Document and Entity Information
Document and Entity Information - May. 31, 2015 - USD ($) | Total |
Document and Entity Information | |
Entity Registrant Name | NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/ |
Entity Central Index Key | 70,502 |
Document Type | 10-K |
Document Period End Date | May 31, 2015 |
Amendment Flag | false |
Current Fiscal Year End Date | --05-31 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Public Float | $ 0 |
Entity Common Stock, Shares Outstanding | 0 |
Document Fiscal Year Focus | 2,015 |
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | May. 31, 2015 | May. 31, 2014 |
ASSETS | ||
Cash and cash equivalents | $ 248,836 | $ 338,715 |
Restricted cash | 485 | 520 |
Time deposits | 485,000 | 550,000 |
Investment securities | 84,472 | 55,177 |
Loans to members | 21,469,017 | 20,476,642 |
Less: Allowance for loan losses | (33,690) | (56,429) |
Loans to members, net | 21,435,327 | 20,420,213 |
Accrued interest and other receivables | 197,828 | 200,656 |
Fixed assets, net | 110,540 | 107,070 |
Debt service reserve funds | 25,602 | 39,353 |
Debt issuance costs, net | 47,071 | 42,058 |
Foreclosed assets, net | 116,507 | 245,651 |
Derivative assets | 115,276 | 209,759 |
Other assets | 26,186 | 23,571 |
Total assets | 22,893,130 | 22,232,743 |
Liabilities: | ||
Accrued interest payable | 123,697 | 118,381 |
Short-term debt | 3,127,754 | 4,099,331 |
Long-term debt | 16,287,540 | 14,513,284 |
Subordinated deferrable debt | 400,000 | 400,000 |
Members’ subordinated certificates: | ||
Membership subordinated certificates | 645,035 | 644,944 |
Loan and guarantee subordinated certificates | 640,889 | 699,723 |
Member capital securities | 219,520 | 267,560 |
Total members’ subordinated certificates | 1,505,444 | 1,612,227 |
Total debt outstanding | 21,320,738 | 20,624,842 |
Deferred income | 75,579 | 78,040 |
Derivative liabilities | 408,382 | 388,208 |
Other liabilities | 52,948 | 52,898 |
Total liabilities | $ 21,981,344 | $ 21,262,369 |
Commitments and contingencies | ||
Equity: | ||
Retained equity | $ 880,242 | $ 939,888 |
Accumulated other comprehensive income | 4,080 | 3,649 |
Total CFC equity | 884,322 | 943,537 |
Noncontrolling interest | 27,464 | 26,837 |
Total equity | 911,786 | 970,374 |
Total liabilities and equity | $ 22,893,130 | $ 22,232,743 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | ||
Income Statement [Abstract] | ||||
Interest income | $ 952,976 | $ 957,540 | $ 955,753 | |
Interest expense | (635,684) | [1] | (654,655) | (692,025) |
Net interest income | 317,292 | 302,885 | 263,728 | |
Provision for loan losses | 21,954 | (3,498) | 70,091 | |
Net interest income after provision for loan losses | 339,246 | 299,387 | 333,819 | |
Non-interest income: | ||||
Fee and other income | 36,783 | 17,762 | 38,181 | |
Derivative gains (losses) | (196,999) | (34,421) | 84,843 | |
Results of operations of foreclosed assets | (120,148) | (13,494) | (897) | |
Total non-interest income | (280,364) | (30,153) | 122,127 | |
Non-interest expense: | ||||
Salaries and employee benefits | (43,845) | (41,176) | (55,536) | |
Other general and administrative expenses | (32,685) | (31,390) | (28,646) | |
Provision for guarantee liability | 520 | (217) | 4,772 | |
Losses on early extinguishment of debt | (703) | (1,452) | (10,636) | |
Other | (687) | (69) | (5,064) | |
Total non-interest expense | (77,400) | (74,304) | (95,110) | |
Income (loss) before income taxes | (18,518) | 194,930 | 360,836 | |
Income tax expense | (409) | (2,004) | (2,749) | |
Net income (loss) | (18,927) | 192,926 | 358,087 | |
Less: Net income attributable to noncontrolling interests | (105) | (2,859) | (4,328) | |
Net income (loss) attributable to CFC | $ (19,032) | $ 190,067 | $ 353,759 | |
[1] | Represents interest expense and the amortization of discounts on debt. |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ (18,927) | $ 192,926 | $ 358,087 |
Other comprehensive income (loss): | |||
Unrealized gains (losses) on available-for-sale investment securities | 4,295 | (1,455) | 165 |
Unrealized losses on foreclosed assets | (1,938) | (2,310) | 0 |
Reclassification of derivative losses to net income | (959) | (983) | (1,004) |
Defined benefit plan adjustments | (977) | 0 | 0 |
Other comprehensive income (loss) | 421 | (4,748) | (839) |
Total comprehensive income (loss) | (18,506) | 188,178 | 357,248 |
Less: Total comprehensive income attributable to noncontrolling interest | (95) | (2,843) | (4,307) |
Total comprehensive income (loss) attributable to CFC | $ (18,601) | $ 185,335 | $ 352,941 |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - USD ($) $ in Thousands | Total | Noncontrolling interest | Total CFC equity | CFC Accumulated other comprehensive income | CFC retained equity | Unallocated net income (loss) | Members' capital reserve | Patronage capital allocated | Membership fees and education fund |
Balance at May. 31, 2012 | $ 490,755 | $ 7,592 | $ 483,163 | $ 9,199 | $ 473,964 | $ (346,941) | $ 272,126 | $ 546,366 | $ 2,413 |
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | 358,087 | 4,328 | 353,759 | 353,759 | 133,257 | 138,133 | 81,449 | 920 | |
Other comprehensive loss | (839) | (21) | (818) | (818) | |||||
Patronage capital retirement | (36,599) | (794) | (35,805) | (35,805) | 429 | (36,234) | |||
Other | (143) | 685 | (828) | (828) | (828) | ||||
Balance at May. 31, 2013 | 811,261 | 11,790 | 799,471 | 8,381 | 791,090 | (213,255) | 410,259 | 591,581 | 2,505 |
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | 192,926 | 2,859 | 190,067 | 190,067 | 34,605 | 75,188 | 79,324 | 950 | |
Other comprehensive loss | (4,748) | (16) | (4,732) | (4,732) | |||||
Patronage capital retirement | (40,965) | (400) | (40,565) | (40,565) | 0 | (40,565) | |||
Other | 11,900 | 12,604 | (704) | (704) | (704) | ||||
Balance at May. 31, 2014 | 970,374 | 26,837 | 943,537 | 3,649 | 939,888 | (178,650) | 485,447 | 630,340 | 2,751 |
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | (18,927) | 105 | (19,032) | (19,032) | (114,662) | 16,283 | 78,420 | 927 | |
Other comprehensive loss | 421 | (10) | 431 | 431 | |||||
Patronage capital retirement | (40,141) | (362) | (39,779) | (39,779) | (39,779) | ||||
Other | 59 | 894 | (835) | (835) | 100 | 1 | (1) | (935) | |
Balance at May. 31, 2015 | $ 911,786 | $ 27,464 | $ 884,322 | $ 4,080 | $ 880,242 | $ (293,212) | $ 501,731 | $ 668,980 | $ 2,743 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income (loss) | $ (18,927) | $ 192,926 | $ 358,087 |
Adjustments to reconcile net income to net cash provided by operating activities | |||
Amortization of deferred income | (11,582) | (10,137) | (8,766) |
Amortization of debt issuance costs and deferred charges | 7,351 | 7,367 | 7,582 |
Amortization of discount on long-term debt | 7,939 | 5,690 | 4,314 |
Amortization of issuance costs for revolving bank lines of credit | 5,238 | 2,827 | 2,932 |
Depreciation | 6,497 | 5,646 | 5,381 |
Provision for loan losses | (21,954) | 3,498 | (70,091) |
Provision for guarantee liability | (520) | 217 | (4,772) |
Results of operations of foreclosed assets | 120,148 | 13,494 | 897 |
Derivative forward value | 114,093 | (39,541) | (141,304) |
Changes in operating assets and liabilities: | |||
Accrued interest and other receivables | (3,622) | (25,736) | 17,092 |
Accounts payable | (2,358) | (1,390) | 5,801 |
Accrued interest payable | 5,316 | (26,564) | (16,872) |
Deferred income | 9,122 | 62,460 | 8,352 |
Other | 2,237 | (772) | (5,152) |
Net cash provided by operating activities | 218,978 | 189,985 | 163,481 |
Cash flows from investing activities: | |||
Advances on loans | (8,333,180) | (7,795,237) | (9,027,063) |
Principal collections on loans | 7,339,378 | 7,623,829 | 7,623,527 |
Net investment in fixed assets | (9,940) | (8,229) | (7,119) |
Proceeds from foreclosed assets | 16,709 | 13,667 | 48,144 |
Investments in foreclosed assets | (9,651) | (13,650) | (87,037) |
Proceeds from (investments in) time deposits | 65,000 | 150,000 | (700,000) |
Proceeds from early redemption of equity securities | 0 | 0 | 57,578 |
Investments in equity securities | (25,000) | (25,000) | (30,000) |
Change in restricted cash | 35 | 7,176 | (2) |
Net cash used in investing activities | (956,649) | (47,444) | (2,121,972) |
Cash flows from financing activities: | |||
(Repayments of) proceeds from issuances of short-term debt, net | (1,042,483) | (122,385) | 681,612 |
Proceeds from issuances of short-term debt with original maturity greater than 90 days | 574,187 | 742,935 | 639,148 |
Repayments of short term-debt with original maturity greater than 90 days | (503,281) | (783,625) | (517,192) |
Payments for issuance costs for revolving bank lines of credit | (3,249) | (3,121) | (3,159) |
Proceeds from issuance of long-term debt | 3,049,869 | 3,592,292 | 2,640,850 |
Payments for retirement of long-term debt | (1,296,620) | (3,122,790) | (1,569,555) |
Proceeds from issuance of subordinated debt | 0 | 0 | 395,724 |
Payments for retirement of subordinated debt | 0 | 0 | (186,440) |
Proceeds from issuance of members’ subordinated certificates | 74,842 | 153,921 | 66,620 |
Payments for retirement of members’ subordinated certificates | (166,275) | (307,271) | (34,780) |
Payments for retirement of patronage capital | (39,198) | (40,030) | (35,036) |
Payments for cash portion of debt exchange premium | 0 | (90,814) | (133,406) |
Net cash provided by financing activities | 647,792 | 19,112 | 1,944,386 |
Net increase (decrease) in cash and cash equivalents | (89,879) | 161,653 | (14,105) |
Beginning cash and cash equivalents | 338,715 | 177,062 | 191,167 |
Ending cash and cash equivalents | 248,836 | 338,715 | 177,062 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 609,840 | 665,334 | 694,069 |
Cash paid for income taxes | 210 | 157 | 89 |
Non-cash financing and investing activities: | |||
Subordinated certificates applied against loan balances | 228 | 0 | 670 |
Patronage capital applied against loan balances | 117 | (160) | 160 |
Noncontrolling interest patronage capital applied against loan balances | 0 | 0 | 58 |
Charge-offs of allowance for loan losses applied against loan balances | 999 | 1,606 | 19,122 |
Net decrease in debt service reserve funds/debt service reserve certificates | (13,751) | (450) | 0 |
Collateral trust bonds issued as debt exchange premium | $ 0 | $ 2,408 | $ 39,647 |
General Information and Account
General Information and Accounting Policies | 12 Months Ended |
May. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
General Information and Accounting Policies | NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The Company National Rural Utilities Cooperative Finance Corporation (“CFC”) is a member-owned cooperative association incorporated under the laws of the District of Columbia in April 1969. CFC’s principal purpose is to provide its members with financing to supplement the loan programs of the Rural Utilities Service (“RUS”) of the United States Department of Agriculture (“USDA”). CFC makes loans to its rural electric members so they can acquire, construct and operate electric distribution, generation, transmission and related facilities. CFC also provides its members with credit enhancements in the form of letters of credit and guarantees of debt obligations. As a cooperative, CFC is owned by and exclusively serves its membership, which consists of not-for-profit entities or subsidiaries or affiliates of not-for-profit entities. CFC is exempt from federal income taxes. Rural Telephone Finance Cooperative (“RTFC”) is a cooperative association originally incorporated in South Dakota in 1987 and reincorporated as a member-owned cooperative association in the District of Columbia in 2005. RTFC’s principal purpose is to provide and arrange financing for its rural telecommunications members and their affiliates. As a member-owned cooperative lender, RTFC’s objective is to offer its members cost-based financial products and services consistent with sound financial management and is not to maximize net income. RTFC’s membership consists of a combination of not-for-profit entities and for-profit entities. RTFC’s results of operations and financial condition are consolidated with CFC in the accompanying financial statements. RTFC is headquartered with CFC in Dulles, Virginia. RTFC is a taxable cooperative that pays income tax based on its net income, excluding patronage-sourced net earnings allocated to its patrons, as permitted under Subchapter T of the Internal Revenue Code. National Cooperative Services Corporation (“NCSC”) was incorporated in 1981 in the District of Columbia as a member-owned cooperative association. NCSC’s principal purpose is to provide financing to members of CFC, entities eligible to be members of CFC and the for-profit and nonprofit entities that are owned, operated or controlled by or provide significant benefit to certain members of CFC. As a member-owned cooperative lender, NCSC’s objective is to offer its members cost-based financial products and services consistent with sound financial management and is not to maximize net income. As of May 31, 2015 , NCSC’s membership consisted primarily of distribution systems that were members of CFC or were eligible for such membership. NCSC’s results of operations and financial condition are consolidated with CFC in the accompanying financial statements. NCSC is headquartered with CFC in Dulles, Virginia. NCSC is a taxable cooperative that pays income tax on the full amount of its reportable taxable income and allowable deductions. Basis of Presentation and Use of Estimates The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the assets, liabilities, revenue and expenses reported in the financial statements, as well as amounts included in the notes thereto, including discussion and disclosure of contingent liabilities. Items that require our most significant estimates and subjective judgments, and involve inherent uncertainty, include the allowance for loan losses, the determination of the fair value of our derivative instruments and impairment assessments related to our foreclosed assets. Our judgment regarding estimates and assumptions may change as new and unforeseen events occur; additional information is obtained through the passage of time; and through changes in economic conditions and the operating environment. Actual results could differ from our estimates. Principles of Consolidation The consolidated financial statements include CFC, RTFC and NCSC and certain entities created and controlled by CFC to hold foreclosed assets, after elimination of intercompany accounts and transactions. Unless stated otherwise, references to “we, “our” or “us” represent the consolidation of CFC, RTFC, NCSC and certain entities controlled by CFC to hold foreclosed assets. CFC established limited liability corporations and partnerships to hold foreclosed assets resulting from defaulted loans or bankruptcy. CFC owns and controls all of these entities and, therefore, consolidates their financial results. CFC presents the companies formed to hold foreclosed assets in one line on the consolidated balance sheets and the consolidated statements of operations. Foreclosed assets are held by two subsidiaries controlled by CFC. Denton Realty Partners, LP (“DRP”) holds assets including a land development loan and limited partnership interest in certain real estate developments and related receivables, developed lots and retail land. During the fourth quarter of the year ended May 31, 2015 , all of DRP’s remaining assets were sold. Caribbean Asset Holdings (“CAH”) holds our investment in cable and telecommunications operating entities in the United States Virgin Islands (“USVI”), British Virgin Islands and St. Maarten. Variable Interest Entities Based on the accounting standards governing consolidations, equity controlled by RTFC and NCSC is classified as noncontrolling interest on the consolidated balance sheet, and the subsidiary earnings controlled by RTFC and NCSC are reported as net income or net loss attributable to the noncontrolling interest on the consolidated statement of operations. CFC manages the lending activities of RTFC and NCSC. We are required to consolidate the financial results of RTFC and NCSC because CFC is the primary beneficiary of variable interests in RTFC and NCSC due to its exposure to absorbing the majority of their expected losses. Under separate guarantee agreements, RTFC and NCSC pay CFC a fee to indemnify them against loan losses. CFC is the sole lender to and manages the business operations of RTFC through a management agreement in effect until December 1, 2016, which is automatically renewed for one -year terms thereafter unless terminated by either party. CFC is the primary source of funding to and manages the lending activities of NCSC through a management agreement that is automatically renewable on an annual basis unless terminated by either party. NCSC funds its lending programs through loans from CFC or debt guaranteed by CFC. In connection with these guarantees, NCSC must pay a guarantee fee. All loans that require RTFC board approval also require approval by CFC for funding under RTFC’s credit facilities with CFC. CFC is not a member of RTFC and does not elect directors to the RTFC board. RTFC has a non-voting associate member relationship with CFC. RTFC members elect directors to the RTFC board based on one vote for each member. All loans that require NCSC board approval also require CFC board approval. CFC is not a member of NCSC. If CFC becomes a member of NCSC, it would control the nomination process for one NCSC director. NCSC members elect directors to the NCSC board based on one vote for each member within a district. NCSC is a service organization member of CFC. RTFC and NCSC creditors have no recourse against CFC in the event of a default by RTFC and NCSC, unless there is a guarantee agreement under which CFC has guaranteed NCSC or RTFC debt obligations to a third-party. As of May 31, 2015 , CFC had guaranteed $61 million of NCSC debt, derivative instruments and guarantees with third parties, and CFC’s maximum potential exposure for these instruments totaled $66 million . The maturities for NCSC obligations guaranteed by CFC extend through 2031. Guarantees of NCSC debt and derivative instruments are not included in Note 12, Guarantees, as the debt and derivatives are reported on the consolidated balance sheet. As of May 31, 2015 , CFC guaranteed $2 million of RTFC guarantees with third parties. The maturities for RTFC obligations guaranteed by CFC extend through 2016 and are renewed on an annual basis. All CFC loans to RTFC and NCSC are secured by all assets and revenue of RTFC and NCSC. As of May 31, 2015 , RTFC had total assets of $494 million including loans outstanding to members of $386 million , and NCSC had total assets of $757 million including loans outstanding of $732 million . As of May 31, 2015 , CFC had committed to lend RTFC up to $4,000 million , of which $367 million was outstanding. As of May 31, 2015 , CFC had committed to provide up to $3,000 million of credit to NCSC, of which $784 million was outstanding, representing $723 million of outstanding loans and $61 million of credit enhancements. As of May 31, 2015 , after taking into consideration systems that are members of both CFC and NCSC and eliminating memberships between CFC, RTFC and NCSC, our consolidated membership totaled 1,462 members and 229 associates. Our membership includes the following: • 839 distribution systems; • 72 power supply systems; • 486 telecommunications members; • 64 statewide and regional associations; and • 1 national association of cooperatives. Associates are eligible to borrow, however, they are not eligible to vote on matters submitted to the membership for approval. Our members and associates are located in 49 states, the District of Columbia and two U.S. territories. All references to members within this document include members and associates. Cash and Cash Equivalents Cash, certificates of deposit and other investments with original maturities of less than 90 days are classified as cash and cash equivalents. Restricted Cash Restricted cash represents cash and cash equivalents for which use is contractually restricted. Time Deposits Time deposits are deposits that we make with financial institutions in interest-bearing accounts. These deposits have a maturity of less than one year as of the reporting date and are valued at carrying value, which approximates fair value. Investment Securities Our investment securities, which are classified as available for sale, consist of investments in Federal Agricultural Mortgage Corporation (“Farmer Mac”) Series A Common Stock, Farmer Mac Series A, Series B and Series C Preferred Stock. Available-for-sale securities are carried at fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive income. We regularly evaluate our investment securities whose fair value has declined below the amortized cost to assess whether the decline in fair value is other than temporary. We recognize any other-than-temporary impairment amounts in earnings. Loans to Members Loans to members are classified as held for investment and reported at amortized cost, which is measured based on the outstanding principal balance net of unamortized deferred loan origination costs. Deferred loan origination costs are amortized using the straight-line method, which approximates the effective interest method, over the life of the loan as a reduction to interest income. Allowance for Loan Losses We maintain an allowance for loan losses at a level estimated by management to provide for probable losses inherent in the loan portfolio. The allowance for loan losses is reported separately on the consolidated balance sheet, and the provision for loan losses is reported as a separate line item on the consolidated statement of operations. We review the estimates and assumptions used in the calculations of the allowance for loan losses on a quarterly basis. The estimate of the allowance for loan losses is based on a review of the composition of the loan portfolio, past loss experience, specific problem loans, current economic conditions, available market data and/or projection of future cash flows and other pertinent factors that in management’s judgment may contribute to incurred losses. The allowance is based on estimates and, accordingly, actual losses may differ from the allowance amount. The methodology used to calculate the allowance for loan losses is summarized below. The allowance for loan losses is calculated by dividing the portfolio into two categories of loans: (1) the general portfolio, which comprises loans that are performing according to the contractual agreements; and (2) the impaired portfolio, which comprises loans that (i) are not currently performing or (ii) for various reasons we do not expect to collect all amounts as and when due and payable under the loan agreement or (iii) are performing according to a restructured loan agreement, but as a result of the troubled debt restructuring are required to be classified as impaired. Collective Allowance The general portfolio of loans consists of all loans not specifically identified in the impaired category. We disaggregate the loans in the general portfolio by company: CFC, RTFC and NCSC. We further disaggregate the CFC loan portfolio by member class: distribution, power supply and statewide and associates. We use the following factors to determine the allowance for loan losses for the general portfolio category: • Internal risk ratings system. We maintain risk ratings for our borrowers that are updated at least annually and are based on the following: ◦ general financial condition of the borrower; ◦ our judgment of the quality of the borrower’s management; ◦ our judgment of the borrower’s competitive position within its service territory and industry; ◦ our estimate of the potential impact of proposed regulation and litigation; and ◦ other factors specific to individual borrowers or classes of borrowers. • Standard & Poor’s historical utility sector default table. The table provides expected default rates for the utility sector based on rating level and the remaining maturity. We correlate our internal risk ratings to the ratings used in the utility sector default table. We use the default table to assist in estimating our allowance for loan losses because we have limited history from which to develop loss expectations. • Loss Emergence Period. Based on the estimated time between the loss causing event(s) and the date that we charge off the unrecoverable portion of the loan. • Recovery rates. Estimated recovery rates are based on our historical recovery experience by member class calculated by comparing loan balances at the time of default to the total loss recorded on the loan. We have been lending to electric cooperatives since our incorporation in 1969. In addition to the allowance for loan losses for the general portfolio, we maintain a qualitative reserve for the general portfolio based on risk factors not captured in the collective allowance for loan losses. The overriding factor that creates the necessity for this additional component of loan loss reserves not captured in our loan loss model is lag in the timing of receipt of information regarding our borrowers. We actively monitor the operations and financial performance of our borrowers through the review of audited financial statements, review of borrower prepared financial statements (if required) and discussions with borrower management. As a result of the lag, there could be credit events or circumstances that exist with our borrowers for which we have not been made aware that could potentially lead to reassessing/downgrading of certain borrower risk ratings (“BRRs”) to better reflect the risk of default and ultimate loss. Additional qualitative considerations include our expectations with respect to loan workouts, risks associated with large loan exposures and economic and environmental factors. To measure these additional risk factors supporting an additional reserve for the general portfolio, we perform an internal credit risk ratings portfolio stress test quantifying the impact that both upgrades and downgrades in internal credit risk ratings would have on our estimate of losses inherent in the portfolio. Specific Allowance A loan is considered to be impaired when we do not expect to collect all principal and interest payments as scheduled by the original loan terms, other than an insignificant delay or an insignificant shortfall in amount. Factors considered in determining impairment may include, but are not limited to: • the review of the borrower’s audited financial statements and interim financial statements if available, • the borrower’s payment history, • communication with the borrower, • economic conditions in the borrower’s service territory, • pending legal action involving the borrower, • restructure agreements between us and the borrower and • estimates of the value of the borrower’s assets that have been pledged as collateral to secure our loans. We generally measure impairment for individually impaired loans based on the difference between the recorded investment of the loan and the present value of the expected future cash flows discounted at the loan’s effective interest rate. If the loan is collateral dependent, we measure impairment based upon the fair value of the underlying collateral, which we determine based on the current fair value of the collateral less estimated selling costs. Loans are identified as collateral dependent if we believe that collateral is the expected source of repayment. In calculating the impairment on a loan, the estimates of the expected future cash flows or collateral value are the key estimates made by management. Changes in the estimated future cash flows or collateral value affect the amount of the calculated impairment. The change in cash flows required to make the change in the calculated impairment material will be different for each borrower and depend on the period covered, the effective interest rate at the time the loan became impaired and the amount of the loan outstanding. Estimates are not used to determine our investment in the receivables or the discount rate since, in all cases, the investment is equal to the loan balance outstanding at the reporting date, and the discount rate is equal to the effective interest rate on the loan at the time the loan became impaired. We recognize interest income on impaired loans on a case-by-case basis. An impaired loan to a borrower that is nonperforming will typically be placed on nonaccrual status and we will reverse all accrued and unpaid interest. We generally apply all cash received during the nonaccrual period to the reduction of principal, thereby foregoing interest income recognition. Interest income may be recognized on an accrual basis for restructured impaired loans where the borrower is performing and is expected to continue to perform based on agreed-upon terms. All of our restructured loans are troubled debt restructurings. All loans are written off in the period that it becomes evident that collectability is highly unlikely; however, our efforts to recover all charged-off amounts may continue. The determination to write off all or a portion of a loan balance is made based on various factors on a case-by-case basis including, but not limited to, cash flow analysis and the fair value of collateral securing the borrower’s loans. Allowance for Unadvanced Loan Commitments We do not maintain an allowance for the majority of our unadvanced loan commitments as the loans are generally subject to material adverse change clauses that would not require us to lend or continue to lend to a borrower experiencing a material adverse change in their business or condition, financial or otherwise. The methodology used to determine an estimate of probable losses for unadvanced commitments related to committed lines of credit that are not subject to a material adverse change clause at the time of each loan advance is consistent with the methodology used to determine the allowance for loan losses. Due to the nature of unadvanced commitments, the estimate of probable losses also considers the probability of funding such loans based on our historical average utilization rate for committed lines of credit. The allowance for unadvanced commitments is included in the other liabilities line item on the consolidated balance sheet. Changes to the allowance for unadvanced commitments are recorded in the consolidated statement of operations in other non-interest expense. Guarantee Liability We maintain a guarantee liability that represents our contingent and non-contingent exposure related to guarantees and standby liquidity obligations associated with our members’ debt. The guarantee liability is included in the other liabilities line item on the consolidated balance sheet, and the provision for guarantee liability is reported in non-interest expense as a separate line item on the consolidated statement of operations. The contingent portion of the guarantee liability represents management’s estimate of our exposure to losses within the guarantee portfolio. The methodology used to estimate the contingent guarantee liability is consistent with the methodology used to determine the allowance for loan losses. We record a non-contingent guarantee liability for all new or modified guarantees since January 1, 2003. Our non-contingent guarantee liability represents our obligation to stand ready to perform over the term of our guarantees and liquidity obligations that we have entered into or modified since January 1, 2003. Our non-contingent obligation is estimated based on guarantee and liquidity fees charged for guarantees issued, which represents management’s estimate of the fair value of our obligation to stand ready to perform. The fees are deferred and amortized using the straight-line method into interest income over the term of the guarantee. Nonperforming Loans We classify loans as nonperforming when any one of the following criteria is met: • principal or interest payments on any loan to the borrower are past due 90 days or more; • as a result of court proceedings, repayment on the original terms is not anticipated; or • for other reasons, management does not expect the timely repayment of principal and interest. A loan is considered past due if a full payment of principal and interest is not received within 30 days of its due date. Once a borrower is classified as nonperforming, we typically place the loan on nonaccrual status and reverse any accrued and unpaid interest recorded during the period in which the borrower stopped performing. We generally apply all cash received during the nonaccrual period to the reduction of principal, thereby foregoing interest income recognition. The decision to return a loan to accrual status is determined on a case-by-case basis. Fixed Assets Fixed assets are recorded at cost less accumulated depreciation. Depreciation expense ( $6 million , $6 million and $5 million in fiscal years 2015 , 2014 and 2013 , respectively) is computed on the straight-line method over estimated useful lives ranging from 2 to 40 years . CFC owns its headquarters facility in Loudoun County, Virginia, which is included in the building and building equipment balance below. Fixed assets consisted of the following as of May 31, 2015 and 2014 . (Dollars in thousands) 2015 2014 Building and building equipment $ 50,114 $ 50,008 Furniture and fixtures 5,309 5,071 Computer software and hardware 37,516 30,966 Other 968 916 Less: accumulated depreciation (31,268 ) (24,867 ) Land 37,847 37,847 Construction-in-progress and software 10,054 7,129 Fixed assets, net $ 110,540 $ 107,070 Debt Service Reserve Fund As of May 31, 2015 and 2014 , we had $26 million and $39 million , respectively, pledged to the trustee for our members’ obligations to repay tax-exempt bonds, for which we are the guarantor. The member cooperatives are required to purchase debt service reserve subordinated certificates from us as a condition to obtaining the guarantee. We are required to pledge the proceeds from the members’ purchase of the debt service reserve subordinated certificates to the trustee. A deficiency in the fund may occur when (i) the member does not pay the full amount of the periodic debt service payments as due to the trustee or (ii) upon maturity, the trustee uses the amount of the debt service reserve fund to reduce the final payment required by the member. If there is a deficiency in the bond payment due from a member, the trustee will first use the pledged amounts in the related debt service reserve fund to make up the deficiency. If there is still a deficiency after the debt service reserve fund amount is used, then we are required to perform under our guarantee. The member cooperatives are required to make up any deficiency in their specific debt service reserve fund. We record a guarantee liability, which is based on the full amount of the tax-exempt bonds guaranteed. We do not have any additional liability specific to the debt service reserve fund as we have the right at any time to offset the member’s investment in the debt service subordinated certificate against the amount that the member is required to pay to replenish the debt service reserve fund. There were no deficiencies in the debt service reserve fund as of May 31, 2015 and 2014 . Earnings on the debt service reserve fund inure to the benefit of the member cooperatives but are pledged to the trustee and used to reduce the periodic interest payments due from the member cooperatives. During the year ended May 31, 2015 , $14 million of guaranteed bonds requiring a debt service reserve fund were fully repaid, and no new guarantees requiring a debt service reserve fund were made. This resulted in a reduction of $14 million to the debt service reserve fund and member investments in debt service reserve subordinated certificates. During the year ended May 31, 2014 , $1 million guaranteed bonds requiring a debt service reserve fund were fully repaid and no new guarantees requiring a debt service reserve fund were made. This resulted in a reduction of $0.5 million to the debt service reserve fund and member investments in debt service reserve subordinated certificates for the year ended May 31, 2014 . At maturity, the trustee uses the debt service reserve fund to repay the bonds, reducing the amount that the member must pay. The member is obligated to replenish the debt service reserve fund so the trustee can return the pledged funds to us since the guaranteed tax-exempt bonds have been repaid. We offset our requirement to repay the member the amount of the debt service reserve subordinated certificate against our right to collect the amount of the debt service reserve fund from the trustee. As a result, the member’s obligation to replenish the debt service reserve fund is met. The reduction to the debt service reserve fund and the debt service reserve subordinated certificates on our consolidated balance sheet are offsetting and disclosed as a non-cash transaction in the consolidated statement of cash flows. At inception of the guarantee transaction, the trustee sets aside the required debt service reserve fund amount out of the bond proceeds to be held as the asset pledged by CFC. CFC records a liability for the member’s investment in debt service reserve subordinated certificates and records an asset for the debt service reserve fund. Since the trustee holds the cash out of the proceeds, the increase to the debt service reserve fund and increase to the debt service reserve subordinated certificates are disclosed as a non-cash transaction in the consolidated statement of cash flows. Foreclosed Assets Foreclosed assets acquired through our lending activities in satisfaction of indebtedness currently are held in operating entities created and controlled by CFC and reported separately in our consolidated balance sheets under foreclosed assets, net. These assets are initially recorded at estimated fair value as of the date of acquisition. Subsequent to acquisition, foreclosed assets are carried at the lower of the recorded investment or fair value less estimated costs to sell. Fair value of the operating entities is determined based on either a market and income approach or a committed sales price. The results of foreclosed assets and any impairment write-down are recorded in our consolidated results of operations under results of operations of foreclosed assets. Derivative Financial Instruments We are an end user of derivative financial instruments and do not engage in derivative trading. We use derivatives, primarily interest rate swaps and treasury rate locks, to manage interest rate risk. In accordance with the accounting standards for derivatives and hedging activities, we record derivative instruments at fair value as either a derivative asset or derivative liability on our consolidated balance sheets. We report derivative asset and liability amounts on a gross basis based on individual contracts, which does not take into consideration the effects of master netting agreements or collateral netting. Derivatives in a gain position are reported as derivative assets on our consolidated balance sheets, while derivatives in a loss position are reported as derivative liabilities. Accrued interest related to derivatives is reported on our consolidated balance sheets as a component of either accrued interest and other receivables or accrued interest payable. If we do not elect hedge accounting treatment, changes in the fair value of derivative instruments, which consist of periodic derivative cash settlements and derivative forward value amounts, are recognized in our consolidated statements of operations under derivative gains (losses). If we elect hedge accounting treatment for derivatives, we formally document, designate and assess the effectiveness of the hedge relationship. Changes in the fair value of derivatives designated as qualifying fair value hedges are recorded in earnings together with offsetting changes in the fair value of the hedged item and any related ineffectiveness. Changes in the fair value of derivatives designated as qualifying cash flow hedges are recorded as a component of other comprehensive income (“OCI”), to the extent that the hedge relationships are effective, and reclassified from accumulated other comprehensive income (“AOCI”) to earnings using the effective interest method over the term of the forecasted transaction. Any ineffectiveness in the hedging relationship is recognized as a component of derivative gains (losses) in our consolidated statement of operations. We generally do not designate interest rate swaps, which represent the substantial majority of our derivatives, for hedge accounting. Accordingly, changes in the fair value of interest rate swaps are reported in our consolidated statements of operations under derivative gains (losses). Cash settlements related to interest rate swaps are classified as an operating activity in our consolidated statements of cash flows. We typically designate treasury rate locks as cash flow hedges of forecasted debt issuances. Accordingly, changes in the fair value of the derivative instruments are recorded as a component of OCI and reclassified to interest expense when the forecasted transaction occurs using the effective interest method. Any ineffectiveness in the hedging relationship is recognized as a component of derivative gains (losses) in our consolidated statements of operations. We did not have any derivatives designated as accounting hedges as of May 31, 2015 and 2014 . At June 1, 2001, as a result of the adoption of the derivative accounting guidance that required derivatives to be reported at fair value on the balance sheet, we recorded a transition adjustment net loss in AOCI. The transition adjustment net loss is being reclassified into earnings and reported as a component of derivative gains (losses) in our consolidated statements of operations. We expect to continue to reclassify the remaining balance of the transition adjustment into earnings through 2029. Debt Debt securities are reported at cost net of discounts or premiums. Issuance costs on debt and discounts are deferred as per applicable accounting guidance, and amortized as interest expense using the effective interest method or a method approximating the effective interest method over the legal maturity of each bond issue. Issuance costs on dealer commercial paper and medium-term notes are recognized as incurred. Membership Fees Members are charged a one-time membership fee based on member class. CFC distribution system members, power supply system members and national associations of cooperatives pay a $1,000 membership fee. |
