Document and Entity Information
Document and Entity Information | 3 Months Ended |
Aug. 31, 2020shares | |
Document and Entity Information | |
Entity Registrant Name | NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/ |
Entity Central Index Key | 0000070502 |
Document Type | 10-Q |
Document Period End Date | Aug. 31, 2020 |
Amendment Flag | false |
Current Fiscal Year End Date | --05-31 |
Entity Filer Category | Non-accelerated Filer |
Entity Common Stock, Shares Outstanding | 0 |
Document Fiscal Year Focus | 2021 |
Document Fiscal Period Focus | Q1 |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Entity Interactive Data Current | Yes |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | ||
Aug. 31, 2020 | Aug. 31, 2019 | ||
Income Statement [Abstract] | |||
Interest income | $ 279,584 | $ 290,015 | |
Interest expense | [1],[2] | (179,976) | (213,271) |
Net interest income | 99,608 | 76,744 | |
Provision for credit losses | (326) | (30) | |
Net interest income after provision for credit losses | 99,282 | 76,714 | |
Non-interest income: | |||
Fee and other income | 3,516 | 10,941 | |
Derivative gains (losses) | 60,276 | (395,725) | |
Investment securities gains | 4,659 | 1,620 | |
Total non-interest income | 68,451 | (383,164) | |
Non-interest expense: | |||
Salaries and employee benefits | (13,133) | (12,942) | |
Other general and administrative expenses | (9,530) | (12,387) | |
Other non-interest expense | (332) | 7,179 | |
Total non-interest expense | (22,995) | (18,150) | |
Income (loss) before income taxes | 144,738 | (324,600) | |
Income tax (provision) benefit | (151) | 521 | |
Net income (loss) | 144,587 | (324,079) | |
Less: Net (income) loss attributable to noncontrolling interests | (171) | 1,657 | |
Net income (loss) attributable to CFC | $ 144,416 | $ (322,422) | |
[1] | Includes amortization of debt discounts and debt issuance costs, which are generally deferred and recognized as interest expense over the period to maturity using the effective interest method. Issuance costs related to dealer commercial paper, however, are recognized in interest expense immediately as incurred. | ||
[2] | Includes fees related to funding arrangements, such as up-front fees paid to banks participating in our committed bank revolving line of credit agreements. Based on the nature of the fees, the amount is either recognized immediately as incurred or deferred and recognized in interest expense ratably over the term of the arrangement. |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Statement of Comprehensive Income [Abstract] | ||
Net income (loss) | $ 144,587 | $ (324,079) |
Other comprehensive income (loss): | ||
Reclassification of derivative gains to earnings | (105) | (112) |
Defined benefit plan adjustments | 188 | 145 |
Other comprehensive income | 83 | 33 |
Total comprehensive income (loss) | 144,670 | (324,046) |
Less: Total comprehensive (income) loss attributable to noncontrolling interests | (171) | 1,657 |
Total comprehensive income (loss) attributable to CFC | $ 144,499 | $ (322,389) |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | |
Assets: | |||
Cash and cash equivalents | $ 347,818 | $ 671,372 | |
Restricted cash | [1] | 9,376 | 8,647 |
Total cash, cash equivalents and restricted cash | 357,194 | 680,019 | |
Investment securities: | |||
Equity securities, at fair value | 62,266 | 60,735 | |
Debt securities trading, at fair value | 527,526 | 309,400 | |
Total investment securities | 589,792 | 370,135 | |
Loans to members | 26,928,877 | 26,702,380 | |
Less: Allowance for credit losses | (57,351) | (53,125) | |
Loans to members, net | 26,871,526 | 26,649,255 | |
Accrued interest receivable | 104,762 | 117,138 | |
Other receivables | 39,701 | 41,099 | |
Fixed assets, net | 88,245 | 89,137 | |
Derivative assets | 167,463 | 173,195 | |
Other assets | 43,938 | 37,627 | |
Total assets | 28,262,621 | 28,157,605 | |
Liabilities: | |||
Accrued interest payable | 182,166 | 139,619 | |
Debt outstanding: | |||
Short-term borrowings | 4,553,491 | 3,961,985 | |
Long-term debt | 19,181,520 | 19,712,024 | |
Subordinated deferrable debt | 986,166 | 986,119 | |
Members’ subordinated certificates: | |||
Membership subordinated certificates | 630,483 | 630,483 | |
Loan and guarantee subordinated certificates | 439,742 | 482,965 | |
Member capital securities | 228,620 | 226,170 | |
Total members’ subordinated certificates | 1,298,845 | 1,339,618 | |
Total debt outstanding | 26,020,022 | 25,999,746 | |
Patronage capital retirement payable | 57,835 | 0 | |
Deferred income | 57,225 | 59,303 | |
Derivative liabilities | 1,165,585 | 1,258,459 | |
Other liabilities | 48,284 | 51,656 | |
Total liabilities | 27,531,117 | 27,508,783 | |
CFC equity: | |||
Retained equity | 708,436 | 628,031 | |
Accumulated other comprehensive loss | (1,827) | (1,910) | |
Total CFC equity | 706,609 | 626,121 | |
Noncontrolling interests | 24,895 | 22,701 | |
Total equity | 731,504 | 648,822 | |
Total liabilities and equity | $ 28,262,621 | $ 28,157,605 | |
[1] | Restricted cash consists primarily of member funds held in escrow for certain specifically designed cooperative programs. |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) $ in Thousands | Total | Cumulative-effect adjustment from adoption of new accounting standard | Balance as of June 1, 2020 | Non-controlling Interests | Non-controlling InterestsBalance as of June 1, 2020 | Total CFC Equity | Total CFC EquityBalance as of June 1, 2020 | Accumulated Other Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss)Balance as of June 1, 2020 | CFC Retained Equity | CFC Retained EquityCumulative-effect adjustment from adoption of new accounting standard | CFC Retained EquityBalance as of June 1, 2020 | Unallocated Net (Loss) Income | Unallocated Net (Loss) IncomeCumulative-effect adjustment from adoption of new accounting standard | Unallocated Net (Loss) IncomeBalance as of June 1, 2020 | Members’ Capital Reserve | Members’ Capital ReserveBalance as of June 1, 2020 | Patronage Capital Allocated | Patronage Capital AllocatedBalance as of June 1, 2020 | Membership Fees and Educational Fund | Membership Fees and Educational FundBalance as of June 1, 2020 |
Beginning balance at May. 31, 2019 | $ 1,303,882 | $ 27,147 | $ 1,276,735 | $ (147) | $ 1,276,882 | $ (345,775) | $ 759,097 | $ 860,578 | $ 2,982 | ||||||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||
Net income (loss) | (324,079) | (1,657) | (322,422) | (322,422) | (322,422) | ||||||||||||||||
Other comprehensive income (loss) | 33 | 33 | 33 | ||||||||||||||||||
Patronage capital retirement | (62,822) | (62,822) | (62,822) | (62,822) | |||||||||||||||||
Other | 1,414 | 1,720 | (306) | (306) | (306) | ||||||||||||||||
Ending balance at Aug. 31, 2019 | 918,428 | 27,210 | 891,218 | (114) | 891,332 | (668,197) | 759,097 | 797,756 | 2,676 | ||||||||||||
Beginning balance at May. 31, 2019 | 1,303,882 | 27,147 | 1,276,735 | (147) | 1,276,882 | (345,775) | 759,097 | 860,578 | 2,982 | ||||||||||||
Ending balance at May. 31, 2020 | 648,822 | $ (3,900) | $ 644,922 | 22,701 | $ 22,701 | 626,121 | $ 622,221 | (1,910) | $ (1,910) | 628,031 | $ (3,900) | $ 624,131 | (1,076,548) | $ (3,900) | $ (1,080,448) | 807,320 | $ 807,320 | 894,066 | $ 894,066 | 3,193 | $ 3,193 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||||||||||||
Net income (loss) | 144,587 | 171 | 144,416 | 144,416 | 144,416 | ||||||||||||||||
Other comprehensive income (loss) | 83 | 83 | 83 | ||||||||||||||||||
Patronage capital retirement | (59,857) | (59,857) | (59,857) | (59,857) | |||||||||||||||||
Other | 1,769 | 2,023 | (254) | (254) | (254) | ||||||||||||||||
Ending balance at Aug. 31, 2020 | $ 731,504 | $ 24,895 | $ 706,609 | $ (1,827) | $ 708,436 | $ (936,032) | $ 807,320 | $ 834,209 | $ 2,939 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Cash flows from operating activities: | ||
Net income (loss) | $ 144,587 | $ (324,079) |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Amortization of deferred loan fees | (2,460) | (2,332) |
Amortization of debt issuance costs and deferred charges | 2,172 | 2,357 |
Amortization of discount on long-term debt | 2,876 | 2,626 |
Amortization of issuance costs for bank revolving lines of credit | 1,118 | 1,268 |
Depreciation and amortization | 1,819 | 2,374 |
Provision for credit losses | 326 | 30 |
Gain on sale of land | 0 | (7,713) |
Unrealized gains on equity and debt securities | (4,366) | (1,620) |
Derivative forward value losses | (87,248) | 384,682 |
Changes in operating assets and liabilities: | ||
Accrued interest receivable | 12,376 | 485 |
Accrued interest payable | 42,546 | 50,934 |
Deferred income | 383 | (43) |
Other | (10,102) | (9,160) |
Net cash provided by operating activities | 104,027 | 99,809 |
Cash flows from investing activities: | ||
Advances on loans, net | (226,245) | (382,936) |
Investment in fixed assets | (837) | (3,087) |
Proceeds from sale of land | 0 | 21,618 |
Purchase of trading securities | (245,095) | 0 |
Proceeds from sales and maturities of trading securities | 30,097 | 0 |
Proceeds from redemption of equity securities | 0 | 25,000 |
Purchases of held-to-maturity debt securities | 0 | (23,650) |
