Class and Loan Type 39 10 Debt—Debt Product Types 40 11 Debt—Total Debt Outstanding and Weighted-Average Interest Rates 42 12 Debt—Member Investments 43 13 Equity 44 14 Loans—Loan Portfolio Security Profile 48 15 Loans—Loan Exposure to 20 Largest Borrowers 49 16 Loans—Loan Geographic Concentration 51 17 Loans—Nonperforming Loans 52 18 Allowance for Credit Losses by Borrower Member Class and Evaluation Methodology 54 19 Available Liquidity 57 20 Liquidity Coverage Ratios 58 21 Committed Bank Revolving Line of Credit Agreements 60 22 Short-Term Borrowings—Outstanding Amount and Weighted-Average Interest Rates 61 23 Short-Term Borrowings—Funding Sources 62 24 Long-Term and Subordinated Debt— Issuances and Repayments 63 25 Collateral Pledged 64 26 Loans—Unencumbered Loans 64 27 Loans—Scheduled Principal Payments 65 28 Contractual Obligations 66 29 Liquidity—Projected Long-Term Sources and Uses of Funds 67 30 Credit Ratings 67 31 Interest Rate Sensitivity Analysis 69 32 Adjusted Net Income 75 33 TIER and Adjusted TIER 75 34 Adjusted Liabilities and Equity 77 35 Debt-to-Equity Ratio and Adjusted Debt-to-Equity Ratio 77 36 Members' Equity 78 iii Table of Contents

FORWARD-LOOKING STATEMENTS

FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K for the fiscal year ended May 31, 2024 ("this Report" or "2024 Form 10-K") contains certain statements that are considered "forward-looking statements" as defined in and within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements do not represent historical facts or statements of current conditions. Instead, forward-looking statements represent management's current beliefs and expectations, based on certain assumptions and estimates made by, and information available to, management at the time the statements are made, regarding our future plans, strategies, operations, financial results or other events and developments, many of which, by their nature, are inherently uncertain and outside our control. Forward-looking statements are generally identified by the use of words such as "intend," "plan," "may," "should," "will," "project," "estimate," "anticipate," "believe," "expect," "continue," "potential," "opportunity" and similar expressions, whether in the negative or affirmative. All statements about future expectations or projections, including statements about loan volume, the adequacy of the allowance for credit losses, operating income and expenses, leverage and debt-to-equity ratios, borrower financial performance, impaired loans, and sources and uses of liquidity, are forward-looking statements. Although we believe the expectations reflected in our forward-looking statements are based on reasonable assumptions, actual results and performance may differ materially from our forward-looking statements. Therefore, you should not place undue reliance on any forward-looking statement and should consider the risks and uncertainties that could cause our current expectations to vary from our forward-looking statements, including, but not limited to, legislative changes that could affect our tax status and other matters, demand for our lo

Business

Item 1. Business OVERVIEW Our financial statements include the consolidated accounts of National Rural Utilities Cooperative Finance Corporation ("CFC") and National Cooperative Services Corporation ("NCSC"). Our principal operations are currently organized for management reporting purposes into two business segments, which are based on the accounts of each of the legal entities included in our consolidated financial statements and are discussed below. On December 1, 2023, Rural Telephone Finance Cooperative ("RTFC"), which was consolidated into our financial statements in prior periods, completed the sale of its business to NCSC (hereon referred to as the "RTFC sale transaction") and was subsequently dissolved. The business affairs of CFC and NCSC are governed by separate boards of directors for each entity. We provide information on CFC's corporate governance in "Item 10. Directors, Executive Officers and Corporate Governance." We provide information on the members of each of these entities below in "Item 1. Business—Members" and describe the financing products offered to members by each entity under "Item 1. Business—Loan and Guarantee Programs." Information on the financial performance of our business segments is disclosed in "Note 16—Business Segments." Unless stated otherwise, references to "we," "our" or "us" relate to CFC and its consolidated entities. All references to members within this document include members, associates and affiliates of CFC and its consolidated entities, except where indicated otherwise. CFC CFC is a member-owned, nonprofit finance cooperative association incorporated under the laws of the District of Columbia in April 1969. CFC's principal purpose is to provide its members and associates with financing to supplement the loan 1 Table of Contents programs of the Rural Utilities Service ("RUS") of the United States Department of Agriculture ("USDA"). CFC extends loans to its rural electric members for construction, acquis

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