Investments
Investments | 12 Months Ended |
May. 31, 2015 | |
Investments [Abstract] | |
Investments | NOTE 2—INVESTMENT SECURITIES The following tables present the amortized cost, gross unrealized gains and losses and fair value of our investment securities, all of which are classified as available for sale, as of May 31, 2015 and 2014 . 2015 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Farmer Mac—Series A Non-Cumulative Preferred Stock $ 30,000 $ 264 $ — $ 30,264 Farmer Mac—Series B Non-Cumulative Preferred Stock 25,000 1,250 — 26,250 Farmer Mac—Series C Non-Cumulative Preferred Stock 25,000 900 — 25,900 Farmer Mac—Class A Common Stock 538 1,520 — 2,058 Total available-for-sale investment securities $ 80,538 $ 3,934 $ — $ 84,472 2014 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Farmer Mac—Series A Non-Cumulative Preferred Stock $ 30,000 $ — $ (2,220 ) $ 27,780 Farmer Mac—Series B Non-Cumulative Preferred Stock 25,000 500 — 25,500 Farmer Mac—Class A Common Stock 538 1,359 — 1,897 Total available-for-sale investment securities $ 55,538 $ 1,859 $ (2,220 ) $ 55,177 We did not have any investment securities in an unrealized loss position as of May 31, 2015 . The gross unrealized loss on our Farmer Mac—Series A Non-Cumulative Preferred Stock of $2 million as of May 31, 2014 was largely attributable to changes in interest rates and not attributable to a deterioration in the credit quality of the issuer. |
Loans and Commitments
Loans and Commitments | 12 Months Ended |
May. 31, 2015 | |
Loans and Leases Receivable Disclosure [Abstract] | |
Loans and Commitments | NOTE 3—LOANS AND COMMITMENTS We are a cost-based lender that offers long-term fixed- and variable-rate loans and line of credit loans. On long-term loans, borrowers choose between a variable interest rate or a fixed interest rate for periods of one to 35 years . When a selected fixed interest rate term expires, the borrower may select another fixed-rate term or the variable rate. Unadvanced commitments are approved and executed loan contracts for which the funds have not yet been advanced. Collateral and security requirements for advances on commitments are identical to those required at the time of the initial loan approval. The outstanding principal balance of loans to members, unadvanced commitments and deferred loan origination costs, by loan type and member class, as of May 31, 2015 and 2014 are presented below. 2015 2014 (Dollars in thousands) Loans Outstanding Unadvanced Commitments (1) Loans Outstanding Unadvanced Commitments (1) Loan type: (2) Long-term fixed-rate loans $ 19,543,274 $ — $ 18,175,656 $ — Long-term variable-rate loans 698,495 4,835,623 753,918 4,710,273 Loans guaranteed by RUS 179,241 — 201,863 — Line of credit loans 1,038,210 9,294,127 1,335,488 9,201,805 Total loans outstanding (3) 21,459,220 14,129,750 20,466,925 13,912,078 Deferred loan origination costs 9,797 — 9,717 — Loans to members $ 21,469,017 $ 14,129,750 $ 20,476,642 $ 13,912,078 Member class: (2) CFC: Distribution $ 16,095,043 $ 9,474,568 $ 15,035,365 $ 9,531,315 Power supply 4,181,481 3,273,501 4,086,163 3,025,423 Statewide and associate 65,466 127,473 67,902 105,961 CFC total 20,341,990 12,875,542 19,189,430 12,662,699 RTFC 385,709 288,810 449,546 304,500 NCSC 731,521 965,398 827,949 944,879 Total loans outstanding $ 21,459,220 $ 14,129,750 $ 20,466,925 $ 13,912,078 ____________________________ (1) The interest rate on unadvanced commitments is not set until drawn, therefore, the long-term unadvanced loan commitments have been classified in this table as variable-rate unadvanced commitments. However, at the time of the advance, the borrower may select a fixed or a variable rate on the new loan. (2) Includes nonperforming and restructured loans. (3) Represents the unpaid principal balance excluding deferred loan origination costs. Unadvanced Loan Commitments A total of $2,765 million and $2,274 million of unadvanced commitments as of May 31, 2015 and 2014 , respectively, represented unadvanced commitments related to committed lines of credit loans that are not subject to a material adverse change clause at the time of each loan advance. As such, we will be required to advance amounts on these committed facilities as long as the borrower is in compliance with the terms and conditions of the facility. The following table summarizes the available balance under unconditional committed lines of credit as of May 31, 2015 and the related maturities by fiscal year as follows: Available Balance Notional Maturities of Unconditional Committed Lines of Credit (Dollars in thousands) 2016 2017 2018 2019 2020 Committed lines of credit $2,764,968 $78,885 $288,752 $800,250 $965,968 $631,113 The remaining unadvanced commitments totaling $11,365 million and $11,638 million as of May 31, 2015 and 2014 , respectively, were generally subject to material adverse change clauses. Prior to making an advance on these facilities, we confirm that there has been no material adverse change in the business or condition, financial or otherwise, of the borrower since the time the loan was approved and confirm that the borrower is currently in compliance with loan terms and conditions. In some cases, the borrower’s access to the full amount of the facility is further constrained by the designated purpose imposition of borrower-specific restrictions, or by additional conditions that must be met prior to advancing funds. The following table summarizes the available balance under unadvanced commitments as of May 31, 2015 and the related maturities by fiscal year and thereafter by loan type: Available Balance Notional Maturities of Unadvanced Commitments (Dollars in thousands) 2016 2017 2018 2019 2020 Thereafter Line of credit loans $ 9,294,127 $ 5,370,133 $ 641,592 $ 1,194,842 $ 1,108,097 $ 802,063 $ 177,400 Long-term loans 4,835,623 862,311 1,046,660 851,338 1,046,234 985,439 43,641 Total $ 14,129,750 $ 6,232,444 $ 1,688,252 $ 2,046,180 $ 2,154,331 $ 1,787,502 $ 221,041 Unadvanced commitments related to line of credit loans are typically for periods not to exceed five years and are generally revolving facilities used for working capital and backup liquidity purposes. Historically, we have experienced a very low utilization rate on line of credit loan facilities, whether or not there is a material adverse change clause. Since we generally do not charge a fee on the unadvanced portion of the majority of our loan facilities, our borrowers will typically request long-term facilities to cover maintenance and capital expenditure work plans for periods of up to five years and draw down on the facility over that time. In addition, borrowers will typically request an amount in excess of their immediate estimated loan requirements to avoid the expense related to seeking additional loan funding for unexpected items. These factors contribute to our expectation that the majority of the unadvanced commitments will expire without being fully drawn upon and that the total unadvanced amount does not necessarily represent future cash funding requirements. Loan Sales We account for the transfer of loans resulting from direct loan sales to third parties by removing the loans from our consolidated balance sheets when control has been surrendered. We retain the servicing performance obligations on these loans and recognize related servicing fees on an accrual basis over the period for which servicing activity is provided. Because the loans are sold at par, we record immaterial losses on the sale of these loans for unamortized deferred loan origination costs. We do not hold any continuing interest in the loans sold to date other than servicing performance obligations. We have no obligation to repurchase loans from the purchaser, except in the case of breaches of representations and warranties. During the years ended May 31, 2015, 2014 and 2013 , we sold CFC loans with outstanding balances totaling $26 million , $111 million and $149 million , respectively, at par for cash. During the years ended May 31, 2015, 2014 and 2013 , we recognized $3 million in servicing fees on direct loan sales. Payment Status of Loans The tables below show an analysis of the age of the recorded investment in loans outstanding by member class as of May 31, 2015 and 2014 . 2015 (Dollars in thousands) Current 30-89 Days Past Due 90 Days or More Past Due (1) Total Past Due Total Financing Receivables Nonaccrual Loans CFC: Distribution $ 16,095,043 $ — $ — $ — $ 16,095,043 $ 7,221 Power supply 4,181,481 — — — 4,181,481 — Statewide and associate 65,466 — — — 65,466 — CFC total 20,341,990 — — — 20,341,990 7,221 RTFC 385,709 — — — 385,709 4,221 NCSC 731,521 — — — 731,521 294 Total loans outstanding $ 21,459,220 $ — $ — $ — $ 21,459,220 $ 11,736 As a % of total loans 100.00 % — % — % — % 100.00 % 0.05 % 2014 (Dollars in thousands) Current 30-89 Days Past Due 90 Days or More Past Due (1) Total Total Financing Nonaccrual Loans CFC: Distribution $ 15,035,365 $ — $ — $ — $ 15,035,365 $ 7,584 Power supply 4,086,163 — — — 4,086,163 — Statewide and associate 67,902 — — — 67,902 — CFC total 19,189,430 — — — 19,189,430 7,584 RTFC 449,546 — — — 449,546 1,695 NCSC 827,949 — — — 827,949 400 Total loans outstanding $ 20,466,925 $ — $ — $ — $ 20,466,925 $ 9,679 As a % of total loans 100.00 % — % — % — % 100.00 % 0.05 % ____________________________ (1) All loans 90 days or more past due are on nonaccrual status. Credit Quality We monitor the credit quality and performance statistics of our financing receivables in an ongoing manner to provide a balance between the credit needs of our members and the requirements for sound credit quality of the loan portfolio. We evaluate the credit quality of our loans using an internal risk rating system that employs similar criteria for all member classes. Our internal risk rating system is based on a determination of a borrower’s risk of default utilizing both quantitative and qualitative measurements. We have grouped our risk ratings into the categories of pass and criticized based on the criteria below. (i) Pass: Borrowers that are not experiencing difficulty and/or not showing a potential or well-defined credit weakness. (ii) Criticized: Includes borrowers categorized as special mention, substandard and doubtful as described below: • Special mention: Borrowers that may be characterized by a potential credit weakness or deteriorating financial condition that is not sufficiently serious to warrant a classification of substandard or doubtful. • Substandard: Borrowers that display a well-defined credit weakness that may jeopardize the full collection of principal and interest. • Doubtful: Borrowers that have a well-defined weakness and the full collection of principal and interest is questionable or improbable. Borrowers included in the pass, special mention, and substandard categories are generally reflected in the general portfolio of loans. Borrowers included in the doubtful category are reflected in the impaired portfolio of loans. Each risk rating is reassessed annually based on the receipt of the borrower’s audited financial statements; however, interim downgrades and upgrades may take place at any time as significant events or trends occur. The following table presents our loan portfolio by risk rating category and member class based on available data as of May 31, 2015 and 2014 . 2015 2014 (Dollars in thousands) Pass Criticized Total Pass Criticized Total CFC: Distribution $ 16,062,516 $ 32,527 $ 16,095,043 $ 15,018,642 $ 16,723 $ 15,035,365 Power supply 4,181,481 — 4,181,481 4,086,163 — 4,086,163 Statewide and associate 65,200 266 65,466 67,625 277 67,902 CFC total 20,309,197 32,793 20,341,990 19,172,430 17,000 19,189,430 RTFC 373,087 12,622 385,709 447,851 1,695 449,546 NCSC 727,159 4,362 731,521 825,736 2,213 827,949 Total loans outstanding $ 21,409,443 $ 49,777 $ 21,459,220 $ 20,446,017 $ 20,908 $ 20,466,925 Credit Concentration The service territories of our electric and telecommunications members are located throughout the United States and its territories, including 49 states, the District of Columbia, American Samoa and Guam. As of May 31, 2015 and 2014 , loans outstanding to borrowers in any state or territory did not exceed 15% and 16% , respectively, of total loans outstanding. CFC, RTFC and NCSC each have policies limiting the amount of credit that can be extended to individual borrowers or a controlled group of borrowers. As of both May 31, 2015 and 2014 , the total exposure outstanding to any one borrower or controlled group represented approximately 2% of total loans and guarantees outstanding. As of May 31, 2015 , the 20 largest borrowers included 12 distribution systems and 8 power supply systems. As of May 31, 2014 , the 20 largest borrowers included 11 distribution systems and 9 power supply systems.The following table shows the exposure to the 20 largest borrowers as a percentage of total credit exposure broken down by exposure type and by borrower type as of May 31, 2015 and 2014 . 2015 2014 (Dollars in thousands) Amount % Amount % Total by type: Loans $ 5,478,977 24 % $ 5,070,799 24 % Guarantees 374,189 2 555,818 2 Total credit exposure to 20 largest borrowers $ 5,853,166 26 % $ 5,626,617 26 % Company: CFC $ 5,837,463 26 % $ 5,328,333 25 % NCSC 15,703 — 298,284 1 Total credit exposure to 20 largest borrowers $ 5,853,166 26 % $ 5,626,617 26 % Allowance for Loan Losses We maintain an allowance for loan losses at a level estimated by management to provide for probable losses inherent in the loan portfolio as of each balance sheet date. The tables below summarize changes, by company, in the allowance for loan losses as of and for the years ended May 31, 2015, 2014 and 2013 . 2015 (Dollars in thousands) CFC RTFC NCSC Total Balance as of May 31, 2014 $ 45,600 $ 4,282 $ 6,547 $ 56,429 Provision for loan losses (22,098 ) 1,250 (1,106 ) (21,954 ) Charge-offs — (999 ) — (999 ) Recoveries 214 — — 214 Balance as of May 31, 2015 $ 23,716 $ 4,533 $ 5,441 $ 33,690 2014 (Dollars in thousands) CFC RTFC NCSC Total Balance as of May 31, 2013 $ 41,246 $ 9,158 $ 3,921 $ 54,325 Provision for loan losses 4,142 (3,270 ) 2,626 3,498 Charge-offs — (1,606 ) — (1,606 ) Recoveries 212 — — 212 Balance as of May 31, 2014 $ 45,600 $ 4,282 $ 6,547 $ 56,429 2013 (Dollars in thousands) CFC RTFC NCSC Total Balance as of May 31, 2012 $ 126,941 $ 8,562 $ 7,823 $ 143,326 Provision for loan losses (66,785 ) 596 (3,902 ) (70,091 ) Charge-offs (19,122 ) — — (19,122 ) Recoveries 212 — — 212 Balance as of May 31, 2013 $ 41,246 $ 9,158 $ 3,921 $ 54,325 Our allowance for loan losses consists of a specific allowance for loans individually evaluated for impairment and a collective allowance for loans collectively evaluated for impairment. The tables below present, by company, the components of our allowance for loan losses and the recorded investment of the related loans as of May 31, 2015 and 2014 . 2015 (Dollars in thousands) CFC RTFC NCSC Total Ending balance of the allowance: Collectively evaluated $ 23,716 $ 4,138 $ 5,441 $ 33,295 Individually evaluated — 395 — 395 Total ending balance of the allowance $ 23,716 $ 4,533 $ 5,441 $ 33,690 Recorded investment in loans: Collectively evaluated $ 20,334,769 $ 381,488 $ 731,227 $ 21,447,484 Individually evaluated 7,221 4,221 294 11,736 Total recorded investment in loans $ 20,341,990 $ 385,709 $ 731,521 $ 21,459,220 Loans to members, net (1) $ 20,318,274 $ 381,176 $ 726,080 $ 21,425,530 2014 (Dollars in thousands) CFC RTFC NCSC Total Ending balance of the allowance: Collectively evaluated $ 45,600 $ 3,876 $ 6,527 $ 56,003 Individually evaluated — 406 20 426 Total ending balance of the allowance $ 45,600 $ 4,282 $ 6,547 $ 56,429 Recorded investment in loans: Collectively evaluated $ 19,181,846 $ 447,851 $ 827,549 $ 20,457,246 Individually evaluated 7,584 1,695 400 9,679 Total recorded investment in loans $ 19,189,430 $ 449,546 $ 827,949 $ 20,466,925 Loans to members, net (1) $ 19,143,830 $ 445,264 $ 821,402 $ 20,410,496 ___________________________ (1) Excludes deferred origination costs of $10 million as of May 31, 2015 and 2014 . Impaired Loans Our recorded investment in individually-impaired loans, which consists of the unpaid principal balance, and the related specific valuation allowance, by member class, as of May 31, 2015 and 2014 are summarized below. 2015 2014 (Dollars in thousands) Recorded Investment Related Allowance Recorded Investment Related Allowance With no specific allowance recorded: CFC/Distribution $ 7,221 $ — $ 7,584 $ — NCSC 294 — — — Total 7,515 — 7,584 — With a specific allowance recorded: NCSC — — 400 20 RTFC 4,221 395 1,695 406 Total 4,221 395 2,095 426 Total impaired loans $ 11,736 $ 395 $ 9,679 $ 426 The table below represents the average recorded investment in impaired loans and the interest income recognized by member class for the years ended May 31, 2015, 2014 and 2013 . Average Recorded Investment Interest Income Recognized (Dollars in thousands) 2015 2014 2013 2015 2014 2013 CFC/Distribution $ 7,312 $ 10,850 $ 171,928 $ — $ 136 $ 13,956 CFC/Power Supply — 4,250 5,000 — 5 — NCSC 325 218 — 15 7 — RTFC 1,438 6,235 6,942 — 224 — Total impaired loans $ 9,075 $ 21,553 $ 183,870 $ 15 $ 372 $ 13,956 Nonperforming and Restructured Loans Nonperforming and restructured loans outstanding and unadvanced commitments to members are summarized as follows by loan type and by company as of May 31, 2015 and 2014 . 2015 2014 (Dollars in thousands) Loans Outstanding Unadvanced Commitments (1) Loans Outstanding Unadvanced Commitments (1) Nonperforming and restructured loans: Nonperforming loans: RTFC: Long-term variable-rate loans $ — $ — $ 1,695 $ — NCSC: Line of credit loans — — 400 — Total nonperforming loans $ — $ — $ 2,095 $ — Restructured loans: CFC: Long-term fixed-rate loans (2) $ 7,221 $ — $ 7,584 $ — RTFC: Long-term variable-rate loans 4,221 — — — NCSC: Line of credit loans 294 — — — Total restructured loans $ 11,736 $ — $ 7,584 $ — ___________________________ (1) The interest rate on unadvanced commitments is not set until drawn, therefore, the long-term unadvanced loan commitments have been classified in this table as variable-rate unadvanced commitments. However, at the time of the advance, the borrower may select a fixed or a variable rate on the new loan. (2) A borrower in this category also had a line of credit loan outstanding that was classified as performing as of May 31, 2015 and 2014 . Unadvanced commitments related to this line of credit loan totaled $2 million and $3 million as of May 31, 2015 and 2014 , respectively. The following table shows foregone interest income as a result of holding loans on nonaccrual status as of each of the years ended May 31, 2015, 2014 and 2013 . (Dollars in thousands) 2015 2014 2013 Nonperforming loans $ 123 $ 314 $ 597 Restructured loans 532 488 341 Total $ 655 $ 802 $ 938 As of May 31, 2015 , we had no loans classified as nonperforming. As of May 31, 2014 , nonperforming loans totaled $2 million or 0.01% , of loans outstanding. As of May 31, 2015 and 2014 , we had restructured loans totaling $12 million , or 0.05% , of loans outstanding and $8 million , or 0.04% , of loans outstanding, respectively, all of which were performing according to their restructured terms. Interest income recognized on restructured loans was less than $1 million during the years ended May 31, 2015 and 2014 . We believe our allowance for loan losses was appropriate to cover the losses inherent in our loan portfolio as of May 31, 2015 . Pledging of Loans and Loans on Deposit We are required to pledge eligible mortgage notes in an amount at least equal to the outstanding balance of our secured debt. The following table summarizes our loans outstanding as collateral pledged to secure our collateral trust bonds, Clean Renewable Energy Bonds and notes payable to Farmer Mac and the amount of the corresponding debt outstanding as of May 31, 2015 and 2014 . See “Note 5—Short-Term Debt and Credit Arrangements” and “Note 6—Long-Term Debt” for information on our borrowings. (Dollars in thousands) 2015 2014 Collateral trust bonds: 2007 indenture: Distribution system mortgage notes $ 6,551,836 $ 5,987,767 RUS guaranteed loans qualifying as permitted investments 156,665 161,372 Total pledged collateral $ 6,708,501 $ 6,149,139 Collateral trust bonds outstanding 6,197,711 5,397,711 1994 indenture: Distribution system mortgage notes $ 905,656 $ 1,005,058 Collateral trust bonds outstanding 855,000 860,000 Farmer Mac: Distribution and power supply system mortgage notes $ 2,160,805 $ 1,907,607 Notes payable outstanding 1,910,688 1,667,505 Clean Renewable Energy Bonds Series 2009A: Distribution and power supply system mortgage notes $ 19,260 $ 21,398 Cash 485 520 Total pledged collateral $ 19,745 $ 21,918 Notes payable outstanding 16,529 18,230 We are required to maintain collateral on deposit in an amount at least equal to the balance of debt outstanding to the Federal Financing Bank (“FFB”) of the United States Treasury issued under the Guaranteed Underwriter Program of the USDA (the “Guaranteed Underwriter Program”). See “Note 5—Short-Term Debt and Credit Arrangements” and “Note 6—Long-Term Debt”. The following table shows the collateral on deposit and the amount of the corresponding debt outstanding as of May 31, 2015 and 2014 . (Dollars in thousands) 2015 2014 FFB: Distribution and power supply system mortgage notes on deposit $ 4,943,746 $ 5,076,428 Notes payable outstanding 4,406,785 4,299,000 The $4,407 million and $4,299 million of notes payable to the FFB as of May 31, 2015 and 2014 , respectively, contain a rating trigger related to our senior secured credit ratings from Standard & Poor’s Corporation (“S&P”), Moody’s Investors Service (“Moody’s”) and Fitch Ratings (“Fitch”). A rating trigger event exists if our senior secured debt does not have at least two of the following ratings: (i) A- or higher from S&P, (ii) A3 or higher from Moody’s, (iii) A- or higher from Fitch or (iv) an equivalent rating from a successor rating agency to any of the above rating agencies. If our senior secured credit ratings fall below the levels listed above, the mortgage notes on deposit at that time, which totaled $4,944 million as of May 31, 2015 , would be pledged as collateral rather than held on deposit. Also, if during any portion of a fiscal year, our senior secured credit ratings fall below the levels listed above, we may not make cash patronage capital distributions in excess of 5% of total patronage capital. As of May 31, 2015 , our senior secured debt ratings from S&P, Moody’s and Fitch were A, A1 and A+, respectively. As of May 31, 2015 , all three companies had our ratings on stable outlook. Subsequent to May 31, 2015 , on July 6, 2015, S&P revised its outlook of CFC to negative. A total of $4,407 million and $4,299 million of these notes payable to the FFB as of May 31, 2015 and 2014 , respectively, have a second trigger requiring that a director on the CFC Board of Directors satisfies the requirements of a financial expert as defined by Section 407 of the Sarbanes-Oxley Act of 2002. A financial expert triggering event will occur if the financial expert position remains vacant for more than 90 consecutive days. If CFC does not satisfy the financial expert requirement, the mortgage notes on deposit at that time, which totaled $4,944 million as of May 31, 2015 , would be pledged as collateral rather than held on deposit. The financial expert position on the CFC Board of Directors has been filled since March 2007. |
Foreclosed Assets
Foreclosed Assets | 12 Months Ended |
May. 31, 2015 | |
Repossessed Assets [Abstract] | |
Foreclosed Assets | NOTE 4—FORECLOSED ASSETS Foreclosed asset activity as of and for the year ended May 31, 2015 is summarized below. 2015 (Dollars in thousands) CAH DRP Total Balance as of beginning of period $ 239,119 $ 6,532 $ 245,651 Results of operations (9,677 ) 244 (9,433 ) Impairment (110,715 ) — (110,715 ) Results of operations of foreclosed assets (120,392 ) 244 (120,148 ) Other comprehensive loss (1,938 ) — (1,938 ) Net cash proceeds (282 ) (6,776 ) (7,058 ) Balance as of end of period $ 116,507 $ — $ 116,507 CAH We recorded an initial investment in CAH of $254 million upon the completion of transfer of control of the U.S. Virgin Islands, British Virgin Islands and St. Maarten-based operating businesses of Innovative Communication Corporation (“ICC”) to CAH in October 2010 and March 2011. As a result of certain events and developments during fiscal year 2015 , the estimated CAH fair value was reduced below the carrying value, resulting in the recognition of an impairment charge of $111 million , of which $27 million was recorded in the second quarter and $84 million was recorded in the fourth quarter, which, together with CAH’s operating losses, resulted in a reduction in CAH’s carrying value to $117 million as of May 31, 2015 , from $239 million as of May 31, 2014 . When we acquired CAH through foreclosure and bankruptcy in 2010 and 2011, our intent was to make the necessary investments to allow CAH to upgrade its infrastructure and technology and increase its customer base in order to position the company for sale. By the middle of fiscal year 2015, the program to update CAH’s network infrastructure was substantially completed, enabling the company to market enhanced services and transition existing customers to the new infrastructure. However, CAH experienced less than expected subscriber growth and lower than anticipated customer migration rates to its new network and Internet services, resulting in a revision to its forecasted revenues. In addition, the economic recovery in the service area has lagged improvements in the overall U.S. recovery and is slower than previously expected. After taking these multiple factors into consideration, we concluded that a triggering event had occurred requiring us to conduct an interim impairment test to evaluate certain CAH tangible and intangible assets for impairment and assess whether the estimated fair value of CAH was less than our carrying value. As a result of the aforementioned events, CAH cash flow forecasts utilized in the interim impairment test were lowered to reflect reduced revenues. To assess goodwill impairment, we estimated the fair value of CAH based on a market approach and an income approach (discounted cash flow method), both of which require significant judgment. In applying these approaches, we relied on a number of factors, including actual operating results, an updated cash flow forecast based on the developments during the quarter and future business plans, revised economic projections and market data. We also considered recent transaction activity and market multiples for the telecommunications industry. Based on our assessment, we recognized impairment on certain tangible assets, identifiable intangible assets and goodwill of $27 million during the second quarter of fiscal year 2015. During the third quarter of fiscal 2015, following the completion of CAH’s infrastructure upgrade, we engaged in a formal process to initiate the sale of CAH. We retained a third-party consulting firm to manage the process, including identifying potential buyers and assisting with performing due diligence on the interested parties. CAH received non-binding indicators of interest (“IOI”) from multiple parties, including both strategic and financial buyers, for all or certain of CAH’s businesses. The interested parties were requested to include an approximate offering price range and information about the availability of funds and sources of financing for the transaction in their IOI. As of February 28, 2015, our carrying value of CAH fell within the range of the initial offering prices. Therefore, we concluded that there were no indicators of impairment of CAH as of the end of the third quarter. As the prospective purchasers performed further due diligence, the pool of potential buyers was narrowed, and, on June 26, 2015, CFC and CAH executed a non-binding letter of intent (“LOI”) to dispose of the telecommunications and cable television operations held by operating subsidiaries of CAH. The terms of the LOI, which assume a debt-free, cash-free transaction, together with our estimated costs to sell, resulted in an additional impairment charge of $84 million in the fourth quarter of fiscal year 2015, which reduced our carrying value of CAH to $117 million as of May 31, 2015 . The costs to sell include estimated legal and other transaction-related costs of approximately $3 million . The impairment charges contributed to a decrease in CAH’s total assets, which consisted primarily of property, plant and equipment and goodwill and other intangible assets, to $173 million as of May 31, 2015 , from $295 million as of May 31, 2014 . CAH had total liabilities of $239 million and $236 million as of May 31, 2015 and 2014 , respectively, and an equity deficit of $66 million and equity of $59 million , respectively. CAH’s total liabilities included loans and interest payable to CFC, which are eliminated in consolidation, of $185 million and $180 million as of May 31, 2015 and 2014 , respectively. DRP During the fourth quarter of the year ended May 31, 2015 , all of DRP’s remaining assets were sold. As such, our carrying value decreased to $0 as of May 31, 2015 , from $7 million as of May 31, 2014 . The decrease was due to the sale of DRP’s interest in bond reimbursement receivables and real estate properties throughout fiscal year 2015 for which we received proceeds of approximately $7 million . |
Short-Term Debt and Credit Arra
Short-Term Debt and Credit Arrangements | 12 Months Ended |
May. 31, 2015 | |
Debt Disclosure [Abstract] | |
Short-Term Debt and Credit Arrangements | NOTE 5—SHORT-TERM DEBT AND CREDIT ARRANGEMENTS The following is a summary of short-term debt outstanding and the weighted-average interest rates as of May 31, 2015 and 2014 . 2015 2014 (Dollars in thousands) Debt Outstanding Weighted- Average Interest Rate Debt Outstanding Weighted-Average Interest Rate Short-term debt: Commercial paper sold through dealers, net of discounts (1) $ 984,954 0.15 % $ 1,973,557 0.14 % Commercial paper sold directly to members, at par (1)(2) 736,162 0.15 858,389 0.13 Select notes 671,635 0.29 548,610 0.27 Daily liquidity fund notes 509,131 0.08 486,501 0.06 Bank bid notes — — 20,000 0.60 Medium-term notes sold to members 225,872 0.65 212,274 0.63 Total short-term debt $ 3,127,754 0.20 $ 4,099,331 0.17 ___________________________ (1) Backup liquidity is provided by our revolving credit agreements. (2) Includes commercial paper sold directly to associates and affiliates. We issue commercial paper for periods of one to 270 days . We also issue select notes for periods ranging from 30 to 270 days , which are unsecured obligations that do not require backup bank lines of credit for liquidity purposes. These notes require a larger minimum investment than our commercial paper sold to members and as a result, offer a higher interest rate than our commercial paper. We also issue daily liquidity fund notes, which are unsecured obligations that do not require backup bank lines of credit for liquidity purposes. We also enter into short-term bank bid note agreements, which are unsecured obligations that do not require backup bank lines of credit for liquidity purposes. We do not pay a commitment fee for bank bid notes. The commitments are generally subject to termination at the discretion of the individual banks. We also issue medium-term notes, which represent unsecured obligations that may be issued through dealers in the capital markets or directly to our members. As indicated in “Note 1—Summary of Significant Accounting Policies,” effective August 31, 2014, we began classifying debt as either short-term or long-term based on the original contractual maturity at issuance. For reporting periods prior to August 31, 2014, we reported long-term debt maturing within one year as part of our short-term debt. The amount reclassified from short-term debt to long-term debt as of May 31, 2014 was $1,300 million . Revolving Credit Agreements As of May 31, 2015 and 2014 , we had $3,420 million and $3,226 million , respectively, of commitments under revolving credit agreements. We had the ability to request up to $150 million of letters of credit under each agreement in place as of May 31, 2015 , which would then reduce the amount available under the facility. The following table presents the total available and the outstanding letters of credit under our revolving credit agreements as of May 31, 2015 and 2014 . Total Available Letters of Credit Outstanding (Dollars in thousands) 2015 2014 2015 2014 Maturity Annual Facility Fee (1) Three-year agreement $ 1,719,855 $ — $ 145 $ — October 28, 2017 7.5 basis points Five-year agreement 1,699,000 — 1,000 — October 28, 2019 10 basis points Three-year agreement — 1,036,000 — — October 28, 2016 10 basis points Four-year agreement — 1,122,500 — — October 28, 2017 10 basis points Five-year agreement — 1,065,609 — 1,891 October 28, 2018 10 basis points Total $ 3,418,855 $ 3,224,109 $ 1,145 $ 1,891 ___________________________ (1) Facility fee determined by CFC’s senior unsecured credit ratings based on the pricing schedules put in place at the inception of the related agreement. On October 28, 2014, we amended the $1,123 million four-year and $1,068 million five-year revolving credit agreements to increase the total aggregate amount of commitments under the four-year and five-year agreements to $1,720 million and $1,700 million, respectively, and to extend the commitment termination date for the five-year agreement to October 28, 2019. Also, on October 28, 2014, we terminated the existing $1,036 million three-year revolving credit agreement that was scheduled to mature on October 28, 2016. The facility fee and applicable margin under each agreement are determined by the pricing matrices in the agreements based on our senior unsecured credit ratings. With respect to the borrowings, we have the right to choose between a (i) Eurodollar rate plus an applicable margin or (ii) base rate calculated based on the greater of prime rate, the federal funds effective rate plus 0.50% or the one-month LIBOR rate plus 1% , plus an applicable margin. Our ability to borrow or obtain a letter of credit under all of the agreements is not conditioned on the absence of material adverse changes with regard to CFC. We also have the right, subject to certain terms and conditions, to increase the aggregate amount of the commitments under each of the three-year credit facility and the five-year credit facility to a maximum of $2,200 million . For calculating the required financial covenants in our revolving credit agreements, we adjust net income, senior debt and total equity to exclude the non-cash adjustments from the accounting for derivative financial instruments and foreign currency translation. Additionally, the times interest earned ratio (“TIER”) and senior debt to total equity ratio include the following adjustments: • The adjusted TIER, as defined by the agreements, represents the interest expense adjusted to include the derivative cash settlements plus net income prior to the cumulative effect of change in accounting principle and dividing that total by the interest expense adjusted to include the derivative cash settlements. • The senior debt to total equity ratio includes adjustments to senior debt to exclude RUS-guaranteed loans, subordinated deferrable debt and members’ subordinated certificates. Total equity is adjusted to include subordinated deferrable debt and members’ subordinated certificates. Senior debt includes guarantees; however, it excludes: ◦ guarantees for members where the long-term unsecured debt of the member is rated at least BBB+ by S&P or Baa1 by Moody’s; and ◦ the payment of principal and interest by the member on the guaranteed indebtedness if covered by insurance or reinsurance provided by an insurer having an insurance financial strength rating of AAA by S&P Corporation or a financial strength rating of Aaa by Moody’s. • The CAH results of operations and other comprehensive income are eliminated from the CFC financial results used to calculate both the adjusted TIER ratio and the senior debt-to-equity ratio. The following represents our required and actual financial ratios under the revolving credit agreements at or for the years ended May 31, 2015 and 2014 . Actual Requirement 2015 2014 Minimum average adjusted TIER over the six most recent fiscal quarters (1) 1.025 1.28 1.28 Minimum adjusted TIER for the most recent fiscal year (1) (2) 1.05 1.30 1.23 Maximum ratio of adjusted senior debt to total equity (1) 10.00 5.93 5.79 ___________________________ (1) In addition to the adjustments made to the leverage ratio set forth in “Item 7. MD&A—Non-GAAP Financial Measures,” senior debt excludes guarantees to member systems that have certain investment-grade ratings by Moody’s and S&P. The TIER and debt-to-equity calculations include the adjustments set forth in “Item 7. MD&A—Non-GAAP Financial Measures” and exclude the results of operations and other comprehensive income for CAH. (2) We must meet this requirement to retire patronage capital. As of May 31, 2015 and 2014 , we were in compliance with all covenants and conditions under our revolving credit agreements and there were no borrowings outstanding under these agreements. |
Long-Term Debt
Long-Term Debt | 12 Months Ended |
May. 31, 2015 | |
Debt Instruments [Abstract] | |
Long-Term Debt | NOTE 6—LONG-TERM DEBT The following is a summary of long-term debt outstanding and the weighted-average interest rates as of May 31, 2015 and 2014 . 2015 2014 (Dollars in thousands) Maturity Date (1) Interest Rate Debt Outstanding Weighted-Average Interest Rate Debt Outstanding Weighted-Average Interest Rate Unsecured long-term debt: Medium-term notes sold through dealers 2015 - 2032 0.53% - 8.00% $ 2,749,894 2.55 % $ 2,228,459 2.68 % Medium-term notes sold to members 2015 - 2032 0.65% - 8.82% 392,298 1.44 285,988 1.82 Subtotal medium-term notes 3,142,192 2.41 2,514,447 2.58 Unamortized discount (706 ) (418 ) Total unsecured medium-term notes 3,141,486 2,514,029 Guaranteed Underwriter Program notes payable 2025 - 2035 1.22% - 5.40% 4,406,785 3.14 4,299,000 3.15 Other unsecured notes payable 2022 - 2023 0% -9.07% 31,168 4.07 35,075 4.14 Subtotal unsecured notes payable 4,437,953 3.15 4,334,075 3.16 Unamortized discount (626 ) (770 ) Total unsecured notes payable 4,437,327 4,333,305 Total unsecured long-term debt 7,578,813 2.84 6,847,334 2.95 Secured long-term debt: Collateral trust bonds 2015 - 2032 1.10% - 10.38% 7,052,711 4.48 6,257,711 4.65 Unamortized discount (271,201 ) (277,496 ) Total collateral trust bonds 6,781,510 5,980,215 Farmer Mac notes payable 2018 - 2045 0.61% - 1.03% 1,910,688 0.77 1,667,505 1.15 Other secured notes payable 2024 2.48% - 3.31% 16,529 2.91 18,230 2.94 Total secured notes payable 1,927,217 0.79 1,685,735 1.16 Total secured long-term debt 8,708,727 3.69 7,665,950 3.91 Total long-term debt $ 16,287,540 3.30 $ 14,513,284 3.47 ___________________________ (1) Maturity date is based on calendar year. The amount of long-term debt maturing in each of the five fiscal years subsequent to May 31, 2015 and thereafter is presented in the table below. (Dollars in thousands) Amount Maturing Weighted-Average Interest Rate 2016 $ 1,690,286 2.12 % 2017 2,060,130 2.19 2018 980,881 4.20 2019 1,821,542 6.91 2020 937,252 2.12 Thereafter 8,797,449 3.07 Total $ 16,287,540 3.30 Medium-Term Notes Medium-term notes represent unsecured obligations that may be issued through dealers in the capital markets or directly to our members. Collateral Trust Bonds Collateral trust bonds represent secured obligations sold to investors in the capital markets. Collateral trust bonds are secured by the pledge of mortgage notes or eligible securities in an amount at least equal to the principal balance of the bonds outstanding. During the year ended May 31, 2015 , we issued a total of $1,200 million collateral trust bonds with an average coupon of 2.43% and maturities ranging between 2019 and 2025. On December 1, 2014, we redeemed $400 million of 1.00% collateral trust bonds due February 2, 2015. The premium and unamortized issuance costs totaling $1 million were recorded as a loss on early extinguishment of debt during the third quarter of fiscal year 2015. Unsecured Notes Payable As of May 31, 2015 and 2014 , we had unsecured notes payable totaling $4,407 million and $4,299 million , respectively, outstanding under bond purchase agreements with the FFB and a bond guarantee agreement with RUS issued under the Guaranteed Underwriter Program, which provides guarantees to the FFB. We pay RUS a fee of 30 basis points per year on the total amount borrowed. As of May 31, 2015 , $4,407 million of unsecured notes payable outstanding under the Guaranteed Underwriter Program require us to place mortgage notes on deposit in an amount at least equal to the principal balance of the notes outstanding. See “Note 3—Loans and Commitments” for additional information on the mortgage notes held on deposit and the triggering events that result in these mortgage notes becoming pledged as collateral. During the year ended May 31, 2015 , we borrowed $124 million under our committed loan facilities with the FFB. On November 18, 2014, we closed on a commitment from RUS to guarantee a loan from the FFB for additional funding of $250 million as part of the Guaranteed Underwriter Program. As a result, we will have an additional $250 million available under FFB loan facilities with a 20 -year maturity repayment period for advances made through October 15, 2017. As of May 31, 2015 , we had up to $750 million available under committed loan facilities from the FFB as part of this program. On July 31, 2015, we borrowed $250 million under the Guaranteed Underwriter Program. We are required to maintain collateral on deposit in an amount at least equal to the balance of debt outstanding to the FFB under this program. Secured Notes Payable As of May 31, 2015 and 2014 , secured notes payable include $1,911 million and $1,668 million , respectively, in debt outstanding to Farmer Mac under a note purchase agreement totaling $4,500 million and $3,900 million , respectively. On January 8, 2015, the commitment amount under the Farmer Mac note purchase agreement was increased by $600 million to $4,500 million , and the draw period was extended by four years to January 11, 2020. Under the terms of the note purchase agreement in place as of May 31, 2015 , we could borrow up to $4,500 million at any time through January 11, 2020, and thereafter automatically extend the agreement on each anniversary date of the closing for an additional year, unless prior to any such anniversary date, Farmer Mac provided CFC with a notice that the draw period would not be extended beyond the remaining term. During the year ended May 31, 2015 , we borrowed a total of $480 million under the note purchase agreement with Farmer Mac. On July 7, 2015, we borrowed $180 million under the note purchase agreement with Farmer Mac and on July 31, 2015, we entered into a new revolving note purchase agreement with Farmer Mac for an additional $300 million . The agreement with the Farmer Mac is a revolving credit facility that allows us to borrow, repay and re-borrow funds at any time through maturity or from time to time as market conditions permit, provided that the principal amount at any time outstanding under the note purchase agreement is not more than the total available under the agreement. We are required to pledge eligible distribution system or power supply system loans as collateral in an amount at least equal to the total principal amount of notes outstanding under the agreement. See “Note 3—Loans and Commitments” for additional information on the collateral pledged to secure notes payable under these programs. As of May 31, 2015 and 2014 , we were in compliance with all covenants and conditions under our senior debt indentures. |