Proceeds from maturities of held-to-maturity debt securities | 0 | 19,533 |
Net cash used in investing activities | (442,080) | (343,522) |
Cash flows from financing activities: | ||
Proceeds from short-term borrowings, net | 585,021 | 355,750 |
Proceeds from short-term borrowings with original maturity 90 days | 836,241 | 679,062 |
Repayments of short-term borrowings with original maturity 90 days | (829,756) | (614,892) |
Proceeds from issuance of long-term debt, net of discount and issuance costs | 8,050 | 94,256 |
Payments for retirement of long-term debt | (543,555) | (215,751) |
Payments for issuance costs for subordinated deferrable debt | 0 | (84) |
Proceeds from issuance of members’ subordinated certificates | 3,257 | 1,289 |
Payments for retirement of members’ subordinated certificates | (44,030) | (1,933) |
Net cash provided by financing activities | 15,228 | 297,697 |
Net increase (decrease) in cash, cash equivalents and restricted cash | (322,825) | 53,984 |
Beginning cash, cash equivalents and restricted cash | 680,019 | 186,204 |
Ending cash, cash equivalents and restricted cash | 357,194 | 240,188 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | $ 129,017 | $ 155,330 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Aug. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Summary of Significant 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 systems, electric generation and transmission (“power supply”) systems 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. Principles of Consolidation and Basis of Presentation The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These consolidated financial statements include the accounts of CFC, variable interest entities (“VIEs”) where CFC is the primary beneficiary and subsidiary entities created and controlled by CFC to hold foreclosed assets. National Cooperative Services Corporation (“NCSC”) and Rural Telephone Finance Cooperative (“RTFC”) are VIEs that are required to be consolidated by CFC. NCSC is a taxable member-owned cooperative that may provide financing to members of CFC, government or quasi-government entities which own electric utility systems that meet the Rural Electrification Act definition of “rural,” and for-profit and nonprofit entities that are owned, operated or controlled by, or provide significant benefits to certain members of CFC. RTFC is a taxable Subchapter T cooperative association that provides financing for its rural telecommunications members and their affiliates. CFC has not had entities that held foreclosed assets since fiscal year 2017. All intercompany balances and transactions have been eliminated. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and related disclosures during the period. Management’s most significant estimates and assumptions involve determining the allowance for credit losses and the fair value of financial assets and liabilities. Actual results could differ from these estimates. We believe these financial statements reflect all adjustments of a normal, recurring nature that are, in the opinion of management, necessary for the fair presentation of the results for the interim period. The results of operations in the interim financial statements are not necessarily indicative of results that may be expected for the full fiscal year. Certain reclassifications have been made to prior periods to conform to the current presentation. Unless stated otherwise, references to “we,” “our” or “us” relate to CFC and its consolidated entities. Risks and Uncertainties We have considered the impact of the emergence in 2019 and continued spread of a novel strain of coronavirus that causes coronavirus disease 2019 (“COVID-19”), which was declared a global pandemic by the World Health Organization (“WHO”) in March 2020, on our consolidated financial statements. Although the effects of COVID-19 and the response to the virus have negatively impacted financial markets and overall economic conditions, we have been able to navigate the challenges of the pandemic reasonably well. We have been monitoring developments closely, and the future impact of COVID-19 on our operations is highly uncertain and cannot be predicted. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including, among others, the duration and severity of the COVID-19 pandemic, the ultimate impact on our members, potential further disruption and deterioration in the corporate debt markets and additional, or extended, federal, state and local government orders and regulations that might be imposed in response to the pandemic, all of which are uncertain. New Accounting Standards Adopted in Fiscal Year 2021 Fair Value Measurement—Changes to the Disclosure Requirements for Fair Value Measurement On June 1, 2020, we adopted Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which removes, adds and modifies certain disclosure requirements on fair value measurements. The adoption of this guidance, which resulted only in certain changes to the fair value measurement disclosures presented in “Note 12—Fair Value Measurement” did not otherwise affect our consolidated financial statements. Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments On June 1, 2020, we adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology for estimating credit losses with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) model. The incurred loss model delayed the recognition of credit losses until it was probable that a loss had occurred, while the CECL model requires the immediate recognition of expected credit losses over the contractual term, adjusted as appropriate for estimated prepayments, of financial instruments that fall within the scope of CECL at the date of origination or purchase of the financial instrument. The CECL model, which is applicable to the measurement of credit losses on financial assets measured at amortized cost and certain off-balance sheet credit exposures, affects our estimates of the allowance for credit losses for our loan portfolio and our off-balance sheet credit exposures related to unadvanced loan commitments and financial guarantees. In measuring lifetime expected credit losses, management is required to take into consideration relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount of the financial instrument. The adoption of CECL resulted in an increase in our allowance for credit losses for our loan portfolio of $4 million and a corresponding decrease to retained earnings of $4 million recorded as a cumulative-effect adjustment. The impact on the allowance for credit losses for our off-balance sheet credit exposures related to unadvanced loan commitments and financial guarantees was not material. The increase in the allowance for credit losses for our loan portfolio was attributable to the transition to measuring the allowance based on expected credit losses over the remaining contractual term of loans in our portfolio as required under the CECL model, whereas the allowance under the incurred model did not consider the remaining contractual term of our loans. The transition adjustment was primarily driven by an increase in the allowances for CFC distribution and CFC power supply loans, which have a much longer remaining contractual term than the estimated loss emergence period of five years we used in estimating probable losses in our loan portfolio under the incurred loss model. While the adoption of CECL had no impact on our earnings, subsequent to our adoption on June 1, 2020, lifetime expected credit losses for newly recognized loans, unadvanced loan commitments and financial guarantees, as well as changes during the period in our estimate of lifetime expected credit losses for existing financial instruments subject to CECL, will be recognized in earnings. In connection with our adoption of CECL, we have provided an update to certain of our significant accounting policies below under “Updates to Significant Accounting Policies.” We present the expanded credit quality disclosures required under CECL for financial instruments measured at amortized cost in “Note 4—Loans” and “Note 5—Allowance for Credit Losses.” Amounts in periods prior to our adoption of CECL on June 1, 2020, continue to be reported in accordance with previously applicable GAAP. New Accounting Standards Issued But Not Yet Adopted Reference Rate Reform On March 12, 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions for applying GAAP on contracts, hedging relationships and other transactions subject to modification due to the expected discontinuance of the London Interbank Offered Rate (“LIBOR”) and other reference rate reform changes to ease the potential accounting and financial burdens related to the expected transition in market reference rates. This guidance permits entities to elect not to apply certain modification accounting requirements to contracts affected by reference rate transition, if certain criteria are met. An entity that makes this election would not be required to remeasure modified contracts at the modification date or reassess a previous accounting determination. The guidance was effective upon issuance on