CFC: 45 Years of Service, Integrity and Excellence
Annual Report
2014
Our industry has changed
a lot over the years.
Our commitment to our
member-owners has not.
a message from the board president and the ceo
Highlights from CFC’s FY2014 (ended May 31, 2014) include:
• CFC’s adjusted* net income for FY2014 was $153 million,
compared with the adjusted net income of $217 million for
FY2013.
• We are proud to have returned $41 million to our
members in October 2013 in the form of patronage capital
retirements. With the additional retirement of $40 million in
September 2014, CFC has returned $1.5 billion to members
over 35 consecutive years, putting money back in the
hands of our members that has helped lower your cost of
borrowing from us.
• In addition to this retirement, our member-owners received
$77 million of interest on their adjusted equity holdings in
CFC during FY2014, consisting of subscription, loan and
member certificates.
• At May 31, 2014, members had $4 billion invested in
CFC, which represents 19 percent of our total funding. Our
member-owners provide an important source of capital that
is viewed very favorably by banks, investors and the credit
rating agencies.
Since 1969, CFC has never stopped working with you to meet
your financial needs, and we’re well positioned to build on that
success for the next 45 years and beyond.
With thanks for your continued support,
Joel Cunningham
President, CFC Board of Directors
Sheldon C. Petersen
CEO
Joel Cunningham
Board President
Sheldon C. Petersen
CEO
T his year, CFC proudly celebrates 45 years of service to
our nation’s electric cooperatives. Throughout all of the
ups and downs of the past 45 years, CFC has stood ready,
willing and able to provide the capital that our members
need to power and grow rural America. Of course, the CFC story
is about so much more than financing electric power. It’s about
big dreams, hard work and most importantly, the core values of
service, integrity and excellence—the values that define not only
CFC, but also the entire electric cooperative network.
Whether it’s our emergency lines of credit that are tapped after a
weather disaster, our unique relationships with the capital markets
and our banking partners, or the investment opportunities we
offer our members, CFC has been there for all of our members’
evolving financial needs—and fiscal year 2014 was no exception.
At May 31, 2014, CFC’s total loans outstanding were
$20.5 billion. In FY2014, CFC advanced $1.7 billion in long-
term loans to our electric cooperative members—largely offset
by predominantly principal amortization and loan sales to result
in a net increase of $171 million in loans outstanding since the
end of FY2013.
Consistent with our culture of being much more than just a
lender, CFC has continued to provide our members a wide range
of world-class meetings and educational opportunities, including
Forum, IBES, Statewide Financial Workshops, Orientations,
Financial Webinar Series and the Cooperative Financial
Professional Certificate program. In fact, CFC hosted its very first
Forum in Chicago 20 years ago, which continues to be a valuable
conference tailored to meet the unique needs of the electric
cooperative industry.
*For more information on the adjustments that CFC makes to its financial results for the purposes of its own analysis and covenant
compliance, refer to “Non-GAAP Financial Measures” in the Management’s Discussion & Analysis (MD&A) section of the May 31, 2014,
Form 10-K. CFC’s 10-K is available at www.nrucfc.coop.
Cover: (Top) Photo courtesy of Northern Virginia Electric Cooperative (VA), and (Bottom) Photo by Robin Conover, Tennessee Electric Cooperative Association (TN)
Page 3: Photo by Brian Litzenberger, Sunflower Electric Power Cooperative (KS)
Page 4: Photo by Stephen Crane, Basin Electric Power Cooperative (SD)
Page 5: Photo courtesy of Wabash Valley Power Association (IN)
Page 6: Photo by Jason Weiss, Twin Valleys Public Power District (NE)
1
CFC Annual Report 2014 | 2
CFC Board of Directors
As of May 31, 2014
Board Officers
Joel Cunningham
President
Ray Beavers
Vice President
R. Grant Clawson
Secretary-Treasurer
About CFC
Formed in 1969, the National
Rural Utilities Cooperative
Finance Corporation (CFC) is
a nonprofit finance cooperative
created and owned by America’s
electric cooperative network.
CFC is guided by a 23-member
board of directors that
represents 10 geographically
defined districts, the electric
cooperatives’ national trade
association and an at-large
director.
CFC operates from its corporate
headquarters in Dulles,
Virginia, with a staff of 221
employees as of May 31, 2014.