Subordinated Deferrable Debt
Subordinated Deferrable Debt | 12 Months Ended |
May. 31, 2015 | |
Subordinated Debt [Abstract] | |
Subordinated Deferrable Debt | NOTE 7—SUBORDINATED DEFERRABLE DEBT Subordinated deferrable debt is long-term debt that is subordinated to our outstanding debt and senior to subordinated certificates held by our members. Our 4.75% subordinated debt due 2043 was issued for a term of up to 30 years , pays interest semi-annually, may be called at par after ten years , converts to a variable rate after ten years, and allows us to defer the payment of interest for one or more consecutive interest periods not exceeding five consecutive years. To date, we have not exercised our right to defer interest payments. As of May 31, 2015 and 2014 , we had $400 million of 4.75% subordinated deferrable debt outstanding due 2043. Subordinated deferrable debt currently outstanding is callable at par on or after April 30, 2023. |
Members' Subordinated Certifica
Members' Subordinated Certificates | 12 Months Ended |
May. 31, 2015 | |
Members' subordinated certificates | |
Members' Subordinated Certificates | NOTE 7—SUBORDINATED DEFERRABLE DEBT Subordinated deferrable debt is long-term debt that is subordinated to our outstanding debt and senior to subordinated certificates held by our members. Our 4.75% subordinated debt due 2043 was issued for a term of up to 30 years , pays interest semi-annually, may be called at par after ten years , converts to a variable rate after ten years, and allows us to defer the payment of interest for one or more consecutive interest periods not exceeding five consecutive years. To date, we have not exercised our right to defer interest payments. As of May 31, 2015 and 2014 , we had $400 million of 4.75% subordinated deferrable debt outstanding due 2043. Subordinated deferrable debt currently outstanding is callable at par on or after April 30, 2023. |
Subordinated certificates | |
Members' subordinated certificates | |
Members' Subordinated Certificates | NOTE 8—MEMBERS' SUBORDINATED CERTIFICATES Membership Subordinated Certificates CFC members may be required to purchase membership subordinated certificates as a condition of membership. Such certificates are interest-bearing, unsecured, subordinated debt. Members may purchase the certificates over time as a percentage of the amount they borrow from CFC. Membership certificates typically have an original maturity of 100 years and pay interest at 5% semi-annually. The weighted-average maturity for all membership subordinated certificates outstanding as of May 31, 2015 and 2014 was 61 years and 62 years , respectively. RTFC and NCSC members are not required to purchase membership certificates as a condition of membership. Loan and Guarantee Subordinated Certificates Members obtaining long-term loans, certain line of credit loans or guarantees may be required to purchase additional loan or guarantee subordinated certificates with each such loan or guarantee based on the borrower’s debt-to-equity ratio with CFC. These certificates are unsecured, subordinated debt and may be interest bearing or non-interest bearing. Under our current policy, most borrowers requesting standard loans are not required to buy equity certificates as a condition of a loan or guarantee. Borrowers meeting certain criteria, including but not limited to, high leverage ratios, or borrowers requesting large facilities, may be required to purchase loan or guarantee subordinated certificates or member capital securities (described below) as a condition of the loan. Loan subordinated certificates have the same maturity as the related long-term loan. Some certificates may amortize annually based on the outstanding loan balance. The interest rates payable on guarantee subordinated certificates purchased in conjunction with our guarantee program vary in accordance with applicable CFC policy. Guarantee subordinated certificates have the same maturity as the related guarantee. Member Capital Securities CFC offers member capital securities to its voting members. Member capital securities are interest-bearing unsecured obligations of CFC and are subordinate to all of our existing and future senior indebtedness and all existing and future subordinated indebtedness of CFC that may be held by or transferred to non-members of CFC, but rank proportionally to our member subordinated certificates. Series 2008 member capital maturities mature 35 years from the date of issuance pay interest at 5% and are callable at par at our option five years from the date of issuance and anytime thereafter. Series 2013 member capital securities mature 30 years from the date of issuance, typically pay interest at 5% and are callable at par at our option 10 years from the date of issuance and anytime thereafter. These securities represent voluntary investments in CFC by the members. During fiscal year 2014, the CFC Board of Directors authorized management to execute the call of our 7.5% member capital securities and offer members the option to invest in the series 2013 of member capital securities that currently have a 5% interest rate. As of May 31, 2015 , all $387 million of the 7.5% member capital securities were redeemed. As of May 31, 2015 , members have invested $219 million in the series 2013 member capital securities. Information with respect to members’ subordinated certificates as of May 31, 2015 and 2014 is as follows: 2015 2014 (Dollars in thousands) Amounts Outstanding Weighted- Interest Rate Amounts Outstanding Weighted- Interest Rate Number of subscribing members 911 909 Membership subordinated certificates: Certificates maturing 2020 through 2095 $ 628,916 $ 628,749 Subscribed and unissued (1) 16,119 16,195 Total membership subordinated certificates 645,035 4.89 % 644,944 4.90 % Loan and guarantee subordinated certificates: 3% certificates maturing through 2040 110,164 110,219 3% to 12% certificates maturing through 2047 301,361 329,748 Non-interest bearing certificates maturing through 2047 229,126 258,789 Subscribed and unissued (1) 238 967 Total loan and guarantee subordinated certificates 640,889 2.94 699,723 3.01 Member capital securities: Securities maturing through 2048 219,520 5.00 267,560 6.12 Total members’ subordinated certificates $ 1,505,444 4.08 $ 1,612,227 4.28 ___________________________ (1) The subscribed and unissued subordinated certificates represent subordinated certificates that members are required to purchase, but are not yet paid for. Upon collection of the full amount of the subordinated certificate based on various payment options, the amount of the certificate will be reclassified from subscribed and unissued to outstanding. The amount of members’ subordinated certificates maturing in each of the five fiscal years following May 31, 2015 and thereafter is presented in the table below. (Dollars in thousands) Amount Maturing Weighted-Average Interest Rate 2016 $ 22,544 2.62 % 2017 11,520 4.10 2018 10,755 2.90 2019 10,571 3.60 2020 11,334 5.39 Thereafter 1,322,381 4.46 Total (1) $ 1,389,105 4.42 ___________________________ (1) Excludes loan subordinated certificates totaling $116 million that amortize annually based on the outstanding balance of the related loan and $0.2 million in subscribed and unissued certificates for which a payment has been received. There are many items that affect the amortization of a loan, such as loan conversions, loan repricing at the end of an interest rate term and prepayments; therefore, an amortization schedule cannot be maintained for these certificates. Over the past fiscal year, annual amortization on these certificates was $11 million . In fiscal year 2015 , amortization represented 10% of amortizing loan subordinated certificates outstanding. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
May. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Financial Instruments | NOTE 9—DERIVATIVE FINANCIAL INSTRUMENTS Use of Derivatives We are an end user of derivative financial instruments and do not engage in derivative trading. We use derivatives, primarily interest rate swaps and treasury rate locks, to manage interest rate risk. Derivatives may be privately negotiated contracts, which are often referred to as over-the-counter (“OTC”) derivatives, or they may be listed and traded on an exchange. We generally engage in OTC derivative transactions. Outstanding Notional Amount and Maturities of Derivatives The notional amount provides an indication of the volume of our derivatives activity, but this amount is not recorded on our consolidated balance sheets. The notional amount is used only as the basis on which interest payments are determined and is not the amount exchanged. The following table shows the outstanding notional amounts and the weighted-average rate paid and received for our interest rate swaps, by type, as of May 31, 2015 and 2014 . The substantial majority of our interest rate exchange agreements use an index based on the London Interbank Offered Rate (“LIBOR”) for either the pay or receive leg of the swap agreement. 2015 2014 (Dollars in thousands) Notional Amount Weighted- Average Rate Paid Weighted- Average Rate Received Notional Weighted- Weighted- Pay fixed-receive variable $ 5,776,533 3.15 % 0.28 % $ 5,322,809 3.33 % 0.21 % Pay variable-receive fixed 3,849,000 0.79 3.09 3,124,000 0.85 3.62 Total interest rate swaps $ 9,625,533 2.21 1.40 $ 8,446,809 2.41 1.48 The following table provides the notional amount and maturities by fiscal year and thereafter for the interest rate exchange agreements to which we were a party as of May 31, 2015 . Notional Amortization and Maturities Notional Amount (Dollars in thousands) 2016 2017 2018 2019 2020 Thereafter Interest rate exchange agreements $9,625,533 $677,906 $1,538,188 $678,356 $535,698 $1,063,825 $5,131,560 Impact of Derivatives on Consolidated Balance Sheets The following table displays the fair value of the derivative assets and derivative liabilities recorded on our consolidated balance sheets and the related outstanding notional amount of our interest rate swaps as of May 31, 2015 and 2014 . 2015 2014 (Dollars in thousands) Fair Value Notional Balance Fair Value Notional Balance Derivative assets $ 115,276 $ 3,448,615 $ 209,759 $ 3,817,593 Derivative liabilities (408,382 ) 6,176,918 (388,208 ) 4,629,216 Total $ (293,106 ) $ 9,625,533 $ (178,449 ) $ 8,446,809 All of our master swap agreements include legally enforceable netting provisions that allow for offsetting of all contracts with a given counterparty in the event of default by one of the two parties. However, as indicated above in “Note 1—Summary of Significant Accounting Policies,” we report derivative asset and liability amounts on a gross basis based on individual contracts. The following table presents the gross fair value of derivative assets and liabilities reported on our consolidated balance sheets as of May 31, 2015 and 2014 , and provides information on the impact of netting provisions and collateral pledged. 2015 Gross Amounts of Recognized Assets/ Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Assets/ Liabilities Presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet (Dollars in thousands) Financial Instruments Cash Collateral Pledged Net Amount Derivative assets: Interest rate swaps $ 115,276 $ — $ 115,276 $ 115,276 $ — $ — Derivative liabilities: Interest rate swaps 408,382 — 408,382 115,276 — 293,106 2014 Gross Amounts of Recognized Assets/ Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Assets/ Liabilities Presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet (Dollars in thousands) Financial Instruments Cash Collateral Pledged Net Amount Derivative assets: Interest rate swaps $ 209,759 $ — $ 209,759 $ 169,700 $ — $ 40,059 Derivative liabilities: Interest rate swaps 388,208 — 388,208 169,700 — 218,508 Impact of Derivatives on Consolidated Statements of Operations Derivative gains (losses) reported in our consolidated statements of operations consist of derivative cash settlements and derivative forward value. Derivative cash settlements represent net contractual interest expense accruals on interest rate swaps during the period. The derivative forward value represents the change in fair value of our interest rate swaps during the reporting period due to changes in the estimate of future interest rates over the remaining life of our derivative contracts. The following table presents the components of the derivative gains (losses) reported in our consolidated statements of operations for our interest rate swaps for the years ended May 31, 2015, 2014 and 2013 . (Dollars in thousands) 2015 2014 2013 Derivative cash settlements $ (82,906 ) $ (73,962 ) $ (56,461 ) Derivative forward value (114,093 ) 39,541 141,304 Derivative gains (losses) $ (196,999 ) $ (34,421 ) $ 84,843 Credit-Risk-Related Contingent Features in Derivatives The majority of our interest rate swap agreements have credit risk-related contingent features referred to as rating triggers. Under these rating triggers, if the credit rating for either counterparty falls to the level specified in the agreement, the other counterparty may, but is not obligated to, terminate the agreement. Our senior unsecured credit ratings from Moody’s and S&P were A2 and A, respectively, as of May 31, 2015. Moody’s and S&P had our ratings on stable outlook as of May 31, 2015 . Subsequent to May 31, 2015 , on July 6, 2015, S&P revised its outlook of CFC to negative. The table below displays the notional amounts of our derivative contracts with rating triggers as of May 31, 2015 and the payments that would be required if the contracts were terminated as of that date because of a downgrade of our unsecured credit ratings or the counterparty's unsecured credit ratings to or below Baa1/BBB+, Baa3/BBB- or Ba3/BB by Moody’s or S&P, respectively. In calculating the payment amounts that would be required upon termination of the derivative contracts, we assumed that the amounts for each counterparty would be netted in accordance with the provisions of the master netting agreements for each counterparty. The net payment amounts are based on the fair value of the underlying derivative instrument, excluding the credit risk valuation adjustment, plus any unpaid accrued interest amounts. (Dollars in thousands) Notional Amount Payment Required by CFC Payment Due to CFC Net (Payable) Due Impact of mutual rating downgrade trigger: fall to Baa1/BBB+ $ 5,122,355 $ (180,384 ) $ 1,114 $ (179,270 ) falls to Baa3/BBB- 1,789,236 (15,981 ) — (15,981 ) falls below Baa3/BBB- 586,715 (24,333 ) — (24,333 ) falls to or below Ba3/BB (1) 50,000 (6 ) — (6 ) Total $ 7,548,306 $ (220,704 ) $ 1,114 $ (219,590 ) ___________________________ (1) Rating trigger for counterparty falls to or below Ba3/BB, while rating trigger for CFC falls to or below Baa2/BBB by Moody’s or S&P, respectively. The aggregate amount, including the credit risk valuation adjustment, of all interest rate swaps with rating triggers that were in a net liability position was $218 million as of May 31, 2015 . The aggregate amount, including the credit risk valuation adjustment, of all interest rate swaps with rating triggers that were in a net asset position was $1 million as of May 31, 2015 . |
Equity
Equity | 12 Months Ended |
May. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
Equity | NOTE 10—EQUITY District of Columbia cooperative law requires cooperatives to allocate net earnings to patrons, to a general reserve in an amount sufficient to maintain a balance of at least 50% of paid-in capital, and to a cooperative educational fund, as well as permits additional allocations to board-approved reserves. District of Columbia cooperative law also requires that a cooperative’s net earnings be allocated to all patrons in proportion to their individual patronage and each patron’s allocation be distributed to the patron unless the patron agrees that the cooperative may retain its share as additional capital. Annually, the CFC Board of Directors allocates its net earnings to its patrons in the form of patronage capital, to a cooperative educational fund, to a general reserve, if necessary, and to board-approved reserves. An allocation to the general reserve is made, if necessary, to maintain the balance of the general reserve at 50% of the membership fees collected. CFC’s bylaws require the allocation to the cooperative educational fund to be at least 0.25% of its net earnings. Funds from the cooperative educational fund are disbursed annually to statewide cooperative organizations to fund the teaching of cooperative principles and for other cooperative education programs. Currently, CFC has one additional board-approved reserve, the members’ capital reserve. The CFC Board of Directors determines the amount of net earnings that is allocated to the members’ capital reserve, if any. The members’ capital reserve represents net earnings that CFC holds to increase equity retention. The net earnings held in the members’ capital reserve have not been specifically allocated to members, but may be allocated to individual members in the future as patronage capital if authorized by the CFC Board of Directors. All remaining net earnings are allocated to CFC’s members in the form of patronage capital. The amount of net earnings allocated to each member is based on the members’ patronage of CFC’s lending programs during the year. No interest is earned by members on allocated patronage capital. There is no effect on CFC’s total equity as a result of allocating net earnings to members in the form of patronage capital or to board-approved reserves. The CFC Board of Directors has voted annually to retire a portion of the patronage capital allocation. Upon retirement, patronage capital is paid out in cash to the members to whom it was allocated. CFC’s total equity is reduced by the amount of patronage capital retired to its members and by amounts disbursed from board-approved reserves. The current policy of the CFC Board of Directors is to retire 50% of the prior year’s allocated patronage capital and hold the remaining 50% for 25 years . The retirement amount and timing remains subject to annual approval by the CFC Board of Directors. In May 2014 , the CFC Board of Directors authorized the allocation of $1 million of fiscal year 2014 net earnings to the Cooperative Educational Fund. In July 2014 , the CFC Board of Directors authorized the allocation of the fiscal year 2014 net earnings as follows: $75 million to the members' capital reserve and $79 million to members in the form of patronage. In July 2014 , the CFC Board of Directors authorized the retirement of allocated net earnings totaling $40 million , representing 50% of the fiscal year 2014 allocation. This amount was returned to members in cash in September 2014 . In July 2015 , the CFC Board of Directors authorized the allocation of the fiscal year 2015 net earnings as follows: $1 million to the Cooperative Educational Fund, $16 million to the members’ capital reserve and $78 million to members in the form of patronage. In July 2015 , the CFC Board of Directors authorized the retirement of allocated net earnings totaling $39 million , representing 50% of the fiscal year 2015 allocation. This amount will be returned to members in cash in the second quarter of fiscal year 2016 . Future allocations and retirements of net earnings may be made annually as determined by the CFC Board of Directors with due regard for its financial condition. The CFC Board of Directors has the authority to change the current practice for allocating and retiring net earnings at any time, subject to applicable laws and regulations. Total equity includes noncontrolling interest, which represents 100% of RTFC and NCSC equity, as the members of RTFC and NCSC own or control 100% of the interest in their respective companies. In accordance with District of Columbia cooperative law and its bylaws and board policies, RTFC allocates its net earnings to its patrons, a cooperative educational fund and a general reserve, if necessary. RTFC’s bylaws require that it allocate at least 1% of net income to a cooperative educational fund. Funds from the cooperative educational fund are disbursed annually to fund the teaching of cooperative principles and for other cooperative education programs. An allocation to the general reserve is made, if necessary, to maintain the balance of the general reserve at 50% of the membership fees collected. The remainder is allocated to borrowers in proportion to their patronage. RTFC retires at least 20% of the allocation for that year to members in cash prior to filing the applicable tax return. Any additional amounts are retired as determined by the board of directors with due regard for RTFC’s financial condition. In December 2014 , the RTFC Board of Directors approved the allocation of earnings for the year ended May 31, 2014 with 99% allocated to members and 1% allocated to the Cooperative Educational Fund. A total of $1.2 million was allocated to members as follows: $0.2 million in cash and $1 million in the form of certificates to be redeemed at a later date. In January 2015 , RTFC distributed the $0.2 million cash portion of the allocation to members, representing 20% of allocated net earnings for fiscal year 2013. NCSC’s bylaws require that it allocate at least 0.25% of its net earnings to a cooperative educational fund and an amount to the general reserve required to maintain the general reserve balance at 50% of membership fees collected. Funds from the cooperative educational fund are disbursed annually to fund the teaching of cooperative principles and for other cooperative education programs. The NCSC Board of Directors has the authority to determine if and when net earnings will be allocated and retired. There is no effect on noncontrolling interest as a result of RTFC and NCSC allocating net earnings to borrowers or board-approved reserves. There is a reduction to noncontrolling interest as a result of the cash retirement of amounts allocated to borrowers or to disbursements from board-approved reserves. Equity includes the following components as of May 31, 2015 and 2014 . (Dollars in thousands) 2015 2014 Membership fees $ 976 $ 973 Educational fund 1,767 1,778 Total membership fees and educational fund 2,743 2,751 Patronage capital allocated 668,980 630,340 Members' capital reserve 501,731 485,447 Unallocated net income (loss) (1) (6,135 ) (6,238 ) Total members equity (1) 1,167,319 1,112,300 Prior years cumulative derivative forward value and foreign currency adjustments (172,412 ) (207,025 ) Current year derivative forward value gain (loss) (2) (114,665 ) 34,613 Cumulative derivative forward value and foreign currency adjustments (287,077 ) (172,412 ) CFC retained equity 880,242 939,888 Accumulated other comprehensive income 4,080 3,649 Total CFC equity 884,322 943,537 Noncontrolling interests 27,464 26,837 Total equity $ 911,786 $ 970,374 ____________________________ (1) Excludes derivative forward value. (2) Represents the derivative forward value income (loss) recorded by CFC for the year-to-date period. The activity in the accumulated other comprehensive income account is summarized below by component as of and for the years ended May 31, 2015 and 2014 . 2015 (Dollars in thousands) Unrealized Gains (Losses) AFS Securities Unrealized Gains Derivatives Unrealized Losses Foreclosed Assets Unrealized Losses Defined Benefit Plan Total Beginning balance $ (361 ) $ 6,320 $ (2,310 ) $ — $ 3,649 Unrealized gains 4,295 — — — 4,295 Unrealized losses — — (1,938 ) (1,050 ) (2,988 ) Losses reclassified into earnings — — — 73 73 Gains reclassified into earnings — (949 ) — — (949 ) Other comprehensive income 4,295 (949 ) (1,938 ) (977 ) 431 Ending balance $ 3,934 $ 5,371 $ (4,248 ) $ (977 ) $ 4,080 2014 (Dollars in thousands) Unrealized Gains (Losses) AFS Securities Unrealized Gains Derivatives Unrealized Losses Foreclosed Assets Unrealized Losses Defined Benefit Plan Total Beginning balance $ 1,094 $ 7,287 $ — $ — $ 8,381 Unrealized gains — — — — — Unrealized losses (1,455 ) — (2,310 ) — (3,765 ) Gains reclassified into earnings — (967 ) — — (967 ) Other comprehensive income (1,455 ) (967 ) (2,310 ) — (4,732 ) Ending balance $ (361 ) $ 6,320 $ (2,310 ) $ — $ 3,649 Approximately $1 million of the accumulated other comprehensive income is expected to be reclassified into earnings over the next 12 months. |
Employee Benefits
Employee Benefits | 12 Months Ended |
May. 31, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Benefits | NOTE 11—EMPLOYEE BENEFITS NRECA Retirement Security Plan CFC is a participant in the NRECA Retirement Security Plan (“the Plan”), a noncontributory, defined benefit multiemployer master pension plan. The employer identification number of the Plan is 53-0116145 and the Plan number is 333. Plan information is available publicly through the annual Form 5500, including attachments. The Plan is available to all qualified CFC employees. Under the Plan, participating employees are entitled to receive annually, under a 50 percent joint and surviving spouse annuity, 1.70 percent of the average of their five highest base salaries during their last 10 years of employment, multiplied by the number of years of participation in the Plan. As a multiemployer plan, there is no funding liability for CFC related to the plan. CFC’s expense is limited to the annual premium to participate in the plan. The risks of participating in CFC’s multiemployer plan are different from single-employer plans based on the following characteristics of the Plan: • Assets contributed to the multiemployer plan by one participating employer may be used to provide benefits to employees of other participating employers. • If a participating employer stops contributing to the Plan, the unfunded obligations of the Plan may be borne by the remaining participating employers. • If CFC chooses to stop participating in the Plan, CFC may be required to pay a withdrawal liability representing an amount based on the underfunded status of the Plan. In the Plan, a certified zone status determination is not required, and therefore not determined, under the Pension Protection Act of 2006. In total, the Plan was more than 80 percent funded at January 1, 2015 and 2014 , based on the Pension Protection Act (“PPA”) funding target and PPA actuarial value of assets on those dates. CFC made contributions of $3 million , $4 million , and $17 million during fiscal years 2015 , 2014 and 2013 , respectively. The contribution made during fiscal year 2013 includes a voluntary $13 million payment made in January 2013. CFC made this payment to obtain a reduction in the base rate it will pay for the pension plan in all future periods. In each of these years, these contributions represented less than 5 percent of total contributions made to the plan by all participating employers. There are no collective bargaining agreements in place that cover CFC’s employees. As of May 31, 2015 , CFC’s contribution rate did not include a surcharge, there were no funding improvement plans or rehabilitation plans implemented or pending and there were no required minimum contributions. Pension Restoration Plan The Economic Growth and Tax Relief Act of 2001 set a limit of $265,000 for calendar year 2015 on the compensation to be used in the calculation of pension benefits. To restore potential lost benefits, we adopted a Pension Restoration Plan administered by NRECA. Under the Plan, the amount that NRECA invoices CFC for the Retirement Security Plan will continue to be based on the full compensation paid to each employee. Upon the retirement of a covered employee, NRECA will calculate the retirement and security benefit to be paid with consideration of the compensation limits and will pay the maximum benefit thereunder. NRECA will also calculate the retirement and security benefit that would have been available without consideration of the compensation limits and CFC will pay the difference. NRECA will then give CFC a credit against future retirement and security contribution liabilities in the amount paid by CFC to the covered employee. The Pension Restoration Plan is an unfunded, unsecured deferred compensation plan (“Deferred Compensation Pension Restoration Plan”). The benefit and payout formula under the restoration component of the Retirement Security Plan is similar to that under the qualified plan component. However, four of the named executive officers have satisfied the provisions established to receive the benefit from this plan. Since there is no longer a risk of forfeiture of the benefit under the Pension Restoration Plan, distributions will be made from the plan to each of those named executive officers annually and credited back to CFC by NRECA on following pension invoices. Executive Benefit Restoration Plan NRECA has restricted additional participation in the Pension Restoration Plan. We therefore adopted a top-hat Executive Benefit Restoration Plan, effective January 1, 2015. The Executive Benefit Restoration Plan is a nonqualified, unfunded plan maintained by CFC to provide retirement benefits to a select group of senior management employees whose compensation exceed IRS limits for qualified defined benefit plans. There is a risk of forfeiture if participants leave the company prior to becoming fully vested in the Executive Benefit Restoration Plan. At adoption of this plan on January 1, 2015, we recorded an unfunded pension obligation of $1 million and an offsetting adjustment to AOCI. The pension obligation is included on our consolidated balance sheet as a component of other liabilities. Defined Contribution Plan CFC offers a 401(k) defined contribution savings program, the 401(k) Pension Plan, to all employees who have completed a minimum of 1000 hours of service in either the first 12 consecutive months or first full calendar year of employment. CFC contributes an amount up to 2 percent of an employee’s salary each year for all employees participating in the program with a minimum 2 percent employee contribution. CFC contributed $0.5 million to the plan during each of the fiscal years 2015 , 2014 and 2013 . |
Guarantees
Guarantees | 12 Months Ended |
May. 31, 2015 | |
Guarantees [Abstract] | |
Guarantees | NOTE 12—GUARANTEES We guarantee certain contractual obligations of our members so they may obtain various forms of financing. We use the same credit policies and monitoring procedures in providing guarantees as we do for loans and commitments. If a member system defaults on its obligation to pay debt service, then we are obligated to pay any required amounts under our guarantees. Meeting our guarantee obligations satisfies the underlying obligation of our member systems and prevents the exercise of remedies by the guarantee beneficiary based upon a payment default by a member system. In general, the member system is required to repay any amount advanced by us with interest, pursuant to the documents evidencing the member system’s reimbursement obligation. The following table summarizes total guarantees by type of guarantee and member class as of May 31, 2015 and 2014 . (Dollars in thousands) 2015 2014 Total by type: Long-term tax-exempt bonds $ 489,520 $ 518,360 Letters of credit 382,233 431,064 Other guarantees 114,747 115,398 Total $ 986,500 $ 1,064,822 Total by member class: CFC: Distribution $ 172,104 $ 165,559 Power supply 763,746 826,231 Statewide and associate 17,025 5,397 CFC total 952,875 997,187 RTFC 1,574 2,304 NCSC 32,051 65,331 Total $ 986,500 $ 1,064,822 We guarantee debt issued in connection with the construction or acquisition of pollution control, solid waste disposal, industrial development and electric distribution facilities, classified as long-term tax-exempt bonds in the table above. We unconditionally guarantee to the holders or to trustees for the benefit of holders of these bonds the full principal, interest and in most cases, premium, if any, on each bond when due. If a member system defaults in its obligation to pay debt service, then we are obligated to pay any required amounts under our guarantees. Such payment will prevent the occurrence of an event of default that would otherwise permit acceleration of the bond issue. In general, the member system is required to repay any amount advanced by us with interest, pursuant to the documents evidencing the member system’s reimbursement obligation. The maturities for the long-term tax-exempt bonds and the related guarantees run through calendar year 2042. Amounts in the table represent the outstanding principal amount of the guaranteed bonds. As of May 31, 2015 , our maximum potential exposure for the $72 million of fixed-rate tax-exempt bonds is $102 million , representing principal and interest. Of the amounts shown in the table above for long-term tax-exempt bonds, $418 million and $445 million as of May 31, 2015 and 2014 , respectively, are adjustable or floating-rate bonds that may be converted to a fixed rate as specified in the applicable indenture for each bond offering. We are unable to determine the maximum amount of interest that we could be required to pay related to the remaining adjustable and floating-rate bonds. Many of these bonds have a call provision that in the event of a default allow us to trigger the call provision. This would limit our exposure to future interest payments on these bonds. Our maximum potential exposure is secured by a mortgage lien on all of the system’s assets and future revenue. If the debt is accelerated because of a determination that the interest thereon is not tax-exempt, the system’s obligation to reimburse us for any guarantee payments will be treated as a long-term loan. The maturities for letters of credit run through calendar year 2024. The amounts shown in the table above represent our maximum potential exposure, of which $63 million is secured as of May 31, 2015 . As of May 31, 2015 and 2014 the letters of credit include $76 million and $125 million , respectively, to provide the standby liquidity for adjustable and floating-rate tax-exempt bonds issued for the benefit of our members, respectively. Security provisions include a mortgage lien on substantially all of the system’s assets, future revenue and the system’s investment in our commercial paper. In addition to the letters of credit listed in the table, under master letter of credit facilities in place as of May 31, 2015 , we may be required to issue up to an additional $105 million in letters of credit to third parties for the benefit of our members. As of May 31, 2015 , all of our master letter of credit facilities were subject to material adverse change clauses at the time of issuance. Also, as of May 31, 2015 we had hybrid letter of credit facilities totaling $1,659 million that represent commitments that may be used for the issuance of letters of credit or line of credit loan advances, at the option of a borrower, and are included in unadvanced loan commitments for line of credit loans reported in “Note 3— Loans and Commitments.” Hybrid letter of credit facilities subject to material adverse change clauses at the time of issuance totaled $360 million as of May 31, 2015 . Prior to issuing a letter of credit, we would confirm that there has been no material adverse change in the business or condition, financial or otherwise, of the borrower since the time the loan was approved and confirm that the borrower is currently in compliance with the letter of credit terms and conditions. The remaining commitment under hybrid letter of credit facilities of $1,299 million may be used for the issuance of letters of credit as long as the borrower is in compliance with the terms and conditions of the facility. The maturities for other guarantees listed in the table run through calendar year 2025. The maximum potential exposure for these other guarantees is $115 million , all of which is unsecured. As of May 31, 2015 and 2014 , we had $434 million and $418 million of guarantees, respectively, representing 44% and 39% , respectively, of total guarantees, under which our right of recovery from our members was not secured. In addition to the guarantees described above, as of May 31, 2015 , we were the liquidity provider for a total of $494 million of variable-rate tax-exempt bonds issued for our member cooperatives. While the bonds are in variable-rate mode, in return for a fee, we have unconditionally agreed to purchase bonds tendered or put for redemption if the remarketing agents are unable to sell such bonds to other investors. During the year ended May 31, 2015 , we were not required to perform as liquidity provider pursuant to these obligations. Guarantee Liability As of May 31, 2015 and 2014 , we recorded a guarantee liability of $20 million and $22 million , respectively, which represents the contingent and non-contingent exposures related to guarantees and liquidity obligations associated with our members’ debt. The contingent guarantee liability as of May 31, 2015 and 2014 was $1 million and $2 million , respectively, based on management’s estimate of exposure to losses within the guarantee portfolio. The remaining balance of the total guarantee liability of $19 million and $20 million as of May 31, 2015 and 2014 , respectively, relates to our non-contingent obligation to stand ready to perform over the term of our guarantees and liquidity obligations that we have entered into or modified since January 1, 2003. Activity in the guarantee liability account, which is presented in other liabilities, is summarized below as of and for the years ended May 31, 2015, 2014 and 2013 . (Dollars in thousands) 2015 2014 2013 Beginning balance $ 22,091 $ 24,742 $ 28,663 Net change in non-contingent liability (1,654 ) (2,868 ) 851 Provision for contingent guarantee liability (520 ) 217 (4,772 ) Ending balance $ 19,917 $ 22,091 $ 24,742 Liability as a percentage of total guarantees 2.02 % 2.07 % 2.22 % The following table details the scheduled maturities of our outstanding guarantees in each of the five fiscal years following May 31, 2015 and thereafter: (Dollars in thousands) Amount Maturing 2016 $ 207,330 2017 35,198 2018 209,711 2019 18,087 2020 63,345 Thereafter 452,829 Total $ 986,500 |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
May. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | NOTE 13—FAIR VALUE MEASUREMENTS Fair Value Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date (also referred to as an exit price). The fair value accounting guidance provides a three-level fair value hierarchy for classifying financial instruments. This hierarchy is based on the markets in which the assets or liabilities trade and whether the inputs to the valuation techniques used to measure fair value are observable or unobservable. Fair value measurement of a financial asset or liability is assigned a level based on the lowest level of any input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are summarized below: • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities • Level 2: Observable market-based inputs, other than quoted prices in active markets for identical assets or liabilities. • Level 3: Unobservable inputs Assets and liabilities measured at fair value on either a recurring or non-recurring basis on the consolidated balance sheets as of May 31, 2015 and 2014 consisted of investments in common and preferred stock, derivative instruments, and nonperforming collateral-dependent loans. Assets and Liabilities Measured at Fair Value on a Recurring Basis Assets and liabilities measured at fair value on a recurring basis as of May 31, 2015 and 2014 consisted of our derivative instruments, investments in common and preferred stock and deferred compensation investments. The following table presents our assets and liabilities that are measured at fair value on a recurring basis as of May 31, 2015 and 2014 . 2015 2014 (Dollars in thousands) Level 1 Level 2 Level 1 Level 2 Investment securities $ 84,472 $ — $ 55,177 $ — Deferred compensation investments 4,294 — 4,156 — Derivative assets — 115,276 — 209,759 Derivative liabilities — 408,382 — 388,208 Derivative Instruments We account for derivative instruments in the consolidated balance sheets as either an asset or liability measured at fair value. We only enter into swap agreements with counterparties that are participating in our revolving lines of credit at the time the exchange agreements are executed. All of our swap agreements are subject to master netting agreements. There is not an active secondary market for the types of interest rate swaps we use. We use an internal model to calculate the value of our derivatives based on discounted cash flows utilizing observable market inputs. To calculate fair value, we determine the forward curve. The forward curve allows us to determine the projected floating rate cash flows and the discount factors needed to calculate the net present value of each interest payment. The significant observable market inputs for our derivatives include spot LIBOR rates, Eurodollar futures contracts, and market swap rates. We record counterparty credit risk valuation adjustments on our derivative assets to properly reflect the credit quality of the counterparty. The credit default swap levels represent the credit risk premium required by a market participant based on the available information related to us and the counterparty. Fair values for our interest rate swaps are classified as a Level 2 valuation. We record the change in the fair value of our derivatives for each reporting period in the derivative gains (losses) line, included in non-interest income in the consolidated statements of operations, as currently none of our derivatives qualify for hedge accounting. Investments in Preferred and Common Stock Our investments in equity securities consist of investments in Farmer Mac Series A, Series B and Series C preferred stock and Class A common stock, which are recorded in the consolidated balance sheets at fair value. We determine the fair value of these investments based on the quoted price on the stock exchange where the stock is traded. That stock exchange is an active market based on the volume of shares transacted. Fair values for these securities are classified as a Level 1 valuation. For the years ended May 31, 2015 and 2014 , we recorded an unrealized gain of $4 million and unrealized loss of $1 million , respectively, in accumulated other comprehensive income on the consolidated balance sheet. Deferred Compensation Investments Deferred compensation investments are recorded in the consolidated balance sheets in the other assets category at fair value. We calculate fair value based on the quoted price on the stock exchange where the funds are traded. That stock exchange is an active market based on the volume of shares transacted. The amounts are invested in highly liquid indices and mutual funds and are classified within Level 1 of the fair value hierarchy. Assets and Liabilities Measured at Fair Value on a Non-recurring Basis We may be required, from time to time, to measure certain assets at fair value on a non-recurring basis in accordance with GAAP. Any adjustments to fair value usually result from application of lower-of-cost or fair value accounting or write-downs of individual assets. Assets measured at fair value on a non-recurring basis as of May 31, 2015 and 2014 consisted of certain nonperforming collateral-dependent loans and foreclosed assets. The fair value of these assets is determined based on the use of significant unobservable inputs, which are considered Level 3 in the fair value hierarchy. We provide additional information on foreclosed assets in “Note 1—Summary of Significant Accounting Policies” and “Note 4—Foreclosed Assets.” Nonperforming Collateral-Dependent Loans As of May 31, 2015 and 2014 , we measured certain collateral-dependent nonperforming loans at fair value. We utilize the fair value of the collateral underlying the loan to determine the specific allowance for loan loss. In estimating the fair value of the collateral, we may use third-party valuation specialists, internal estimates or a combination of both. The valuation technique used to determine fair value of the nonperforming loans provided by both our internal staff and third-party specialists includes market multiples (i.e., comparable companies). The significant unobservable input used in the determination of fair value for the specific nonperforming loans was a multiple of earnings before interest, taxes, depreciation and amortization of 3.5 x as of May 31, 2014 . The material inputs used in estimating fair value by both internal staff and third-party specialists are Level 3 within the fair value hierarchy. In these instances, the valuation is considered to be a non-recurring item. The significant unobservable inputs for estimating the fair value of nonperforming collateral-dependent loans are obtained from third-party specialists and reviewed by our Credit Risk Management group to assess the reasonableness of the assumptions used and the accuracy of the work performed. In cases where we rely on third-party inputs, we use the final unadjusted third-party valuation analysis as support for any financial statement adjustments and disclosures to the financial statements. Because of the balance of nonperforming collateral-dependent loans, we do not believe that changes in the significant unobservable inputs used in the determination of the fair value will have a material impact on the fair value measurement of these assets or our results of operations. The following table displays the carrying value and fair value of these loans as of May 31, 2015 and 2014 and the total losses for the May 31, 2015 and 2014 . Level 3 Fair Value Total Losses (Dollars in thousands) 2015 2014 2015 2014 Nonperforming loans, net of specific reserves $ — $ 1,669 $ — $ — |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
May. 31, 2015 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | NOTE 14—FAIR VALUE OF FINANCIAL INSTRUMENTS The carrying and fair values of our financial instruments as of May 31, 2015 and 2014 are presented below. 2015 Fair Value Measurements Using (Dollars in thousands) Carrying Value Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 248,836 $ 248,836 $ 248,836 $ — $ — Restricted cash 485 485 485 — — Time deposits 485,000 485,000 — 485,000 — Investment securities 84,472 84,472 84,472 — — Deferred compensation investments 4,294 4,294 4,294 — — Loans to members, net 21,435,327 21,961,048 — — 21,961,048 Debt service reserve funds 25,602 25,602 25,602 — — Derivative instruments 115,276 115,276 — 115,276 — Liabilities: Short-term debt 3,127,754 3,127,541 1,494,131 1,633,410 — Long-term debt 16,287,540 17,356,223 — 10,878,302 6,477,921 Guarantee liability 19,917 22,545 — — 22,545 Derivative instruments 408,382 408,382 — 408,382 — Subordinated deferrable debt 400,000 406,000 — 406,000 — Members’ subordinated certificates 1,505,444 1,505,444 — — 1,505,444 2014 Fair Value Measurements Using (Dollars in thousands) Carrying Value Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 338,715 $ 338,715 $ 338,715 $ — $ — Restricted cash 520 520 520 — — Time deposits 550,000 550,000 — 550,000 — Investment securities 55,177 55,177 55,177 — — Deferred compensation investments 4,156 4,156 4,156 — — Loans to members, net 20,420,213 21,000,687 — — 21,000,687 Debt service reserve funds 39,353 39,353 39,353 — — Derivative instruments 209,759 209,759 — 209,759 — Liabilities: Short-term debt 4,099,331 4,099,534 2,480,166 1,619,368 — Long-term debt 14,513,284 15,738,970 — 9,618,645 6,120,325 Guarantee liability 22,091 24,946 — — 24,946 Derivative instruments 388,208 388,208 — 388,208 — Subordinated deferrable debt 400,000 385,744 — 385,744 — Members’ subordinated certificates 1,612,227 1,612,227 — — 1,612,227 We consider observable prices in the principal market in our valuations where possible. Fair value estimates were developed at the reporting date and may not necessarily be indicative of amounts that could ultimately be realized in a market transaction at a future date. There were no transfers between levels of the fair value hierarchy during the years ended May 31, 2015 and 2014 . With the exception of redeeming debt under early redemption provisions, terminating derivative instruments under early termination provisions and allowing borrowers to prepay their loans, we held and intend to hold all financial instruments to maturity excluding common stock and preferred stock investments that have no stated maturity. Below is a summary of significant methodologies used in estimating fair value amounts as of May 31, 2015 and 2014 . Cash and Cash Equivalents Cash and cash equivalents include cash and certificates of deposit with original maturities of less than 90 days. Cash and cash equivalents are valued at the carrying value, which approximates fair value. Restricted Cash Restricted cash consists of cash and cash equivalents for which use is contractually restricted. The carrying value of restricted cash approximates fair value. Investment Securities Our investments consist of Farmer Mac Series A, Series B and Series C preferred stock and Class A common stock. These securities are classified as available-for-sale and reported at fair value in our consolidated balance sheets. We determine the fair value based on quoted prices on the stock exchange where the stock is traded. That stock exchange is an active market based on the volume of shares transacted. Time Deposits Time deposits with financial institutions in interest-bearing accounts have maturities of less than one year as of the reporting date and are valued at the carrying value, which approximates fair value. Deferred Compensation Investments CFC offers a nonqualified 457(b) deferred compensation plan to highly compensated employees. Such amounts deferred by employees are invested by the company. The deferred compensation investments are presented as other assets in the consolidated balance sheets in the other assets category at fair value. We calculate fair value based on the quoted price on the stock exchange where the funds are traded. That stock exchange is an active market based on the volume of shares transacted. The amounts are invested in highly liquid indices and mutual funds. Loans to Members, Net As part of receiving a loan from us, our members have additional requirements and rights that are not typical of other financial institutions, such as the ability to receive a patronage capital allocation, the general requirement to purchase subordinated certificates or member capital securities to meet their capital contribution requirements as a condition of obtaining additional credit from us, the option to select fixed rates from one year to maturity with the fixed rate resetting or repricing at the end of each selected rate term, the ability to convert from a fixed rate to another fixed rate or the variable rate at any time, and certain interest rate discounts that are specific to the borrower’s activity with us. These features make it difficult to obtain market data for similar loans. Therefore, we must use other methods to estimate the fair value. Fair values for fixed-rate loans are estimated using a discounted cash flow technique by discounting the expected future cash flows using the current rates at which we would make similar loans to new borrowers for the same remaining maturities. The maturity date used in the fair value calculation of loans with a fixed rate for a selected rate term is the next repricing date since these borrowers must reprice their loans at various times throughout the life of the loan at the current market rate. Loans with different risk characteristics, specifically nonperforming and restructured loans, are valued by using collateral valuations or by adjusting cash flows for credit risk and discounting those cash flows using the current rates at which similar loans would be made by us to borrowers for the same remaining maturities. See “Note 13—Fair Value Measurement” for more details about how we calculate the fair value of certain nonperforming loans. The carrying value of our variable-rate loans adjusted for credit risk approximates fair value since variable-rate loans are eligible to be reset at least monthly. Debt Service Reserve Funds Debt service reserve funds represent cash and/or investments on deposit with the bond trustee for tax-exempt bonds that we guarantee. Debt service reserve fund investments include actively traded tax exempt municipal bonds and commercial paper. Carrying value is considered to be equal to fair value. Short-Term Debt Short-term debt consists of commercial paper, select notes, bank bid notes, daily liquidity fund notes and medium-term notes. The fair value of short-term debt with maturities less than or equal to 90 days is carrying value, which is a reasonable estimate of fair value. The fair value of short-term debt with maturities greater than 90 days is estimated based on discounted cash flows and quoted market rates for debt with similar maturities. Short-term debt classified within Level 1 of the fair value hierarchy includes dealer commercial paper, bank bid notes and daily liquidity fund notes. Short-term debt classified within Level 2 of the fair value hierarchy is comprised of member commercial paper and select notes and is determined based on discounted cash flows using discount rates consistent with current market rates for similar products with similar remaining terms. Short-term debt classified within Level 2 also includes our medium-term notes with an original maturity equal to or less than one year. The fair value of short-term medium-term notes classified within Level 2 of the fair value hierarchy was determined based on discounted cash flows using a pricing model that incorporates available market information such as indicative benchmark yields and credit spread assumptions that are provided by third-party pricing services such as our banks that underwrite our other debt transactions. Long-Term Debt Long-term debt consists of collateral trust bonds, medium-term notes and long-term notes payable. We issue substantially all collateral trust bonds and some medium-term notes in underwritten public transactions. Collateral trust bonds and medium-term notes are classified within Level 2 of the fair value hierarchy. The fair value of long-term debt classified within Level 2 of the fair value hierarchy was determined based on discounted cash flows. There is no active secondary trading for the underwritten collateral trust bonds and medium-term notes; therefore, dealer quotes and recent market prices are both used in estimating fair value. There is essentially no secondary market for the medium-term notes issued to our members or in transactions that are not underwritten; therefore, fair value is estimated based on observable benchmark yields and spreads for similar instruments supplied by banks that underwrite our other debt transactions. The long-term notes payable are issued in private placement transactions and there is no secondary trading of such debt. Long-term notes payable are classified within Level 3 of the fair value hierarchy. The fair value was determined based on discounted cash flows using benchmark yields and spreads for similar instruments supplied by underwriter quotes for similar instruments, if available. Secondary trading quotes for our debt instruments used in the determination of fair value incorporate our credit risk. Guarantees The fair value of our guarantee liability is based on the fair value of our contingent and non-contingent exposure related to our guarantees. The fair value of our contingent exposure for guarantees is based on management’s estimate of our exposure to losses within the guarantee portfolio using a discounted cash flow method. The fair value of our non-contingent exposure for guarantees issued is estimated based on the total unamortized balance of guarantee fees paid and guarantee fees to be paid discounted at our current short-term funding rate, which represents management’s estimate of the fair value of our obligation to stand ready to perform. Subordinated Deferrable Debt Subordinated deferrable debt outstanding was issued in an underwritten public transaction. There is no active secondary trading for this subordinated deferrable debt; therefore, dealer quotes and recent market prices are both used in estimating fair value based on a discounted cash flow method. Members’ Subordinated Certificates Members’ subordinated certificates include (i) membership subordinated certificates issued to our members, (ii) loan and guarantee subordinated certificates issued as a condition of obtaining loan funds or guarantees and (iii) member capital securities issued as voluntary investments by our members. All members' subordinated certificates are non-transferable other than among members with CFC’s consent and there is no ready market from which to obtain fair value quotes. These certificates are valued at par. Derivative Instruments We account for derivative instruments in the consolidated balance sheets as either an asset or liability measured at fair value. There is not an active secondary market for the types of interest rate swaps we use. We use an internal model to calculate the value of our derivatives based on discounted cash flows utilizing observable market inputs. The significant observable market inputs for our derivatives include spot LIBOR rates, Eurodollar futures contracts, and market swap rates. We record counterparty credit risk valuation adjustments on our derivative assets to properly reflect the credit quality of the counterparty. The credit default swap levels represent the credit risk premium required by a market participant based on the available information related to us and the counterparty. Commitments The fair value of our commitments is estimated based on the carrying value, or zero. Extensions of credit under these commitments, if exercised, would result in loans priced at market rates. See “Note 13—Fair Value Measurement” for additional information on assets and liabilities reported at fair value on a recurring and non-recurring basis on our consolidated balance sheets. |
Segment Information
Segment Information | 12 Months Ended |
May. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | NOTE 15—SEGMENT INFORMATION Our consolidated financial statements include the financial results of CFC, RTFC and NCSC and certain entities created and controlled by CFC to hold foreclosed assets. Separate financial statements are produced for CFC, RTFC and NCSC and are the primary reports that management reviews in evaluating performance. The separate financial statements for CFC represent the consolidation of the financial results for CFC and the entities controlled by CFC. For more detail on the requirement to consolidate the financial results of RTFC and NCSC see “Note 1—Summary of Significant Accounting Policies.” The consolidated CFC financial statements include three operating segments: CFC, RTFC and NCSC. As of May 31, 2015 , the RTFC and NCSC operating segments are not required to be separately reported as the financial results of RTFC and NCSC do not meet the quantitative thresholds outlined by the accounting standards for segment reporting. As a result, we have elected to aggregate the RTFC and NCSC financial results into a combined “Other” segment. CFC is the sole source of funding to RTFC. CFC is the primary source of funding to NCSC. Pursuant to a guarantee agreement, CFC has agreed to indemnify RTFC and NCSC for loan losses. The loan loss allowance at RTFC and NCSC is offset by a guarantee receivable from CFC. The following tables display segment results for the years ended May 31, 2015, 2014 and 2013 , and assets attributable to each segment as of May 31, 2015 and 2014 . Year Ended May 31, 2015 (Dollars in thousands) CFC Other Elimination Consolidated Statement of operations: Interest income $ 940,541 $ 46,666 $ (34,231 ) $ 952,976 Interest expense (634,287 ) (35,628 ) 34,231 (635,684 ) Net interest income 306,254 11,038 — 317,292 Provision for loan losses 21,954 — — 21,954 Net interest income after provision for loan losses 328,208 11,038 — 339,246 Non-interest income: Fee and other income 36,215 3,447 (2,879 ) 36,783 Derivative losses (193,289 ) (3,710 ) — (196,999 ) Results of operations of foreclosed assets (120,148 ) — — (120,148 ) Total non-interest income (277,222 ) (263 ) (2,879 ) (280,364 ) Non-interest expense: General and administrative expenses (69,129 ) (8,370 ) 969 (76,530 ) Provision for guarantee liability 520 — — 520 Losses on early extinguishment of debt (703 ) — — (703 ) Other (706 ) (1,891 ) 1,910 (687 ) Total non-interest expense (70,018 ) (10,261 ) 2,879 (77,400 ) Income (loss) before income taxes (19,032 ) 514 — (18,518 ) Income tax expense — (409 ) — (409 ) Net income (loss) $ (19,032 ) $ 105 $ — $ (18,927 ) May 31, 2015 CFC Other Elimination Consolidated Assets: Total loans outstanding $ 21,431,927 $ 1,117,230 $ (1,089,937 ) $ 21,459,220 Deferred origination costs 9,797 — — 9,797 Less: Allowance for loan losses (33,690 ) — — (33,690 ) Loans to members, net 21,408,034 1,117,230 (1,089,937 ) 21,435,327 Other assets 1,428,327 134,622 (105,146 ) 1,457,803 Total assets $ 22,836,361 $ 1,251,852 $ (1,195,083 ) $ 22,893,130 Year Ended May 31, 2014 (Dollars in thousands) CFC Other Elimination Consolidated Statement of operations: Interest income $ 942,611 $ 50,856 $ (35,927 ) $ 957,540 Interest expense (653,189 ) (37,393 ) 35,927 (654,655 ) Net interest income 289,422 13,463 — 302,885 Provision for loan losses (3,498 ) — — (3,498 ) Net interest income after provision for loan losses 285,924 13,463 — 299,387 Non-interest income: Fee and other income 17,255 1,433 (926 ) 17,762 Derivative losses (33,325 ) (1,096 ) — (34,421 ) Results of operations of foreclosed assets (13,494 ) — — (13,494 ) Total non-interest income (29,564 ) 337 (926 ) (30,153 ) Non-interest expense: General and administrative expenses (64,555 ) (8,937 ) 926 (72,566 ) Provision for guarantee liability (217 ) — — (217 ) Losses on early extinguishment of debt (1,452 ) — — (1,452 ) Other (69 ) — — (69 ) Total non-interest expense (66,293 ) (8,937 ) 926 (74,304 ) Income before income taxes 190,067 4,863 — 194,930 Income tax expense — (2,004 ) — (2,004 ) Net income $ 190,067 $ 2,859 $ — $ 192,926 May 31, 2014 CFC Other Elimination Consolidated Assets: Total loans outstanding $ 20,433,069 $ 1,277,495 $ (1,243,639 ) $ 20,466,925 Deferred origination costs 9,717 — — 9,717 Less: Allowance for loan losses (56,429 ) — — (56,429 ) Loans to members, net 20,386,357 1,277,495 (1,243,639 ) 20,420,213 Other assets 1,792,703 136,339 (116,512 ) 1,812,530 Total assets $ 22,179,060 $ 1,413,834 $ (1,360,151 ) $ 22,232,743 Year Ended May 31, 2013 (Dollars in thousands) CFC Other Elimination Consolidated Statement of operations: Interest income $ 939,780 $ 55,987 $ (40,014 ) $ 955,753 Interest expense (690,355 ) (41,684 ) 40,014 (692,025 ) Net interest income 249,425 14,303 — 263,728 Provision for loan losses 70,091 — — 70,091 Net interest income after provision for loan losses 319,516 14,303 — 333,819 Non-interest income: Fee and other income 37,740 1,347 (906 ) 38,181 Derivative losses 83,604 1,263 (24 ) 84,843 Results of operations of foreclosed assets (897 ) — — (897 ) Total non-interest income 120,447 2,610 (930 ) 122,127 Non-interest expense: General and administrative expenses (75,252 ) (9,836 ) 906 (84,182 ) Provision for guarantee liability 4,772 — — 4,772 Losses on early extinguishment of debt (10,636 ) — — (10,636 ) Other (5,088 ) — 24 (5,064 ) Total non-interest expense (86,204 ) (9,836 ) 930 (95,110 ) Income before income taxes 353,759 7,077 — 360,836 Income tax expense — (2,749 ) — (2,749 ) Net income $ 353,759 $ 4,328 $ — $ 358,087 |
General Information and Accou22
General Information and Accounting Policies (Policies) | 12 Months Ended |
May. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Fair value of assets and liabilities measured on recurring or nonrecurring basis | Fair Value Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date (also referred to as an exit price). The fair value accounting guidance provides a three-level fair value hierarchy for classifying financial instruments. This hierarchy is based on the markets in which the assets or liabilities trade and whether the inputs to the valuation techniques used to measure fair value are observable or unobservable. Fair value measurement of a financial asset or liability is assigned a level based on the lowest level of any input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are summarized below: • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities • Level 2: Observable market-based inputs, other than quoted prices in active markets for identical assets or liabilities. • Level 3: Unobservable inputs Assets and liabilities measured at fair value on either a recurring or non-recurring basis on the consolidated balance sheets as of May 31, 2015 and 2014 consisted of investments in common and preferred stock, derivative instruments, and nonperforming collateral-dependent loans. Assets and Liabilities Measured at Fair Value on a Recurring Basis Assets and liabilities measured at fair value on a recurring basis as of May 31, 2015 and 2014 consisted of our derivative instruments, investments in common and preferred stock and deferred compensation investments. The following table presents our assets and liabilities that are measured at fair value on a recurring basis as of May 31, 2015 and 2014 . 2015 2014 (Dollars in thousands) Level 1 Level 2 Level 1 Level 2 Investment securities $ 84,472 $ — $ 55,177 $ — Deferred compensation investments 4,294 — 4,156 — Derivative assets — 115,276 — 209,759 Derivative liabilities — 408,382 — 388,208 Derivative Instruments We account for derivative instruments in the consolidated balance sheets as either an asset or liability measured at fair value. We only enter into swap agreements with counterparties that are participating in our revolving lines of credit at the time the exchange agreements are executed. All of our swap agreements are subject to master netting agreements. There is not an active secondary market for the types of interest rate swaps we use. We use an internal model to calculate the value of our derivatives based on discounted cash flows utilizing observable market inputs. To calculate fair value, we determine the forward curve. The forward curve allows us to determine the projected floating rate cash flows and the discount factors needed to calculate the net present value of each interest payment. The significant observable market inputs for our derivatives include spot LIBOR rates, Eurodollar futures contracts, and market swap rates. We record counterparty credit risk valuation adjustments on our derivative assets to properly reflect the credit quality of the counterparty. The credit default swap levels represent the credit risk premium required by a market participant based on the available information related to us and the counterparty. Fair values for our interest rate swaps are classified as a Level 2 valuation. We record the change in the fair value of our derivatives for each reporting period in the derivative gains (losses) line, included in non-interest income in the consolidated statements of operations, as currently none of our derivatives qualify for hedge accounting. Investments in Preferred and Common Stock Our investments in equity securities consist of investments in Farmer Mac Series A, Series B and Series C preferred stock and Class A common stock, which are recorded in the consolidated balance sheets at fair value. We determine the fair value of these investments based on the quoted price on the stock exchange where the stock is traded. That stock exchange is an active market based on the volume of shares transacted. Fair values for these securities are classified as a Level 1 valuation. For the years ended May 31, 2015 and 2014 , we recorded an unrealized gain of $4 million and unrealized loss of $1 million , respectively, in accumulated other comprehensive income on the consolidated balance sheet. Deferred Compensation Investments Deferred compensation investments are recorded in the consolidated balance sheets in the other assets category at fair value. We calculate fair value based on the quoted price on the stock exchange where the funds are traded. That stock exchange is an active market based on the volume of shares transacted. The amounts are invested in highly liquid indices and mutual funds and are classified within Level 1 of the fair value hierarchy. Assets and Liabilities Measured at Fair Value on a Non-recurring Basis We may be required, from time to time, to measure certain assets at fair value on a non-recurring basis in accordance with GAAP. Any adjustments to fair value usually result from application of lower-of-cost or fair value accounting or write-downs of individual assets. Assets measured at fair value on a non-recurring basis as of May 31, 2015 and 2014 consisted of certain nonperforming collateral-dependent loans and foreclosed assets. The fair value of these assets is determined based on the use of significant unobservable inputs, which are considered Level 3 in the fair value hierarchy. We provide additional information on foreclosed assets in “Note 1—Summary of Significant Accounting Policies” and “Note 4—Foreclosed Assets.” Nonperforming Collateral-Dependent Loans As of May 31, 2015 and 2014 , we measured certain collateral-dependent nonperforming loans at fair value. We utilize the fair value of the collateral underlying the loan to determine the specific allowance for loan loss. In estimating the fair value of the collateral, we may use third-party valuation specialists, internal estimates or a combination of both. The valuation technique used to determine fair value of the nonperforming loans provided by both our internal staff and third-party specialists includes market multiples (i.e., comparable companies). The significant unobservable input used in the determination of fair value for the specific nonperforming loans was a multiple of earnings before interest, taxes, depreciation and amortization of 3.5 x |
Fair value of financial instruments | We consider observable prices in the principal market in our valuations where possible. Fair value estimates were developed at the reporting date and may not necessarily be indicative of amounts that could ultimately be realized in a market transaction at a future date. There were no transfers between levels of the fair value hierarchy during the years ended May 31, 2015 and 2014 . With the exception of redeeming debt under early redemption provisions, terminating derivative instruments under early termination provisions and allowing borrowers to prepay their loans, we held and intend to hold all financial instruments to maturity excluding common stock and preferred stock investments that have no stated maturity. Below is a summary of significant methodologies used in estimating fair value amounts as of May 31, 2015 and 2014 . Cash and Cash Equivalents Cash and cash equivalents include cash and certificates of deposit with original maturities of less than 90 days. Cash and cash equivalents are valued at the carrying value, which approximates fair value. Restricted Cash Restricted cash consists of cash and cash equivalents for which use is contractually restricted. The carrying value of restricted cash approximates fair value. Investment Securities Our investments consist of Farmer Mac Series A, Series B and Series C preferred stock and Class A common stock. These securities are classified as available-for-sale and reported at fair value in our consolidated balance sheets. We determine the fair value based on quoted prices on the stock exchange where the stock is traded. That stock exchange is an active market based on the volume of shares transacted. Time Deposits Time deposits with financial institutions in interest-bearing accounts have maturities of less than one year as of the reporting date and are valued at the carrying value, which approximates fair value. Deferred Compensation Investments CFC offers a nonqualified 457(b) deferred compensation plan to highly compensated employees. Such amounts deferred by employees are invested by the company. The deferred compensation investments are presented as other assets in the consolidated balance sheets in the other assets category at fair value. We calculate fair value based on the quoted price on the stock exchange where the funds are traded. That stock exchange is an active market based on the volume of shares transacted. The amounts are invested in highly liquid indices and mutual funds. Loans to Members, Net As part of receiving a loan from us, our members have additional requirements and rights that are not typical of other financial institutions, such as the ability to receive a patronage capital allocation, the general requirement to purchase subordinated certificates or member capital securities to meet their capital contribution requirements as a condition of obtaining additional credit from us, the option to select fixed rates from one year to maturity with the fixed rate resetting or repricing at the end of each selected rate term, the ability to convert from a fixed rate to another fixed rate or the variable rate at any time, and certain interest rate discounts that are specific to the borrower’s activity with us. These features make it difficult to obtain market data for similar loans. Therefore, we must use other methods to estimate the fair value. Fair values for fixed-rate loans are estimated using a discounted cash flow technique by discounting the expected future cash flows using the current rates at which we would make similar loans to new borrowers for the same remaining maturities. The maturity date used in the fair value calculation of loans with a fixed rate for a selected rate term is the next repricing date since these borrowers must reprice their loans at various times throughout the life of the loan at the current market rate. Loans with different risk characteristics, specifically nonperforming and restructured loans, are valued by using collateral valuations or by adjusting cash flows for credit risk and discounting those cash flows using the current rates at which similar loans would be made by us to borrowers for the same remaining maturities. See “Note 13—Fair Value Measurement” for more details about how we calculate the fair value of certain nonperforming loans. The carrying value of our variable-rate loans adjusted for credit risk approximates fair value since variable-rate loans are eligible to be reset at least monthly. Debt Service Reserve Funds Debt service reserve funds represent cash and/or investments on deposit with the bond trustee for tax-exempt bonds that we guarantee. Debt service reserve fund investments include actively traded tax exempt municipal bonds and commercial paper. Carrying value is considered to be equal to fair value. Short-Term Debt Short-term debt consists of commercial paper, select notes, bank bid notes, daily liquidity fund notes and medium-term notes. The fair value of short-term debt with maturities less than or equal to 90 days is carrying value, which is a reasonable estimate of fair value. The fair value of short-term debt with maturities greater than 90 days is estimated based on discounted cash flows and quoted market rates for debt with similar maturities. Short-term debt classified within Level 1 of the fair value hierarchy includes dealer commercial paper, bank bid notes and daily liquidity fund notes. Short-term debt classified within Level 2 of the fair value hierarchy is comprised of member commercial paper and select notes and is determined based on discounted cash flows using discount rates consistent with current market rates for similar products with similar remaining terms. Short-term debt classified within Level 2 also includes our medium-term notes with an original maturity equal to or less than one year. The fair value of short-term medium-term notes classified within Level 2 of the fair value hierarchy was determined based on discounted cash flows using a pricing model that incorporates available market information such as indicative benchmark yields and credit spread assumptions that are provided by third-party pricing services such as our banks that underwrite our other debt transactions. Long-Term Debt Long-term debt consists of collateral trust bonds, medium-term notes and long-term notes payable. We issue substantially all collateral trust bonds and some medium-term notes in underwritten public transactions. Collateral trust bonds and medium-term notes are classified within Level 2 of the fair value hierarchy. The fair value of long-term debt classified within Level 2 of the fair value hierarchy was determined based on discounted cash flows. There is no active secondary trading for the underwritten collateral trust bonds and medium-term notes; therefore, dealer quotes and recent market prices are both used in estimating fair value. There is essentially no secondary market for the medium-term notes issued to our members or in transactions that are not underwritten; therefore, fair value is estimated based on observable benchmark yields and spreads for similar instruments supplied by banks that underwrite our other debt transactions. The long-term notes payable are issued in private placement transactions and there is no secondary trading of such debt. Long-term notes payable are classified within Level 3 of the fair value hierarchy. The fair value was determined based on discounted cash flows using benchmark yields and spreads for similar instruments supplied by underwriter quotes for similar instruments, if available. Secondary trading quotes for our debt instruments used in the determination of fair value incorporate our credit risk. Guarantees The fair value of our guarantee liability is based on the fair value of our contingent and non-contingent exposure related to our guarantees. The fair value of our contingent exposure for guarantees is based on management’s estimate of our exposure to losses within the guarantee portfolio using a discounted cash flow method. The fair value of our non-contingent exposure for guarantees issued is estimated based on the total unamortized balance of guarantee fees paid and guarantee fees to be paid discounted at our current short-term funding rate, which represents management’s estimate of the fair value of our obligation to stand ready to perform. Subordinated Deferrable Debt Subordinated deferrable debt outstanding was issued in an underwritten public transaction. There is no active secondary trading for this subordinated deferrable debt; therefore, dealer quotes and recent market prices are both used in estimating fair value based on a discounted cash flow method. Members’ Subordinated Certificates Members’ subordinated certificates include (i) membership subordinated certificates issued to our members, (ii) loan and guarantee subordinated certificates issued as a condition of obtaining loan funds or guarantees and (iii) member capital securities issued as voluntary investments by our members. All members' subordinated certificates are non-transferable other than among members with CFC’s consent and there is no ready market from which to obtain fair value quotes. These certificates are valued at par. Derivative Instruments We account for derivative instruments in the consolidated balance sheets as either an asset or liability measured at fair value. There is not an active secondary market for the types of interest rate swaps we use. We use an internal model to calculate the value of our derivatives based on discounted cash flows utilizing observable market inputs. The significant observable market inputs for our derivatives include spot LIBOR rates, Eurodollar futures contracts, and market swap rates. We record counterparty credit risk valuation adjustments on our derivative assets to properly reflect the credit quality of the counterparty. The credit default swap levels represent the credit risk premium required by a market participant based on the available information related to us and the counterparty. Commitments The fair value of our commitments is estimated based on the carrying value, or zero. Extensions of credit under these commitments, if exercised, would result in loans priced at market rates. See “Note 13—Fair Value Measurement” for additional information on assets and liabilities reported at fair value on a recurring and non-recurring basis on our consolidated balance sheets. |