March 12, 2020, and can generally be applied through December 31, 2022. We expect to apply certain of the practical expedients and are in the process of evaluating the timing and application of those elections. Based on our current assessment, we do not believe that the application of this guidance will have a material impact on our consolidated financial statements. Updates to Significant Accounting Policies Pursuant to our June 1, 2020 adoption of the CECL accounting standard, we have provided an update to the significant accounting policies presented below. Loans to Members We originate loans to members and classify loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff as held for investment. Loans classified as held for investment are reported based on the unpaid principal balance, net of principal charge-offs, and deferred loan origination costs. As permitted by CECL, we elected to continue reporting accrued interest on loans separately on our consolidated balance sheets as a component of the line item accrued interest receivable rather than as a component of loans to member. Accrued interest receivable amounts generally represent three months or less of accrued interest on loans outstanding. Because our policy is to write off past due accrued interest receivable in a timely manner, we elected not to measure an allowance for credit losses for accrued interest receivable on loans outstanding, which totaled $86 million and $96 million as of August 31, 2020 and May 31, 2020 , respectively. We also elected to exclude accrued interest receivable from the credit quality disclosures required under CECL. Interest Income Interest income on performing loans is accrued and recognized as interest income based on the contractual rate of interest. Loan origination costs and nonrefundable loan fees that meet the definition of loan origination fees are deferred and recognized in interest income as yield adjustments over the period to maturity of the loan using the effective interest method. Troubled Debt Restructurings A loan modification is considered a troubled debt restructuring (“TDR”) if the borrower is experiencing financial difficulties and a concession is granted to the borrower that we would not otherwise consider. Under CECL, we are required to estimate an allowance for lifetime expected credit losses for TDR loans. As discussed below under “Allowance for Credit Losses—Loan Portfolio,” TDR loans are evaluated on an individual basis in estimating expected credit losses. Credit losses for anticipated TDRs are accounted for similarly to TDRs and are identified when there is a reasonable expectation that a TDR will be executed with the borrower and when we expect the modification to affect the timing or amount of payments and/or the payment term. We generally classify TDR loans as nonperforming and place the loan on nonaccrual status, although in many cases such loans were already classified as nonperforming prior to modification. These loans may be returned to performing status and the accrual of interest resumed if the borrower performs under the modified terms for an extended period of time, and we expect the borrower to continue to perform in accordance with the modified terms. In certain limited circumstances in which a TDR loan is current at the modification date, the loan may remain on accrual status at the time of modification. Nonperforming Loans We classify loans as nonperforming when contractual principal or interest is 90 days past due or when we believe the collection of principal and interest in full is not reasonably assured. When a loan is classified as nonperforming, we generally place the loan on nonaccrual status. Interest accrued but not collected at the date a loan is placed on nonaccrual status is reversed against current period interest income. Interest income on nonaccrual loans is subsequently recognized only upon the receipt of cash payments. However, if we believe the ultimate collectibility of the loan principal is in doubt, cash received is applied against the principal balance of the loan. Nonaccrual loans generally are returned to accrual status when principal and interest becomes and remains current for a specified period and repayment of the remaining contractual principal and interest is reasonably assured. Charge-Offs We charge off loans or a portion of a loan when we determine that the loan is uncollectible. The charge-off of uncollectible principal amounts result in a reduction to the allowance for credit losses for our loan portfolio. Recoveries of previously charged off principal amounts result in an increase to the allowance. Allowance for Credit Losses—Loan Portfolio We maintain an allowance for credit losses for our loan portfolio that represents management’s current estimate of expected credit losses over the remaining contractual term, adjusted as appropriate for estimated prepayments, of loans in our loan portfolio as of each balance sheet date. The allowance for our loan portfolio is reported on our consolidated balance sheet as a valuation account that is deducted from loans to members to present the net amount we expect to collect over the life of our loans. We are required to immediately recognize an allowance for expected credit losses upon origination of a loan. Adjustments to the allowance each period for changes in our estimate of lifetime expected credit losses for existing loans, or for newly originated loans, are recognized in earnings through the provision for credit losses presented on our consolidated statements of operations. We estimate our allowance for lifetime expected credit losses for our loan portfolio using a using a probability of default/loss given default methodology. Our allowance for credit losses consists of a collective allowance and an asset-specific allowance. The collective allowance is established for loans in our portfolio that share similar risk characteristics and are therefore evaluated on a collective, or pool, basis in measuring expected credit losses. The asset-specific allowance is established for loans in our portfolio that do not share similar risk characteristics with other loans in our portfolio and are therefore evaluated on an individual basis in measuring expected credit losses. Expected credit losses are estimated based on historical experience, current conditions and forecasts, if applicable, that affect the collectibility of the reported amount. Since inception in 1969, CFC has experienced limited defaults and losses as the utility sector generally tends to be less sensitive to changes in the economy than other sectors largely due to the essential nature of the service provided. The losses we have incurred were not tied to economic factors, but rather to distinct operating issues related to each borrower. Given that our loss experience has not correlated to specific underlying macroeconomic variables, such as U.S. unemployment rates or gross national domestic (“GDP”) growth, we have not made adjustments to our historical loss rates for any forecasted period. We consider the need, however, to adjust our historical loss information for differences in the specific characteristics of our existing loan portfolio based on an evaluation of relative qualitative factors, such as differences in the composition of our loan portfolio, our underwriting standards, problem loan trends, the quality of our credit review function, the regulatory environment and other pertinent external factors. Collective Allowance We employ a quantitative methodology and a qualitative framework to measure the collective component of our allowance for expected credit losses. The first element in our quantitative methodology involves the segmentation of our loan into loan pools that share similar risk characteristics. We divide our portfolio into segments that reflect the member borrower type, which is based on the utility sector of the borrower because the key operational, infrastructure, regulatory, environmental, customer and financial risks of each sector are similar in nature. Our primary member borrower types consist of CFC electric distribution, CFC electric power supply, CFC statewide and associate, NCSC and RTFC telecommunications. Our portfolio segments align with the sectors generally seen in the utilities industry. We further stratify each portfolio into loan pools based on our internal borrower risk ratings, as our borrower risk ratings provide important information on the collectibility of each of our loan portfolio segments. We then apply loss factors, consisting of the probability of default and loss given default, to the scheduled loan-level amortization amounts over the life of the loans for each of our loan pools. Below we discuss the source and basis for the key inputs, which include borrower risk ratings and the loss factors, in measuring expected credit losses for our loan portfolio. • Borrower Risk Ratings : We evaluate each borrower and loan facility in our loan portfolio and assign internal borrower and loan facility risk ratings based on consideration of a number of quantitative and qualitative factors. Each risk rating is reassessed annually