National Rural Utilities Cooper

Please stand by. We're about to begin. Good day and welcome to the National Rural Utilities Cooperative Finance Corporation Full Year 2025 Third Quarter Investor Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Heesun Choi. Please go ahead.

Thank you, operator. Welcome to our investor conference call for the third quarter of fiscal year 2025. We appreciate your time and interest in our company. Today, I'm joined by our CEO, Andrew Don, and our CFO, Ling Wang. Andrew and Ling will discuss our third quarter end results 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 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 slide two and slide three regarding these statements and measures. Any four looking statements made during today's call are subject to risk and uncertainties. Factors that may cause actual results to differ materially from expectations are described on slide two and in our annual and quarterly reports filed with the SEC. Information about any non-GAAP financial results referenced during the presentation, including reconciliations to GAAP measures can also be found in our Form 10-Q580-SEC on April 11, 2025, as well as the appendix of the presentation slide. At the end of the presentation, we will open the call for questions. And Andrew and Ling will take your questions, which you can ask over the phone or submit online. With that, I will turn this call over to Andrew.

Thank you, Heesun. Good afternoon and thank you for joining our call today to review our business and operating results during the three months ended February 28, 2025, which is our third quarter of fiscal year 2025. I'm moving to slide five to discuss highlights from the third fiscal quarter. During this quarter, we continue to experience strong loan demand from our members. Loans to members reached $36.5 billion marking an increase of approximately $1.94 billion, or 6%, from the prior fiscal year end on May 31, 2024, and $865 million, or 2%, from November 30, 2024, which was our second fiscal quarter end. I'll discuss the drivers of loan growth in more detail on the next slide. In addition to the robust loan growth, our loan portfolio continues to maintain its pristine quality. We had no charge-offs during this fiscal quarter. As of the quarter end, we only had one 42 million loan that was classified as non-performing. In March 2025, we received a 16 million payment on this non-performing loan, reducing its outstanding balance to 26 million. Our financial position remains strong with an adjusted tier of 1.2 times during the nine months ended February 28, 2025, and 1.19 times during the third quarter of fiscal year 2025, each exceeding our goal of 1.1 times. Our members' equity increased to $2.5 billion at the current fiscal quarter end. We continue to maintain a diversified range of liquidity sources at the current 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. As we discussed on a prior Financial Investor Update conference call, during the third fiscal quarter of fiscal year 2025, We increased our available liquidity by $1.45 billion through a $500 million increase in committed bank lines, an additional $450 million commitment under the Guaranteed Underwriter Program, and a $500 million increase in the Farmer Mac Note Purchase Agreement. We remain committed to maintaining strong investment credit ratings from Fitch, Moody's, and S&P. During the current year-to-day fiscal 2025, Moody's, Fitch, and S&P affirmed CFC's credit ratings with a stable outlook, with Moody's affirming most recently in February 2025. Our short-term and long-term credit ratings and outlook are unchanged. Our current long-term senior unsecured credit ratings are A, A2, A-. Turning to slide six, this slide highlights the drivers of our loan growth. As I mentioned earlier, during the current fiscal year date, we experienced a $1.94 billion increase in loans to our members. Of the $1.94 billion nine-month loan growth, 60%, or $1.16 billion, was a net increase in line of credit loans, and 40%, or $774 million, was a net increase in long-term loans. Since the prior fiscal quarter end, our members' need for line of credit loans continued to increase. During the three months ended February 28, 2025, we experienced a net increase of $650 million in line of credit loans, which represented 55% of the total increase in lines of credit since the prior fiscal year end. Approximately 73%, or 477, of the $650 million net increase in line of credit loans during these three months was due to our members' emergency borrowing needs primarily caused by Hurricane Helene, which impacted five southeastern states in September 2024. For the fiscal year to date, the $1.16 billion increase in line of credit loans, 60% or $696 million of line of credit advances were to fund members' recovery efforts following Hurricane Helene, and the remaining 40% or $465 million was primarily attributable to members' working capital and capital expenditure requirements. Additionally, $247 million of the $1.94 billion loan growth was related to loans to our members' broadband projects. For the three months ended February 28, 2025, the net loan growth for broadband projects was 35 million, the lowest quarterly increase we have experienced since we started tracking broadband loan advances. Loan activities related to broadband projects have slowed as our cooperative members' projects are either nearing the end of the build-out or are already completed. Our aggregate loans outstanding to our electric distribution cooperative members relating to broadband projects are an estimated $3.4 billion as of February 28, 2025, compared to approximately $3.1 billion at the prior fiscal year end. With that, I'll now turn the call over to Ling, who will review our financial results in greater detail. Thank you.