General Information | National Rural Utilities Cooperative Finance Corporation (“CFC”) is a member-owned cooperative association incorporated under the laws of the District of Columbia in April 1969. CFC’s principal purpose is to provide its members with financing to supplement the loan programs of the Rural Utilities Service (“RUS”) of the United States Department of Agriculture (“USDA”). CFC makes loans to its rural electric members so they can acquire, construct and operate electric distribution, generation, transmission and related facilities. CFC also provides its members with credit enhancements in the form of letters of credit and guarantees of debt obligations. As a cooperative, CFC is owned by and exclusively serves its membership, which consists of not-for-profit entities or subsidiaries or affiliates of not-for-profit entities. CFC is exempt from federal income taxes. Rural Telephone Finance Cooperative (“RTFC”) is a cooperative association originally incorporated in South Dakota in 1987 and reincorporated as a member-owned cooperative association in the District of Columbia in 2005. RTFC’s principal purpose is to provide and arrange financing for its rural telecommunications members and their affiliates. As a member-owned cooperative lender, RTFC’s objective is to offer its members cost-based financial products and services consistent with sound financial management and is not to maximize net income. RTFC’s membership consists of a combination of not-for-profit entities and for-profit entities. RTFC’s results of operations and financial condition are consolidated with CFC in the accompanying financial statements. RTFC is headquartered with CFC in Dulles, Virginia. RTFC is a taxable cooperative that pays income tax based on its net income, excluding patronage-sourced net earnings allocated to its patrons, as permitted under Subchapter T of the Internal Revenue Code. National Cooperative Services Corporation (“NCSC”) was incorporated in 1981 in the District of Columbia as a member-owned cooperative association. NCSC’s principal purpose is to provide financing to members of CFC, entities eligible to be members of CFC and the for-profit and nonprofit entities that are owned, operated or controlled by or provide significant benefit to certain members of CFC. As a member-owned cooperative lender, NCSC’s objective is to offer its members cost-based financial products and services consistent with sound financial management and is not to maximize net income. As of May 31, 2015 , NCSC’s membership consisted primarily of distribution systems that were members of CFC or were eligible for such membership. NCSC’s results of operations and financial condition are consolidated with CFC in the accompanying financial statements. NCSC is headquartered with CFC in Dulles, Virginia. NCSC is a taxable cooperative that pays income tax on the full amount of its reportable taxable income and allowable deductions. |
Principles of Consolidation and Basis of Presentation | Basis of Presentation and Use of Estimates The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Preparation of these consolidated financial statements requires management to make estimates and assumptions that affect the assets, liabilities, revenue and expenses reported in the financial statements, as well as amounts included in the notes thereto, including discussion and disclosure of contingent liabilities. Items that require our most significant estimates and subjective judgments, and involve inherent uncertainty, include the allowance for loan losses, the determination of the fair value of our derivative instruments and impairment assessments related to our foreclosed assets. Our judgment regarding estimates and assumptions may change as new and unforeseen events occur; additional information is obtained through the passage of time; and through changes in economic conditions and the operating environment. Actual results could differ from our estimates. Principles of Consolidation The consolidated financial statements include CFC, RTFC and NCSC and certain entities created and controlled by CFC to hold foreclosed assets, after elimination of intercompany accounts and transactions. Unless stated otherwise, references to “we, “our” or “us” represent the consolidation of CFC, RTFC, NCSC and certain entities controlled by CFC to hold foreclosed assets. CFC established limited liability corporations and partnerships to hold foreclosed assets resulting from defaulted loans or bankruptcy. CFC owns and controls all of these entities and, therefore, consolidates their financial results. CFC presents the companies formed to hold foreclosed assets in one line on the consolidated balance sheets and the consolidated statements of operations. Foreclosed assets are held by two subsidiaries controlled by CFC. Denton Realty Partners, LP (“DRP”) holds assets including a land development loan and limited partnership interest in certain real estate developments and related receivables, developed lots and retail land. During the fourth quarter of the year ended May 31, 2015 , all of DRP’s remaining assets were sold. Caribbean Asset Holdings (“CAH”) holds our investment in cable and telecommunications operating entities in the United States Virgin Islands (“USVI”), British Virgin Islands and St. Maarten. Variable Interest Entities Based on the accounting standards governing consolidations, equity controlled by RTFC and NCSC is classified as noncontrolling interest on the consolidated balance sheet, and the subsidiary earnings controlled by RTFC and NCSC are reported as net income or net loss attributable to the noncontrolling interest on the consolidated statement of operations. CFC manages the lending activities of RTFC and NCSC. We are required to consolidate the financial results of RTFC and NCSC because CFC is the primary beneficiary of variable interests in RTFC and NCSC due to its exposure to absorbing the majority of their expected losses. Under separate guarantee agreements, RTFC and NCSC pay CFC a fee to indemnify them against loan losses. CFC is the sole lender to and manages the business operations of RTFC through a management agreement in effect until December 1, 2016, which is automatically renewed for one -year terms thereafter unless terminated by either party. CFC is the primary source of funding to and manages the lending activities of NCSC through a management agreement that is automatically renewable on an annual basis unless terminated by either party. NCSC funds its lending programs through loans from CFC or debt guaranteed by CFC. In connection with these guarantees, NCSC must pay a guarantee fee. All loans that require RTFC board approval also require approval by CFC for funding under RTFC’s credit facilities with CFC. CFC is not a member of RTFC and does not elect directors to the RTFC board. RTFC has a non-voting associate member relationship with CFC. RTFC members elect directors to the RTFC board based on one vote for each member. All loans that require NCSC board approval also require CFC board approval. CFC is not a member of NCSC. If CFC becomes a member of NCSC, it would control the nomination process for one NCSC director. NCSC members elect directors to the NCSC board based on one vote for each member within a district. NCSC is a service organization member of CFC. RTFC and NCSC creditors have no recourse against CFC in the event of a default by RTFC and NCSC, unless there is a guarantee agreement under which CFC has guaranteed NCSC or RTFC debt obligations to a third-party. As of May 31, 2015 , CFC had guaranteed $61 million of NCSC debt, derivative instruments and guarantees with third parties, and CFC’s maximum potential exposure for these instruments totaled $66 million . The maturities for NCSC obligations guaranteed by CFC extend through 2031. Guarantees of NCSC debt and derivative instruments are not included in Note 12, Guarantees, as the debt and derivatives are reported on the consolidated balance sheet. As of May 31, 2015 , CFC guaranteed $2 million of RTFC guarantees with third parties. The maturities for RTFC obligations guaranteed by CFC extend through 2016 and are renewed on an annual basis. All CFC loans to RTFC and NCSC are secured by all assets and revenue of RTFC and NCSC. As of May 31, 2015 , RTFC had total assets of $494 million including loans outstanding to members of $386 million , and NCSC had total assets of $757 million including loans outstanding of $732 million . As of May 31, 2015 , CFC had committed to lend RTFC up to $4,000 million , of which $367 million was outstanding. As of May 31, 2015 , CFC had committed to provide up to $3,000 million of credit to NCSC, of which $784 million was outstanding, representing $723 million of outstanding loans and $61 million of credit enhancements. As of May 31, 2015 , after taking into consideration systems that are members of both CFC and NCSC and eliminating memberships between CFC, RTFC and NCSC, our consolidated membership totaled 1,462 members and 229 associates. Our membership includes the following: • 839 distribution systems; • 72 power supply systems; • 486 telecommunications members; • 64 statewide and regional associations; and • 1 national association of cooperatives. Associates are eligible to borrow, however, they are not eligible to vote on matters submitted to the membership for approval. Our members and associates are located in 49 states, the District of Columbia and two U.S. territories. All references to members within this document include members and associates. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash, certificates of deposit and other investments with original maturities of less than 90 days are classified as cash and cash equivalents. |
Restricted Cash | Restricted Cash Restricted cash represents cash and cash equivalents for which use is contractually restricted. |
Investments | Time Deposits Time deposits are deposits that we make with financial institutions in interest-bearing accounts. These deposits have a maturity of less than one year as of the reporting date and are valued at carrying value, which approximates fair value. Investment Securities Our investment securities, which are classified as available for sale, consist of investments in Federal Agricultural Mortgage Corporation (“Farmer Mac”) Series A Common Stock, Farmer Mac Series A, Series B and Series C Preferred Stock. Available-for-sale securities are carried at fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive income. We regularly evaluate our investment securities whose fair value has declined below the amortized cost to assess whether the decline in fair value is other than temporary. We recognize any other-than-temporary impairment amounts in earnings. |
Loans to Members | Loans to Members Loans to members are classified as held for investment and reported at amortized cost, which is measured based on the outstanding principal balance net of unamortized deferred loan origination costs. Deferred loan origination costs are amortized using the straight-line method, which approximates the effective interest method, over the life of the loan as a reduction to interest income. |
Allowance for Credit Losses | Allowance for Loan Losses We maintain an allowance for loan losses at a level estimated by management to provide for probable losses inherent in the loan portfolio. The allowance for loan losses is reported separately on the consolidated balance sheet, and the provision for loan losses is reported as a separate line item on the consolidated statement of operations. We review the estimates and assumptions used in the calculations of the allowance for loan losses on a quarterly basis. The estimate of the allowance for loan losses is based on a review of the composition of the loan portfolio, past loss experience, specific problem loans, current economic conditions, available market data and/or projection of future cash flows and other pertinent factors that in management’s judgment may contribute to incurred losses. The allowance is based on estimates and, accordingly, actual losses may differ from the allowance amount. The methodology used to calculate the allowance for loan losses is summarized below. The allowance for loan losses is calculated by dividing the portfolio into two categories of loans: (1) the general portfolio, which comprises loans that are performing according to the contractual agreements; and (2) the impaired portfolio, which comprises loans that (i) are not currently performing or (ii) for various reasons we do not expect to collect all amounts as and when due and payable under the loan agreement or (iii) are performing according to a restructured loan agreement, but as a result of the troubled debt restructuring are required to be classified as impaired. Collective Allowance The general portfolio of loans consists of all loans not specifically identified in the impaired category. We disaggregate the loans in the general portfolio by company: CFC, RTFC and NCSC. We further disaggregate the CFC loan portfolio by member class: distribution, power supply and statewide and associates. We use the following factors to determine the allowance for loan losses for the general portfolio category: • Internal risk ratings system. We maintain risk ratings for our borrowers that are updated at least annually and are based on the following: ◦ general financial condition of the borrower; ◦ our judgment of the quality of the borrower’s management; ◦ our judgment of the borrower’s competitive position within its service territory and industry; ◦ our estimate of the potential impact of proposed regulation and litigation; and ◦ other factors specific to individual borrowers or classes of borrowers. • Standard & Poor’s historical utility sector default table. The table provides expected default rates for the utility sector based on rating level and the remaining maturity. We correlate our internal risk ratings to the ratings used in the utility sector default table. We use the default table to assist in estimating our allowance for loan losses because we have limited history from which to develop loss expectations. • Loss Emergence Period. Based on the estimated time between the loss causing event(s) and the date that we charge off the unrecoverable portion of the loan. • Recovery rates. Estimated recovery rates are based on our historical recovery experience by member class calculated by comparing loan balances at the time of default to the total loss recorded on the loan. We have been lending to electric cooperatives since our incorporation in 1969. In addition to the allowance for loan losses for the general portfolio, we maintain a qualitative reserve for the general portfolio based on risk factors not captured in the collective allowance for loan losses. The overriding factor that creates the necessity for this additional component of loan loss reserves not captured in our loan loss model is lag in the timing of receipt of information regarding our borrowers. We actively monitor the operations and financial performance of our borrowers through the review of audited financial statements, review of borrower prepared financial statements (if required) and discussions with borrower management. As a result of the lag, there could be credit events or circumstances that exist with our borrowers for which we have not been made aware that could potentially lead to reassessing/downgrading of certain borrower risk ratings (“BRRs”) to better reflect the risk of default and ultimate loss. Additional qualitative considerations include our expectations with respect to loan workouts, risks associated with large loan exposures and economic and environmental factors. To measure these additional risk factors supporting an additional reserve for the general portfolio, we perform an internal credit risk ratings portfolio stress test quantifying the impact that both upgrades and downgrades in internal credit risk ratings would have on our estimate of losses inherent in the portfolio. Specific Allowance A loan is considered to be impaired when we do not expect to collect all principal and interest payments as scheduled by the original loan terms, other than an insignificant delay or an insignificant shortfall in amount. Factors considered in determining impairment may include, but are not limited to: • the review of the borrower’s audited financial statements and interim financial statements if available, • the borrower’s payment history, • communication with the borrower, • economic conditions in the borrower’s service territory, • pending legal action involving the borrower, • restructure agreements between us and the borrower and • estimates of the value of the borrower’s assets that have been pledged as collateral to secure our loans. We generally measure impairment for individually impaired loans based on the difference between the recorded investment of the loan and the present value of the expected future cash flows discounted at the loan’s effective interest rate. If the loan is collateral dependent, we measure impairment based upon the fair value of the underlying collateral, which we determine based on the current fair value of the collateral less estimated selling costs. Loans are identified as collateral dependent if we believe that collateral is the expected source of repayment. In calculating the impairment on a loan, the estimates of the expected future cash flows or collateral value are the key estimates made by management. Changes in the estimated future cash flows or collateral value affect the amount of the calculated impairment. The change in cash flows required to make the change in the calculated impairment material will be different for each borrower and depend on the period covered, the effective interest rate at the time the loan became impaired and the amount of the loan outstanding. Estimates are not used to determine our investment in the receivables or the discount rate since, in all cases, the investment is equal to the loan balance outstanding at the reporting date, and the discount rate is equal to the effective interest rate on the loan at the time the loan became impaired. We recognize interest income on impaired loans on a case-by-case basis. An impaired loan to a borrower that is nonperforming will typically be placed on nonaccrual status and we will reverse all accrued and unpaid interest. We generally apply all cash received during the nonaccrual period to the reduction of principal, thereby foregoing interest income recognition. Interest income may be recognized on an accrual basis for restructured impaired loans where the borrower is performing and is expected to continue to perform based on agreed-upon terms. All of our restructured loans are troubled debt restructurings. All loans are written off in the period that it becomes evident that collectability is highly unlikely; however, our efforts to recover all charged-off amounts may continue. The determination to write off all or a portion of a loan balance is made based on various factors on a case-by-case basis including, but not limited to, cash flow analysis and the fair value of collateral securing the borrower’s loans. Allowance for Unadvanced Loan Commitments We do not maintain an allowance for the majority of our unadvanced loan commitments as the loans are generally subject to material adverse change clauses that would not require us to lend or continue to lend to a borrower experiencing a material adverse change in their business or condition, financial or otherwise. The methodology used to determine an estimate of probable losses for unadvanced commitments related to committed lines of credit that are not subject to a material adverse change clause at the time of each loan advance is consistent with the methodology used to determine the allowance for loan losses. Due to the nature of unadvanced commitments, the estimate of probable losses also considers the probability of funding such loans based on our historical average utilization rate for committed lines of credit. The allowance for unadvanced commitments is included in the other liabilities line item on the consolidated balance sheet. Changes to the allowance for unadvanced commitments are recorded in the consolidated statement of operations in other non-interest expense. Guarantee Liability We maintain a guarantee liability that represents our contingent and non-contingent exposure related to guarantees and standby liquidity obligations associated with our members’ debt. The guarantee liability is included in the other liabilities line item on the consolidated balance sheet, and the provision for guarantee liability is reported in non-interest expense as a separate line item on the consolidated statement of operations. The contingent portion of the guarantee liability represents management’s estimate of our exposure to losses within the guarantee portfolio. The methodology used to estimate the contingent guarantee liability is consistent with the methodology used to determine the allowance for loan losses. We record a non-contingent guarantee liability for all new or modified guarantees since January 1, 2003. Our non-contingent guarantee liability represents our obligation to stand ready to perform over the term of our guarantees and liquidity obligations that we have entered into or modified since January 1, 2003. Our non-contingent obligation is estimated based on guarantee and liquidity fees charged for guarantees issued, which represents management’s estimate of the fair value of our obligation to stand ready to perform. The fees are deferred and amortized using the straight-line method into interest income over the term of the guarantee. |
Non-performing Loans | Nonperforming Loans We classify loans as nonperforming when any one of the following criteria is met: • principal or interest payments on any loan to the borrower are past due 90 days or more; • as a result of court proceedings, repayment on the original terms is not anticipated; or • for other reasons, management does not expect the timely repayment of principal and interest. A loan is considered past due if a full payment of principal and interest is not received within 30 days of its due date. Once a borrower is classified as nonperforming, we typically place the loan on nonaccrual status and reverse any accrued and unpaid interest recorded during the period in which the borrower stopped performing. We generally apply all cash received during the nonaccrual period to the reduction of principal, thereby foregoing interest income recognition. The decision to return a loan to accrual status is determined on a case-by-case basis. |
Fixed Assets | Fixed Assets Fixed assets are recorded at cost less accumulated depreciation. Depreciation expense ( $6 million , $6 million and $5 million in fiscal years 2015 , 2014 and 2013 , respectively) is computed on the straight-line method over estimated useful lives ranging from 2 to 40 years . |
Debt Service Reserve Fund | Debt Service Reserve Fund As of May 31, 2015 and 2014 , we had $26 million and $39 million , respectively, pledged to the trustee for our members’ obligations to repay tax-exempt bonds, for which we are the guarantor. The member cooperatives are required to purchase debt service reserve subordinated certificates from us as a condition to obtaining the guarantee. We are required to pledge the proceeds from the members’ purchase of the debt service reserve subordinated certificates to the trustee. A deficiency in the fund may occur when (i) the member does not pay the full amount of the periodic debt service payments as due to the trustee or (ii) upon maturity, the trustee uses the amount of the debt service reserve fund to reduce the final payment required by the member. If there is a deficiency in the bond payment due from a member, the trustee will first use the pledged amounts in the related debt service reserve fund to make up the deficiency. If there is still a deficiency after the debt service reserve fund amount is used, then we are required to perform under our guarantee. The member cooperatives are required to make up any deficiency in their specific debt service reserve fund. We record a guarantee liability, which is based on the full amount of the tax-exempt bonds guaranteed. We do not have any additional liability specific to the debt service reserve fund as we have the right at any time to offset the member’s investment in the debt service subordinated certificate against the amount that the member is required to pay to replenish the debt service reserve fund. There were no deficiencies in the debt service reserve fund as of May 31, 2015 and 2014 . Earnings on the debt service reserve fund inure to the benefit of the member cooperatives but are pledged to the trustee and used to reduce the periodic interest payments due from the member cooperatives. During the year ended May 31, 2015 , $14 million of guaranteed bonds requiring a debt service reserve fund were fully repaid, and no new guarantees requiring a debt service reserve fund were made. This resulted in a reduction of $14 million to the debt service reserve fund and member investments in debt service reserve subordinated certificates. During the year ended May 31, 2014 , $1 million guaranteed bonds requiring a debt service reserve fund were fully repaid and no new guarantees requiring a debt service reserve fund were made. This resulted in a reduction of $0.5 million to the debt service reserve fund and member investments in debt service reserve subordinated certificates for the year ended May 31, 2014 . At maturity, the trustee uses the debt service reserve fund to repay the bonds, reducing the amount that the member must pay. The member is obligated to replenish the debt service reserve fund so the trustee can return the pledged funds to us since the guaranteed tax-exempt bonds have been repaid. We offset our requirement to repay the member the amount of the debt service reserve subordinated certificate against our right to collect the amount of the debt service reserve fund from the trustee. As a result, the member’s obligation to replenish the debt service reserve fund is met. The reduction to the debt service reserve fund and the debt service reserve subordinated certificates on our consolidated balance sheet are offsetting and disclosed as a non-cash transaction in the consolidated statement of cash flows. At inception of the guarantee transaction, the trustee sets aside the required debt service reserve fund amount out of the bond proceeds to be held as the asset pledged by CFC. CFC records a liability for the member’s investment in debt service reserve subordinated certificates and records an asset for the debt service reserve fund. Since the trustee holds the cash out of the proceeds, the increase to the debt service reserve fund and increase to the debt service reserve subordinated certificates are disclosed as a non-cash transaction in the consolidated statement of cash flows. |
Foreclosed Assets | Foreclosed Assets Foreclosed assets acquired through our lending activities in satisfaction of indebtedness currently are held in operating entities created and controlled by CFC and reported separately in our consolidated balance sheets under foreclosed assets, net. These assets are initially recorded at estimated fair value as of the date of acquisition. Subsequent to acquisition, foreclosed assets are carried at the lower of the recorded investment or fair value less estimated costs to sell. Fair value of the operating entities is determined based on either a market and income approach or a committed sales price. The results of foreclosed assets and any impairment write-down are recorded in our consolidated results of operations under results of operations of foreclosed assets. |
Derivative Financial Instruments | Derivative Financial Instruments We are an end user of derivative financial instruments and do not engage in derivative trading. We use derivatives, primarily interest rate swaps and treasury rate locks, to manage interest rate risk. In accordance with the accounting standards for derivatives and hedging activities, we record derivative instruments at fair value as either a derivative asset or derivative liability on our consolidated balance sheets. We report derivative asset and liability amounts on a gross basis based on individual contracts, which does not take into consideration the effects of master netting agreements or collateral netting. Derivatives in a gain position are reported as derivative assets on our consolidated balance sheets, while derivatives in a loss position are reported as derivative liabilities. Accrued interest related to derivatives is reported on our consolidated balance sheets as a component of either accrued interest and other receivables or accrued interest payable. If we do not elect hedge accounting treatment, changes in the fair value of derivative instruments, which consist of periodic derivative cash settlements and derivative forward value amounts, are recognized in our consolidated statements of operations under derivative gains (losses). If we elect hedge accounting treatment for derivatives, we formally document, designate and assess the effectiveness of the hedge relationship. Changes in the fair value of derivatives designated as qualifying fair value hedges are recorded in earnings together with offsetting changes in the fair value of the hedged item and any related ineffectiveness. Changes in the fair value of derivatives designated as qualifying cash flow hedges are recorded as a component of other comprehensive income (“OCI”), to the extent that the hedge relationships are effective, and reclassified from accumulated other comprehensive income (“AOCI”) to earnings using the effective interest method over the term of the forecasted transaction. Any ineffectiveness in the hedging relationship is recognized as a component of derivative gains (losses) in our consolidated statement of operations. We generally do not designate interest rate swaps, which represent the substantial majority of our derivatives, for hedge accounting. Accordingly, changes in the fair value of interest rate swaps are reported in our consolidated statements of operations under derivative gains (losses). Cash settlements related to interest rate swaps are classified as an operating activity in our consolidated statements of cash flows. We typically designate treasury rate locks as cash flow hedges of forecasted debt issuances. Accordingly, changes in the fair value of the derivative instruments are recorded as a component of OCI and reclassified to interest expense when the forecasted transaction occurs using the effective interest method. Any ineffectiveness in the hedging relationship is recognized as a component of derivative gains (losses) in our consolidated statements of operations. We did not have any derivatives designated as accounting hedges as of May 31, 2015 and 2014 . At June 1, 2001, as a result of the adoption of the derivative accounting guidance that required derivatives to be reported at fair value on the balance sheet, we recorded a transition adjustment net loss in AOCI. The transition adjustment net loss is being reclassified into earnings and reported as a component of derivative gains (losses) in our consolidated statements of operations. We expect to continue to reclassify the remaining balance of the transition adjustment into earnings through 2029. |
Debt | Debt Debt securities are reported at cost net of discounts or premiums. Issuance costs on debt and discounts are deferred as per applicable accounting guidance, and amortized as interest expense using the effective interest method or a method approximating the effective interest method over the legal maturity of each bond issue. Issuance costs on dealer commercial paper and medium-term notes are recognized as incurred. |
Membership Fees | Membership Fees Members are charged a one-time membership fee based on member class. CFC distribution system members, power supply system members and national associations of cooperatives pay a $1,000 membership fee. CFC service organization members pay a $200 membership fee and CFC associates pay a $1,000 fee. RTFC voting members pay a $1,000 membership fee and RTFC associates pay a $100 fee. NCSC members pay a $100 membership fee. Membership fees are accounted for as members’ equity. |
Financial Instruments with Off-Balance Sheet Risk | Financial Instruments with Off-Balance Sheet Risk In the normal course of business, we are a party to financial instruments with off-balance sheet risk to meet the financing needs of our member borrowers. These financial instruments include committed lines of credit, standby letters of credit and guarantees of members’ obligations. |
Interest Income | Interest Income Interest income on loans is recognized using the effective interest method. |
Interest Expense | Interest Expense The following table presents the components of interest expense for the years ended May 31, 2015, 2014 and 2013 . Year Ended May 31, (Dollars in thousands) 2015 2014 2013 Interest expense on debt: (1) Short-term debt $ 5,654 $ 5,899 $ 6,888 Medium-term notes 69,359 82,978 95,495 Collateral trust bonds 308,474 300,014 327,978 Subordinated deferrable debt 19,000 19,000 12,922 Subordinated certificates 63,604 79,328 81,920 Long-term notes payable 151,206 150,956 150,553 Debt issuance costs (2) 7,544 7,447 7,582 Fee expense (3) 10,843 9,033 8,687 Total interest expense $ 635,684 $ 654,655 $ 692,025 ____________________________ (1) Represents interest expense and the amortization of discounts on debt. (2) Primarily consists of underwriter’s fees, legal fees, printing costs and certain accounting fees, which are deferred and recognized in interest expense using the effective interest method. Also includes issuance costs related to dealer commercial paper, which are recognized immediately as incurred. (3) Reflects various fees related to funding activities, including fees paid to banks participating in our revolving credit agreements. Amounts are recognized as incurred or amortized on a straight-line basis over the life of the agreement. We exclude indirect costs, if any, related to funding activities from interest expense. |
Early Extinguishment of Debt | Early Extinguishment of Debt We redeem outstanding debt early from time to time to manage liquidity and interest rate risk. When we redeem outstanding debt early, we recognize a gain or loss related to the difference between the amount paid to redeem the debt and the net book value of the extinguished debt as a component of non-interest expense in the gain (loss) on early extinguishment of debt line item. |
Income Taxes | Income Taxes While CFC is exempt under Section 501(c)(4) of the Internal Revenue Code, it is subject to tax on unrelated business taxable income. RTFC is a taxable cooperative under Subchapter T of the Internal Revenue Code and is not subject to income taxes on income from patronage sources that is allocated to its borrowers, as long as the allocation is properly noticed and at least 20% of the amount allocated is retired in cash prior to filing the applicable tax return. NCSC is a taxable cooperative that pays income tax on the full amount of its reportable taxable income and allowable deductions. The income tax benefit (expense) recorded in the consolidated statement of operations for the years ended May 31, 2015, 2014 and 2013 represents the income tax benefit (expense) for RTFC and NCSC at the applicable federal and state income tax rates resulting in a statutory tax rate of approximately 38%. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified to conform to the current period presentation in our Form 10-K for the years ended May 31, 2014, 2013, 2012 and 2011. The most significant reclassification relates to the presentation of short-term and long-term debt. Effective August 31, 2014, we began classifying debt as either short-term or long-term based on the original contractual maturity at issuance. For reporting periods prior to August 31, 2014, we reported long-term debt maturing within one year as part of our short-term debt. The debt reclassification had no impact on our debt ratios or financial covenants. |
New Accounting Pronouncements | Recently Issued but Not Yet Adopted Accounting Standards In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers , which clarifies the principles for recognizing revenue from contracts with customers. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers - Deferral of the Effective Date. The new accounting guidance, which does not apply to financial instruments, is effective for us beginning in the first quarter of fiscal year 2019. We do not expect the new guidance to have a material impact on our financial condition, results of operations or liquidity, as CFC’s primary business and source of revenue is from lending. In February 2015, the FASB issued ASU 2015-02, Amendments to the Consolidation Analysis , which is intended to improve upon and simplify the consolidation assessment required to evaluate whether organizations should consolidate certain legal entities such as limited partnerships, limited liability corporations, and securitization structures. The new accounting guidance is effective for us beginning in the first quarter of fiscal year 2017. We do not expect the new guidance to have a material impact on our financial condition, results of operations or liquidity. In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs , which changes the presentation of debt issuance costs in the financial statements. Under the ASU, an entity presents such costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. The new accounting guidance is effective for us beginning in the first quarter of fiscal year 2017. We do not expect the new guidance to have a material impact on our financial condition, results of operations or liquidity. |
General Information and Accou23
General Information and Accounting Policies (Tables) | 12 Months Ended |
May. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of fixed assets | Fixed assets consisted of the following as of May 31, 2015 and 2014 . (Dollars in thousands) 2015 2014 Building and building equipment $ 50,114 $ 50,008 Furniture and fixtures 5,309 5,071 Computer software and hardware 37,516 30,966 Other 968 916 Less: accumulated depreciation (31,268 ) (24,867 ) Land 37,847 37,847 Construction-in-progress and software 10,054 7,129 Fixed assets, net $ 110,540 $ 107,070 |
Schedule of components of interest income | Interest income on loans is recognized using the effective interest method. The following table presents the components of interest income for the years ended May 31, 2015, 2014 and 2013 . Year Ended May 31, (Dollars in thousands) 2015 2014 2013 Interest on long-term fixed-rate loans $ 886,545 $ 887,010 $ 874,287 Interest on long-term variable-rate loans 20,184 20,388 21,684 Interest on line of credit loans 26,411 31,376 32,378 Interest on restructured loans 15 136 13,956 Interest on nonperforming loans — 236 — Interest on investments 7,933 7,080 6,325 Fee income (1) 11,888 11,314 7,123 Total interest income $ 952,976 $ 957,540 $ 955,753 ____________________________ (1) Primarily related to conversion fees, which are deferred and recognized in interest income over the original loan interest rate pricing term using the effective interest method. Also includes a small portion of conversion fees that are intended to cover the administrative costs related to the conversion, which are recognized immediately. |
Schedule of components of interest expense | The following table presents the components of interest expense for the years ended May 31, 2015, 2014 and 2013 . Year Ended May 31, (Dollars in thousands) 2015 2014 2013 Interest expense on debt: (1) Short-term debt $ 5,654 $ 5,899 $ 6,888 Medium-term notes 69,359 82,978 95,495 Collateral trust bonds 308,474 300,014 327,978 Subordinated deferrable debt 19,000 19,000 12,922 Subordinated certificates 63,604 79,328 81,920 Long-term notes payable 151,206 150,956 150,553 Debt issuance costs (2) 7,544 7,447 7,582 Fee expense (3) 10,843 9,033 8,687 Total interest expense $ 635,684 $ 654,655 $ 692,025 ____________________________ (1) Represents interest expense and the amortization of discounts on debt. (2) Primarily consists of underwriter’s fees, legal fees, printing costs and certain accounting fees, which are deferred and recognized in interest expense using the effective interest method. Also includes issuance costs related to dealer commercial paper, which are recognized immediately as incurred. (3) Reflects various fees related to funding activities, including fees paid to banks participating in our revolving credit agreements. Amounts are recognized as incurred or amortized on a straight-line basis over the life of the agreement. |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
May. 31, 2015 | |
Investments [Abstract] | |
Schedule of investments in equity securities | as of May 31, 2015 and 2014 . 2015 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Farmer Mac—Series A Non-Cumulative Preferred Stock $ 30,000 $ 264 $ — $ 30,264 Farmer Mac—Series B Non-Cumulative Preferred Stock 25,000 1,250 — 26,250 Farmer Mac—Series C Non-Cumulative Preferred Stock 25,000 900 — 25,900 Farmer Mac—Class A Common Stock 538 1,520 — 2,058 Total available-for-sale investment securities $ 80,538 $ 3,934 $ — $ 84,472 2014 (Dollars in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Farmer Mac—Series A Non-Cumulative Preferred Stock $ 30,000 $ — $ (2,220 ) $ 27,780 Farmer Mac—Series B Non-Cumulative Preferred Stock 25,000 500 — 25,500 Farmer Mac—Class A Common Stock 538 1,359 — 1,897 Total available-for-sale investment securities $ 55,538 $ 1,859 $ (2,220 ) $ 55,177 |
