Content analysis
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Legalese | ||
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H.S. sophomore Good
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New words:
consecutive, deconsolidated, deconsolidation, diversification, environmental, exceeding, fall, hereon, telecom, unemployment
Removed:
cessation, conform, elevated, execute, flattening, funded, index, LIBOR, opposite, pointed, recognition, referenced
Financial report summary
?Risks
- We are subject to credit risk given that borrowers may not be able to meet their contractual obligations in accordance with agreed-upon terms, which could have a material adverse effect on our financial condition, results of operations and liquidity. Because we lend primarily to U.S. rural electric utility systems, we also are inherently subject to single-industry and single-obligor concentration risks.
- Adverse changes, developments or uncertainties in the rural electric utility industry could adversely impact the operations or financial performance of our member electric cooperatives, which, in turn, could have an adverse impact on our financial results.
- Advances in technology may change the way electricity is generated and transmitted or the way broadband is deployed, which could adversely affect the business operations of our members and negatively impact the credit quality of our loan portfolio and financial results.
- We may obtain entities or other assets through foreclosure, which would subject us to the same performance and financial risks as any other owner or operator of similar businesses or assets.
- The nonperformance of our derivative counterparties could impair our financial results.
- A decline in our credit rating could trigger payments under our derivative agreements, which could impair our financial results.
- If we are unable to access the capital markets or other external sources for funding, our liquidity position may be negatively affected and we may not have sufficient funds to meet all of our financial obligations as they become due.
- A reduction in the credit ratings for our debt could adversely affect our liquidity and/or cost of debt.
- Our ability to maintain compliance with the covenants related to our revolving credit agreements, collateral trust bond and medium-term note indentures and debt agreements could affect our ability to retire patronage capital, result in the acceleration of the repayment of certain debt obligations, adversely impact our credit ratings and hinder our ability to obtain financing.
- Changes in the level and direction of interest rates or our ability to successfully manage interest rate risk could adversely affect our financial results and condition.
- The Secured Overnight Financing Rate (“SOFR”) is a relatively new reference rate with limited historical performance and composition and characteristics that differ from the London Interbank Offered Rate (“LIBOR”). We may be adversely affected by developments in the SOFR market or changes in the methods by which SOFR is determined.
- Damage to our reputation could harm our business, including our ability to attract highly skilled employees and our competitive position.
- Our elected directors also serve as officers or directors of certain of our individual member cooperatives, which may result in a potential conflict of interest with respect to loans, guarantees and extensions of credit that we may make to or on behalf of such member cooperatives.
- Competition from other lenders could adversely impact our financial results.
- Loss of our tax-exempt status could adversely affect our earnings.
- As a tax-exempt cooperative and nonbank financial institution, our lending activities are not subject to the regulations and oversight of U.S. financial regulators such as the Federal Reserve, the Federal Deposit Insurance Corporation or the Office of Comptroller of Currency. Because we are not under the purview of such regulation, we could engage in activities that could expose us to greater credit, market and liquidity risk, reduce our safety and soundness and adversely affect our financial results.
- Changes in accounting standards or assumptions in applying accounting policies could materially impact our financial statements.