following the receipt of the borrower’s audited financial statements; however, interim risk-rating adjustments may occur as a result of updated information affecting a borrower’s ability to fulfill its obligations or other significant developments and trends. Our internally assigned borrower risk ratings are intended to assess the general credit worthiness of the borrower and probability of default. We use our internal borrower risk ratings, which we map to the equivalent credit ratings by external rating agencies, to differentiate risk within each of our portfolio segments and loan pools. We provide additional information on our borrower risk ratings below in “Note 4—Loans.” • Probability of Default : The probability of default, or default rate, represents the likelihood that a borrower will default over a particular time horizon. Because of our limited default history, we utilize third-party default data for the utility sector as a proxy to estimate default rates for each of our loan pools. The third-party default data provides historical default rates, based on credit ratings and remaining maturities of outstanding bonds, for the utility sector. Based on the mapping and alignment of our internal borrower risk ratings to equivalent credit ratings provided in the third-party utility default table, we apply the corresponding cumulative default rates to the scheduled amortization amounts over the remaining term of the loans in each of our loan pools. • Loss Given Default : The loss given default, or loss severity, represents the estimated loss, net of recoveries, on a loan that would be realized in the event of a borrower default. While we utilize third-party default data, we utilize our lifetime historical loss experience to estimate loss given default, or the recovery rate, for each of our loan portfolio segments. We believe our internal historical loss severity rates provide a more reliable estimate than third-party loss severity data due to the organizational structure and operating environment of rural utility cooperatives, our lending practice of generally requiring a senior security position on the assets and revenues of borrowers for long-term loans, the investment our member borrowers have in CFC and therefore the collaborative approach we generally take in working with members in the event that a default occurs. In addition to the quantitative methodology used in our collective measurement of expected credit losses, management performs a qualitative evaluation and analyses of relevant factors, such as changes in risk-management practices, current and past underwriting standards, specific industry issues and trends and other subjective factors. Based on our assessment, we did not make a qualitative adjustment to the collective allowance for credit losses measured under our quantitative methodology as of August 31, 2020 or at adoption of CECL on June 1, 2020. Asset-Specific Allowance We generally consider nonperforming loans as well as loans that have been or are anticipated to be modified under a troubled debt restructuring for individual evaluation given the risk characteristics of such loans. Factors we consider in measuring the extent of expected credit loss include the payment status, the collateral value, the borrower’s financial condition, guarantor support, the probability of collecting scheduled principal and interest payments when due, anticipated modifications of payment structure or term for troubled borrowers, and recoveries if they can be reasonably estimated. We measure the expected credit loss as the difference between the amortized cost basis in the loan and the present value of the expected future cash flows from the borrower which is generally discounted at the loan’s effective interest rate, or the fair value of the collateral, if the loan is collateral dependent. Reserve for Credit Losses—Off-Balance Sheet Credit Exposures We also maintain a reserve for credit losses for our off-balance sheet credit exposures related to unadvanced loan commitments and financial guarantees. Because our business processes and credit risks associated with our off-balance sheet credit exposures are essentially the same as for our loans, we utilize similar processes to measure expected credit losses over the contractual period of our exposure to credit risk arising from these obligations. We include the reserve for expected credit losses for our off-balance sheet credit exposures as a component of other liabilities on our consolidated balance sheets. |
Interest Income and Interest Ex
Interest Income and Interest Expense | 3 Months Ended |
Aug. 31, 2020 | |
Banking and Thrift, Interest [Abstract] | |
Interest Income and Interest Expense | NOTE 2—INTEREST INCOME AND INTEREST EXPENSE The following table presents the components of interest income, by interest-earning asset type, and interest expense, by debt product type, presented on our consolidated statements of operations. Table 2.1: Interest Income and Interest Expense Three Months Ended August 31, (Dollars in thousands) 2020 2019 Interest income: Long-term fixed-rate loans (1) $ 263,184 $ 258,528 Long-term variable-rate loans 4,400 9,756 Line of credit loans 8,242 16,033 Troubled debt restructuring (“TDR”) loans 207 206 Other, net (2) (335 ) (334 ) Total loans 275,698 284,189 Cash, time deposits and investment securities 3,886 5,826 Total interest income 279,584 290,015 Interest expense: (3)(4) Short-term borrowings 4,341 22,822 Medium-term notes 29,887 32,076 Collateral trust bonds 62,593 65,381 Guaranteed Underwriter Program notes payable 42,413 40,433 Farmer Mac notes payable 13,933 25,074 Other notes payable 87 254 Subordinated deferrable debt 12,890 12,882 Subordinated certificates 13,832 14,349 Total interest expense 179,976 213,271 Net interest income $ 99,608 $ 76,744 ____________________________ (1) Includes loan conversion fees, which are generally deferred and recognized in interest income over the period to maturity using the effective interest method. (2) Consists of late payment fees, commitment fees and net amortization of deferred loan fees and loan origination costs. (3) Includes amortization of debt discounts and debt issuance costs, which are generally deferred and recognized as interest expense over the period to maturity using the effective interest method. Issuance costs related to dealer commercial paper, however, are recognized in interest expense immediately as incurred. (4) Includes fees related to funding arrangements, such as up-front fees paid to banks participating in our committed bank revolving line of credit agreements. Based on the nature of the fees, the amount is either recognized immediately as incurred or deferred and recognized in interest expense ratably over the term of the arrangement. Deferred income reported on our consolidated balance sheets of $57 million and $59 million as of August 31, 2020 and May 31, 2020 , respectively, consists primarily of deferred loan conversion fees, which totaled $51 million and $53 million as of each respective date. Deferred loan conversion fees are recognized in interest income over the period to maturity using the effective interest method. |
Investment Securities
Investment Securities | 3 Months Ended |
Aug. 31, 2020 | |
Investments [Abstract] | |
Investment Securities | NOTE 3—INVESTMENT SECURITIES We maintain a portfolio of debt and equity securities that is intended to serve as a supplemental source of liquidity. We generally record purchases and sales of securities on the trade date. Our current equity security holdings have readily determinable fair values. Therefore, we report these securities at fair value with changes in fair value recognized in earnings as a component of non-interest income in our consolidated statements of operations. In the fourth quarter of fiscal year 2020, we transferred our debt securities from held-to-maturity to trading. As a result, our debt securities were classified as trading as of both August 31, 2020 and May 31, 2020 . Debt securities classified as trading are reported at fair value with changes in fair value recognized in earnings as a component of non-interest income on our consolidated statements of operations. Equity Securities The following table presents the composition of our equity security holdings and the fair value as of August 31, 2020 and May 31, 2020 . Table 3.1: Investments in Equity Securities, at Fair Value (Dollars in thousands) August 31, 2020 May 31, 2020 Equity securities, at fair value: Farmer Mac—Series A and Series C non-cumulative preferred stock $ 57,376 $ 55,640 Farmer Mac—Class A common stock 4,890 5,095 Total equity securities, at fair value $ 62,266 $ 60,735 We recognized net unrealized gains on our equity securities of $2 million for both the three months ended August 31, 2020 and the three months ended August 31, 2019 . On September 19, 2020, Farmer Mac redeemed all of the outstanding shares of its 5.875% Series A non-cumulative preferred stock at a redemption price of $25.00 per share, plus any declared and unpaid dividends through and including the redemption date. We held 1.2 million shares of Farmer Mac’s Series A non-cumulative preferred stock at an amortized cost of $25 per share as of the redemption date, which was equal to the per share redemption price. Debt Securities The following table presents the composition of our debt security holdings and the fair value as of August 31, 2020 and May 31, 2020 . Table 3.2: Investments in Debt Securities, at Fair Value (Dollars in thousands) August 31, 2020 May 31, 2020 Debt securities, at fair value: Certificates of deposit $ 5,007 $ 5,585 Commercial paper 5,993 — Corporate debt securities 454,286 253,153 Commercial mortgage-backed securities (“MBS”): Agency 7,703 7,655 Non-agency 1,321 3,207 Total commercial MBS 9,024 10,862 U.S. state and municipality debt securities 8,423 8,296 Other asset-backed securities (1) 44,793 31,504 Total debt securities, at fair value $ 527,526 $ 309,400 ____________________________ (1) Consists primarily of securities backed by auto lease loans, equipment-backed loans, auto loans and credit card loans. We sold debt investment securities totaling $3 million and realized a gain related to the sale of these securities of less than $1 million during the three months ended August 31, 2020 . We recognized net unrealized gains on our debt securities of $3 million for the three months ended August 31, 2020 . |