District 1
District 5
District 9
Curtin R. Rakestraw II
Director
Sullivan County REC, PA
Kent D. Farmer
President & CEO
Rappahannock EC, VA
Randy D. Renth, CPA
Director
Clinton County EC, IL
Lyle Korver
CEO & General Manager
North West REC, IA
Fred Brog
Director
Lower Valley Energy, WY
Roman E. Gillen
President & CEO
Consumers Power, OR
District 2
District 6
District 10
Harry N. Park
Director
Southern Rivers Energy, GA
Thomas L. Hayes
Board President
Brown County REA, MN
Mike Campbell
Executive Vice President & GM
Central Florida EC, FL
Scott W. Handy
President & CEO
Cass County EC, ND
R. Grant Clawson
Trustee
Continental Divide EC, NM
Ray Beavers
CEO
United Cooperative Services, TX
District 3
District 7
District 11
Joel Cunningham, CPA
Director
Twin County EPA, MS
R.W. “Bob” Matheny
President & CEO
Sequachee Valley EC, TN
Walter K. Crook
Director
Butler PPD, NE
Kirk A. Thompson
General Manager
CMS EC, KS
District 4
District 8
Stephen C. Vail
Board Chairman
Ninestar Connect, IN
Glenn W. Miller, CPA
President & CEO
Holmes-Wayne EC, OH
Robert M. Hill
Chair
First EC Corporation, AR
Christopher L. Hamon
CEO
White River Valley EC, MO
Curtis Nolan
President, NRECA
Director
Sulphur Springs Valley EC, AZ
Mel Coleman
Vice President, NRECA
CEO
North Arkansas EC, AR
At-Large Director
Audit Committee Financial Expert
Patrick L. Bridges
CFO
Tri-State G&T Association, CO
CFC: Created and Owned by America’s Electric Cooperative Network
Pictured, front row from left, Thomas L. Hayes, Board President, Brown County REA (MN); Stephen C. Vail, Board Chairman, NineStar Connect (IN); Randy D. Renth, Director, Clinton County
EC (IL); Kirk A. Thompson, General Manager, CMS EC (KS); CFC Board Secretary-Treasurer R. Grant Clawson, Trustee, Continental Divide EC (NM); CFC Board President Joel Cunningham,
Director, Twin County EPA (MS); CFC Board Vice President Ray Beavers, General Manager & CEO, United Cooperative Services (TX); and Lyle Korver, CEO & General Manager, North West
REC (IA); back row from left, Kent D. Farmer, President & CEO, Rappahannock EC, (VA); Walter K. Crook, Director, Butler PPD (NE); R.W. “Bob” Matheny, President & CEO, Sequachee
Valley EC (TN); Scott W. Handy, President & CEO, Cass County EC, (ND); Christopher L. Hamon, CEO, White River Valley EC (MO); Glenn W. Miller, President & CEO, Holmes-Wayne EC
(OH); Curtis Nolan, NRECA President and Director, Sulphur Springs Valley EC (AZ); Harry N. Park, Director, Southern Rivers Energy (GA); Fred Brog, Director, Lower Valley Energy (WY); Mel
Coleman, NRECA Vice President and CEO, North Arkansas EC (AR); Patrick L. Bridges, CFO, Tri-State G&T Association (CO); Curtin R. Rakestraw, II, Director, Sullivan County REC (PA); Robert
M. Hill, Chair, First EC Corp., (AR); Mike Campbell, EVP & General Manager, Central Florida EC (FL); and Roman E. Gillen, President & CEO, Consumers Power (OR).
3 | CFC Annual Report 2014
To view the FY2014 Form 10-K, please visit www.nrucfc.coop.
Total Credit Outstanding
As of May 31, 2014
Dollars in Billions
At the end of FY2014, CFC’s loans and
guarantees outstanding totaled $21.5 billion.
$24
$22
$20
$18
$16
$14
$12
$10
$8
$6
$4
$2
$0
$20.5
$20.4
$20.2
$21.4
$21.5
FY2010
FY2011
FY2012
FY2013
FY2014
Total Credit Outstanding by Member Class
As of May 31, 2014
Dollars in Millions
At the end of FY2014, nearly $21.1 billion, or 98 percent, of CFC’s credit outstanding
was to electric borrowers, which is unchanged from FY2013 year-end.
2%
4%
23%
Electric
Distribution
Power Supply (G&T)
Statewide & Associate
71%
NCSC
Total Electric
$ 15,201
4,913
73
893
$21,080
71%
23%
<1%
4%
98%
Telecommunications
452
2%
H I S T O R Y
TOTAL
$ 21,532
100%
FY2010
FY2011
FY2012
FY2013
Member Investments & Equity
As of May 31, 2014
Dollars in Millions
CFC members had $4 billion invested in CFC at May 31, 2014, and members’ equity totaled $1.1 billion.
Continued member investments are an important expression of member confidence in CFC.