Loans and Commitments (Tables)
Loans and Commitments (Tables) | 12 Months Ended |
May. 31, 2015 | |
Loans and Leases Receivable Disclosure [Abstract] | |
Summary of loans outstanding to members and unadvanced commitments by loan type and by member class | May 31, 2015 and 2014 are presented below. 2015 2014 (Dollars in thousands) Loans Outstanding Unadvanced Commitments (1) Loans Outstanding Unadvanced Commitments (1) Loan type: (2) Long-term fixed-rate loans $ 19,543,274 $ — $ 18,175,656 $ — Long-term variable-rate loans 698,495 4,835,623 753,918 4,710,273 Loans guaranteed by RUS 179,241 — 201,863 — Line of credit loans 1,038,210 9,294,127 1,335,488 9,201,805 Total loans outstanding (3) 21,459,220 14,129,750 20,466,925 13,912,078 Deferred loan origination costs 9,797 — 9,717 — Loans to members $ 21,469,017 $ 14,129,750 $ 20,476,642 $ 13,912,078 Member class: (2) CFC: Distribution $ 16,095,043 $ 9,474,568 $ 15,035,365 $ 9,531,315 Power supply 4,181,481 3,273,501 4,086,163 3,025,423 Statewide and associate 65,466 127,473 67,902 105,961 CFC total 20,341,990 12,875,542 19,189,430 12,662,699 RTFC 385,709 288,810 449,546 304,500 NCSC 731,521 965,398 827,949 944,879 Total loans outstanding $ 21,459,220 $ 14,129,750 $ 20,466,925 $ 13,912,078 ____________________________ (1) The interest rate on unadvanced commitments is not set until drawn, therefore, the long-term unadvanced loan commitments have been classified in this table as variable-rate unadvanced commitments. However, at the time of the advance, the borrower may select a fixed or a variable rate on the new loan. (2) Includes nonperforming and restructured loans. (3) Represents the unpaid principal balance excluding deferred loan origination costs. |
Summary of available balance under committed lines of credit and the related maturities by fiscal year | The following table summarizes the available balance under unconditional committed lines of credit as of May 31, 2015 and the related maturities by fiscal year as follows: Available Balance Notional Maturities of Unconditional Committed Lines of Credit (Dollars in thousands) 2016 2017 2018 2019 2020 Committed lines of credit $2,764,968 $78,885 $288,752 $800,250 $965,968 $631,113 |
Schedule of Available Balance and Maturities of Lines of Credit [Table Text Block] | The following table summarizes the available balance under unadvanced commitments as of May 31, 2015 and the related maturities by fiscal year and thereafter by loan type: Available Balance Notional Maturities of Unadvanced Commitments (Dollars in thousands) 2016 2017 2018 2019 2020 Thereafter Line of credit loans $ 9,294,127 $ 5,370,133 $ 641,592 $ 1,194,842 $ 1,108,097 $ 802,063 $ 177,400 Long-term loans 4,835,623 862,311 1,046,660 851,338 1,046,234 985,439 43,641 Total $ 14,129,750 $ 6,232,444 $ 1,688,252 $ 2,046,180 $ 2,154,331 $ 1,787,502 $ 221,041 |
Schedule of analysis of the age of the recorded investment in loans outstanding by member class | The tables below show an analysis of the age of the recorded investment in loans outstanding by member class as of May 31, 2015 and 2014 . 2015 (Dollars in thousands) Current 30-89 Days Past Due 90 Days or More Past Due (1) Total Past Due Total Financing Receivables Nonaccrual Loans CFC: Distribution $ 16,095,043 $ — $ — $ — $ 16,095,043 $ 7,221 Power supply 4,181,481 — — — 4,181,481 — Statewide and associate 65,466 — — — 65,466 — CFC total 20,341,990 — — — 20,341,990 7,221 RTFC 385,709 — — — 385,709 4,221 NCSC 731,521 — — — 731,521 294 Total loans outstanding $ 21,459,220 $ — $ — $ — $ 21,459,220 $ 11,736 As a % of total loans 100.00 % — % — % — % 100.00 % 0.05 % 2014 (Dollars in thousands) Current 30-89 Days Past Due 90 Days or More Past Due (1) Total Total Financing Nonaccrual Loans CFC: Distribution $ 15,035,365 $ — $ — $ — $ 15,035,365 $ 7,584 Power supply 4,086,163 — — — 4,086,163 — Statewide and associate 67,902 — — — 67,902 — CFC total 19,189,430 — — — 19,189,430 7,584 RTFC 449,546 — — — 449,546 1,695 NCSC 827,949 — — — 827,949 400 Total loans outstanding $ 20,466,925 $ — $ — $ — $ 20,466,925 $ 9,679 As a % of total loans 100.00 % — % — % — % 100.00 % 0.05 % ____________________________ (1) All loans 90 days or more past due are on nonaccrual status. |
Schedule of loan portfolio by risk rating category and member class based on available data | The following table presents our loan portfolio by risk rating category and member class based on available data as of May 31, 2015 and 2014 . 2015 2014 (Dollars in thousands) Pass Criticized Total Pass Criticized Total CFC: Distribution $ 16,062,516 $ 32,527 $ 16,095,043 $ 15,018,642 $ 16,723 $ 15,035,365 Power supply 4,181,481 — 4,181,481 4,086,163 — 4,086,163 Statewide and associate 65,200 266 65,466 67,625 277 67,902 CFC total 20,309,197 32,793 20,341,990 19,172,430 17,000 19,189,430 RTFC 373,087 12,622 385,709 447,851 1,695 449,546 NCSC 727,159 4,362 731,521 825,736 2,213 827,949 Total loans outstanding $ 21,409,443 $ 49,777 $ 21,459,220 $ 20,446,017 $ 20,908 $ 20,466,925 |
Schedule of exposure to the 10 largest borrowers as a percentage of total credit exposure broken down by exposure type and by borrower type | The following table shows the exposure to the 20 largest borrowers as a percentage of total credit exposure broken down by exposure type and by borrower type as of May 31, 2015 and 2014 . 2015 2014 (Dollars in thousands) Amount % Amount % Total by type: Loans $ 5,478,977 24 % $ 5,070,799 24 % Guarantees 374,189 2 555,818 2 Total credit exposure to 20 largest borrowers $ 5,853,166 26 % $ 5,626,617 26 % Company: CFC $ 5,837,463 26 % $ 5,328,333 25 % NCSC 15,703 — 298,284 1 Total credit exposure to 20 largest borrowers $ 5,853,166 26 % $ 5,626,617 26 % |
Summary of the activity in the loan loss allowance reflecting disaggregation by company of the allowance for loan losses held at CFC based on borrower type | years ended May 31, 2015, 2014 and 2013 . 2015 (Dollars in thousands) CFC RTFC NCSC Total Balance as of May 31, 2014 $ 45,600 $ 4,282 $ 6,547 $ 56,429 Provision for loan losses (22,098 ) 1,250 (1,106 ) (21,954 ) Charge-offs — (999 ) — (999 ) Recoveries 214 — — 214 Balance as of May 31, 2015 $ 23,716 $ 4,533 $ 5,441 $ 33,690 2014 (Dollars in thousands) CFC RTFC NCSC Total Balance as of May 31, 2013 $ 41,246 $ 9,158 $ 3,921 $ 54,325 Provision for loan losses 4,142 (3,270 ) 2,626 3,498 Charge-offs — (1,606 ) — (1,606 ) Recoveries 212 — — 212 Balance as of May 31, 2014 $ 45,600 $ 4,282 $ 6,547 $ 56,429 2013 (Dollars in thousands) CFC RTFC NCSC Total Balance as of May 31, 2012 $ 126,941 $ 8,562 $ 7,823 $ 143,326 Provision for loan losses (66,785 ) 596 (3,902 ) (70,091 ) Charge-offs (19,122 ) — — (19,122 ) Recoveries 212 — — 212 Balance as of May 31, 2013 $ 41,246 $ 9,158 $ 3,921 $ 54,325 |
Schedule of loan loss allowance and the recorded investment in outstanding loans by impairment methodology and by company | May 31, 2015 and 2014 . 2015 (Dollars in thousands) CFC RTFC NCSC Total Ending balance of the allowance: Collectively evaluated $ 23,716 $ 4,138 $ 5,441 $ 33,295 Individually evaluated — 395 — 395 Total ending balance of the allowance $ 23,716 $ 4,533 $ 5,441 $ 33,690 Recorded investment in loans: Collectively evaluated $ 20,334,769 $ 381,488 $ 731,227 $ 21,447,484 Individually evaluated 7,221 4,221 294 11,736 Total recorded investment in loans $ 20,341,990 $ 385,709 $ 731,521 $ 21,459,220 Loans to members, net (1) $ 20,318,274 $ 381,176 $ 726,080 $ 21,425,530 2014 (Dollars in thousands) CFC RTFC NCSC Total Ending balance of the allowance: Collectively evaluated $ 45,600 $ 3,876 $ 6,527 $ 56,003 Individually evaluated — 406 20 426 Total ending balance of the allowance $ 45,600 $ 4,282 $ 6,547 $ 56,429 Recorded investment in loans: Collectively evaluated $ 19,181,846 $ 447,851 $ 827,549 $ 20,457,246 Individually evaluated 7,584 1,695 400 9,679 Total recorded investment in loans $ 19,189,430 $ 449,546 $ 827,949 $ 20,466,925 Loans to members, net (1) $ 19,143,830 $ 445,264 $ 821,402 $ 20,410,496 ___________________________ (1) Excludes deferred origination costs of $10 million as of May 31, 2015 and 2014 . |
Summary of recorded investment in individually-impaired loans and the related specific valuation allowance by member class | May 31, 2015 and 2014 are summarized below. 2015 2014 (Dollars in thousands) Recorded Investment Related Allowance Recorded Investment Related Allowance With no specific allowance recorded: CFC/Distribution $ 7,221 $ — $ 7,584 $ — NCSC 294 — — — Total 7,515 — 7,584 — With a specific allowance recorded: NCSC — — 400 20 RTFC 4,221 395 1,695 406 Total 4,221 395 2,095 426 Total impaired loans $ 11,736 $ 395 $ 9,679 $ 426 |
Schedule of average recorded investment in impaired loans and the interest income recognized by member class | The table below represents the average recorded investment in impaired loans and the interest income recognized by member class for the years ended May 31, 2015, 2014 and 2013 . Average Recorded Investment Interest Income Recognized (Dollars in thousands) 2015 2014 2013 2015 2014 2013 CFC/Distribution $ 7,312 $ 10,850 $ 171,928 $ — $ 136 $ 13,956 CFC/Power Supply — 4,250 5,000 — 5 — NCSC 325 218 — 15 7 — RTFC 1,438 6,235 6,942 — 224 — Total impaired loans $ 9,075 $ 21,553 $ 183,870 $ 15 $ 372 $ 13,956 |
Schedule of nonperforming and restructured loans | Nonperforming and restructured loans outstanding and unadvanced commitments to members are summarized as follows by loan type and by company as of May 31, 2015 and 2014 . 2015 2014 (Dollars in thousands) Loans Outstanding Unadvanced Commitments (1) Loans Outstanding Unadvanced Commitments (1) Nonperforming and restructured loans: Nonperforming loans: RTFC: Long-term variable-rate loans $ — $ — $ 1,695 $ — NCSC: Line of credit loans — — 400 — Total nonperforming loans $ — $ — $ 2,095 $ — Restructured loans: CFC: Long-term fixed-rate loans (2) $ 7,221 $ — $ 7,584 $ — RTFC: Long-term variable-rate loans 4,221 — — — NCSC: Line of credit loans 294 — — — Total restructured loans $ 11,736 $ — $ 7,584 $ — ___________________________ (1) The interest rate on unadvanced commitments is not set until drawn, therefore, the long-term unadvanced loan commitments have been classified in this table as variable-rate unadvanced commitments. However, at the time of the advance, the borrower may select a fixed or a variable rate on the new loan. (2) A borrower in this category also had a line of credit loan outstanding that was classified as performing as of May 31, 2015 and 2014 . Unadvanced commitments related to this line of credit loan totaled $2 million and $3 million as of May 31, 2015 and 2014 , respectively. |
Summary of foregone interest income as a result of holding loans on non-accrual status | oregone interest income as a result of holding loans on nonaccrual status as of each of the years ended May 31, 2015, 2014 and 2013 . (Dollars in thousands) 2015 2014 2013 Nonperforming loans $ 123 $ 314 $ 597 Restructured loans 532 488 341 Total $ 655 $ 802 $ 938 |
Summary of loans outstanding as collateral pledged to secure the entity's collateral trust bonds, Clean Renewable Energy Bonds and notes payable to the Federal Agricultural Mortgage Corporation and the amount of the corresponding debt outstanding | The following table summarizes our loans outstanding as collateral pledged to secure our collateral trust bonds, Clean Renewable Energy Bonds and notes payable to Farmer Mac and the amount of the corresponding debt outstanding as of May 31, 2015 and 2014 . See “Note 5—Short-Term Debt and Credit Arrangements” and “Note 6—Long-Term Debt” for information on our borrowings. (Dollars in thousands) 2015 2014 Collateral trust bonds: 2007 indenture: Distribution system mortgage notes $ 6,551,836 $ 5,987,767 RUS guaranteed loans qualifying as permitted investments 156,665 161,372 Total pledged collateral $ 6,708,501 $ 6,149,139 Collateral trust bonds outstanding 6,197,711 5,397,711 1994 indenture: Distribution system mortgage notes $ 905,656 $ 1,005,058 Collateral trust bonds outstanding 855,000 860,000 Farmer Mac: Distribution and power supply system mortgage notes $ 2,160,805 $ 1,907,607 Notes payable outstanding 1,910,688 1,667,505 Clean Renewable Energy Bonds Series 2009A: Distribution and power supply system mortgage notes $ 19,260 $ 21,398 Cash 485 520 Total pledged collateral $ 19,745 $ 21,918 Notes payable outstanding 16,529 18,230 |
Schedule of collateral on deposit and the amount of the corresponding debt outstanding | The following table shows the collateral on deposit and the amount of the corresponding debt outstanding as of May 31, 2015 and 2014 . (Dollars in thousands) 2015 2014 FFB: Distribution and power supply system mortgage notes on deposit $ 4,943,746 $ 5,076,428 Notes payable outstanding 4,406,785 4,299,000 |
Foreclosed Assets (Tables)
Foreclosed Assets (Tables) | 12 Months Ended |
May. 31, 2015 | |
Repossessed Assets [Abstract] | |
Summary of activity for foreclosed assets | Foreclosed asset activity as of and for the year ended May 31, 2015 is summarized below. 2015 (Dollars in thousands) CAH DRP Total Balance as of beginning of period $ 239,119 $ 6,532 $ 245,651 Results of operations (9,677 ) 244 (9,433 ) Impairment (110,715 ) — (110,715 ) Results of operations of foreclosed assets (120,392 ) 244 (120,148 ) Other comprehensive loss (1,938 ) — (1,938 ) Net cash proceeds (282 ) (6,776 ) (7,058 ) Balance as of end of period $ 116,507 $ — $ 116,507 |
Short-Term Debt and Credit Ar27
Short-Term Debt and Credit Arrangements (Tables) | 12 Months Ended |
May. 31, 2015 | |
Debt Disclosure [Abstract] | |
Summary of short-term debt outstanding and the weighted-average effective interest rates | The following is a summary of short-term debt outstanding and the weighted-average interest rates as of May 31, 2015 and 2014 . 2015 2014 (Dollars in thousands) Debt Outstanding Weighted- Average Interest Rate Debt Outstanding Weighted-Average Interest Rate Short-term debt: Commercial paper sold through dealers, net of discounts (1) $ 984,954 0.15 % $ 1,973,557 0.14 % Commercial paper sold directly to members, at par (1)(2) 736,162 0.15 858,389 0.13 Select notes 671,635 0.29 548,610 0.27 Daily liquidity fund notes 509,131 0.08 486,501 0.06 Bank bid notes — — 20,000 0.60 Medium-term notes sold to members 225,872 0.65 212,274 0.63 Total short-term debt $ 3,127,754 0.20 $ 4,099,331 0.17 ___________________________ (1) Backup liquidity is provided by our revolving credit agreements. |
Schedule of total available and outstanding letters of credit under the revolving credit agreements | The following table presents the total available and the outstanding letters of credit under our revolving credit agreements as of May 31, 2015 and 2014 . Total Available Letters of Credit Outstanding (Dollars in thousands) 2015 2014 2015 2014 Maturity Annual Facility Fee (1) Three-year agreement $ 1,719,855 $ — $ 145 $ — October 28, 2017 7.5 basis points Five-year agreement 1,699,000 — 1,000 — October 28, 2019 10 basis points Three-year agreement — 1,036,000 — — October 28, 2016 10 basis points Four-year agreement — 1,122,500 — — October 28, 2017 10 basis points Five-year agreement — 1,065,609 — 1,891 October 28, 2018 10 basis points Total $ 3,418,855 $ 3,224,109 $ 1,145 $ 1,891 ___________________________ (1) Facility fee determined by CFC’s senior unsecured credit ratings based on the pricing schedules put in place at the inception of the related agreement. |
Schedule of required and actual financial ratios under the revolving credit agreements | The following represents our required and actual financial ratios under the revolving credit agreements at or for the years ended May 31, 2015 and 2014 . Actual Requirement 2015 2014 Minimum average adjusted TIER over the six most recent fiscal quarters (1) 1.025 1.28 1.28 Minimum adjusted TIER for the most recent fiscal year (1) (2) 1.05 1.30 1.23 Maximum ratio of adjusted senior debt to total equity (1) 10.00 5.93 5.79 ___________________________ (1) In addition to the adjustments made to the leverage ratio set forth in “Item 7. MD&A—Non-GAAP Financial Measures,” senior debt excludes guarantees to member systems that have certain investment-grade ratings by Moody’s and S&P. The TIER and debt-to-equity calculations include the adjustments set forth in “Item 7. MD&A—Non-GAAP Financial Measures” and exclude the results of operations and other comprehensive income for CAH. (2) We must meet this requirement to retire patronage capital. |
Long-Term Debt (Tables)
Long-Term Debt (Tables) - Long-Term Debt | 12 Months Ended |
May. 31, 2015 | |
Long-term debt | |
Summary of long-term debt outstanding and the weighted-average effective interest rates | The following is a summary of long-term debt outstanding and the weighted-average interest rates as of May 31, 2015 and 2014 . 2015 2014 (Dollars in thousands) Maturity Date (1) Interest Rate Debt Outstanding Weighted-Average Interest Rate Debt Outstanding Weighted-Average Interest Rate Unsecured long-term debt: Medium-term notes sold through dealers 2015 - 2032 0.53% - 8.00% $ 2,749,894 2.55 % $ 2,228,459 2.68 % Medium-term notes sold to members 2015 - 2032 0.65% - 8.82% 392,298 1.44 285,988 1.82 Subtotal medium-term notes 3,142,192 2.41 2,514,447 2.58 Unamortized discount (706 ) (418 ) Total unsecured medium-term notes 3,141,486 2,514,029 Guaranteed Underwriter Program notes payable 2025 - 2035 1.22% - 5.40% 4,406,785 3.14 4,299,000 3.15 Other unsecured notes payable 2022 - 2023 0% -9.07% 31,168 4.07 35,075 4.14 Subtotal unsecured notes payable 4,437,953 3.15 4,334,075 3.16 Unamortized discount (626 ) (770 ) Total unsecured notes payable 4,437,327 4,333,305 Total unsecured long-term debt 7,578,813 2.84 6,847,334 2.95 Secured long-term debt: Collateral trust bonds 2015 - 2032 1.10% - 10.38% 7,052,711 4.48 6,257,711 4.65 Unamortized discount (271,201 ) (277,496 ) Total collateral trust bonds 6,781,510 5,980,215 Farmer Mac notes payable 2018 - 2045 0.61% - 1.03% 1,910,688 0.77 1,667,505 1.15 Other secured notes payable 2024 2.48% - 3.31% 16,529 2.91 18,230 2.94 Total secured notes payable 1,927,217 0.79 1,685,735 1.16 Total secured long-term debt 8,708,727 3.69 7,665,950 3.91 Total long-term debt $ 16,287,540 3.30 $ 14,513,284 3.47 |
Schedule of amount of long-term debt maturities | The amount of long-term debt maturing in each of the five fiscal years subsequent to May 31, 2015 and thereafter is presented in the table below. (Dollars in thousands) Amount Maturing Weighted-Average Interest Rate 2016 $ 1,690,286 2.12 % 2017 2,060,130 2.19 2018 980,881 4.20 2019 1,821,542 6.91 2020 937,252 2.12 Thereafter 8,797,449 3.07 Total $ 16,287,540 3.30 |
Members' Subordinated Certifi29
Members' Subordinated Certificates (Tables) - Subordinated certificates | 12 Months Ended |
May. 31, 2015 | |
Members' subordinated certificates | |
Schedule of information with respect to members' subordinated certificates | Information with respect to members’ subordinated certificates as of May 31, 2015 and 2014 is as follows: 2015 2014 (Dollars in thousands) Amounts Outstanding Weighted- Interest Rate Amounts Outstanding Weighted- Interest Rate Number of subscribing members 911 909 Membership subordinated certificates: Certificates maturing 2020 through 2095 $ 628,916 $ 628,749 Subscribed and unissued (1) 16,119 16,195 Total membership subordinated certificates 645,035 4.89 % 644,944 4.90 % Loan and guarantee subordinated certificates: 3% certificates maturing through 2040 110,164 110,219 3% to 12% certificates maturing through 2047 301,361 329,748 Non-interest bearing certificates maturing through 2047 229,126 258,789 Subscribed and unissued (1) 238 967 Total loan and guarantee subordinated certificates 640,889 2.94 699,723 3.01 Member capital securities: Securities maturing through 2048 219,520 5.00 267,560 6.12 Total members’ subordinated certificates $ 1,505,444 4.08 $ 1,612,227 4.28 ___________________________ (1) The subscribed and unissued subordinated certificates represent subordinated certificates that members are required to purchase, but are not yet paid for. Upon collection of the full amount of the subordinated certificate based on various payment options, the amount of the certificate will be reclassified from subscribed and unissued to outstanding. |
Schedule of amount of members' subordinated certificates maturing in each of the five fiscal years | The amount of members’ subordinated certificates maturing in each of the five fiscal years following May 31, 2015 and thereafter is presented in the table below. (Dollars in thousands) Amount Maturing Weighted-Average Interest Rate 2016 $ 22,544 2.62 % 2017 11,520 4.10 2018 10,755 2.90 2019 10,571 3.60 2020 11,334 5.39 Thereafter 1,322,381 4.46 Total (1) $ 1,389,105 4.42 ___________________________ (1) Excludes loan subordinated certificates totaling $116 million that amortize annually based on the outstanding balance of the related loan and $0.2 million in subscribed and unissued certificates for which a payment has been received. There are many items that affect the amortization of a loan, such as loan conversions, loan repricing at the end of an interest rate term and prepayments; therefore, an amortization schedule cannot be maintained for these certificates. Over the past fiscal year, annual amortization on these certificates was $11 million . In fiscal year 2015 , amortization represented 10% of amortizing loan subordinated certificates outstanding. |
Derivative Financial Instrume30
Derivative Financial Instruments (Tables) | 12 Months Ended |
May. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of notional amounts outstanding and the weighted average interest rate paid and received for the entity's interest rate swaps | 2015 2014 (Dollars in thousands) Notional Amount Weighted- Average Rate Paid Weighted- Average Rate Received Notional Weighted- Weighted- Pay fixed-receive variable $ 5,776,533 3.15 % 0.28 % $ 5,322,809 3.33 % 0.21 % Pay variable-receive fixed 3,849,000 0.79 3.09 3,124,000 0.85 3.62 Total interest rate swaps $ 9,625,533 2.21 1.40 $ 8,446,809 2.41 1.48 |
Schedule of Derivative Instruments Maturity [Table Text Block] | The following table provides the notional amount and maturities by fiscal year and thereafter for the interest rate exchange agreements to which we were a party as of May 31, 2015 . Notional Amortization and Maturities Notional Amount (Dollars in thousands) 2016 2017 2018 2019 2020 Thereafter Interest rate exchange agreements $9,625,533 $677,906 $1,538,188 $678,356 $535,698 $1,063,825 $5,131,560 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value [Table Text Block] | The following table displays the fair value of the derivative assets and derivative liabilities recorded on our consolidated balance sheets and the related outstanding notional amount of our interest rate swaps as of May 31, 2015 and 2014 . 2015 2014 (Dollars in thousands) Fair Value Notional Balance Fair Value Notional Balance Derivative assets $ 115,276 $ 3,448,615 $ 209,759 $ 3,817,593 Derivative liabilities (408,382 ) 6,176,918 (388,208 ) 4,629,216 Total $ (293,106 ) $ 9,625,533 $ (178,449 ) $ 8,446,809 |
Offsetting Assets [Table Text Block] | The following table presents the gross fair value of derivative assets and liabilities reported on our consolidated balance sheets as of May 31, 2015 and 2014 , and provides information on the impact of netting provisions and collateral pledged. 2015 Gross Amounts of Recognized Assets/ Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Assets/ Liabilities Presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet (Dollars in thousands) Financial Instruments Cash Collateral Pledged Net Amount Derivative assets: Interest rate swaps $ 115,276 $ — $ 115,276 $ 115,276 $ — $ — Derivative liabilities: Interest rate swaps 408,382 — 408,382 115,276 — 293,106 2014 Gross Amounts of Recognized Assets/ Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Assets/ Liabilities Presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet (Dollars in thousands) Financial Instruments Cash Collateral Pledged Net Amount Derivative assets: Interest rate swaps $ 209,759 $ — $ 209,759 $ 169,700 $ — $ 40,059 Derivative liabilities: Interest rate swaps 388,208 — 388,208 169,700 — 218,508 |
Offsetting Liabilities [Table Text Block] | The following table presents the gross fair value of derivative assets and liabilities reported on our consolidated balance sheets as of May 31, 2015 and 2014 , and provides information on the impact of netting provisions and collateral pledged. 2015 Gross Amounts of Recognized Assets/ Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Assets/ Liabilities Presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet (Dollars in thousands) Financial Instruments Cash Collateral Pledged Net Amount Derivative assets: Interest rate swaps $ 115,276 $ — $ 115,276 $ 115,276 $ — $ — Derivative liabilities: Interest rate swaps 408,382 — 408,382 115,276 — 293,106 2014 Gross Amounts of Recognized Assets/ Liabilities Gross Amounts Offset in the Balance Sheet Net Amounts of Assets/ Liabilities Presented in the Balance Sheet Gross Amounts Not Offset in the Balance Sheet (Dollars in thousands) Financial Instruments Cash Collateral Pledged Net Amount Derivative assets: Interest rate swaps $ 209,759 $ — $ 209,759 $ 169,700 $ — $ 40,059 Derivative liabilities: Interest rate swaps 388,208 — 388,208 169,700 — 218,508 |
Summary of gains and losses recorded on the consolidated statements of operations for the entity's interest rate swaps | (Dollars in thousands) 2015 2014 2013 Derivative cash settlements $ (82,906 ) $ (73,962 ) $ (56,461 ) Derivative forward value (114,093 ) 39,541 141,304 Derivative gains (losses) $ (196,999 ) $ (34,421 ) $ 84,843 |
Schedule of notional amounts of derivative instruments having rating triggers | (Dollars in thousands) Notional Amount Payment Required by CFC Payment Due to CFC Net (Payable) Due Impact of mutual rating downgrade trigger: fall to Baa1/BBB+ $ 5,122,355 $ (180,384 ) $ 1,114 $ (179,270 ) falls to Baa3/BBB- 1,789,236 (15,981 ) — (15,981 ) falls below Baa3/BBB- 586,715 (24,333 ) — (24,333 ) falls to or below Ba3/BB (1) 50,000 (6 ) — (6 ) Total $ 7,548,306 $ (220,704 ) $ 1,114 $ (219,590 ) |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
May. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
Schedule of components of equity | Equity includes the following components as of May 31, 2015 and 2014 . (Dollars in thousands) 2015 2014 Membership fees $ 976 $ 973 Educational fund 1,767 1,778 Total membership fees and educational fund 2,743 2,751 Patronage capital allocated 668,980 630,340 Members' capital reserve 501,731 485,447 Unallocated net income (loss) (1) (6,135 ) (6,238 ) Total members equity (1) 1,167,319 1,112,300 Prior years cumulative derivative forward value and foreign currency adjustments (172,412 ) (207,025 ) Current year derivative forward value gain (loss) (2) (114,665 ) 34,613 Cumulative derivative forward value and foreign currency adjustments (287,077 ) (172,412 ) CFC retained equity 880,242 939,888 Accumulated other comprehensive income 4,080 3,649 Total CFC equity 884,322 943,537 Noncontrolling interests 27,464 26,837 Total equity $ 911,786 $ 970,374 ____________________________ (1) Excludes derivative forward value. (2) Represents the derivative forward value income (loss) recorded by CFC for the year-to-date period. |
Summary of activity in accumulated other comprehensive income account by component | The activity in the accumulated other comprehensive income account is summarized below by component as of and for the years ended May 31, 2015 and 2014 . 2015 (Dollars in thousands) Unrealized Gains (Losses) AFS Securities Unrealized Gains Derivatives Unrealized Losses Foreclosed Assets Unrealized Losses Defined Benefit Plan Total Beginning balance $ (361 ) $ 6,320 $ (2,310 ) $ — $ 3,649 Unrealized gains 4,295 — — — 4,295 Unrealized losses — — (1,938 ) (1,050 ) (2,988 ) Losses reclassified into earnings — — — 73 73 Gains reclassified into earnings — (949 ) — — (949 ) Other comprehensive income 4,295 (949 ) (1,938 ) (977 ) 431 Ending balance $ 3,934 $ 5,371 $ (4,248 ) $ (977 ) $ 4,080 2014 (Dollars in thousands) Unrealized Gains (Losses) AFS Securities Unrealized Gains Derivatives Unrealized Losses Foreclosed Assets Unrealized Losses Defined Benefit Plan Total Beginning balance $ 1,094 $ 7,287 $ — $ — $ 8,381 Unrealized gains — — — — — Unrealized losses (1,455 ) — (2,310 ) — (3,765 ) Gains reclassified into earnings — (967 ) — — (967 ) Other comprehensive income (1,455 ) (967 ) (2,310 ) — (4,732 ) Ending balance $ (361 ) $ 6,320 $ (2,310 ) $ — $ 3,649 |
Guarantees (Tables)
Guarantees (Tables) | 12 Months Ended |
May. 31, 2015 | |
Guarantees [Abstract] | |
Summary of total guarantees by type of guarantee and member class | The following table summarizes total guarantees by type of guarantee and member class as of May 31, 2015 and 2014 . (Dollars in thousands) 2015 2014 Total by type: Long-term tax-exempt bonds $ 489,520 $ 518,360 Letters of credit 382,233 431,064 Other guarantees 114,747 115,398 Total $ 986,500 $ 1,064,822 Total by member class: CFC: Distribution $ 172,104 $ 165,559 Power supply 763,746 826,231 Statewide and associate 17,025 5,397 CFC total 952,875 997,187 RTFC 1,574 2,304 NCSC 32,051 65,331 Total $ 986,500 $ 1,064,822 |
Summary of activity in the guarantee liability account | Activity in the guarantee liability account, which is presented in other liabilities, is summarized below as of and for the years ended May 31, 2015, 2014 and 2013 . (Dollars in thousands) 2015 2014 2013 Beginning balance $ 22,091 $ 24,742 $ 28,663 Net change in non-contingent liability (1,654 ) (2,868 ) 851 Provision for contingent guarantee liability (520 ) 217 (4,772 ) Ending balance $ 19,917 $ 22,091 $ 24,742 Liability as a percentage of total guarantees 2.02 % 2.07 % 2.22 % |
Schedule of maturities of outstanding guarantees | The following table details the scheduled maturities of our outstanding guarantees in each of the five fiscal years following May 31, 2015 and thereafter: (Dollars in thousands) Amount Maturing 2016 $ 207,330 2017 35,198 2018 209,711 2019 18,087 2020 63,345 Thereafter 452,829 Total $ 986,500 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 12 Months Ended |
May. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of the entity's assets and liabilities that are measured at fair value on a recurring basis | The following table presents our assets and liabilities that are measured at fair value on a recurring basis as of May 31, 2015 and 2014 . 2015 2014 (Dollars in thousands) Level 1 Level 2 Level 1 Level 2 Investment securities $ 84,472 $ — $ 55,177 $ — Deferred compensation investments 4,294 — 4,156 — Derivative assets — 115,276 — 209,759 Derivative liabilities — 408,382 — 388,208 |
Schedule of carrying/fair value of the related individual assets and the total losses | Level 3 Fair Value Total Losses (Dollars in thousands) 2015 2014 2015 2014 Nonperforming loans, net of specific reserves $ — $ 1,669 $ — $ — |
Fair Value of Financial Instr34
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
May. 31, 2015 | |
Fair Value of Financial Instruments | |
Schedule of carrying and fair values for entity's financial instruments | arrying and fair values of our financial instruments as of May 31, 2015 and 2014 are presented below. 2015 Fair Value Measurements Using (Dollars in thousands) Carrying Value Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 248,836 $ 248,836 $ 248,836 $ — $ — Restricted cash 485 485 485 — — Time deposits 485,000 485,000 — 485,000 — Investment securities 84,472 84,472 84,472 — — Deferred compensation investments 4,294 4,294 4,294 — — Loans to members, net 21,435,327 21,961,048 — — 21,961,048 Debt service reserve funds 25,602 25,602 25,602 — — Derivative instruments 115,276 115,276 — 115,276 — Liabilities: Short-term debt 3,127,754 3,127,541 1,494,131 1,633,410 — Long-term debt 16,287,540 17,356,223 — 10,878,302 6,477,921 Guarantee liability 19,917 22,545 — — 22,545 Derivative instruments 408,382 408,382 — 408,382 — Subordinated deferrable debt 400,000 406,000 — 406,000 — Members’ subordinated certificates 1,505,444 1,505,444 — — 1,505,444 2014 Fair Value Measurements Using (Dollars in thousands) Carrying Value Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 338,715 $ 338,715 $ 338,715 $ — $ — Restricted cash 520 520 520 — — Time deposits 550,000 550,000 — 550,000 — Investment securities 55,177 55,177 55,177 — — Deferred compensation investments 4,156 4,156 4,156 — — Loans to members, net 20,420,213 21,000,687 — — 21,000,687 Debt service reserve funds 39,353 39,353 39,353 — — Derivative instruments 209,759 209,759 — 209,759 — Liabilities: Short-term debt 4,099,331 4,099,534 2,480,166 1,619,368 — Long-term debt 14,513,284 15,738,970 — 9,618,645 6,120,325 Guarantee liability 22,091 24,946 — — 24,946 Derivative instruments 388,208 388,208 — 388,208 — Subordinated deferrable debt 400,000 385,744 — 385,744 — Members’ subordinated certificates 1,612,227 1,612,227 — — 1,612,227 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
May. 31, 2015 | |
Segment Reporting [Abstract] | |
Schedule of segment presentation for the consolidated statements of operations and consolidated balance sheets | The following tables display segment results for the years ended May 31, 2015, 2014 and 2013 , and assets attributable to each segment as of May 31, 2015 and 2014 . Year Ended May 31, 2015 (Dollars in thousands) CFC Other Elimination Consolidated Statement of operations: Interest income $ 940,541 $ 46,666 $ (34,231 ) $ 952,976 Interest expense (634,287 ) (35,628 ) 34,231 (635,684 ) Net interest income 306,254 11,038 — 317,292 Provision for loan losses 21,954 — — 21,954 Net interest income after provision for loan losses 328,208 11,038 — 339,246 Non-interest income: Fee and other income 36,215 3,447 (2,879 ) 36,783 Derivative losses (193,289 ) (3,710 ) — (196,999 ) Results of operations of foreclosed assets (120,148 ) — — (120,148 ) Total non-interest income (277,222 ) (263 ) (2,879 ) (280,364 ) Non-interest expense: General and administrative expenses (69,129 ) (8,370 ) 969 (76,530 ) Provision for guarantee liability 520 — — 520 Losses on early extinguishment of debt (703 ) — — (703 ) Other (706 ) (1,891 ) 1,910 (687 ) Total non-interest expense (70,018 ) (10,261 ) 2,879 (77,400 ) Income (loss) before income taxes (19,032 ) 514 — (18,518 ) Income tax expense — (409 ) — (409 ) Net income (loss) $ (19,032 ) $ 105 $ — $ (18,927 ) May 31, 2015 CFC Other Elimination Consolidated Assets: Total loans outstanding $ 21,431,927 $ 1,117,230 $ (1,089,937 ) $ 21,459,220 Deferred origination costs 9,797 — — 9,797 Less: Allowance for loan losses (33,690 ) — — (33,690 ) Loans to members, net 21,408,034 1,117,230 (1,089,937 ) 21,435,327 Other assets 1,428,327 134,622 (105,146 ) 1,457,803 Total assets $ 22,836,361 $ 1,251,852 $ (1,195,083 ) $ 22,893,130 Year Ended May 31, 2014 (Dollars in thousands) CFC Other Elimination Consolidated Statement of operations: Interest income $ 942,611 $ 50,856 $ (35,927 ) $ 957,540 Interest expense (653,189 ) (37,393 ) 35,927 (654,655 ) Net interest income 289,422 13,463 — 302,885 Provision for loan losses (3,498 ) — — (3,498 ) Net interest income after provision for loan losses 285,924 13,463 — 299,387 Non-interest income: Fee and other income 17,255 1,433 (926 ) 17,762 Derivative losses (33,325 ) (1,096 ) — (34,421 ) Results of operations of foreclosed assets (13,494 ) — — (13,494 ) Total non-interest income (29,564 ) 337 (926 ) (30,153 ) Non-interest expense: General and administrative expenses (64,555 ) (8,937 ) 926 (72,566 ) Provision for guarantee liability (217 ) — — (217 ) Losses on early extinguishment of debt (1,452 ) — — (1,452 ) Other (69 ) — — (69 ) Total non-interest expense (66,293 ) (8,937 ) 926 (74,304 ) Income before income taxes 190,067 4,863 — 194,930 Income tax expense — (2,004 ) — (2,004 ) Net income $ 190,067 $ 2,859 $ — $ 192,926 May 31, 2014 CFC Other Elimination Consolidated Assets: Total loans outstanding $ 20,433,069 $ 1,277,495 $ (1,243,639 ) $ 20,466,925 Deferred origination costs 9,717 — — 9,717 Less: Allowance for loan losses (56,429 ) — — (56,429 ) Loans to members, net 20,386,357 1,277,495 (1,243,639 ) 20,420,213 Other assets 1,792,703 136,339 (116,512 ) 1,812,530 Total assets $ 22,179,060 $ 1,413,834 $ (1,360,151 ) $ 22,232,743 Year Ended May 31, 2013 (Dollars in thousands) CFC Other Elimination Consolidated Statement of operations: Interest income $ 939,780 $ 55,987 $ (40,014 ) $ 955,753 Interest expense (690,355 ) (41,684 ) 40,014 (692,025 ) Net interest income 249,425 14,303 — 263,728 Provision for loan losses 70,091 — — 70,091 Net interest income after provision for loan losses 319,516 14,303 — 333,819 Non-interest income: Fee and other income 37,740 1,347 (906 ) 38,181 Derivative losses 83,604 1,263 (24 ) 84,843 Results of operations of foreclosed assets (897 ) — — (897 ) Total non-interest income 120,447 2,610 (930 ) 122,127 Non-interest expense: General and administrative expenses (75,252 ) (9,836 ) 906 (84,182 ) Provision for guarantee liability 4,772 — — 4,772 Losses on early extinguishment of debt (10,636 ) — — (10,636 ) Other (5,088 ) — 24 (5,064 ) Total non-interest expense (86,204 ) (9,836 ) 930 (95,110 ) Income before income taxes 353,759 7,077 — 360,836 Income tax expense — (2,749 ) — (2,749 ) Net income $ 353,759 $ 4,328 $ — $ 358,087 |
General Information and Accou36
General Information and Accounting Policies - Fixed Assets (Details) $ in Thousands | 12 Months Ended | ||
May. 31, 2015USD ($)category | May. 31, 2014USD ($) | May. 31, 2013USD ($) | |
Fixed Assets | |||
Depreciation | $ 6,497 | $ 5,646 | $ 5,381 |
Fixed Assets | |||
Number of categories of loans | category | 2 | ||
Loan Sales | |||
Loans Receivable Cost of Loans Sold | $ 26,000 | 111,000 | 149,000 |
Bank Servicing Fees | 3,000 | 3,000 | $ 3,000 |
Fixed Assets | |||
Less: accumulated depreciation | (31,268) | (24,867) | |
Fixed assets, net | 110,540 | 107,070 | |
Building and building equipment | |||
Fixed Assets | |||
Fixed assets, gross | 50,114 | 50,008 | |
Furniture and fixtures | |||
Fixed Assets | |||
Fixed assets, gross | 5,309 | 5,071 | |
Computer software and hardware | |||
Fixed Assets | |||
Fixed assets, gross | 37,516 | 30,966 | |
Other | |||
Fixed Assets | |||
Fixed assets, gross | 968 | 916 | |
Land | |||
Fixed Assets | |||
Fixed assets, gross | 37,847 | 37,847 | |
Construction-in-progress and software | |||
Fixed Assets | |||
Fixed assets, gross | $ 10,054 | $ 7,129 | |
Minimum | |||
Fixed Assets | |||
Estimated useful lives | 2 years | ||
Maximum | |||
Fixed Assets | |||
Estimated useful lives | 40 years |
General Information and Accou37
General Information and Accounting Policies - Interest Income (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | ||
Components of interest income | ||||
Interest on investments | $ 7,933 | $ 7,080 | $ 6,325 | |
Fee income | [1] | 11,888 | 11,314 | 7,123 |
Interest income | 952,976 | 957,540 | 955,753 | |
Deferred conversion fees | 70,000 | 73,000 | ||
Long-term fixed-rate loans | ||||
Components of interest income | ||||
Interest income | 886,545 | 887,010 | 874,287 | |
Long-term variable-rate loans | ||||
Components of interest income | ||||
Interest income | 20,184 | 20,388 | 21,684 | |
Line of credit loans | ||||
Components of interest income | ||||
Interest income | 26,411 | 31,376 | 32,378 | |
Restructured loans | ||||
Components of interest income | ||||
Interest income | 15 | 136 | 13,956 | |
Non-performing loans | ||||
Components of interest income | ||||
Interest income | $ 0 | $ 236 | $ 0 | |
[1] | Represents interest expense and the amortization of discounts on debt. |
General Information and Accou38
General Information and Accounting Policies - Interest Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
May. 31, 2015 | [2] | May. 31, 2014 | May. 31, 2013 | |
Interest expense on debt: | ||||
Debt issuance costs | $ 7,544 | [1] | $ 7,447 | $ 7,582 |
Fee expense | 10,843 | [3] | 9,033 | 8,687 |
Total interest expense | 635,684 | 654,655 | 692,025 | |
Short-term debt | ||||
Interest expense on debt: | ||||
Interest expense on debt | 5,654 | 5,899 | 6,888 | |
Medium-term notes | ||||
Interest expense on debt: | ||||
Interest expense on debt | 69,359 | 82,978 | 95,495 | |
Collateral trust bonds | ||||
Interest expense on debt: | ||||
Interest expense on debt | 308,474 | 300,014 | 327,978 | |
Subordinated deferrable debt | ||||
Interest expense on debt: | ||||
Interest expense on debt | 19,000 | 19,000 | 12,922 | |
Subordinated certificates | ||||
Interest expense on debt: | ||||
Interest expense on debt | 63,604 | 79,328 | 81,920 | |
Long-term notes payable | ||||
Interest expense on debt: | ||||
Interest expense on debt | $ 151,206 | $ 150,956 | $ 150,553 | |
[1] | (2) Primarily consists of underwriter’s fees, legal fees, printing costs and certain accounting fees, which are deferred and recognized in interest expense using the effective interest method. Also includes issuance costs related to dealer commercial paper, which are recognized immediately as incurred. | |||
[2] | Represents interest expense and the amortization of discounts on debt. | |||
[3] | 3) Reflects various fees related to funding activities, including fees paid to banks participating in our revolving credit agreements. Amounts are recognized as incurred or amortized on a straight-line basis over the life of the agreement. |
General Information and Accou39
General Information and Accounting Policies - Narrative (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | |||
May. 31, 2015USD ($)associatestatedistribution_systemdirectormemberpower_supply_systemtelecommunication_memberterritoryline_itemcategoryvotesubsidiary$ / shares | May. 31, 2014USD ($) | May. 31, 2013USD ($) | Dec. 01, 2014USD ($) | |
