National Rural Utilities Cooper

and welcome to the National Rural Utilities Cooperative Finance Corporation FY 2025 Second Quarter Investor Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to He Sun Choi, VP of Capital Markets Relations. Please go ahead. Thank you, Operator.

Welcome to our Investor Conference Call for our second quarter of fiscal year 2025. We appreciate your time and interest in CFC. Today, I'm joined by our CEO, Andrew Dan, and our CFO, Ling Wang. Andrew and Ling will discuss our second quarter and answer your questions. Before we get started, I would like to remind you that today's presentation slides and financial reports filed with the SEC can be found on our website at nrucfc.coop under investor relations. This call is being recorded and a replay and call transcript will be available on our website as well. Our presentation today will include four looking statements and certain non-GAAP financial measures. Please review the disclosures on slides two and three regarding these statements and measures. Any four looking statements made during today's call are subject to risks and uncertainties. Factors that may cause actual results to differ materially from expectations are described on slide 2 and in our annual and quarterly reports filed with the SEC. Information about any non-GAAP financial measures referenced during the presentation, including reconciliations to GAAP measures, can also be found in our Form 10-Q filed with the SEC on January 13, 2025, as well as in the appendix of the presentation slides. At the end of the presentation, we will open the call for questions. Andrew and Lynn will take your questions, which you can ask over the phone or sub in online. With that, I will now turn the call over to Andrew.

Thank you, Yisan. Good afternoon. Thank you for joining our call today to review our business and operation results during the three months ended November 30, 2024, which is our second fiscal quarter of fiscal 2025. And moving to slide five to discuss highlights from the second fiscal quarter. We continue to experience strong loan demand from our members during the quarter, with loans to members reaching $35.6 billion, an increase of $1.1 billion, or 3%, from the prior fiscal year end of May 31, 2024, and $503 million, or 1%, from August 31, 2024, which was our first fiscal quarter end date. Of the $1.1 billion Six-month loan growth, 52%, or $559 million, was a net increase in long-term loans, and 48%, or $513 million, was a net increase in line of credit loans. Since the prior fiscal quarter end, our members' needs for line of credit loans have continued to increase. During the three months ended November 30, 2024, we experienced a net increase of $330 million in line of credit loans, which represented 64% of the increase since the prior fiscal year end. Of the $513 million increase in line of credit loans, 43%, or 219, support members' recovery efforts following Hurricane Helene, and the remaining 57%, or $294 million, was primarily attributable to members' higher working capital and capital expenditure requirements. Subsequent to November 30, 2024, our line of credit loans have further increased by $776 million for the month of December 2024, of which 30% or $235 million was attributable borrowings under emergency line of credit loans. From June 1, 2024 to December 31, 2024, we have made a total of $454 million emergency line of credit loan advances. Additionally, 212 of the $1.1 billion loan growth was related to Loan Store members' broadband projects. Our aggregate loans outstanding to our electric distribution cooperative members relating to broadband projects increased to an estimated $3.3 billion as of November 30, 2024, compared to approximately $3.1 billion at the prior fiscal year end. Despite the robust loan growth, our loan portfolio continued to maintain its pristine quality. With no charge-offs during the second fiscal quarter, only 0.14% of loans were classified as non-performing at the quarter end. Our financial position remains strong within just a tier at 1.2 times during the six months ended November 30, 2024, and 1.19 times during the second fiscal quarter fiscal year 2025, each exceeding our goal of 1.1 times. Our members' equity increased to $2.5 billion at the fiscal quarter end. During the second fiscal quarter, we have revised the methodology and the internal threshold for our adjusted debt-to-equity ratio. These changes are intended to more accurately reflect our financial condition given the continued growth in our loan portfolio, align our methodology more closely with the rating agency methodologies, and provide a ratio that is consistent with our business objectives. Ling will discuss the revised methodology later in her presentation. Having strategically diversified our funding and liquidity sources, we have minimized the risk of being dependent on any single source or market and continue to strategically expand our funding sources. In October 2024, we accessed the private placement debt market for the first time and priced $300 million in collateral trust bonds, which are scheduled to settle next week. In addition, in November 2024, we launched a new subordinated note program that we offer to retail investors via the Insperix platform. We continue to maintain Adversa's range of liquidity sources at the fiscal quarter end, including operating cash, investments, committed bank lines, committed loan facilities under the Guaranteed Underwriter Program, a revolving note purchase agreement with Pharmac, and access to repo facilities. Subsequent to November 30, 2024, we further enhanced our liquidity position by increasing our available liquidity to a total of $1.45 billion. The increase consists of a $500 million increase in committed bank lines, an additional $450 million commitment under the Guaranteed Underwriting Program, and a $500 million increase in the Farmer Mac Note Purchase Agreement. We remain committed to maintaining strong investment grade credit ratings from Fitch, Moody's, and S&P. In November 2024, S&P affirmed CFC's credit ratings with a stable outlook. Our short-term and long-term credit ratings outlooks earned changed. Our current long-term unsecured credit ratings are A, A2, A-, all with a stable outlook. As we discussed on a previous call, the Empowering Rural America program, referred to as New Era, provides $9.7 billion in available funding to rural electric cooperatives for their investments in renewable power supply, transmission, and storm projects to support a transition to clean, affordable, and reliable energy. So far, a total of 49 electric cooperatives covering 38 states have been selected for loan funding or grants under the new ERA program. More specifically, 43 electric cooperatives consisting of 19 generation transmission and 24 distribution cooperatives have been awarded more than $9 billion of funding in the form of either grants or loans to build over 13 gigawatts of additional renewable resources, including solar, wind, battery storage, and nuclear. The remaining six cooperatives, three generation transmission and three distribution cooperatives, have been selected as program finalists and are currently undergoing New Air's underwriting to be awarded funding. Additional cooperatives can be selected for awards under the New Air program until January 20, 2025. Electric cooperatives who were awarded New Air funding will have until September 30, 2031 to complete their projects. We view the New Air program as potentially creating a need from our members for bridge financing. With that, I will now turn this call over to Ling, who will review our financial results in greater detail. Thank you.