CFC Reports Successful FY2005 Financial Results

From September 2, 2005, Solutions

Last week CFC presented audited financial results for the 2005 fiscal year, which ended May 31, 2005, by filing its latest 10-K report with the Securities and Exchange Commission (SEC).

“We’re pleased to report another successful year,” said CFC Governor and CEO Sheldon C. Petersen, “and we’re grateful for the support of our members for their financing cooperative. CFC is well positioned to continue to provide the capital necessary to meet the needs of electric cooperatives in the future.”

CFC’s FY2005 financial results include increased operating income, higher adjusted net margins, surpassed TIER goals, and increased revolving credit facilities with its line banks.

Subsequent to the end of the fiscal year, CFC also reported closing

two major funding transactions: government guaranteed bonds supporting the Rural Economic Development Loan and Grant (REDL&G) program totaling $1 billion and a private note placement to the Federal Agricultural Mortgage Corporation (Farmer Mac) totaling $500 million.

“This increase in the diversity of investors in CFC’s securities, combined with the increase in the revolver, strong overall portfolio performance and balance sheet performance has a significant positive impact on our capital market access and liquidity,” said Steve Lilly, CFC CFO.

Total loans to electric cooperatives increased by $150 million during the year, while loans to the telecommunication sector declined by $1.7 billion as a result of CFC’s strategic initiative to reduce its telecom exposure, leaving this segment of CFC’s portfolio at 16 percent of total loans at year-end versus 23 percent for the prior year.

Details and other highlights from the financial statements include:

• Operating income totaled $1.026 billion versus $1.007 billion the prior year.
• Gross margin before Statement of Financial Accounting Standards 133 and foreign currency adjustments totaled $104 million versus $82 million in 2004.
• General and administrative expenses totaled $43 million, representing 22 basis points.
• Adjusted net margins were $122 million versus $96 million the prior fiscal year.
• Adjusted TIER was 1.14 in 2005 versus 1.12 in 2004.
• Adjusted margins in excess of a 1.12 TIER—$32.8 million—were retained in members’ capital reserve, which now totals $164 million.
• Loan loss reserves totaled $590 million, representing 3.11 percent of gross loans outstanding; no significant charge-offs occurred during the year.
• Revolving credit facilities were renewed and increased to $5 billion, with over 74 percent in multi-year commitments.