General Information and Accounting Policies [Line Items] | ||||
Number of lines holding foreclosed assets on the balance sheet | line_item | 1 | |||
Number of subsidiaries controlled by the entity, holding foreclosed assets | subsidiary | 2 | |||
Subsidiary management agreements renewal, term | 1 year | |||
Loans to members, net | $ 21,435,327 | $ 20,420,213 | ||
Number of members in consolidated membership | member | 1,462 | |||
Number of associates in consolidated membership | associate | 229 | |||
Number of states where members and associates are located | state | 49 | |||
Number of U.S. territories where members and associates are located | territory | 2 | |||
Number of categories of loans | category | 2 | |||
Loans Receivable Cost of Loans Sold | $ 26,000 | 111,000 | $ 149,000 | |
Bank Servicing Fees | 3,000 | 3,000 | 3,000 | |
Depreciation | 6,497 | 5,646 | 5,381 | |
Debt service reserve funds | 25,602 | 39,353 | ||
Reduction to reserve funds and subordinated certifications due to repaid | 14,000 | 500 | ||
Deferred conversion fees | 70,000 | 73,000 | ||
Losses on early extinguishment of debt | $ (703) | $ (1,452) | $ (10,636) | |
RTFC | ||||
General Information and Accounting Policies [Line Items] | ||||
Effective percentage of tax rate | 38.00% | 38.00% | 38.00% | |
NCSC | ||||
General Information and Accounting Policies [Line Items] | ||||
Membership fees (in dollars per share) | $ / shares | $ 100 | |||
Effective percentage of tax rate | 38.00% | 38.00% | 38.00% | |
Consolidated variable interest entities | RTFC | ||||
General Information and Accounting Policies [Line Items] | ||||
Number of votes by each member for election of directors | vote | 1 | |||
Guarantee amount | $ 2,000 | |||
Total assets including loans outstanding to members | 494,000 | |||
Loans to members, net | 386,000 | |||
Maximum amount committed to extend loan | 4,000,000 | |||
Commitment outstanding | $ 367,000 | |||
Consolidated variable interest entities | NCSC | ||||
General Information and Accounting Policies [Line Items] | ||||
Number of votes by each member for election of directors | vote | 1 | |||
Number of directors for whom nomination process is controlled | director | 1 | |||
Guarantee amount | $ 61,000 | |||
Maximum potential exposure | 66,000 | |||
Total assets including loans outstanding to members | 757,000 | |||
Loans to members, net | 732,000 | |||
Maximum amount committed to extend loan | 3,000,000 | |||
Commitment outstanding | 784,000 | |||
Loans outstanding | $ 723,000 | |||
Distribution | Consolidated variable interest entities | ||||
General Information and Accounting Policies [Line Items] | ||||
Number of members in consolidated membership | distribution_system | 839 | |||
Power supply | Consolidated variable interest entities | ||||
General Information and Accounting Policies [Line Items] | ||||
Number of members in consolidated membership | power_supply_system | 72 | |||
Telecommunications | Consolidated variable interest entities | ||||
General Information and Accounting Policies [Line Items] | ||||
Number of members in consolidated membership | telecommunication_member | 486 | |||
Statewide and regional associations | Consolidated variable interest entities | ||||
General Information and Accounting Policies [Line Items] | ||||
Number of members in consolidated membership | associate | 64 | |||
National association of cooperatives | Consolidated variable interest entities | ||||
General Information and Accounting Policies [Line Items] | ||||
Number of members in consolidated membership | associate | 1 | |||
Maximum | ||||
General Information and Accounting Policies [Line Items] | ||||
Estimated useful lives | 40 years | |||
Minimum | ||||
General Information and Accounting Policies [Line Items] | ||||
Estimated useful lives | 2 years | |||
Minimum | RTFC | ||||
General Information and Accounting Policies [Line Items] | ||||
Percentage of income from patronage sources allocated to borrowers to be retired in cash prior to filing the applicable tax return | 20.00% | |||
Debt Service Reserve Guaranteed Bonds | ||||
General Information and Accounting Policies [Line Items] | ||||
Debt service reserve funds | $ 26,000 | $ 39,000 | ||
Repayment of guarantee bonds requiring a debt service reserve fund | $ 14,000 | $ 1,000 | ||
Distribution system members | CFC | ||||
General Information and Accounting Policies [Line Items] | ||||
Membership fees (in dollars per share) | $ / shares | $ 1,000 | |||
Service organization members | CFC | ||||
General Information and Accounting Policies [Line Items] | ||||
Membership fees (in dollars per share) | $ / shares | 200 | |||
Associates | RTFC | ||||
General Information and Accounting Policies [Line Items] | ||||
Membership fees (in dollars per share) | $ / shares | 100 | |||
Associates | CFC | ||||
General Information and Accounting Policies [Line Items] | ||||
Membership fees (in dollars per share) | $ / shares | 1,000 | |||
Voting members | RTFC | ||||
General Information and Accounting Policies [Line Items] | ||||
Membership fees (in dollars per share) | $ / shares | $ 1,000 | |||
5.50 percent, collateral trust bonds due July 1, 2013 | ||||
General Information and Accounting Policies [Line Items] | ||||
Amount redeemed | $ 400,000 | |||
Stated interest rate (as a percent) | 1.00% | |||
Losses on early extinguishment of debt | $ 1,000 |
Investments (Details)
Investments (Details) - USD ($) $ in Thousands | May. 31, 2015 | May. 31, 2014 |
Investments | ||
Amortized Cost | $ 80,538 | $ 55,538 |
Gross Unrealized Gains | 3,934 | 1,859 |
Gross Unrealized Losses | 0 | (2,220) |
Fair Value | 84,472 | 55,177 |
Preferred Stock | Federal Agricultural Mortgage Corporation Series A preferred stock | ||
Investments | ||
Amortized Cost | 30,000 | 30,000 |
Gross Unrealized Gains | 264 | 0 |
Gross Unrealized Losses | 0 | (2,220) |
Fair Value | 30,264 | 27,780 |
Preferred Stock | Federal Agricultural Mortgage Corporation Series B Preferred Stock | ||
Investments | ||
Amortized Cost | 25,000 | 25,000 |
Gross Unrealized Gains | 1,250 | 500 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 26,250 | 25,500 |
Preferred Stock | Federal Agricultural Mortgage Corporation Series C Preferred Stock [Member] | ||
Investments | ||
Amortized Cost | 25,000 | |
Gross Unrealized Gains | 900 | |
Gross Unrealized Losses | 0 | |
Fair Value | 25,900 | |
Common Stock | Federal Agricultural Mortgage Corporation Class A common stock | ||
Investments | ||
Amortized Cost | 538 | 538 |
Gross Unrealized Gains | 1,520 | 1,359 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 2,058 | $ 1,897 |
Loans and Commitments (Details)
Loans and Commitments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | May. 31, 2012 | ||
Loans outstanding | |||||
Total loans outstanding | $ 21,459,220 | [1],[2] | $ 20,466,925 | ||
Total unadvanced commitments | 2,000 | 3,000 | |||
Deferred origination costs | 9,797 | 9,717 | |||
Loans and Leases Receivable, Net Amount, Commercial | 21,425,530 | [3] | 20,410,496 | ||
Less: Allowance for loan losses | 33,690 | 56,429 | $ 54,325 | $ 143,326 | |
Loans to members | 21,469,017 | 20,476,642 | |||
Unadvanced commitments | |||||
Loans outstanding | |||||
Total unadvanced commitments | 14,129,750 | [1],[2],[4] | 13,912,078 | ||
Non-performing loans | |||||
Loans outstanding | |||||
Total loans outstanding | 0 | 2,000 | |||
Restructured loans | |||||
Loans outstanding | |||||
Total loans outstanding | 12,000 | 8,000 | |||
CFC | |||||
Loans outstanding | |||||
Total loans outstanding | 20,341,990 | [1] | 19,189,430 | ||
Loans and Leases Receivable, Net Amount, Commercial | 20,318,274 | [3] | 19,143,830 | ||
Less: Allowance for loan losses | 23,716 | 45,600 | 41,246 | 126,941 | |
CFC | Unadvanced commitments | |||||
Loans outstanding | |||||
Total unadvanced commitments | 12,875,542 | [1],[4] | 12,662,699 | ||
CFC | Distribution | |||||
Loans outstanding | |||||
Total loans outstanding | 16,095,043 | [1] | 15,035,365 | ||
CFC | Distribution | Unadvanced commitments | |||||
Loans outstanding | |||||
Total unadvanced commitments | 9,474,568 | [1],[4] | 9,531,315 | ||
CFC | Power supply | |||||
Loans outstanding | |||||
Total loans outstanding | 4,181,481 | [1] | 4,086,163 | ||
CFC | Power supply | Unadvanced commitments | |||||
Loans outstanding | |||||
Total unadvanced commitments | 3,273,501 | [1],[4] | 3,025,423 | ||
CFC | Statewide and associate | |||||
Loans outstanding | |||||
Total loans outstanding | 65,466 | [1] | 67,902 | ||
CFC | Statewide and associate | Unadvanced commitments | |||||
Loans outstanding | |||||
Total unadvanced commitments | 127,473 | [1],[4] | 105,961 | ||
RTFC | |||||
Loans outstanding | |||||
Total loans outstanding | 385,709 | [1] | 449,546 | ||
Loans and Leases Receivable, Net Amount, Commercial | 381,176 | [3] | 445,264 | ||
Less: Allowance for loan losses | 4,533 | 4,282 | 9,158 | 8,562 | |
RTFC | Unadvanced commitments | |||||
Loans outstanding | |||||
Total unadvanced commitments | 288,810 | [1],[4] | 304,500 | ||
NCSC | |||||
Loans outstanding | |||||
Total loans outstanding | 731,521 | [1] | 827,949 | ||
Loans and Leases Receivable, Net Amount, Commercial | 726,080 | [3] | 821,402 | ||
Less: Allowance for loan losses | 5,441 | 6,547 | $ 3,921 | $ 7,823 | |
NCSC | Unadvanced commitments | |||||
Loans outstanding | |||||
Total unadvanced commitments | $ 965,398 | [1],[4] | 944,879 | ||
Minimum | |||||
Unadvanced Loan Commitments | |||||
Term of loans | 1 year | ||||
Maximum | |||||
Unadvanced Loan Commitments | |||||
Term of loans | 35 years | ||||
Long-term fixed-rate loans | |||||
Loans outstanding | |||||
Total loans outstanding | $ 19,543,274 | [1] | 18,175,656 | ||
Long-term variable-rate loans | |||||
Loans outstanding | |||||
Total loans outstanding | 698,495 | [1] | 753,918 | ||
Long-term variable-rate loans | Unadvanced commitments | |||||
Loans outstanding | |||||
Total unadvanced commitments | 4,835,623 | [1],[4] | 4,710,273 | ||
Loans guaranteed by RUS | |||||
Loans outstanding | |||||
Total loans outstanding | 179,241 | [1] | 201,863 | ||
Line of credit loans | |||||
Loans outstanding | |||||
Total loans outstanding | 1,038,210 | [1] | 1,335,488 | ||
Line of credit loans | Unadvanced commitments | |||||
Loans outstanding | |||||
Total unadvanced commitments | $ 9,294,127 | [1],[4] | $ 9,201,805 | ||
[1] | Includes nonperforming and restructured loans. | ||||
[2] | Represents the unpaid principal balance excluding deferred loan origination costs. | ||||
[3] | Excludes deferred origination costs of $10 million as of May 31, 2015 and 2014. | ||||
[4] | The interest rate on unadvanced commitments is not set until drawn, therefore, the long-term unadvanced loan commitments have been classified in this table as variable-rate unadvanced commitments. However, at the time of the advance, the borrower may select a fixed or a variable rate on the new loan. |
Loans and Commitments (Details
Loans and Commitments (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |||
Notional maturities of commitments | |||||
Total unadvanced commitments | $ 2,000 | $ 3,000 | |||
Loans Receivable Cost of Loans Sold | 26,000 | 111,000 | $ 149,000 | ||
Bank Servicing Fees | 3,000 | 3,000 | $ 3,000 | ||
Unadvanced commitments | |||||
Notional maturities of commitments | |||||
2,016 | [1],[2],[3] | 6,232,444 | |||
2,017 | [1],[2],[3] | 1,688,252 | |||
2,018 | [1],[2],[3] | 2,046,180 | |||
2,019 | [1],[2],[3] | 2,154,331 | |||
2,020 | [1],[2],[3] | 1,787,502 | |||
Total unadvanced commitments | $ 14,129,750 | [1],[2],[3] | 13,912,078 | ||
Maximum period of commitments to fully fund agreements which have not yet been advanced | 5 years | ||||
Other Commitment, Due after Fifth Year | [1],[2],[3] | $ 221,041 | |||
Unadvanced commitments not subject to material adverse change clauses | |||||
Notional maturities of commitments | |||||
2,016 | 78,885 | ||||
2,017 | 288,752 | ||||
2,018 | 800,250 | ||||
2,019 | 965,968 | ||||
2,020 | 631,113 | ||||
Total unadvanced commitments | $ 2,764,968 | 2,274,000 | |||
Maximum period of commitments to fully fund agreements which have not yet been advanced | 5 years | ||||
Unadvanced commitments subject to material adverse change clauses | |||||
Notional maturities of commitments | |||||
Total unadvanced commitments | $ 11,365,000 | 11,638,000 | |||
Line of credit loans | Unadvanced commitments | |||||
Notional maturities of commitments | |||||
2,016 | [1],[3] | 5,370,133 | |||
2,017 | [1],[3] | 641,592 | |||
2,018 | [1],[3] | 1,194,842 | |||
2,019 | [1],[3] | 1,108,097 | |||
2,020 | [1],[3] | 802,063 | |||
Total unadvanced commitments | 9,294,127 | [1],[3] | 9,201,805 | ||
Other Commitment, Due after Fifth Year | [1],[3] | 177,400 | |||
Long-term variable-rate loans | Unadvanced commitments | |||||
Notional maturities of commitments | |||||
2,016 | [1],[3] | 862,311 | |||
2,017 | [1],[3] | 1,046,660 | |||
2,018 | [1],[3] | 851,338 | |||
2,019 | [1],[3] | 1,046,234 | |||
2,020 | [1],[3] | 985,439 | |||
Total unadvanced commitments | 4,835,623 | [1],[3] | $ 4,710,273 | ||
Other Commitment, Due after Fifth Year | [1],[3] | $ 43,641 | |||
[1] | Includes nonperforming and restructured loans. | ||||
[2] | Represents the unpaid principal balance excluding deferred loan origination costs. | ||||
[3] | The interest rate on unadvanced commitments is not set until drawn, therefore, the long-term unadvanced loan commitments have been classified in this table as variable-rate unadvanced commitments. However, at the time of the advance, the borrower may select a fixed or a variable rate on the new loan. |
Loans and Commitments (Detail43
Loans and Commitments (Details 3) - USD ($) $ in Thousands | May. 31, 2015 | May. 31, 2014 | ||
Payment Status of Loans | ||||
Current | $ 21,459,220 | $ 20,466,925 | ||
30-89 days past due | 0 | 0 | ||
90 days or more past due | 0 | [1] | 0 | |
Total past due | 0 | 0 | ||
Total recorded investment in loans | 21,459,220 | [2],[3] | 20,466,925 | |
Non-accrual loans | $ 11,736 | $ 9,679 | ||
As a % of total loans | ||||
Current | 100.00% | 100.00% | ||
30-89 days past due | 0.00% | 0.00% | ||
90 days or more past due | 0.00% | [1] | 0.00% | |
Total past due | 0.00% | 0.00% | ||
Total financing receivables | 100.00% | 100.00% | ||
Non-accrual loans | 0.05% | 0.05% | ||
CFC | ||||
Payment Status of Loans | ||||
Current | $ 20,341,990 | $ 19,189,430 | ||
30-89 days past due | 0 | 0 | ||
90 days or more past due | 0 | [1] | 0 | |
Total past due | 0 | 0 | ||
Total recorded investment in loans | 20,341,990 | [2] | 19,189,430 | |
Non-accrual loans | 7,221 | 7,584 | ||
CFC | Distribution | ||||
Payment Status of Loans | ||||
Current | 16,095,043 | 15,035,365 | ||
30-89 days past due | 0 | 0 | ||
90 days or more past due | [1] | 0 | ||
Total past due | 0 | 0 | ||
Total recorded investment in loans | 16,095,043 | [2] | 15,035,365 | |
Non-accrual loans | 7,221 | 7,584 | ||
CFC | Power supply | ||||
Payment Status of Loans | ||||
Current | 4,181,481 | 4,086,163 | ||
90 days or more past due | 0 | [1] | 0 | |
Total past due | 0 | 0 | ||
Total recorded investment in loans | 4,181,481 | [2] | 4,086,163 | |
Non-accrual loans | 0 | 0 | ||
CFC | Statewide and associate | ||||
Payment Status of Loans | ||||
Current | 65,466 | 67,902 | ||
Total recorded investment in loans | 65,466 | [2] | 67,902 | |
RTFC | ||||
Payment Status of Loans | ||||
Current | 385,709 | 449,546 | ||
30-89 days past due | 0 | 0 | ||
90 days or more past due | 0 | [1] | 0 | |
Total past due | 0 | 0 | ||
Total recorded investment in loans | 385,709 | [2] | 449,546 | |
Non-accrual loans | 4,221 | 1,695 | ||
NCSC | ||||
Payment Status of Loans | ||||
Current | 731,521 | 827,949 | ||
Total recorded investment in loans | 731,521 | [2] | 827,949 | |
Non-accrual loans | $ 294 | $ 400 | ||
[1] | All loans 90 days or more past due are on nonaccrual status. | |||
[2] | Includes nonperforming and restructured loans. | |||
[3] | Represents the unpaid principal balance excluding deferred loan origination costs. |
Loans and Commitments (Detail44
Loans and Commitments (Details 4) - USD ($) $ in Thousands | May. 31, 2015 | May. 31, 2014 | |
Credit Quality | |||
Total loans outstanding | $ 21,459,220 | [1],[2] | $ 20,466,925 |
CFC | |||
Credit Quality | |||
Total loans outstanding | 20,341,990 | [1] | 19,189,430 |
CFC | Distribution | |||
Credit Quality | |||
Total loans outstanding | 16,095,043 | [1] | 15,035,365 |
CFC | Power supply | |||
Credit Quality | |||
Total loans outstanding | 4,181,481 | [1] | 4,086,163 |
CFC | Statewide and associate | |||
Credit Quality | |||
Total loans outstanding | 65,466 | [1] | 67,902 |
RTFC | |||
Credit Quality | |||
Total loans outstanding | 385,709 | [1] | 449,546 |
NCSC | |||
Credit Quality | |||
Total loans outstanding | 731,521 | [1] | 827,949 |
Pass | |||
Credit Quality | |||
Total loans outstanding | 21,409,443 | 20,446,017 | |
Pass | CFC | |||
Credit Quality | |||
Total loans outstanding | 20,309,197 | 19,172,430 | |
Pass | CFC | Distribution | |||
Credit Quality | |||
Total loans outstanding | 16,062,516 | 15,018,642 | |
Pass | CFC | Power supply | |||
Credit Quality | |||
Total loans outstanding | 4,181,481 | 4,086,163 | |
Pass | CFC | Statewide and associate | |||
Credit Quality | |||
Total loans outstanding | 65,200 | 67,625 | |
Pass | RTFC | |||
Credit Quality | |||
Total loans outstanding | 373,087 | 447,851 | |
Pass | NCSC | |||
Credit Quality | |||
Total loans outstanding | 727,159 | 825,736 | |
Criticized | |||
Credit Quality | |||
Total loans outstanding | 49,777 | 20,908 | |
Criticized | CFC | |||
Credit Quality | |||
Total loans outstanding | 32,793 | 17,000 | |
Criticized | CFC | Distribution | |||
Credit Quality | |||
Total loans outstanding | 32,527 | 16,723 | |
Criticized | CFC | Power supply | |||
Credit Quality | |||
Total loans outstanding | 0 | 0 | |
Criticized | CFC | Statewide and associate | |||
Credit Quality | |||
Total loans outstanding | 266 | 277 | |
Criticized | RTFC | |||
Credit Quality | |||
Total loans outstanding | 12,622 | 1,695 | |
Criticized | NCSC | |||
Credit Quality | |||
Total loans outstanding | $ 4,362 | $ 2,213 | |
[1] | Includes nonperforming and restructured loans. | ||
[2] | Represents the unpaid principal balance excluding deferred loan origination costs. |
Loans and Commitments (Detail45
Loans and Commitments (Details 5) $ in Thousands | 12 Months Ended | |
May. 31, 2015USD ($)statedistribution_systempower_supply_system | May. 31, 2014USD ($)distribution_systemborrowerpower_supply_system | |
Credit concentration | ||
Number of states in which electric and telecommunications members are located | state | 49 | |
Amount of exposure | $ 5,853,166 | $ 5,626,617 |
Percentage of concentration | 26.00% | 26.00% |
Loans outstanding | Geographic concentration | Maximum | ||
Credit concentration | ||
Percentage of concentration | 15.00% | 16.00% |
Loans outstanding | Credit concentration | ||
Credit concentration | ||
Number of borrowers | borrower | 20 | |
Loans outstanding | Credit concentration | CFC | ||
Credit concentration | ||
Amount of exposure | $ 5,837,463 | $ 5,328,333 |
Percentage of concentration | 26.00% | 25.00% |
Loans outstanding | Credit concentration | NCSC | ||
Credit concentration | ||
Amount of exposure | $ 15,703 | $ 298,284 |
Percentage of concentration | 0.00% | 1.00% |
Loans outstanding | Credit concentration | Loans | ||
Credit concentration | ||
Amount of exposure | $ 5,478,977 | $ 5,070,799 |
Percentage of concentration | 24.00% | 24.00% |
Loans outstanding | Credit concentration | Guarantees | ||
Credit concentration | ||
Amount of exposure | $ 374,189 | $ 555,818 |
Percentage of concentration | 2.00% | 2.00% |
Loans outstanding | Credit concentration | Distribution | ||
Credit concentration | ||
Number of borrowers | distribution_system | 12 | 11 |
Loans outstanding | Credit concentration | Power supply | ||
Credit concentration | ||
Number of borrowers | power_supply_system | 8 | 9 |
Loans outstanding | Credit concentration | Maximum | ||
Credit concentration | ||
Percentage of concentration | 2.00% |
Loans and Commitments (Detail46
Loans and Commitments (Details 6) | 12 Months Ended |
May. 31, 2015 | |
Minimum | |
Weighted-average loan balance and weighted-average yield earned | |
Term of loans | 1 year |
Maximum | |
Weighted-average loan balance and weighted-average yield earned | |
Term of loans | 35 years |
Loans and Commitments (Detail47
Loans and Commitments (Details 7) | 12 Months Ended |
May. 31, 2015 | |
Maximum | |
Unadvanced Loan Commitments | |
Term of loans | 35 years |
Loans and Commitments (Detail48
Loans and Commitments (Details 8) - USD ($) $ in Thousands | May. 31, 2015 | May. 31, 2014 | |
Loan Security | |||
Total loans outstanding | $ 21,459,220 | [1],[2] | $ 20,466,925 |
Loans receivable as a percentage of total loan | 100.00% | 100.00% | |
CFC | |||
Loan Security | |||
Total loans outstanding | $ 20,341,990 | [1] | $ 19,189,430 |
RTFC | |||
Loan Security | |||
Total loans outstanding | 385,709 | [1] | 449,546 |
NCSC | |||
Loan Security | |||
Total loans outstanding | 731,521 | [1] | 827,949 |
Long-term fixed-rate loans | |||
Loan Security | |||
Total loans outstanding | 19,543,274 | [1] | 18,175,656 |
Long-term variable-rate loans | |||
Loan Security | |||
Total loans outstanding | 698,495 | [1] | 753,918 |
Loans guaranteed by RUS | |||
Loan Security | |||
Total loans outstanding | 179,241 | [1] | 201,863 |
Line of credit loans | |||
Loan Security | |||
Total loans outstanding | $ 1,038,210 | [1] | $ 1,335,488 |
[1] | Includes nonperforming and restructured loans. | ||
[2] | Represents the unpaid principal balance excluding deferred loan origination costs. |
Loans and Commitments (Detail49
Loans and Commitments (Details 9) - USD ($) $ in Thousands | 12 Months Ended | |||||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | May. 31, 2015 | May. 31, 2014 | ||
Activity in the loan loss allowance | ||||||
Balance at the beginning of the period | $ 56,429 | $ 54,325 | $ 143,326 | |||
(Recovery of) provision for loan losses | (21,954) | 3,498 | (70,091) | |||
Charge-offs | (999) | (1,606) | (19,122) | |||
Recoveries of loans previously charged-off | 214 | 212 | 212 | |||
Balance at the end of the period | 33,690 | 56,429 | 54,325 | |||
Ending balance of the allowance: | ||||||
Collectively evaluated | $ 33,295 | $ 56,003 | ||||
Individually evaluated | 395 | 426 | ||||
Total ending balance of the allowance | 56,429 | 54,325 | 143,326 | 33,690 | 56,429 | |
Recorded investment in loans: | ||||||
Collectively evaluated | 21,447,484 | 20,457,246 | ||||
Individually evaluated | 11,736 | 9,679 | ||||
Total recorded investment in loans | 21,459,220 | [1],[2] | 20,466,925 | |||
Loans to members, net | 21,425,530 | [3] | 20,410,496 | |||
Deferred origination costs | 9,797 | 9,717 | ||||
CFC | ||||||
Activity in the loan loss allowance | ||||||
Balance at the beginning of the period | 45,600 | 41,246 | 126,941 | |||
(Recovery of) provision for loan losses | (22,098) | 4,142 | (66,785) | |||
Charge-offs | 0 | (19,122) | ||||
Recoveries of loans previously charged-off | 214 | 212 | 212 | |||
Balance at the end of the period | 23,716 | 45,600 | 41,246 | |||
Ending balance of the allowance: | ||||||
Collectively evaluated | 23,716 | 45,600 | ||||
Individually evaluated | 0 | |||||
Total ending balance of the allowance | 45,600 | 41,246 | 126,941 | 23,716 | 45,600 | |
Recorded investment in loans: | ||||||
Collectively evaluated | 20,334,769 | 19,181,846 | ||||
Individually evaluated | 7,221 | 7,584 | ||||
Total recorded investment in loans | 20,341,990 | [1] | 19,189,430 | |||
Loans to members, net | 20,318,274 | [3] | 19,143,830 | |||
RTFC | ||||||
Activity in the loan loss allowance | ||||||
Balance at the beginning of the period | 4,282 | 9,158 | 8,562 | |||
(Recovery of) provision for loan losses | 1,250 | (3,270) | 596 | |||
Charge-offs | (999) | (1,606) | ||||
Recoveries of loans previously charged-off | 0 | |||||
Balance at the end of the period | 4,533 | 4,282 | 9,158 | |||
Ending balance of the allowance: | ||||||
Collectively evaluated | 4,138 | 3,876 | ||||
Individually evaluated | 395 | 406 | ||||
Total ending balance of the allowance | 4,282 | 9,158 | 8,562 | 4,533 | 4,282 | |
Recorded investment in loans: | ||||||
Collectively evaluated | 381,488 | 447,851 | ||||
Individually evaluated | 4,221 | 1,695 | ||||
Total recorded investment in loans | 385,709 | [1] | 449,546 | |||
Loans to members, net | 381,176 | [3] | 445,264 | |||
NCSC | ||||||
Activity in the loan loss allowance | ||||||
Balance at the beginning of the period | 6,547 | 3,921 | 7,823 | |||
(Recovery of) provision for loan losses | (1,106) | 2,626 | (3,902) | |||
Balance at the end of the period | 5,441 | 6,547 | 3,921 | |||
Ending balance of the allowance: | ||||||
Collectively evaluated | 5,441 | 6,527 | ||||
Individually evaluated | 0 | 20 | ||||
Total ending balance of the allowance | $ 6,547 | $ 3,921 | $ 7,823 | 5,441 | 6,547 | |
Recorded investment in loans: | ||||||
Collectively evaluated | 731,227 | 827,549 | ||||
Individually evaluated | 294 | 400 | ||||
Total recorded investment in loans | 731,521 | [1] | 827,949 | |||
Loans to members, net | $ 726,080 | [3] | $ 821,402 | |||
[1] | Includes nonperforming and restructured loans. | |||||
[2] | Represents the unpaid principal balance excluding deferred loan origination costs. | |||||
[3] | Excludes deferred origination costs of $10 million as of May 31, 2015 and 2014. |
Loans and Commitments (Detail50
Loans and Commitments (Details 10) - USD ($) $ in Thousands | 12 Months Ended | |||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | ||
Impaired Loans | ||||
Impaired Financing Receivable, with No Related Allowance, Recorded Investment | $ 7,515 | $ 7,584 | ||
Recorded investment in individually-impaired loans and the related specific valuation allowance | ||||
With a specific allowance recorded | 4,221 | 2,095 | ||
Total impaired loans | 11,736 | 9,679 | ||
Related allowance | 395 | 426 | ||
Average recorded investment | ||||
Total impaired loans | 9,075 | 21,553 | $ 183,870 | |
Interest income recognized | ||||
Interest impaired loans | 15 | 372 | 13,956 | |
Interest income reduction as a result of holding loans on non-accrual status | ||||
Interest income reduced | 655 | 802 | 938 | |
Total loans outstanding | $ 21,459,220 | [1],[2] | $ 20,466,925 | |
Loans receivable as a percentage of total loan | 100.00% | 100.00% | ||
Non-performing loans | ||||
Recorded investment in individually-impaired loans and the related specific valuation allowance | ||||
With a specific allowance recorded | $ 0 | $ 2,095 | ||
Interest income reduction as a result of holding loans on non-accrual status | ||||
Interest income reduced | 123 | 314 | 597 | |
Total loans outstanding | 0 | $ 2,000 | ||
Loans receivable as a percentage of total loan | 0.01% | |||
Restructured loans | ||||
Interest income recognized | ||||
Interest impaired loans | 1,000 | |||
Interest income reduction as a result of holding loans on non-accrual status | ||||
Interest income reduced | 532 | $ 488 | 341 | |
Total loans outstanding | $ 12,000 | $ 8,000 | ||
Loans receivable as a percentage of total loan | 0.05% | 0.04% | ||
CFC | ||||
Interest income reduction as a result of holding loans on non-accrual status | ||||
Total loans outstanding | $ 20,341,990 | [1] | $ 19,189,430 | |
CFC | Distribution | ||||
Impaired Loans | ||||
Impaired Financing Receivable, with No Related Allowance, Recorded Investment | 7,221 | 7,584 | ||
Average recorded investment | ||||
Total impaired loans | 7,312 | 10,850 | 171,928 | |
Interest income recognized | ||||
Interest impaired loans | 0 | 136 | 13,956 | |
Interest income reduction as a result of holding loans on non-accrual status | ||||
Total loans outstanding | 16,095,043 | [1] | 15,035,365 | |
CFC | Power supply | ||||
Average recorded investment | ||||
Total impaired loans | 0 | 4,250 | 5,000 | |
Interest income recognized | ||||
Interest impaired loans | 0 | 5 | ||
Interest income reduction as a result of holding loans on non-accrual status | ||||
Total loans outstanding | 4,181,481 | [1] | 4,086,163 | |
NCSC | ||||
Impaired Loans | ||||
Impaired Financing Receivable, with No Related Allowance, Recorded Investment | 294 | 0 | ||
Recorded investment in individually-impaired loans and the related specific valuation allowance | ||||
With a specific allowance recorded | 0 | 400 | ||
Related allowance | 0 | 20 | ||
Average recorded investment | ||||
Total impaired loans | 325 | 218 | ||
Interest income recognized | ||||
Interest impaired loans | 15 | 7 | ||
Interest income reduction as a result of holding loans on non-accrual status | ||||
Total loans outstanding | 731,521 | [1] | 827,949 | |
RTFC | ||||
Recorded investment in individually-impaired loans and the related specific valuation allowance | ||||
With a specific allowance recorded | 4,221 | 1,695 | ||
Related allowance | 395 | 406 | ||
Average recorded investment | ||||
Total impaired loans | 1,438 | 6,235 | $ 6,942 | |
Interest income recognized | ||||
Interest impaired loans | 0 | 224 | ||
Interest income reduction as a result of holding loans on non-accrual status | ||||
Total loans outstanding | $ 385,709 | [1] | $ 449,546 | |
[1] | Includes nonperforming and restructured loans. | |||
[2] | Represents the unpaid principal balance excluding deferred loan origination costs. |
Loans and Commitments (Detail51
Loans and Commitments (Details 11) - USD ($) $ in Thousands | May. 31, 2015 | May. 31, 2014 | |
Financing Receivable, Modifications [Line Items] | |||
Total unadvanced commitments | $ 2,000 | $ 3,000 | |
Loans outstanding | 4,221 | 2,095 | |
Loans outstanding | 11,736 | 7,584 | |
Unadvanced commitments | [1] | 0 | |
Non-performing loans | |||
Financing Receivable, Modifications [Line Items] | |||
Loans outstanding | 0 | 2,095 | |
CFC | Long-term fixed-rate loans | |||
Financing Receivable, Modifications [Line Items] | |||
Loans outstanding | 7,221 | 7,584 | |
RTFC | |||
Financing Receivable, Modifications [Line Items] | |||
Loans outstanding | 4,221 | 1,695 | |
RTFC | Long-term variable-rate loans | |||
Financing Receivable, Modifications [Line Items] | |||
Loans outstanding | 4,221 | ||
RTFC | Long-term variable-rate loans | Non-performing loans | |||
Financing Receivable, Modifications [Line Items] | |||
Loans outstanding | 0 | 1,695 | |
NCSC | |||
Financing Receivable, Modifications [Line Items] | |||
Loans outstanding | 0 | 400 | |
NCSC | Line of credit loans | |||
Financing Receivable, Modifications [Line Items] | |||
Loans outstanding | 294 | ||
NCSC | Line of credit loans | Non-performing loans | |||
Financing Receivable, Modifications [Line Items] | |||
Loans outstanding | $ 0 | $ 400 | |
[1] | The interest rate on unadvanced commitments is not set until drawn, therefore, the long-term unadvanced loan commitments have been classified in this table as variable-rate unadvanced commitments. However, at the time of the advance, the borrower may select a fixed or a variable rate on the new loan. |
Loans and Commitments (Detail52
Loans and Commitments (Details 12) - USD ($) $ in Thousands | 12 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Pledging of Loans and Loans on Deposit | ||
Cash | $ 485 | $ 520 |
CFC | ||
Pledging of Loans and Loans on Deposit | ||
Period of vacancy of financial expert position forcing occurrence of triggering event | 90 days | |
Mortgage notes to be pledged as collateral in case of not satisfying financial expert requirements | $ 4,944,000 | |
Collateral trust bonds 2007 indenture | ||
Pledging of Loans and Loans on Deposit | ||
Loans outstanding and pledged as collateral | 6,708,501 | 6,149,139 |
Debt outstanding | 6,197,711 | 5,397,711 |
Collateral trust bonds 1994 indenture | ||
Pledging of Loans and Loans on Deposit | ||
Debt outstanding | 855,000 | 860,000 |
Notes payable | Federal Agricultural Mortgage Corporation | ||
Pledging of Loans and Loans on Deposit | ||
Debt outstanding | 1,910,688 | 1,667,505 |
Notes payable | Federal Financing Bank | ||
Pledging of Loans and Loans on Deposit | ||
Debt outstanding | 4,406,785 | 4,299,000 |
Notes payable | Federal Financing Bank | CFC | ||
Pledging of Loans and Loans on Deposit | ||
Notes payable having second trigger requiring a director to satisfy the requirements of financial expert | 4,407,000 | 4,299,000 |
Clean Renewable Energy Bonds Series 2009A | ||
Pledging of Loans and Loans on Deposit | ||
Debt outstanding | 16,529 | 18,230 |
Cash | 485 | 520 |
Total pledged collateral | 19,745 | 21,918 |
Mortgage notes | Distribution system mortgage notes | Collateral trust bonds 2007 indenture | ||
Pledging of Loans and Loans on Deposit | ||
Loans outstanding and pledged as collateral | 6,551,836 | 5,987,767 |
Mortgage notes | Distribution system mortgage notes | Collateral trust bonds 1994 indenture | ||
Pledging of Loans and Loans on Deposit | ||
Loans outstanding and pledged as collateral | 905,656 | 1,005,058 |
Mortgage notes | Distribution and power supply system mortgage notes | Federal Agricultural Mortgage Corporation | ||
Pledging of Loans and Loans on Deposit | ||
Loans outstanding and pledged as collateral | 2,160,805 | 1,907,607 |
Mortgage notes | Distribution and power supply system mortgage notes | Clean Renewable Energy Bonds Series 2009A | ||
Pledging of Loans and Loans on Deposit | ||
Loans outstanding and pledged as collateral | 19,260 | 21,398 |
RUS guaranteed loans qualifying as permitted investments | Collateral trust bonds 2007 indenture | ||
Pledging of Loans and Loans on Deposit | ||
Loans outstanding and pledged as collateral | 156,665 | 161,372 |
Mortgage notes receivable on deposit | Distribution and power supply system mortgage notes | Federal Financing Bank | ||
Pledging of Loans and Loans on Deposit | ||
Loans outstanding and pledged as collateral | $ 4,943,746 | $ 5,076,428 |
Foreclosed Assets (Details)
Foreclosed Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
May. 31, 2015 | Feb. 28, 2015 | May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Foreclosed Assets | |||||
Significant Acquisitions and Disposals, Acquisition Costs or Sale Proceeds | $ 3,000 | $ 3,000 | |||
Activity for foreclosed assets | |||||
Beginning balance | 245,651 | ||||
Results of operations of foreclosed assets | (120,148) | $ (13,494) | $ (897) | ||
Unrealized losses on foreclosed assets | (1,938) | (2,310) | $ 0 | ||
Ending balance | 116,507 | 116,507 | 245,651 | ||
Total assets | 22,893,130 | 22,893,130 | 22,232,743 | ||
Total liabilities | 21,981,344 | 21,981,344 | 21,262,369 | ||
CAH | |||||
Activity for foreclosed assets | |||||
Total assets | 173,000 | 173,000 | 295,000 | ||
Total liabilities | 239,000 | 239,000 | 236,000 | ||
Net Equity | 66,000 | 66,000 | 59,000 | ||
Loans and interest payable | 185,000 | 185,000 | 180,000 | ||
Foreclosed Assets | |||||
Activity for foreclosed assets | |||||
Beginning balance | 245,651 | ||||
Results of operations | (9,433) | ||||
Impairment | 110,715 | ||||
Results of operations of foreclosed assets | (120,148) | ||||
Unrealized losses on foreclosed assets | (1,938) | ||||
Net cash investments (proceeds) | (7,058) | ||||
Ending balance | 116,507 | 116,507 | 245,651 | ||
Foreclosed Assets | CAH | |||||
Activity for foreclosed assets | |||||
Beginning balance | 239,119 | ||||
Results of operations | (9,677) | ||||
Impairment | 84,000 | $ 27,000 | 110,715 | ||
Results of operations of foreclosed assets | (120,392) | ||||
Unrealized losses on foreclosed assets | (1,938) | ||||
Net cash investments (proceeds) | (282) | ||||
Ending balance | 116,507 | 116,507 | 239,119 | ||
Foreclosed Assets | DRP | |||||
Activity for foreclosed assets | |||||
Beginning balance | 6,532 | ||||
Results of operations | 244 | ||||
Impairment | 0 | ||||
Results of operations of foreclosed assets | 244 | ||||
Unrealized losses on foreclosed assets | 0 | ||||
Net cash investments (proceeds) | (6,776) | ||||
Ending balance | $ 0 | $ 0 | $ 6,532 |
Short-Term Debt and Credit Ar54
Short-Term Debt and Credit Arrangements (Details) - USD ($) | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | ||
Short-Term Debt Outstanding | |||
Short-term debt | $ 3,127,754,000 | $ 4,099,331,000 | |
Select notes | Minimum | |||
Short-Term Debt Outstanding | |||
Term of debt | 30 days | ||
Select notes | Maximum | |||
Short-Term Debt Outstanding | |||
Term of debt | 270 days | ||
Commercial paper | Minimum | |||
Short-Term Debt Outstanding | |||
Term of debt | 1 day | ||
Commercial paper | Maximum | |||
Short-Term Debt Outstanding | |||
Term of debt | 270 days | ||
Short-term debt | |||
Short-Term Debt Outstanding | |||
Short-term debt | $ 3,127,754,000 | $ 4,099,331,000 | |
Interest Rate | 0.20% | 0.17% | |
Short-term debt | Select notes | |||
Short-Term Debt Outstanding | |||
Short-term debt | $ 671,635,000 | $ 548,610,000 | |
Interest Rate | 0.29% | 0.27% | |
Short-term debt | Daily liquidity fund notes | |||
Short-Term Debt Outstanding | |||
Short-term debt | $ 509,131,000 | $ 486,501,000 | |
Interest Rate | 0.08% | 0.06% | |
Short-term debt | Bank bid notes | |||
Short-Term Debt Outstanding | |||
Short-term debt | $ 0 | $ 20,000,000 | |
Interest Rate | 0.00% | 0.60% | |
Short-term debt | Commercial paper sold through dealers, net of discounts | |||
Short-Term Debt Outstanding | |||
Short-term debt | [1] | $ 984,954,000 | $ 1,973,557,000 |
Interest Rate | [1] | 0.15% | 0.14% |
Short-term debt | Commercial paper sold directly to members, at par | |||
Short-Term Debt Outstanding | |||
Short-term debt | [1],[2] | $ 736,162,000 | $ 858,389,000 |
Interest Rate | [1] | 0.15% | 0.13% |
Short-term debt | Medium-term notes sold to members | |||
Short-Term Debt Outstanding | |||
Short-term debt | $ 225,872,000 | $ 212,274,000 | |
Interest Rate | 0.65% | 0.63% | |
Revolving Credit Facility [Member] | |||
Short-Term Debt Outstanding | |||
Short-term debt | $ 0 | $ 0 | |
[1] | Backup liquidity is provided by our revolving credit agreements. | ||
[2] | Includes commercial paper sold directly to associates and affiliates. |
Short-Term Debt and Credit Ar55
Short-Term Debt and Credit Arrangements (Details 2) | 12 Months Ended | |||
May. 31, 2015USD ($) | May. 31, 2014USD ($) | Oct. 28, 2014USD ($) | ||
Revolving Credit Agreements | ||||
Long-term Debt, Reclassified from Short-term | $ 1,300,000,000 | |||
Requirement | ||||
Minimum average adjusted TIER over the six most recent fiscal quarters | [1] | 1.025 | ||
Minimum adjusted TIER for the most recent fiscal year | [1],[2] | 1.05 | ||
Maximum ratio of adjusted senior debt to total equity | [1] | 10 | ||
Actual | ||||
Minimum average adjusted TIER over the six most recent fiscal quarters | [1] | 1.28 | 1.28 | |
Minimum adjusted TIER for the most recent fiscal year | [1],[2] | 1.30 | 1.23 | |
Maximum ratio of adjusted senior debt to total equity | [1] | 5.93 | 5.79 | |
Short-term debt | $ 3,127,754,000 | $ 4,099,331,000 | ||
Revolving credit agreements | ||||
Revolving Credit Agreements | ||||
Maximum borrowing capacity | 3,420,000,000 | 3,226,000,000 | ||
Maximum borrowing capacity | 150,000,000 | |||
Total available | 3,418,855,000 | 3,224,109,000 | ||
Letters of credit outstanding | 1,145,000 | 1,891,000 | ||
Actual | ||||
Short-term debt | $ 0 | 0 | ||
Revolving credit agreements | Federal funds effective rate | ||||
Revolving Credit Agreements | ||||
Reference rate | federal funds effective rate | |||
Interest rate added to reference rate (as a percent) | 0.50% | |||
Revolving credit agreements | LIBOR | ||||
Revolving Credit Agreements | ||||
Reference rate | one-month LIBOR | |||
Interest rate added to reference rate (as a percent) | 1.00% | |||
Revolving credit agreements | Three-year agreement maturing on March 21, 2014 | ||||
Revolving Credit Agreements | ||||
Total available | $ 0 | |||
Facility fee per year | [3] | 0.10% | ||
Maximum amount up to which aggregate amount of the commitments can be increased | $ 2,200,000,000 | |||
Revolving credit agreements | Three-year agreement maturing on October 28, 2016 | ||||
Revolving Credit Agreements | ||||
Maximum borrowing capacity | $ 1,036,000,000 | |||
Total available | 0 | 1,036,000,000 | ||
Revolving credit agreements | Four-year agreement maturing on October 28, 2017 | ||||
Revolving Credit Agreements | ||||
Maximum borrowing capacity | 1,123,000,000 | $ 1,720,000,000 | ||
Total available | 1,719,855,000 | $ 1,122,500,000 | ||
Letters of credit outstanding | $ 145,000 | |||
Facility fee per year | [3] | 0.075% | 0.10% | |
Revolving credit agreements | Five-year agreement maturing on October 28, 2018 | ||||
Revolving Credit Agreements | ||||
Maximum borrowing capacity | $ 1,068,000,000 | $ 1,700,000,000 | ||
Total available | $ 1,699,000,000 | 1,065,609,000 | ||
Letters of credit outstanding | $ 1,000,000 | $ 1,891,000 | ||
Facility fee per year | [3] | 0.10% | 0.10% | |
[1] | In addition to the adjustments made to the leverage ratio set forth in “Item 7. MD&A—Non-GAAP Financial Measures,” senior debt excludes guarantees to member systems that have certain investment-grade ratings by Moody’s and S&P. The TIER and debt-to-equity calculations include the adjustments set forth in “Item 7. MD&A—Non-GAAP Financial Measures” and exclude the results of operations and other comprehensive income for CAH. | |||
[2] | We must meet this requirement to retire patronage capital. | |||
[3] | Facility fee determined by CFC’s senior unsecured credit ratings based on the pricing schedules put in place at the inception of the related agreement. |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) $ in Thousands | 12 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Long-term debt | ||
Long-term Debt | $ 16,287,540 | $ 14,513,284 |
Other Secured Notes Payable [Member] | ||
Long-term debt | ||
Weighted-Average Interest Rate | 2.91% | 2.94% |
Long-term Debt, Gross | $ 16,529 | $ 18,230 |
Federal Agricultural Mortgage Corporation Notes Payable [Member] | ||
Long-term debt | ||
Weighted-Average Interest Rate | 0.77% | 1.15% |