22%
37%
10%
31%
Commercial Paper (including Daily Liquidity Fund and Select Notes)
$ 1,869
Medium-Term Notes
Members’ Subordinated Certificates
Members’ Equity (including Noncontrolling Interest)
498
1,612
1,139
37%
10%
31%
22%
Total
$ 5,118 100%
H I S T O R Y
FY2010
FY2011
FY2012
FY2013
Funding Sources
As of May 31, 2014
Dollars in Millions
During FY2014, CFC’s capitalization was at $20.6 billion, compared with $20.5 billion
at the prior year-end.
2%
8%
29%
13%
29%
19%
Collateral Trust Bonds
$ 5,980
Commercial Paper and Other Short-Term Debt
Medium-Term Notes
Long-Term Notes Payable
Subordinated Deferrable Debt
Members’ Subordinated Certificates
3,887
2,727
6,019
400
1,612
29%
19%
13%
29%
2%
8%
Total
$20,625 100%
H I S T O R Y
FY2010
FY2011
FY2012
FY2013
To view the FY2014 Form 10-K, please visit www.nrucfc.coop.
CFC Annual Report 2014 | 4
5 | CFC Annual Report 2014
To view the FY2014 Form 10-K, please visit www.nrucfc.coop.
Operating Expenses
For the period ended May 31, 2014
As percentage of Average Loan Volume
The FY2014 consolidated operating expenses for CFC and its affiliate organizations,
the Rural Telephone Finance Cooperative (RTFC) and the National Cooperative
Services Corporation (NCSC), were approximately $72.6 million, compared with
$84.2 million in FY2013. This figure represented 0.36 percent (36 basis points) of
average loan volume.
0.36%
0.37%
0.35%
0.36%
0.43%
0.5%
0.4%
0.3%
0.2%
0.1%
0.0%
FY2010
FY2011
FY2012
FY2013
FY2014
Adjusted Net Income
For the period ended May 31, 2014
Dollars in Thousands
In its own analysis of operating results, CFC excludes from net income the noncash
gains and losses related to the accounting for derivatives. Therefore, the CFC adjusted
net income for FY2014 was $153 million, compared with adjusted net income of
$217 million for FY2013.
GAAP Net Income
Adjustments
Derivative Forward Value
$192,926
$(39,541)
Adjusted Net Income
$153,385
For an extensive review of how CFC treats derivatives and foreign currency transactions, refer
to the Management’s Discussion & Analysis (MD&A) section of CFC’s May 31, 2014,
Form 10-K. For the GAAP adjustment measure and a complete reconciliation of GAAP to non-
GAAP financial measures, refer to the “Non-GAAP Financial Measures” section of the MD&A.
Patronage Capital Retirement
As of May 31, 2014
Dollars in Billions
In October 2013 (FY2014), CFC retired $41 million in patronage capital, and in
September 2014 (FY2015), CFC retired an additional $40 million in patronage capital.
The retirement in September 2014 represents the 35th consecutive calendar year CFC
has made a cash retirement of patronage capital to its members. CFC has returned
$1.5 billion to members since 1980.
$2.0
$1.5
$1.0
$0.5
$0.0
$1.35
$1.40
$1.43
$1.47
$1.51
FY2011
FY2012
FY2013
FY2014
FY2015
Approximate cumulative amount returned to members since 1980.
Credit Ratings (As of September 1, 2014)
Rating Outlook
Direct
Collateral Trust Bonds (CTBs)
Medium-Term Notes (MTNs)
InterNotes
Subordinated Notes
Commercial Paper
Moody’s
Investors Service
Standard & Poor’s
Corporation
Stable
Stable
A1
A2
A2
A-3
P-1
A+
A
A
BBB+
A-1
The ratings in the table have the meaning defined by each of the rating agencies and are not recommendations
to buy, sell or hold securities and are subject to revision at any time by the rating agencies.
CFC Senior Leadership Team
Sheldon C. Petersen
Chief Executive Officer
John T. Evans
Executive Vice President
and Chief Operating
Officer
r
Joel Allen
Senior Vice President,
Member Services
Roberta Aronson
Senior Vice President
and General Counsel
John Borak
Senior Vice President,
Credit Risk Management
Brad Captain
Senior Vice President,
Corporate Relations
Graceann Clendenen
Senior Vice President,
Corporate Services
Sarah DeShazior
Director, Executive
Office Administration
Andrew Don
Senior Vice President and
Chief Financial Officer
Steve Kettler
Senior Vice President,
Strategic Business
Development and Support
Steven L. Lilly
Senior Vice President,
Special Asset
Management
John J. List
Senior Vice President
and Chief Lending Officer
Robin Reed
Senior Vice President,
Member Services
To view the FY2014 Form 10-K, please visit www.nrucfc.coop.
6
CFC Annual Report 2014 | 6
20701 Cooperative Way | Dulles, Virginia 20166
Visit us at www.nrucfc.coop
703-467-1800
CFC is an equal opportunity provider and employer.