Loans
Loans | 3 Months Ended |
Aug. 31, 2020 | |
Receivables [Abstract] | |
Loans | NOTE 4—LOANS We segregate our loan portfolio into portfolio segments based on the member class of the borrower, which consists of CFC distribution, CFC power supply, CFC statewide and associate, NCSC and RTFC. We offer both long-term and line of credit loan loans to our borrowers. Under our long-term loan facilities, a borrower may select a fixed interest rate or a variable interest rate at the time of each loan advance. Line of credit loans are revolving loan facilities and generally have a variable interest rate. Loans to Members Loans to members consists of total loans outstanding, which reflects the unpaid principal balance, net of charge-offs and recoveries, of loans and deferred loan origination costs. The following table presents loans to members and unadvanced loan commitments, by member class and by loan type, as of August 31, 2020 and May 31, 2020 . Table 4.1: Loans to Members by Member Class and Loan Type August 31, 2020 May 31, 2020 (Dollars in thousands) Loans Outstanding Unadvanced Commitments (1) Loans Outstanding Unadvanced Commitments (1) Member class: CFC: Distribution $ 21,012,216 $ 8,970,802 $ 20,769,653 $ 8,992,457 Power supply 4,730,101 3,673,711 4,731,506 3,409,227 Statewide and associate 97,343 155,041 106,498 153,626 Total CFC 25,839,660 12,799,554 25,607,657 12,555,310 NCSC 681,321 557,550 697,862 551,674 RTFC 396,118 297,538 385,335 281,642 Total loans outstanding (2) 26,917,099 13,654,642 26,690,854 13,388,626 Deferred loan origination costs 11,778 — 11,526 — Loans to members $ 26,928,877 $ 13,654,642 $ 26,702,380 $ 13,388,626 Loan type: Long-term loans: Fixed rate $ 24,817,328 $ — $ 24,472,003 $ — Variable rate 695,400 5,461,029 655,704 5,458,676 Total long-term loans 25,512,728 5,461,029 25,127,707 5,458,676 Lines of credit 1,404,371 8,193,613 1,563,147 7,929,950 Total loans outstanding (2) 26,917,099 13,654,642 26,690,854 13,388,626 Deferred loan origination costs 11,778 — 11,526 — Loans to members $ 26,928,877 $ 13,654,642 $ 26,702,380 $ 13,388,626 ____________________________ (1) The interest rate on unadvanced loan commitments is not set until an advance is made; therefore, all unadvanced long-term loan commitments are reported as variable rate. However, the borrower may select either a fixed or a variable rate when an advance is drawn under a loan commitment. (2) Represents the unpaid principal balance, net of charge-offs and recoveries, of loans as of the end of each period. Unadvanced Loan Commitments Unadvanced loan commitments represent approved and executed loan contracts for which funds have not been advanced to borrowers. The following table displays, by loan type, the available balance under unadvanced loan commitments as of August 31, 2020 , and the related maturities in each fiscal year during the five fiscal-year period ended May 31, 2025, and thereafter. Table 4.2: Unadvanced Loan Commitments Available Balance Notional Maturities of Unadvanced Loan Commitments (Dollars in thousands) 2021 2022 2023 2024 2025 Thereafter Line of credit loans $ 8,193,613 $ 487,556 $ 4,047,076 $ 1,357,059 $ 1,063,694 $ 1,079,137 $ 159,091 Long-term loans 5,461,029 312,622 1,273,237 906,698 1,633,259 1,018,758 316,455 Total $ 13,654,642 $ 800,178 $ 5,320,313 $ 2,263,757 $ 2,696,953 $ 2,097,895 $ 475,546 Unadvanced line of credit commitments accounted for 60% of total unadvanced loan commitments as of August 31, 2020 , while unadvanced long-term loan commitments accounted for 40% of total unadvanced loan commitments. Unadvanced line of credit commitments are typically revolving facilities for periods not to exceed five years. Unadvanced line of credit commitments generally serve as supplemental back-up liquidity to our borrowers. Historically, borrowers have not drawn the full commitment amount for line of credit facilities, and we have experienced a very low utilization rate on line of credit loan facilities regardless of whether or not we are obligated to fund the facility where a material adverse change exists. Our unadvanced long-term loan commitments have a five-year draw period under which a borrower may draw funds prior to the expiration of the commitment. We expect that the majority of the long-term unadvanced loan commitments of $5,461 million will be advanced prior to the expiration of the commitment. Because we historically have experienced a very low utilization rate on line of credit loan facilities, which account for the majority of our total unadvanced loan commitments, we believe the unadvanced loan commitment total of $13,655 million as of August 31, 2020 is not necessarily representative of our future funding requirements. Unadvanced Loan Commitments—Conditional The substantial majority of our line of credit commitments and all of our unadvanced long-term loan commitments include material adverse change clauses. Unadvanced loan commitments subject to material adverse change clauses totaled $10,581 million and $10,532 million as of August 31, 2020 and May 31, 2020 , respectively. 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. Unadvanced Loan Commitments—Unconditional Unadvanced loan commitments not subject to material adverse change clauses at the time of each advance consisted of unadvanced committed lines of credit totaling $3,074 million and $2,857 million as of August 31, 2020 and May 31, 2020 , respectively. As such, we are 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 table below displays the amount available for advance under unconditional committed lines of credit as of August 31, 2020 , and the maturities in each fiscal year during the five-year period ended May 31, 2025, and thereafter. Table 4.3: Unconditional Committed Lines of Credit—Available Balance Available Balance Notional Maturities of Unconditional Committed Lines of Credit (Dollars in thousands) 2021 2022 2023 2024 2025 Thereafter Committed lines of credit $ 3,074,095 $ 120,020 $ 242,006 $ 1,068,391 $ 716,378 $ 927,300 $ — Loan Sales We transfer, from time to time, whole loans and participating interests to third parties. We sold CFC loans, at par for cash, totaling $85 million and $20 million during the three months ended August 31, 2020 and 2019, respectively. We recorded immaterial losses upon the sale of these loans attributable to the unamortized deferred loan origination costs associated with the transferred loans. Pledged Loans 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 loans outstanding pledged as collateral to secure our collateral trust bonds, notes payable under the United States Department of Agriculture (“USDA”) Guaranteed Underwriter Program (“Guaranteed Underwriter Program”), notes payable under the revolving note purchase agreement with Farmer Mac and Clean Renewable Energy Bonds, and the corresponding debt outstanding as of August 31, 2020 and May 31, 2020 . See “Note 6—Short-Term Borrowings” and “Note 7—Long-Term Debt” for information on our borrowings. Table 4.4: Pledged Loans (Dollars in thousands) August 31, 2020 May 31, 2020 Collateral trust bonds: 2007 indenture: Distribution system mortgage notes pledged $ 8,162,005 $ 8,244,202 RUS-guaranteed loans qualifying as permitted investments 126,722 128,361 Total pledged collateral $ 8,288,727 $ 8,372,563 Collateral trust bonds outstanding 7,022,711 7,422,711 1994 indenture: Distribution system mortgage notes pledged $ 39,016 $ 39,785 Collateral trust bonds outstanding 35,000 35,000 Guaranteed Underwriter Program: Distribution and power supply system mortgage notes pledged $ 7,457,756 $ 7,535,931 Notes payable outstanding 6,225,855 6,261,312 Farmer Mac: Distribution and power supply system mortgage notes pledged $ 3,665,038 $ 3,687,418 Notes payable outstanding 3,041,843 3,059,637 Clean Renewable Energy Bonds Series 2009A: Distribution and power supply system mortgage notes pledged $ 6,787 $ 7,269 Cash 708 395 Total pledged collateral $ 7,495 $ 7,664 Notes payable outstanding 6,068 6,068 Credit Concentration Concentrations may exist when there are amounts loaned to borrowers engaged in similar activities or in geographic areas that would cause them to be similarly impacted by economic or other conditions or when there are large exposures to single borrowers. As a tax-exempt, member-owned finance cooperative, CFC’s principal focus is to provide funding to its rural electric utility cooperative members to assist them in acquiring, constructing and operating electric distribution systems, power supply systems and related facilities. Because we lend primarily to our rural electric utility cooperative members, we have had a loan portfolio subject to single-industry and single-obligor concentration risks since our inception in 1969. Loans outstanding to electric utility organizations of $26,521 million and $26,306 million as of August 31, 2020 and May 31, 2020 , respectively, accounted for 99% of total loans outstanding as of each respective date. The remaining loans outstanding in our portfolio were to RTFC members, affiliates and associates in the telecommunications industry. Geographic Concentration Although our organizational structure and mission results in single-industry concentration, we serve a geographically diverse group of electric and telecommunications borrowers throughout the United States. The number of borrowers with outstanding loans totaled 888 and 889 as of August 31, 2020 and May 31, 2020 , respectively, located in 49 states. Texas accounted for the largest number of borrowers in any one state as of each respective date. In addition, Texas accounted for approximately 16% of total loans outstanding as of both August 31, 2020 and May 31, 2020 , representing the largest concentration of loans outstanding to borrowers in any one state. Single-Obligor Concentration The outstanding loan exposure for our 20 largest borrowers totaled $5,910 million and $5,877 million as of August 31, 2020 and May 31, 2020 , respectively, representing 22% of total loans outstanding as of each respective date. The 20 largest borrowers consisted of 12 distribution systems and eight power supply systems as of August 31, 2020 . In comparison, the 20 largest borrowers consisted of 11 distribution systems and nine power supply systems as of May 31, 2020 . The largest total outstanding exposure to a single borrower or controlled group represented less than 2% of total loans outstanding as of both August 31, 2020 and May 31, 2020 . As part of our strategy in managing credit exposure to large borrowers, we entered into a long-term standby purchase commitment agreement with Farmer Mac during fiscal year 2016. Under this agreement, we may designate certain long-term loans to be covered under the commitment, subject to approval by Farmer Mac, and in the event any such loan later goes into payment default for at least 90 days, upon request by us, Farmer Mac must purchase such loan at par value. We are required to pay Farmer Mac a monthly fee based on the unpaid principal balance of loans covered under the purchase commitment. The aggregate unpaid principal balance of designated and Farmer Mac approved loans was $551 million and $569 million as of August 31, 2020 and May 31, 2020 , respectively. Loan exposure to our 20 largest borrowers covered under the Farmer Mac agreement totaled $285 million and $314 million as of August 31, 2020 and May 31, 2020 , respectively. No loans had been put to Farmer Mac for purchase, pursuant to this agreement, as of August 31, 2020 . Our credit exposure is also mitigated by long-term loans guaranteed by the Rural Utilities Service (“RUS”) of the USDA. Guaranteed RUS loans totaled $145 million and $147 million as of August 31, 2020 and May 31, 2020 , respectively. Credit Quality Indicators Assessing the overall credit quality of our loan portfolio and measuring our credit risk is an ongoing process that involves tracking payment status, troubled debt restructurings, nonperforming loans, charge-offs, the internal risk ratings of our borrowers and other indicators of credit risk. We monitor and subject each borrower and loan facility in our loan portfolio to an individual risk assessment based on quantitative and qualitative factors. Payment status trends and internal risk ratings are indicators, among others, of the probability of borrower default and overall credit quality of our loan portfolio. Payment Status of Loans Loans are considered delinquent when contractual principal or interest amounts become past due 30 days or more following the scheduled payment due date. Loans are placed on nonaccrual status when payment of principal or interest is 90 days or more past due or management determines that the full collection of principal and interest is doubtful. The following table presents the payment status, by member class, of loans outstanding as of August 31, 2020 and May 31, 2020 . Table 4.5: Payment Status of Loans Outstanding August 31, 2020 (Dollars in thousands) Current 30-89 Days Past Due 90 Days or More Past Due Total Past Due Total Loans Outstanding Nonaccrual Loans (1) CFC: Distribution $ 21,012,216 $ — $ — $ — $ 21,012,216 $ — Power supply 4,730,101 — — — 4,730,101 161,477 Statewide and associate 97,343 — — — 97,343 — CFC total 25,839,660 — — — 25,839,660 161,477 NCSC 681,321 — — — 681,321 — RTFC 396,118 — — — 396,118 — Total loans outstanding $ 26,917,099 $ — $ — $ — $ 26,917,099 $ 161,477 Percentage of total loans 100.00 % — % — % — % 100.00 % 0.60 % May 31, 2020 (Dollars in thousands) Current 30-89 Days Past Due 90 Days or More Past Due (1) Total Total Loans Outstanding Nonaccrual Loans (1) CFC: Distribution $ 20,769,653 $ — $ — $ — $ 20,769,653 $ — Power supply 4,731,506 — — — 4,731,506 167,708 Statewide and associate 106,498 — — — 106,498 — CFC total 25,607,657 — — — 25,607,657 167,708 NCSC 697,862 — — — 697,862 — RTFC 385,335 — — — 385,335 — Total loans outstanding $ 26,690,854 $ — $ — $ — $ 26,690,854 $ 167,708 Percentage of total loans 100.00 % — % — % — % 100.00 % 0.63 % ____________________________ (1) Consists of one loan to a CFC power supply borrower that was classified as nonperforming in the fourth quarter of fiscal year 2020. We had no delinquent loans as of August 31, 2020 or May 31, 2020 , and we have not experienced any loan defaults or charge-offs since fiscal year 2017. However, we have one loan to a CFC power supply borrower with an outstanding balance of $161 million and $168 million as of August 31, 2020 and May 31, 2020 , respectively, that we classified as nonperforming and placed on nonaccrual status in the fourth quarter of fiscal year 2020. No interest income was recognized on nonaccrual loans during the three months ended August 31, 2020 and 2019 . We provide additional information on this loan below under “Nonperforming Loans.” Troubled Debt Restructurings We did not had any loan modifications that were required to be accounted for as a TDR during the three months ended August 31, 2020 , nor have we had any TRD loan modifications since fiscal year 2016. The following table presents the outstanding balance of modified loans accounted for as TDRs in prior periods and the performance status, by member class, of these loans as of August 31, 2020 and May 31, 2020 . Table 4.6: Trouble Debt Restructurings August 31, 2020 May 31, 2020 (Dollars in thousands) Number of Borrowers Outstanding Amount (1) % of Total Loans Outstanding Number of Borrowers Outstanding Amount (1) % of Total Loans Outstanding TDR loans: CFC—Distribution 1 $ 5,379 0.02 % 1 $ 5,755 0.02 % RTFC 1 4,967 0.02 1 5,092 0.02 Total TDR loans 2 $ 10,346 0.04 % 2 $ 10,847 0.04 % Performance status of TDR loans: Performing TDR loans 2 $ 10,346 0.04 % 2 $ 10,847 0.04 % Total TDR loans 2 $ 10,346 0.04 % 2 $ 10,847 0.04 % ____________________________ (1) Represents the unpaid principal balance net of charge-offs and recoveries as of the end of each period. The outstanding TDR loans for CFC and RTFC each relate to the modification of a loan for one borrower that, at the time of the modification, was experiencing financial difficulty. There were no unadvanced commitments related to these loans as of August 31, 2020 and May 31, 2020 . We did not have any TDR loans classified as nonperforming as of August 31, 2020 or May 31, 2020 . Nonperforming Loans In addition to TDR loans that may be classified as nonperforming, we also may have nonperforming loans that have not been modified as a TDR. During the fourth quarter of fiscal year 2020, we classified one loan to a CFC power supply borrower with an outstanding balance of $168 million as of May 31, 2020 , as nonperforming, placed the loan on nonaccrual status and established an asset-specific allowance for credit losses of $34 million as of as of May 31, 2020 . Under the terms of the loan, which matures in December 2026, the amount the borrower is required to pay in 2024 and 2025 may vary as the payments are contingent on the borrower's financial performance in those years. Based on our review and assessment of the borrower’s most recent forecast and underlying