Long-term Debt, Gross | $ 1,910,688 | $ 1,667,505 |
Other Unsecured Notes Payable [Member] | ||
Long-term debt | ||
Weighted-Average Interest Rate | 4.07% | 4.14% |
Long-term Debt, Gross | $ 31,168 | $ 35,075 |
Long-Term Debt, excluding subordinated debt | ||
Long-term debt | ||
Weighted-Average Interest Rate | 3.30% | 3.47% |
Long-term Debt | $ 16,287,540 | $ 14,513,284 |
Unsecured long-term debt | ||
Long-term debt | ||
Weighted-Average Interest Rate | 2.84% | 2.95% |
Long-term Debt | $ 7,578,813 | $ 6,847,334 |
Unsecured medium-term notes | ||
Long-term debt | ||
Unamortized discount | $ (706) | $ (418) |
Weighted-Average Interest Rate | 2.41% | 2.58% |
Long-term Debt, Gross | $ 3,142,192 | $ 2,514,447 |
Long-term Debt | $ 3,141,486 | $ 2,514,029 |
Medium-term notes sold through dealers | ||
Long-term debt | ||
Weighted-Average Interest Rate | 2.55% | 2.68% |
Long-term Debt, Gross | $ 2,749,894 | $ 2,228,459 |
Medium-term notes sold to members | ||
Long-term debt | ||
Weighted-Average Interest Rate | 1.44% | 1.82% |
Long-term Debt, Gross | $ 392,298 | $ 285,988 |
Unsecured notes payable | ||
Long-term debt | ||
Unamortized discount | $ (626) | $ (770) |
Weighted-Average Interest Rate | 3.15% | 3.16% |
Long-term Debt, Gross | $ 4,437,953 | $ 4,334,075 |
Long-term Debt | $ 4,437,327 | $ 4,333,305 |
Secured long-term debt | ||
Long-term debt | ||
Weighted-Average Interest Rate | 3.69% | 3.91% |
Long-term Debt | $ 8,708,727 | $ 7,665,950 |
Collateral trust bonds | ||
Long-term debt | ||
Unamortized discount | $ (271,201) | $ (277,496) |
Weighted-Average Interest Rate | 4.48% | 4.65% |
Long-term Debt, Gross | $ 7,052,711 | $ 6,257,711 |
Long-term Debt | $ 6,781,510 | $ 5,980,215 |
Secured notes payable | ||
Long-term debt | ||
Weighted-Average Interest Rate | 0.79% | 1.16% |
Long-term Debt | $ 1,927,217 | $ 1,685,735 |
Guaranteed Underwriter Program Notes Payable [Member] | ||
Long-term debt | ||
Weighted-Average Interest Rate | 3.14% | 3.15% |
Long-term Debt, Gross | $ 4,406,785 | $ 4,299,000 |
Minimum | Other Secured Notes Payable [Member] | ||
Long-term debt | ||
Maturity date | Dec. 31, 2024 | |
Interest Rate | 2.48% | |
Minimum | Federal Agricultural Mortgage Corporation Notes Payable [Member] | ||
Long-term debt | ||
Maturity date | Dec. 31, 2018 | |
Interest Rate | 0.61% | |
Minimum | Other Unsecured Notes Payable [Member] | ||
Long-term debt | ||
Maturity date | Dec. 31, 2022 | |
Interest Rate | 0.00% | |
Minimum | Medium-term notes sold through dealers | ||
Long-term debt | ||
Maturity date | Dec. 31, 2015 | |
Interest Rate | 0.53% | |
Minimum | Medium-term notes sold to members | ||
Long-term debt | ||
Maturity date | Dec. 31, 2015 | |
Interest Rate | 0.65% | |
Minimum | Collateral trust bonds | ||
Long-term debt | ||
Maturity date | Dec. 31, 2015 | |
Interest Rate | 1.10% | |
Minimum | Guaranteed Underwriter Program Notes Payable [Member] | ||
Long-term debt | ||
Maturity date | Dec. 31, 2025 | |
Interest Rate | 1.22% | |
Maximum | Other Secured Notes Payable [Member] | ||
Long-term debt | ||
Maturity date | Dec. 31, 2024 | |
Interest Rate | 3.31% | |
Maximum | Federal Agricultural Mortgage Corporation Notes Payable [Member] | ||
Long-term debt | ||
Maturity date | Dec. 31, 2045 | |
Interest Rate | 1.03% | |
Maximum | Other Unsecured Notes Payable [Member] | ||
Long-term debt | ||
Maturity date | Dec. 31, 2023 | |
Interest Rate | 9.07% | |
Maximum | Medium-term notes sold through dealers | ||
Long-term debt | ||
Maturity date | Dec. 31, 2032 | |
Interest Rate | 8.00% | |
Maximum | Medium-term notes sold to members | ||
Long-term debt | ||
Maturity date | Dec. 31, 2032 | |
Interest Rate | 8.82% | |
Maximum | Collateral trust bonds | ||
Long-term debt | ||
Maturity date | Dec. 31, 2032 | |
Interest Rate | 10.38% | |
Maximum | Guaranteed Underwriter Program Notes Payable [Member] | ||
Long-term debt | ||
Maturity date | Dec. 31, 2035 | |
Interest Rate | 5.40% |
Long-Term Debt (Details 2)
Long-Term Debt (Details 2) - May. 31, 2015 - Long-Term Debt, excluding subordinated debt - USD ($) $ in Thousands | Total | |
Amount Maturing | ||
2,015 | [1] | $ 1,690,286 |
2,016 | 2,060,130 | |
2,017 | 980,881 | |
2,018 | 1,821,542 | |
2,019 | 937,252 | |
Thereafter | 8,797,449 | |
Total long-term debt | $ 16,287,540 | |
Weighted-Average Interest Rate | ||
2015 (as a percent) | [1] | 2.12% |
2016 (as a percent) | 2.19% | |
2017 (as a percent) | 4.20% | |
2018 (as a percent) | 6.91% | |
2019 (as a percent) | 2.12% | |
Thereafter (as a percent) | 3.07% | |
Total (as a percent) | 3.30% | |
[1] | (1) Maturity date is based on calendar year. |
Long-Term Debt (Details 3)
Long-Term Debt (Details 3) - USD ($) | 3 Months Ended | 12 Months Ended | ||||||
Aug. 31, 2015 | May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | Jul. 31, 2015 | Jan. 08, 2015 | Dec. 01, 2014 | Nov. 18, 2014 | |
Long-term debt | ||||||||
Losses on early extinguishment of debt | $ (703,000) | $ (1,452,000) | $ (10,636,000) | |||||
Amounts borrowed | $ 0 | 0 | $ 395,724,000 | |||||
2.35% Bonds due 2020 | ||||||||
Long-term debt | ||||||||
Stated interest rate (as a percent) | 2.43% | |||||||
Amounts borrowed | $ 1,200,000,000 | |||||||
4.023% collateral trust bonds due 2032 | ||||||||
Long-term debt | ||||||||
Amount of debt issued in exchange | $ 400,000,000 | |||||||
Stated interest rate (as a percent) | 1.00% | |||||||
Collateral trust bonds | ||||||||
Long-term debt | ||||||||
Long-term Debt, Gross | 7,052,711,000 | 6,257,711,000 | ||||||
Unsecured notes payable | ||||||||
Long-term debt | ||||||||
Long-term Debt, Gross | $ 4,437,953,000 | 4,334,075,000 | ||||||
Unsecured notes payable | RUS | ||||||||
Long-term debt | ||||||||
Fee per year payable to RUS on the total amount borrowed (as a percent) | 0.30% | |||||||
Unsecured notes payable | Federal Financing Bank | RUS | ||||||||
Long-term debt | ||||||||
Long-term Debt, Gross | $ 4,407,000,000 | 4,299,000,000 | ||||||
Committed loan facilities | Federal Financing Bank | ||||||||
Long-term debt | ||||||||
Amounts borrowed | 124,000,000 | |||||||
Committed loan facilities | Federal Financing Bank | Maximum | ||||||||
Long-term debt | ||||||||
Available under committed loan facilities | $ 750,000,000 | |||||||
Committed loan facilities | Federal Financing Bank | Loan guarantees | RUS | ||||||||
Long-term debt | ||||||||
Commitment to guarantee loan | $ 250,000,000 | |||||||
Maturity period | 20 years | |||||||
Secured notes payable | Federal Agricultural Mortgage Corporation | ||||||||
Long-term debt | ||||||||
Long-term debt before unamortized discount | $ 1,911,000,000 | 1,668,000,000 | ||||||
Amounts borrowed | 480,000,000 | |||||||
Maximum borrowing capacity | 4,500,000,000 | $ 3,900,000,000 | ||||||
Debt Instrument, Unused Borrowing Capacity, Additional Amount | $ 600,000,000 | |||||||
Collateral Trust Bonds 1.00 Percent Due 2015 [Member] | Bonds [Member] | ||||||||
Long-term debt | ||||||||
Losses on early extinguishment of debt | $ 1,000,000 | |||||||
Subsequent events | Committed loan facilities | Federal Financing Bank | ||||||||
Long-term debt | ||||||||
Amounts borrowed | $ 250,000,000 | |||||||
Subsequent events | Secured notes payable | Federal Agricultural Mortgage Corporation | ||||||||
Long-term debt | ||||||||
Amounts borrowed | $ 180,000,000 | |||||||
Subsequent events | Secured notes payable | Federal Agricultural Mortgage Corporation new agr. [Member] [Member] | ||||||||
Long-term debt | ||||||||
Maximum borrowing capacity | $ 300,000,000 |
Subordinated Deferrable Debt (D
Subordinated Deferrable Debt (Details) - USD ($) $ in Thousands | 12 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Subordinated Deferrable Debt | ||
Subordinated deferrable debt | $ 400,000 | $ 400,000 |
4.75 percent due 2043 | ||
Subordinated Deferrable Debt | ||
Period after which debt can be called at par | 10 years | |
Interest rate (as a percent) | 4.75% | 4.75% |
Subordinated deferrable debt | $ 400,000 | $ 400,000 |
4.75 percent due 2043 | Maximum | ||
Subordinated Deferrable Debt | ||
Term of debt | 30 years | |
Consecutive period for which interest payment can be deferred | 5 years |
Members' Subordinated Certifi60
Members' Subordinated Certificates (Details) - USD ($) $ in Millions | 12 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Membership subordinated certificates | ||
Members' subordinated certificates | ||
Maturity period | 100 years | |
Interest rate (as a percent) | 5.00% | |
Membership subordinated certificates | Weighted-Average | ||
Members' subordinated certificates | ||
Maturity period | 61 years | 62 years |
Series 2008 Member Capital Securities [Member] | ||
Members' subordinated certificates | ||
Maturity period | 35 years | |
Interest rate (as a percent) | 7.50% | |
Member capital security, call option term | 5 years | |
Subordinated borrowings redeemed | $ 387 | |
Member capital securities | ||
Members' subordinated certificates | ||
Maturity period | 30 years | |
Interest rate (as a percent) | 5.00% | |
Series 2013 Member Capital Securities [Member] | ||
Members' subordinated certificates | ||
Member capital security, call option term | 10 years | |
Subordinated borrowings, current period investment | $ 219 |
Members' Subordinated Certifi61
Members' Subordinated Certificates (Details 2) $ in Thousands | 12 Months Ended | ||
May. 31, 2015USD ($)member | May. 31, 2014USD ($)member | ||
Information with respect to members' subordinated certificates | |||
Subordinated deferrable debt | $ 400,000 | $ 400,000 | |
Subordinated certificates | |||
Information with respect to members' subordinated certificates | |||
Number of subscribing members | member | 911 | 909 | |
Subordinated deferrable debt | $ 1,505,444 | $ 1,612,227 | |
Weighted-Average Interest Rate (as a percent) | 4.08% | 4.28% | |
Membership subordinated certificates | |||
Members' subordinated certificates | |||
Interest rate (as a percent) | 5.00% | ||
Information with respect to members' subordinated certificates | |||
Subordinated deferrable debt | $ 645,035 | $ 644,944 | |
Weighted-Average Interest Rate (as a percent) | 4.89% | 4.90% | |
Certificates maturing 2020 through 2095 | |||
Information with respect to members' subordinated certificates | |||
Subordinated deferrable debt | $ 628,916 | $ 628,749 | |
Subscribed and unissued membership subordinated certificates | |||
Information with respect to members' subordinated certificates | |||
Subordinated deferrable debt | [1] | 16,119 | 16,195 |
Loan and guarantee subordinated certificates | |||
Information with respect to members' subordinated certificates | |||
Subordinated deferrable debt | $ 640,889 | $ 699,723 | |
Weighted-Average Interest Rate (as a percent) | 2.94% | 3.01% | |
3% certificates maturing through 2040 | |||
Members' subordinated certificates | |||
Interest rate (as a percent) | 3.00% | 3.00% | |
Information with respect to members' subordinated certificates | |||
Subordinated deferrable debt | $ 110,164 | $ 110,219 | |
3% to 12% certificates maturing through 2045 | |||
Information with respect to members' subordinated certificates | |||
Subordinated deferrable debt | $ 301,361 | $ 329,748 | |
3% to 12% certificates maturing through 2045 | Minimum | |||
Members' subordinated certificates | |||
Interest rate (as a percent) | 3.00% | 3.00% | |
3% to 12% certificates maturing through 2045 | Maximum | |||
Members' subordinated certificates | |||
Interest rate (as a percent) | 12.00% | 12.00% | |
Non-interest bearing certificates maturing through 2047 | |||
Information with respect to members' subordinated certificates | |||
Subordinated deferrable debt | $ 229,126 | $ 258,789 | |
Subscribed and unissued loan and guarantee subordinated certificates | |||
Information with respect to members' subordinated certificates | |||
Subordinated deferrable debt | [1] | $ 238 | 967 |
Member capital securities | |||
Members' subordinated certificates | |||
Interest rate (as a percent) | 5.00% | ||
Information with respect to members' subordinated certificates | |||
Subordinated deferrable debt | $ 219,520 | $ 267,560 | |
Weighted-Average Interest Rate (as a percent) | 5.00% | 6.12% | |
[1] | The subscribed and unissued subordinated certificates represent subordinated certificates that members are required to purchase, but are not yet paid for. Upon collection of the full amount of the subordinated certificate based on various payment options, the amount of the certificate will be reclassified from subscribed and unissued to outstanding. |
Members' Subordinated Certifi62
Members' Subordinated Certificates (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | ||
Amount Maturing | |||
Total long-term debt | $ 400,000 | $ 400,000 | |
Series 2008 Member Capital Securities [Member] | |||
Members' subordinated certificates | |||
Interest rate (as a percent) | 7.50% | ||
Member capital securities | |||
Members' subordinated certificates | |||
Interest rate (as a percent) | 5.00% | ||
Amount Maturing | |||
Total long-term debt | $ 219,520 | $ 267,560 | |
Members' Certificates, exclusive of certificates amortized annually | |||
Amount Maturing | |||
2,015 | 22,544 | ||
2,016 | 11,520 | ||
2,017 | 10,755 | ||
2,018 | 10,571 | ||
2,019 | 11,334 | ||
Thereafter | 1,322,381 | ||
Total long-term debt | [1] | $ 1,389,105 | |
Weighted-Average Interest Rate | |||
2015 (as a percent) | 2.62% | ||
2016 (as a percent) | 4.10% | ||
2017 (as a percent) | 2.90% | ||
2018 (as a percent) | 3.60% | ||
2019 (as a percent) | 5.39% | ||
Thereafter (as a percent) | 4.46% | ||
Total (as a percent) | [1] | 4.42% | |
Loan subordinated certificates, amortized annually | |||
Amount Maturing | |||
Total long-term debt | $ 116,000 | ||
Other information | |||
Payments not received on certificates subscribed and unissued | 0 | ||
Average amortization of debt | $ 11,000 | ||
Amortization as a percentage of amortizing loan subordinated debt outstanding | 10.00% | ||
[1] | Excludes loan subordinated certificates totaling $116 million that amortize annually based on the outstanding balance of the related loan and $0.2 million in subscribed and unissued certificates for which a payment has been received. There are many items that affect the amortization of a loan, such as loan conversions, loan repricing at the end of an interest rate term and prepayments; therefore, an amortization schedule cannot be maintained for these certificates. Over the past fiscal year, annual amortization on these certificates was $11 million. In fiscal year 2015, amortization represented 10% of amortizing loan subordinated certificates outstanding. |
Derivative Financial Instrume63
Derivative Financial Instruments (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | ||
Derivative Financial Instruments | ||||
Notional amount | $ 9,625,533 | $ 8,446,809 | ||
Derivative Asset, Notional Amount | 3,448,615 | 3,817,593 | ||
Derivative Liability, Notional Amount | 6,176,918 | 4,629,216 | ||
Derivative assets | 115,276 | 209,759 | ||
Derivative liabilities | (408,382) | (388,208) | ||
Derivative Assets (Liabilities), at Fair Value, Net | (293,106) | (178,449) | ||
Derivative forward value | (114,093) | 39,541 | $ 141,304 | |
Derivative gains (losses) | (196,999) | (34,421) | 84,843 | |
Interest rate swaps | ||||
Derivative Financial Instruments | ||||
Notional amount | $ 9,625,533 | $ 8,446,809 | ||
Weighted-average rate paid (as a percent) | 2.21% | 2.41% | ||
Weighted-average rate received (as a percent) | 1.40% | 1.48% | ||
Derivative Notional Amount Maturing in one year | $ 677,906 | |||
Derivative Notional Amount Maturing in two years | 1,538,188 | |||
Derivative Notional Amount Maturing in three years | 678,356 | |||
Derivative Notional Amount Maturing in four years | 535,698 | |||
Derivative Notional Amount Maturing in five years | 1,063,825 | |||
Derivative Notional Amount Maturing in more than five years | 5,131,560 | |||
Gross Amounts Offset in the Balance Sheet | 0 | $ 0 | ||
Net Amounts of Assets/ Liabilities Presented in the Balance Sheet | 115,276 | 209,759 | ||
Derivative, Collateral, Obligation to Return Securities | 115,276 | 169,700 | ||
Derivative, Collateral, Obligation to Return Cash | 0 | 0 | ||
Derivative Asset, Fair Value, Amount Offset Against Collateral | 0 | 40,059 | ||
Gross Amounts Offset in the Balance Sheet | 0 | 0 | ||
Net Amounts of Assets/ Liabilities Presented in the Balance Sheet | 408,382 | 388,208 | ||
Derivative, Collateral, Right to Reclaim Securities | 115,276 | 169,700 | ||
Derivative, Collateral, Right to Reclaim Cash | 0 | 0 | ||
Derivative Liability, Fair Value, Amount Offset Against Collateral | 293,106 | 218,508 | ||
Derivative cash settlements | (82,906) | (73,962) | (56,461) | |
Derivative forward value | (114,093) | 39,541 | 141,304 | |
Derivative gains (losses) | (196,999) | (34,421) | $ 84,843 | |
Aggregate fair value of interest rate swaps with rating triggers that were in net liability position | 218,000 | |||
Derivative, Net Asset Position, Aggregate Fair Value | 1,000 | |||
Interest rate swaps | Counterparty Group | ||||
Derivative Financial Instruments | ||||
Notional amount | 7,548,306 | |||
Entity's required payment | (220,704) | |||
Entity's amount collected | 1,114 | |||
Entity's net payment | (219,590) | |||
Pay fixed-receive variable | ||||
Derivative Financial Instruments | ||||
Notional amount | $ 5,776,533 | $ 5,322,809 | ||
Weighted-average rate paid (as a percent) | 3.15% | 3.33% | ||
Weighted-average rate received (as a percent) | 0.28% | 0.21% | ||
Pay variable-receive fixed | ||||
Derivative Financial Instruments | ||||
Notional amount | $ 3,849,000 | $ 3,124,000 | ||
Weighted-average rate paid (as a percent) | 0.79% | 0.85% | ||
Weighted-average rate received (as a percent) | 3.09% | 3.62% | ||
Baa1 | Interest rate swaps | Counterparty Group | Mutual rating trigger falls to | ||||
Derivative Financial Instruments | ||||
Notional amount | $ 5,122,355 | |||
Entity's required payment | (180,384) | |||
Entity's amount collected | 1,114 | |||
Entity's net payment | (179,270) | |||
Moodys Baa 3 Rating Standard Poor's BBB- Plus Rating [Member] [Domain] | Interest rate swaps | Counterparty Group | Mutual rating trigger falls to | ||||
Derivative Financial Instruments | ||||
Notional amount | 586,715 | |||
Entity's required payment | (24,333) | |||
Entity's amount collected | 0 | |||
Entity's net payment | (24,333) | |||
Moodys Baa 3 Rating Standard Poor's BBB- Plus Rating [Member] [Domain] | Interest rate swaps | Counterparty Group | Mutual rating trigger falls below | ||||
Derivative Financial Instruments | ||||
Notional amount | 1,789,236 | |||
Entity's required payment | (15,981) | |||
Entity's amount collected | 0 | |||
Entity's net payment | (15,981) | |||
Moodys Ba3 Rating Standard Poor's BB Rating [Member] [Domain] [Domain] | Interest rate swaps | Counterparty Group | Mutual rating trigger falls to | ||||
Derivative Financial Instruments | ||||
Notional amount | [1] | 50,000 | ||
Entity's required payment | [1] | (6) | ||
Entity's net payment | [1] | $ (6) | ||
[1] | (1) |
Equity (Details)
Equity (Details) $ in Thousands | 12 Months Ended | ||
May. 31, 2015USD ($)reserve | May. 31, 2014USD ($) | May. 31, 2013USD ($) | |
Equity | |||
Minimum percentage of paid-in-capital required to be maintained under District of Columbia cooperative law | 50.00% | ||
Retirement/allocation of net earnings authorized | $ (40,141) | $ (40,965) | $ (36,599) |
Patronage capital allocated | |||
Equity | |||
Retirement/allocation of net earnings authorized | $ (39,779) | (40,565) | $ (36,234) |
CFC | |||
Equity | |||
General reserve required to be maintained as a percentage of membership fees collected | 50.00% | ||
Number of additional board-approved reserves | reserve | 1 | ||
CFC | Cooperative educational fund | Minimum | |||
Equity | |||
Minimum percentage of net earnings to be allocated to cooperative education fund as per bylaws of the entity | 0.25% | ||
CFC | Cooperative educational fund | Authorized Allocations | |||
Equity | |||
Allocation of net earnings | $ 1,000 | 1,000 | |
CFC | Patronage capital allocated | |||
Equity | |||
Percentage of prior year's allocated patronage capital required to be retired | 50.00% | ||
Percentage of prior year's allocated patronage capital required to be held | 50.00% | ||
Period for which prior year's allocated patronage capital is required to be held | 25 years | ||
CFC | Patronage capital allocated | Authorized Allocations | |||
Equity | |||
Allocation of net earnings | $ 78,000 | 79,000 | |
Members' Capital | 75,000 | ||
Retirement/allocation of net earnings authorized | $ (39,000) | $ (40,000) | |
Retirement of allocated net earnings, percentage | 50.00% | 50.00% | |
CFC | Members' capital reserve | |||
Equity | |||
Allocation of net earnings | $ 16,000 | ||
RTFC | |||
Equity | |||
Minimum percentage of paid-in-capital required to be maintained under District of Columbia cooperative law | 50.00% | ||
Allocation of net earnings | $ (1,200) | ||
Percentage of ownership by parent | 100.00% | ||
Percentage of ownership by minority owners | 100.00% | ||
Percentage of retirement of allocated net earnings in cash | 20.00% | ||
RTFC | Authorized Allocations | Minimum | |||
Equity | |||
Percentage of retirement of allocated net earnings in cash | 20.00% | ||
RTFC | Cooperative educational fund | |||
Equity | |||
Minimum percentage of net earnings to be allocated to cooperative education fund as per bylaws of the entity | 1.00% | ||
RTFC | Cooperative educational fund | Minimum | |||
Equity | |||
Minimum percentage of net earnings to be allocated to cooperative education fund as per bylaws of the entity | 1.00% | ||
RTFC | Members' capital reserve | |||
Equity | |||
Minimum percentage of net earnings to be allocated to cooperative education fund as per bylaws of the entity | 99.00% | ||
NCSC | |||
Equity | |||
Minimum percentage of paid-in-capital required to be maintained under District of Columbia cooperative law | 50.00% | ||
Percentage of ownership by parent | 100.00% | ||
Percentage of ownership by minority owners | 100.00% | ||
NCSC | Cooperative educational fund | Minimum | |||
Equity | |||
Minimum percentage of net earnings to be allocated to cooperative education fund as per bylaws of the entity | 0.25% | ||
Cash Distribution [Member] | RTFC | |||
Equity | |||
Retirement/allocation of net earnings authorized | $ (200) | ||
Redeemable Certificates [Member] | RTFC | |||
Equity | |||
Retirement/allocation of net earnings authorized | $ (1,000) |
Equity (Details 2)
Equity (Details 2) - USD ($) $ in Thousands | May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | May. 31, 2012 | |
Components of equity | |||||
Total members' equity | $ 1,167,319 | $ 1,112,300 | |||
Prior years cumulative derivative forward value and foreign currency adjustments | (172,412) | (207,025) | |||
Year-to-date derivative forward value income (loss) | [1] | (114,665) | 34,613 | ||
Total Cumulative Derivative Forward Value and Foreign Currency Adjustments | [1] | 287,077 | 172,412 | ||
Total CFC retained equity | 880,242 | 939,888 | |||
Accumulated other comprehensive income | 4,080 | 3,649 | $ 8,381 | ||
Total CFC equity | 884,322 | 943,537 | |||
Noncontrolling interest | 27,464 | 26,837 | |||
Total equity | 911,786 | 970,374 | 811,261 | $ 490,755 | |
Membership fees | |||||
Components of equity | |||||
Total members' equity | 976 | 973 | |||
Education fund | |||||
Components of equity | |||||
Total members' equity | 1,767 | 1,778 | |||
Retained Earnings, Appropriated Membership Fees and Education Fund [Member] | |||||
Components of equity | |||||
Total members' equity | 2,743 | 2,751 | |||
Total equity | 2,743 | 2,751 | 2,505 | 2,413 | |
Members' capital reserve | |||||
Components of equity | |||||
Total members' equity | 668,980 | 630,340 | |||
Total equity | 501,731 | 485,447 | 410,259 | 272,126 | |
Allocated net income | |||||
Components of equity | |||||
Total members' equity | 501,731 | 485,447 | |||
Total equity | 668,980 | 630,340 | $ 591,581 | $ 546,366 | |
Unallocated net income (loss) | |||||
Components of equity | |||||
Total members' equity | [2] | $ (6,135) | $ (6,238) | ||
[1] | Represents the derivative forward value income (loss) recorded by CFC for the year-to-date period. | ||||
[2] | Excludes derivative forward value. |
Equity (Details 3)
Equity (Details 3) - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | $ 3,649 | $ 8,381 | |
Change in fair value | 4,295 | (1,455) | $ 165 |
Other Comprehensive Income (Loss), Unrealized Gains (Losses) | (2,988) | (3,765) | |
Unrealized losses on foreclosed assets | (1,938) | (2,310) | 0 |
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, Net of Tax | 73 | ||
Realized gains reclassified into earnings | (949) | (967) | |
Other comprehensive income | 431 | (4,732) | |
Ending balance | 4,080 | 3,649 | 8,381 |
Accumulated other comprehensive income expected to be reclassified into earnings over the next 12 months | 1,000 | ||
Unrealized Gains (Losses) AFS Securities | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | (361) | 1,094 | |
Change in fair value | 4,295 | (1,455) | |
Other comprehensive income | 4,295 | (1,455) | |
Ending balance | 3,934 | (361) | 1,094 |
Unrealized Gains Derivatives | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | 6,320 | 7,287 | |
Realized gains reclassified into earnings | (949) | (967) | |
Other comprehensive income | (949) | (967) | |
Ending balance | 5,371 | 6,320 | $ 7,287 |
Unrealized Losses Foreclosed Assets | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | (2,310) | ||
Unrealized losses on foreclosed assets | (1,938) | (2,310) | |
Other comprehensive income | (1,938) | (2,310) | |
Ending balance | (4,248) | (2,310) | |
Accumulated Defined Benefit Plans Adjustment, Net Transition Asset (Obligation) [Member] | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | 0 | ||
Unrealized losses on foreclosed assets | (1,050) | ||
Other Comprehensive (Income) Loss, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, Net of Tax | 73 | ||
Other comprehensive income | (977) | ||
Ending balance | $ (977) | $ 0 |
Employee Benefits (Details)
Employee Benefits (Details) | 12 Months Ended | |||||
May. 31, 2015USD ($)salary | May. 31, 2014USD ($) | May. 31, 2013USD ($) | Jan. 01, 2015 | Jan. 01, 2014 | Jan. 31, 2013USD ($) | |
Defined benefit multiemployer master pension plan | ||||||
Percentage of joint and surviving spouse annuity | 50.00% | |||||
Annuity factor (as a percent) | 1.70% | |||||
Number of highest base salaries | salary | 5 | |||||
Number of years of employment considered in selection of highest base salaries | 10 years | |||||
Contributions made by CFC | $ 3,000,000 | $ 4,000,000 | $ 17,000,000 | |||
Voluntary payment made by CFC | $ 13,000,000 | |||||
Limit on the compensation to be used in the calculation of pension benefits | 265,000 | |||||
Other Comprehensive (Income) Loss, Pension and Other Postretirement Benefit Plans, Adjustment, before Tax | $ 1,000,000 | |||||
401(k) defined contribution savings program | ||||||
Number of consecutive months considered for eligible period of service | 12 months | |||||
Maximum matching contributions by CFC as a percentage of employee's salary | 2.00% | |||||
Minimum employee contribution (as a percent) | 2.00% | |||||
Contributions made by CFC | $ 500,000 | $ 500,000 | $ 500,000 | |||
Minimum | ||||||
Defined benefit multiemployer master pension plan | ||||||
Funded status, more than 80% (as a percent) | 80.00% | 80.00% | ||||
401(k) defined contribution savings program | ||||||
Period of service in either the first 12 consecutive months or first full calendar year of employment for eligibility of pension plan | 1000 hours | |||||
Maximum | ||||||
Defined benefit multiemployer master pension plan | ||||||
Contributions made by CFC as a percentage of total contributions by all participating employers | 5.00% | 5.00% | 5.00% |
Guarantees (Details)
Guarantees (Details) - USD ($) $ in Thousands | 12 Months Ended | |
May. 31, 2015 | May. 31, 2014 | |
Guarantees | ||
Total | $ 986,500 | $ 1,064,822 |
Amount of unsecured guarantees | $ 434,000 | $ 418,000 |
Unsecured guarantees as a percentage of total guarantees | 44.00% | 39.00% |
Guarantee liability recorded | $ 20,000 | $ 22,000 |
Long-term variable-rate bonds | ||
Guarantees | ||
Value of bonds issued under liquidity provider obligations | 494,000 | |
CFC | ||
Guarantees | ||
Total | 952,875 | 997,187 |
CFC | Distribution | ||
Guarantees | ||
Total | 172,104 | 165,559 |
CFC | Power supply | ||
Guarantees | ||
Total | 763,746 | 826,231 |
CFC | Statewide and associate | ||
Guarantees | ||
Total | 17,025 | 5,397 |
RTFC | ||
Guarantees | ||
Total | 1,574 | 2,304 |
NCSC | ||
Guarantees | ||
Total | 32,051 | 65,331 |
Financial guarantees | Long-term tax-exempt bonds | ||
Guarantees | ||
Total | 489,520 | 518,360 |
Financial guarantees | Long-term fixed-rate bonds | ||
Guarantees | ||
Total | 72,000 | |
Maximum potential exposure | 102,000 | |
Financial guarantees | Long-term variable-rate bonds | ||
Guarantees | ||
Total | 418,000 | 445,000 |
Letters of credit | Master letter of credit | ||
Guarantees | ||
Maximum additional amount potentially required to be issued | 105,000 | |
Letters of credit | Letters of credit | ||
Guarantees | ||
Total | 382,233 | 431,064 |
Letters of credit | Letters of credit, secured | ||
Guarantees | ||
Amount of guarantee secured | 63,000 | |
Letters of credit | Hybrid letter of credit | ||
Guarantees | ||
Commitments that may be used for the issuance of letters of credit or line of credit loan advances | 1,659,000 | |
Commitment remaining under letter of credit facility | 1,299,000 | |
Letters of credit | Hybrid letter of credit facility subject to material adverse change clauses | ||
Guarantees | ||
Commitments that may be used for the issuance of letters of credit or line of credit loan advances | 360,000 | |
Letters of credit | Adjustable and floating-rate tax-exempt bonds | ||
Guarantees | ||
Total | 76,000 | 125,000 |
Other guarantees | ||
Guarantees | ||
Total | 114,747 | $ 115,398 |
Maximum potential exposure | $ 115,000 |
Guarantees (Details 2)
Guarantees (Details 2) - USD ($) $ in Thousands | 12 Months Ended | ||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | |
Guarantee Liability | |||
Contingent guarantee liability | $ 1,000 | $ 2,000 | |
Non-contingent guarantee liability | 19,000 | 20,000 | |
Activity in the guarantee liability account | |||
Beginning balance | 22,091 | 24,742 | $ 28,663 |
Net change in non-contingent liability | (1,654) | (2,868) | 851 |
Provision for contingent guarantee liability | (520) | 217 | (4,772) |
Ending balance | $ 19,917 | $ 22,091 | $ 24,742 |
Liability as a percentage of total guarantees | 2.02% | 2.07% | 2.22% |
Guarantee Obligations | |||
Scheduled maturities of outstanding guarantees | |||
2,016 | $ 207,330 | ||
2,017 | 35,198 | ||
2,018 | 209,711 | ||
2,019 | 18,087 | ||
2,020 | 63,345 | ||
Thereafter | 452,829 | ||
Total | $ 986,500 |
Fair Value Measurement (Details
Fair Value Measurement (Details) $ in Thousands | 12 Months Ended | ||
May. 31, 2015USD ($) | May. 31, 2014USD ($) | May. 31, 2013USD ($) | |
Fair value of assets and liabilities | |||
Investment securities | $ 84,472 | $ 55,177 | |
Deferred Compensation Plan Assets | 4,294 | 4,156 | |
Unrealized gains on securities | 4,295 | (1,455) | $ 165 |
Investments in common and preferred stock | 84,472 | 55,177 | |
Level 1 | |||
Fair value of assets and liabilities | |||
Investment securities | 55,177 | ||
Deferred Compensation Plan Assets | 4,294 | 4,156 | |
Recurring basis | Level 1 | |||
Fair value of assets and liabilities | |||
Investment securities | 84,472 | ||
Deferred Compensation Plan Assets | 4,294 | 4,156 | |
Recurring basis | Level 2 | |||
Fair value of assets and liabilities | |||
Derivative instruments | 408,382 | 388,208 | |
Derivative Asset, Fair Value, Gross Asset | 115,276 | 209,759 | |
Non-recurring basis | Level 3 | |||
Fair value of assets and liabilities | |||
Non-performing loans, net of specific reserves | 0 | 1,669 | |
Total losses | $ 0 | $ 0 | |
Non-recurring basis | Level 3 | Minimum | |||
Fair value of assets and liabilities | |||
EBITDA multiples | 3.50 | ||
Estimate of Fair Value Measurement [Member] | |||
Fair value of assets and liabilities | |||
Deferred Compensation Plan Assets | $ 4,156 |
Fair Value of Financial Instr71
Fair Value of Financial Instruments (Details) - Debt Instrument, Name [Domain] - USD ($) $ in Thousands | 12 Months Ended | |||
May. 31, 2015 | May. 31, 2014 | May. 31, 2013 | May. 31, 2012 | |
Fair value of Financial Instruments | ||||
Cash and cash equivalents | $ 248,836 | $ 338,715 | $ 177,062 | $ 191,167 |
Assets: | ||||
Restricted cash | 485 | 520 | ||
Investment securities | 84,472 | 55,177 | ||
Time deposits | 485,000 | 550,000 | ||
Deferred Compensation Plan Assets | 4,294 | 4,156 | ||
Loans to members, net | 21,435,327 | 20,420,213 | ||
Debt service reserve funds | 25,602 | 39,353 | ||
Financing Receivable, Modifications, Recorded Investment | 11,736 | 7,584 | ||
Derivative instruments | 115,276 | 209,759 | ||
Short-term debt | 3,127,754 | 4,099,331 | ||
Liabilities: | ||||
Long-term Debt | 16,287,540 | 14,513,284 | ||
Guaranty Liabilities Contingent and Noncontingent | 19,917 | 22,091 | $ 24,742 | $ 28,663 |
Derivative instruments | 408,382 | 388,208 | ||
Subordinated debt | 400,000 | 400,000 | ||
Members Subordinated Certificates, Total | 1,505,444 | 1,612,227 | ||
Level 1 | ||||
Assets: | ||||
Cash and cash equivalents | 248,836 | 338,715 | ||
Restricted cash | 485 | 520 | ||
Investment securities | 55,177 | |||
Investments | 84,472 | 55,177 | ||
Deferred Compensation Plan Assets | 4,294 | 4,156 | ||
Debt service reserve funds | 25,602 | 39,353 | ||
Short-term debt | 1,494,131 | 2,480,166 | ||
Level 2 | ||||
Assets: | ||||
Time deposits | 485,000 | 550,000 | ||
Derivative instruments | 115,276 | 209,759 | ||
Short-term debt | 1,633,410 | 1,619,368 | ||
Liabilities: | ||||
Long-term Debt | 10,878,302 | 9,618,645 | ||
Derivative instruments | 408,382 | 388,208 | ||
Level 3 | ||||
Assets: | ||||
Loans to members, net | 21,961,048 | 21,000,687 | ||
Short-term debt | 0 | 0 | ||
Liabilities: | ||||
Long-term Debt | 6,477,921 | 6,120,325 | ||
Guarantee liability | 22,545 | 24,946 | ||
Members Subordinated Certificates, At Fair Value | 1,505,444 | 1,612,227 | ||
Subordinated deferrable debt | ||||
Liabilities: | ||||
Subordinated debt | 400,000 | |||
Subordinated deferrable debt | Level 2 | ||||
Liabilities: | ||||
Subordinated debt | 406,000 | 385,744 | ||
Subordinated certificates | ||||
Liabilities: | ||||
Subordinated debt | 1,505,444 | 1,612,227 | ||
Members Subordinated Certificates, Total | 1,505,444 | 1,612,227 | ||
Estimate of Fair Value Measurement [Member] | ||||
Assets: | ||||
Cash and cash equivalents | 248,836 | 338,715 | ||
Restricted cash | 485 | 520 | ||
Investments | 84,472 | 55,177 | ||
Time deposits | 485,000 | 550,000 | ||
Deferred Compensation Plan Assets | 4,156 | |||
Loans to members, net | 21,961,048 | 21,000,687 | ||
Debt service reserve funds | 25,602 | 39,353 | ||
Derivative instruments | 115,276 | 209,759 | ||
Short-term debt | 3,127,541 | 4,099,534 | ||
Liabilities: | ||||
Long-term Debt | 17,356,223 | 15,738,970 | ||
Guarantee liability | 22,545 | 24,946 | ||
Derivative instruments | 408,382 | 388,208 | ||
Estimate of Fair Value Measurement [Member] | Subordinated deferrable debt | ||||
Liabilities: | ||||
Subordinated debt | 406,000 | 385,744 | ||
Estimate of Fair Value Measurement [Member] | Subordinated certificates | ||||
Liabilities: | ||||
Members Subordinated Certificates, At Fair Value | 1,505,444 | 1,612,227 | ||
Fair Value, Measurements, Nonrecurring [Member] | Level 3 | ||||
Fair value of Financial Instruments | ||||
Financing Receivable Recorded Investment Nonperforming Status Net of Reserve Fair Value Disclosure | 0 | 1,669 | ||
Liabilities: | ||||
Fair Value Measurement with Unobservable Inputs Reconciliation Asset Impaired Financing Receivable Nonperforming Status Gain (Loss) Included in Earnings | 0 | 0 | ||
Recurring basis | Level 1 | ||||
Assets: | ||||
Investment securities | 84,472 | |||
Deferred Compensation Plan Assets | 4,294 | 4,156 | ||
Recurring basis | Level 2 | ||||
Assets: | ||||
Derivative Asset, Fair Value, Gross Asset | 115,276 | 209,759 | ||
Liabilities: | ||||
Derivative instruments | $ 408,382 | $ 388,208 |
Segment Information (Details)
Segment Information (Details) $ in Thousands | 12 Months Ended | ||||
May. 31, 2015USD ($)operating_segment | May. 31, 2014USD ($) | May. 31, 2013USD ($) | May. 31, 2012USD ($) | ||
Segment Reporting [Abstract] | |||||
Number of operating segments | operating_segment | 3 | ||||
Statement of operations: | |||||
Interest income | $ 952,976 | $ 957,540 | $ 955,753 | ||
Interest expense | (635,684) | [1] | (654,655) | (692,025) | |
Net interest income | 317,292 | 302,885 | 263,728 | ||
Provision for loan losses | 21,954 | (3,498) | 70,091 | ||
Net interest income after provision for loan losses | 339,246 | 299,387 | 333,819 | ||
Non-interest income: | |||||
Fee and other income | 36,783 | 17,762 | 38,181 | ||
Derivative gains (losses) | (196,999) | (34,421) | 84,843 | ||
Results of operations from foreclosed assets | (120,148) | (13,494) | (897) | ||
Total non-interest income | (280,364) | (30,153) | 122,127 | ||
Non-interest expense: | |||||
General and administrative expenses | (76,530) | (72,566) | (84,182) | ||
Loss Contingency Accrual, Provision | 520 | (217) | 4,772 | ||
Losses on early extinguishment of debt | (703) | (1,452) | (10,636) | ||
Other | (687) | (69) | (5,064) | ||
Total non-interest expense | (77,400) | (74,304) | (95,110) | ||
Income (loss) prior to income taxes | (18,518) | 194,930 | 360,836 | ||
Income tax expense | (409) | (2,004) | (2,749) | ||
Net income (loss) | (18,927) | 192,926 | 358,087 | ||
Assets: | |||||
Total loans outstanding | 21,459,220 | [2],[3] | 20,466,925 | ||
Deferred origination costs | 9,797 | 9,717 | |||
Less: Allowance for loan losses | (33,690) | (56,429) | (54,325) | $ (143,326) | |
Loans to members, net | 21,435,327 | 20,420,213 | |||
Other assets | 1,457,803 | 1,812,530 | |||
Total assets | 22,893,130 | 22,232,743 | |||
CFC | |||||
Statement of operations: | |||||
Interest income | 940,541 | 942,611 | 939,780 | ||
Interest expense | (634,287) | (653,189) | (690,355) | ||
Net interest income | 306,254 | 289,422 | 249,425 | ||
Provision for loan losses | 21,954 | (3,498) | 70,091 | ||
Net interest income after provision for loan losses | 328,208 | 285,924 | 319,516 | ||
Non-interest income: | |||||
Fee and other income | 36,215 | 17,255 | 37,740 | ||
Derivative gains (losses) | (193,289) | (33,325) | 83,604 | ||
Results of operations from foreclosed assets | (120,148) | (13,494) | (897) | ||
Total non-interest income | (277,222) | (29,564) | 120,447 | ||
Non-interest expense: | |||||
General and administrative expenses | (69,129) | (64,555) | (75,252) | ||
Loss Contingency Accrual, Provision | 520 | (217) | 4,772 | ||
Losses on early extinguishment of debt | (703) | (1,452) | (10,636) | ||
Other | (706) | (69) | (5,088) | ||
Total non-interest expense | (70,018) | (66,293) | (86,204) | ||
Income (loss) prior to income taxes | (19,032) | 190,067 | 353,759 | ||
Net income (loss) | (19,032) | 190,067 | 353,759 | ||
Assets: | |||||
Total loans outstanding | 21,431,927 | 20,433,069 | |||
Deferred origination costs | 9,797 | 9,717 | |||
Less: Allowance for loan losses | (33,690) | (56,429) | |||
Loans to members, net | 21,408,034 | 20,386,357 | |||
Other assets | 1,428,327 | 1,792,703 | |||
Total assets | 22,836,361 | 22,179,060 | |||
Other | |||||
Statement of operations: | |||||
Interest income | 46,666 | 50,856 | 55,987 | ||
Interest expense | (35,628) | (37,393) | (41,684) | ||
Net interest income | 11,038 | 13,463 | 14,303 | ||
Net interest income after provision for loan losses | 11,038 | 13,463 | 14,303 | ||
Non-interest income: | |||||
Fee and other income | 3,447 | 1,433 | 1,347 | ||
Derivative gains (losses) | (3,710) | (1,096) | 1,263 | ||
Total non-interest income | (263) | 337 | 2,610 | ||
Non-interest expense: | |||||
General and administrative expenses | (8,370) | (8,937) | (9,836) | ||
Other | (1,891) | 0 | |||
Total non-interest expense | (10,261) | (8,937) | (9,836) | ||
Income (loss) prior to income taxes | 514 | 4,863 | 7,077 | ||
Income tax expense | (409) | (2,004) | (2,749) | ||
Net income (loss) | 105 | 2,859 | 4,328 | ||
Assets: | |||||
Total loans outstanding | 1,117,230 | 1,277,495 | |||
Loans to members, net | 1,117,230 | 1,277,495 | |||
Other assets | 134,622 | 136,339 | |||
Total assets | 1,251,852 | 1,413,834 | |||
Elimination | |||||
Statement of operations: | |||||
Interest income | (34,231) | (35,927) | (40,014) | ||
Interest expense | 34,231 | 35,927 | 40,014 | ||
Net interest income | 0 | ||||
Net interest income after provision for loan losses | 0 | ||||
Non-interest income: | |||||
Fee and other income | (2,879) | (926) | (906) | ||
Derivative gains (losses) | 0 | 0 | (24) | ||
Results of operations from foreclosed assets | 0 | ||||
Total non-interest income | (2,879) | (926) | (930) | ||
Non-interest expense: | |||||
General and administrative expenses | 969 | 926 | 906 | ||
Other | 1,910 | 0 | 24 | ||
Total non-interest expense | 2,879 | 926 | $ 930 | ||
Assets: | |||||
Total loans outstanding | (1,089,937) | (1,243,639) | |||
Loans to members, net | (1,089,937) | (1,243,639) | |||
Other assets | (105,146) | (116,512) | |||
Total assets | $ (1,195,083) | $ (1,360,151) | |||
[1] | Represents interest expense and the amortization of discounts on debt. | ||||
[2] | Includes nonperforming and restructured loans. | ||||
[3] | Represents the unpaid principal balance excluding deferred loan origination costs. |
Uncategorized Items - nru-20150
Label | Element | Value |
Foreclosed Assets [Member] | Caribbean Asset Holdings [Member] | ||
Repossessed Assets | us-gaap_ForeclosedAssets | $ 254 |