assumptions provided to us in May 2020, we no longer believe that the future expected cash payments from the borrower through the maturity of the loan in December 2026 will be sufficient to repay the outstanding loan balance. We received payments from the borrower on this loan during the current quarter, which reduced the outstanding balance to $161 million as of August 31, 2020 . The asset-specific allowance for credit losses for this loan was $33 million as of August 31, 2020 . Although the borrower is not in default and was current with respect to required payments on the loan as of August 31, 2020 , we continue to report the loan as nonperforming and it remains on nonaccrual status. This loan also was categorized as doubtful as of August 31, 2020 and May 31, 2020 . We had no other loans classified as nonperforming or on nonaccrual status as of August 31, 2020 or May 31, 2020 . Net Charge-Offs We had no loan defaults, charge-offs or recoveries during the three months ended August 31, 2020 and 2019 . We experienced our last charge-off, which was attributable to a borrower in our RTFC telecommunications loan portfolio, in fiscal year 2017. Borrower Risk Ratings As part of our management of credit risk, we maintain a credit risk rating framework under which we employ a consistent process for assessing the credit quality of our loan portfolio. We evaluate each borrower and loan facility in our loan portfolio and assign internal borrower and loan facility risk ratings based on consideration of a number of quantitative and qualitative factors. Each risk rating is reassessed annually following the receipt of the borrower’s audited financial statements; however, interim risk-rating adjustments may occur as a result of updated information affecting a borrower’s ability to fulfill its obligations or other significant developments and trends. We categorize loans in our portfolio based on our internally assigned borrower risk ratings, which are intended to assess the general credit worthiness of the borrower and probability of default. Our borrower risk ratings align with the U.S. federal banking regulatory agencies credit risk definitions of pass and criticized categories, with the criticized category further segmented among special mention, substandard and doubtful. Pass ratings reflect relatively low probability of default, while criticized ratings have a higher probability of default. Following is a description of the borrower risk rating categories. • Pass : Borrowers that are not experiencing difficulty and/or not showing a potential or well-defined credit weakness. • 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 credit weakness or weaknesses that make full collection of principal and interest, on the basis of currently known facts, conditions and collateral values, highly questionable and improbable. We use our internal risk ratings to measure the credit risk of each borrower and loan facility, identify or confirm problem or potential problem loans in a timely manner, differentiate risk within each of our portfolio segments, assess the overall credit quality of our loan portfolio and manage overall risk levels. Our internally assigned borrower risk ratings, which we map to equivalent credit ratings by external credit rating agencies, serve as the primary credit quality indicator for our loan portfolio. Because our internal borrower risk ratings provide important information on the collectibility of each of our loan portfolio segments, they are a key input in estimating our allowance for credit losses. The following table provides a breakdown of our total loans outstanding, by borrower risk rating category and member type, as of August 31, 2020 and May 31, 2020 . If a parent company provides a guarantee of full repayment of loans of a subsidiary borrower, we include the loans outstanding in the borrower risk rating category of the guarantor parent company rather than the risk rating category of the subsidiary borrower for purposes of estimating the allowance for credit losses. The borrower risk rating categories of loans outstanding presented below correspond to the borrower risk rating categories used in estimating the allowance for credit losses. In connection with our adoption of CECL, we present term loans outstanding as of August 31, 2020 , by fiscal year of origination for each year during the five-year annual reporting period beginning in fiscal year 2017, and in aggregate prior to fiscal year 2017. The origination period represents the date CFC advances funds to a borrower, rather than the execution date of a loan facility for a borrower. Revolving loans are presented separately due to the nature of revolving loans. The substantial majority of loans in our portfolio represent fixed-rate advances under secured long-term facilities with terms up to 35 years , and as indicated in the table below, $16,608 million , or 62% , of total loans outstanding of $26,917 million as of August 31, 2020 represent term-loan advances made to borrowers prior to fiscal year 2017. As discussed above, as a tax-exempt, member-owned finance cooperative, CFC’s principal focus is to provide funding to its rural electric utility cooperative members to assist them in acquiring, constructing and operating electric distribution systems, power supply systems and related facilities. As such, since our inception in 1969 we have had an extended repeat lending and repayment history with substantially all of member borrowers through our various loan programs. Our secured long-term loan commitment facilities typically provide a five-year draw period under which a borrower may draw funds prior to the expiration of the commitment. Because our electric utility cooperative borrowers must make substantial annual capital investments to maintain operations and ensure delivery of the essential service provided by electric utilities, they require a continuous inflow of funds to finance infrastructure upgrades and new asset purchases. Due to the funding needs of electric utility cooperatives, a CFC borrower generally has multiple loans outstanding under advances drawn in different years. While the number of borrowers with loans outstanding was 888 borrowers as of August 31, 2020 , the number of loans outstanding was 16,569 as of August 31, 2020 , resulting in an average of 19 loans outstanding per borrower. Our borrowers, however, are subject to cross-default under the terms of our loan agreements. Therefore, if a borrower defaults on one loan, the borrower is considered in default on all outstanding loans. Due to these factors, we historically have not observed a correlation between the year of origination of our loans and default risk. Instead, default risk is more closely correlated to the risk rating of our borrowers. Table 4.7: Loans Outstanding by Borrower Risk Ratings and Origination Year August 31, 2020 Term Loans by Fiscal Year of Origination (Dollars in thousands) Q1 2021 2020 2019 2018 2017 Prior Revolving Loans Total May 31, 2020 Pass CFC: Distribution $ 468,438 $ 1,978,080 $ 1,264,632 $ 1,533,073 $ 1,563,130 $ 13,160,291 $ 921,764 $ 20,889,408 $ 20,643,737 Power supply 294,223 210,030 451,539 257,350 259,332 2,703,549 345,634 4,521,657 4,516,595 Statewide and associate 75 24,537 3,978 — 718 27,508 24,356 81,172 90,274 CFC total 762,736 2,212,647 1,720,149 1,790,423 1,823,180 15,891,348 1,291,754 25,492,237 25,250,606 NCSC 12,476 248,220 4,603 58,797 15,587 271,827 69,813 681,323 697,862 RTFC 31,977 74,146 13,653 31,086 65,921 142,064 22,638 381,485 371,507 Total pass 807,189 2,535,013 1,738,405 1,880,306 1,904,688 16,305,239 1,384,205 26,555,045 26,319,975 Special mention CFC: Distribution — — — — 4,694 99,198 18,916 122,808 7,743 Power supply — — — 2,362 8,293 36,309 — 46,964 — Statewide and associate — — 5,000 4,000 5,963 1,208 — 16,171 16,224 CFC total — — 5,000 6,362 18,950 136,715 18,916 185,943 23,967 RTFC — — 1,596 3,334 3,487 — 1,250 9,667 8,736 Total special mention — — 6,596 9,696 22,437 136,715 20,166 195,610 32,703 Substandard CFC: Distribution — — — — — — — — 118,173 Power supply — — — — — — — — 47,203 CFC total — — — — — — — — 165,376 RTFC — — — — — 4,967 — 4,967 5,092 Total substandard — — — — — 4,967 — 4,967 170,468 Doubtful CFC: Power supply — — — — — 161,477 — 161,477 167,708 CFC total — — — — — 161,477 — 161,477 167,708 Total doubtful — — — — — 161,477 — 161,477 167,708 Total loans outstanding $ 807,189 $ 2,535,013 $ 1,745,001 $ 1,890,002 $ 1,927,125 $ 16,608,398 $ 1,404,371 $ 26,917,099 $ 26,690,854 Loans to one electric distribution cooperative borrower and its subsidiary totaling $165 million as of May 31, 2020 accounted for the substantial majority of the substandard loan category amount of the $170 million as of May 31, 2020 . Several years ago the electric distribution cooperative borrower established a subsidiary to deploy retail broadband service in underserved rural communities, which led to financial difficulties. The borrower and its subsidiary, however, continued to be current with regard to all principal and interest payments due. Based on updated financial performance information from the borrower, we reassessed and upgraded the risk rating for the borrower from substandard to special mention as of August 31, 2020 . The loans outstanding to this borrower of $164 million as of August 31, 2020 are secured under our typical collateral requirements for long-term loan advances as of August 31, 2020 . We currently expect to collect all principal and interest amounts due from the borrower and its subsidiary. The doubtful loan category amounts of $161 million and $168 million as of August 31, 2020 and May 31, 2020 , are attributable to the outstanding loan to the CFC power supply borrower discussed above under “Nonperforming Loans.” |
Allowance for Credit Losses
Allowance for Credit Losses | 3 Months Ended |
Aug. 31, 2020 | |
Credit Loss [Abstract] | |
Allowance for Credit Losses | NOTE 5—ALLOWANCE FOR CREDIT LOSSES Upon adoption of CECL on June 1, 2020, we recorded an increase in our allowance for credit losses for our loan portfolio of $4 million . The impact on the reserve for expected credit losses for our off-balance credit exposures related to unadvanced loan commitments and financial guarantees was not material. Additional information on our adoption of CECL is provided in “Note 1—Summary of Significant Accounting Policies.” Allowance for Credit Losses—Loan Portfolio The following tables summarize changes in the allowance for credit losses for our loan portfolio and present the allowance components. The changes in the allowance and the allowance components prior to our adoption of CECL on June 1, 2020 are based on the incurred loss model. The allowance components, which consist of a collective allowance and an asset-specific allowance, are based on the evaluation method used to measure our loans for credit losses. Loans that share similar risk characteristics are evaluated on a collective basis in measuring credit losses, while loans that do not share similar risk characteristics with other loans in our portfolio are evaluated on an individual basis. Table 5.1: Changes in Allowance for Credit Losses Three Months Ended August 31, 2020 (Dollars in thousands) CFC NCSC RTFC Total Balance as of May 31, 2020 $ 47,438 $ 806 $ 4,881 $ 53,125 Cumulative-effect adjustment from adoption of CECL accounting standard 5,645 (15 ) (1,730 ) 3,900 Balance as of June 1, 2020 53,083 791 3,151 57,025 (Benefit) provision for credit losses (353 ) 38 641 326 Balance as of August 31, 2020 $ 52,730 $ 829 $ 3,792 $ 57,351 Three Months Ended August 31, 2019 (Dollars in thousands) CFC NCSC RTFC Total Balance as of May 31, 2019 $ 13,120 $ 2,007 $ 2,408 $ 17,535 (Benefit) provision for credit losses (158 ) 70 118 30 Balance as of August 31, 2019 $ 12,962 2,077 2,526 17,565 Table 5.2: Allowance for Credit Losses Components August 31, 2020 (Dollars in thousands) CFC NCSC RTFC Total Allowance components: Collective allowance $ 19,914 $ 829 $ 2,776 $ 23,519 Asset-specific allowance 32,816 — 1,016 33,832 Total allowance for credit losses $ 52,730 $ 829 $ 3,792 $ 57,351 Loans outstanding: (1) Collectively evaluated loans $ 25,672,804 $ 681,321 $ 391,151 $ 26,745,276 Individually evaluated loans 166,856 — 4,967 171,823 Total loans outstanding $ 25,839,660 $ 681,321 $ 396,118 $ 26,917,099 Allowance ratios: Collective allowance coverage ratio (2) 0.08 % 0.12 % 0.71 % 0.09 % Asset-specific allowance coverage ratio (3) 19.67 — 20.46 19.69 Total allowance coverage ratio (4) 0.20 0.12 0.96 0.21 May 31, 2020 (Dollars in thousands) CFC NCSC RTFC Total Allowance components: Collective allowance $ 13,584 $ 806 $ 3,902 $ 18,292 Asset-specific allowance 33,854 — 979 34,833 Total allowance for credit losses $ 47,438 $ 806 $ 4,881 $ 53,125 Loans outstanding: (1) Collectively evaluated loans $ 25,434,193 $ 697,862 $ 380,243 $ 26,512,298 Individually evaluated loans 173,464 — 5,092 178,556 Total loans outstanding $ 25,607,657 $ 697,862 $ 385,335 $ 26,690,854 Allowance coverage ratios: Collective allowance coverage ratio (2) 0.05 % 0.12 % 1.03 % 0.07 % Asset-specific allowance coverage ratio (3) 19.52 — 19.23 19.51 Total allowance coverage ratio (4) 0.19 0.12 1.27 0.20 ____________________________ (1) Represents the unpaid principal amount of loans as of the end of each period. Excludes unamortized deferred loan origination costs of $12 million as of both August 31, 2020 and May 31, 2020 . (2) Calculated based on the collective allowance component at period end divided by collectively evaluated loans outstanding at period end. (3) Calculated based on the asset-specific allowance component at period end divided by individually evaluated loans outstanding at period end. (4) Calculated based on the total allowance for credit losses at period end divided by total loans outstanding at period end. As discussed above in “Note 4—Loans,” we had one loan to a CFC power supply borrower with an outstanding balance of $161 million and $168 million as of August 31, 2020 or May 31, 2020 , respectively, classified as nonperforming and on nonaccrual status as of each respective date. We evaluated this loan on an individual basis in determining the asset-specific allowance of $33 million and $34 million as of August 31, 2020 and May 31, 2020 , respectively. Individually Impaired Loans Under Incurred Loss Methodology Prior to our adoption of CECL on June 1, 2020, we assessed loan impairment on a collective basis unless we considered a loan to be impaired. We assessed loan impairment on an individual basis when, based on current information, it was probable that we would not receive all principal and interest amounts due in accordance with the contractual terms of the original loan agreement. In connection with our adoption of CECL, we no longer provide information on impaired loans. The following table provides information on loans previously classified as individually impaired under the incurred loss model for determining the allowance for credit losses. Table 5.3: Individually Impaired Loans—Incurred Loss Model May 31, 2020 Three Months Ended August 31, 2019 (Dollars in thousands) Recorded Invested Related Allowance With Specific Allowance With No Specific Allowance Average Recorded Investment Interest Income Recognized Individually impaired loans: CFC $ 173,463 $ 33,854 $ 167,708 $ 5,755 $ 6,239 $ 137 RTFC 5,092 979 5,092 — 5,547 69 Total $ 178,555 $ 34,833 $ 172,800 $ 5,755 $ 11,786 $ 206 Reserve for Credit Losses—Unadvanced Loan Commitments In addition to the allowance for credit losses for our loan portfolio, we maintain an allowance for credit losses for unadvanced loan commitments, which we refer to as our reserve for credit losses because this amount is reported as a component of other liabilities on our consolidated balance sheets. Upon adoption of CECL on June 1, 2020, we began measuring the reserve for credit losses for unadvanced loan commitments based on expected credit losses over the contractual period of our exposure to credit risk arising from our obligation to extend credit, unless that obligation is unconditionally cancellable by us. The reserve for credit losses related to our off-balance sheet exposure for unadvanced loan commitments was less than $1 million as of both August 31, 2020 and May 31, 2020 . |
Short-Term Borrowings
Short-Term Borrowings | 3 Months Ended |
Aug. 31, 2020 | |
Debt Disclosure [Abstract] | |
Short-Term Borrowings | NOTE 6—SHORT-TERM BORROWINGS Short-term borrowings consist of borrowings with an original contractual maturity of one year or less and do not include the current portion of long-term debt. Our short-term borrowings totaled $4,553 million and accounted for 17% of total debt outstanding as of August 31, 2020 , compared with $3,962 million and 15% of total debt outstanding as of May 31, 2020 . The following table provides comparative information on our short-term borrowings as of August 31, 2020 and May 31, 2020 . Table 6.1: Short-Term Borrowings Sources (Dollars in thousands) August 31, 2020 May 31, 2020 Short-term borrowings: Commercial paper: Commercial paper sold through dealers, net of discounts $ 299,998 $ — Commercial paper sold directly to members, at par 1,421,582 1,318,566 Total commercial paper 1,721,580 1,318,566 Select notes to members 1,655,029 1,597,959 Daily liquidity fund notes 645,036 508,618 Medium-term notes sold to members 281,846 286,842 Farmer Mac notes payable (1) 250,000 250,000 Total short-term borrowings $ 4,553,491 $ 3,961,985 ____________________________ (1) Advanced under the revolving purchase agreement with Farmer Mac dated March 24, 2011. See “Note 7—Long-Term Debt” for additional information on this revolving note purchase agreement. Committed Bank Revolving Line of Credit Agreements Under our committed bank revolving line of credit agreements, we had a total commitment of $2,725 million as of both August 31, 2020 and May 31, 2020 . These agreements allow us to request up to $300 million of letters of credit, which would reduce the remaining amount available for our use. The following table presents the total commitment, letters of credit outstanding and the amount available for access as of August 31, 2020 and May 31, 2020 . Table 6.1: Committed Bank Revolving Line of Credit Agreements Available Amounts August 31, 2020 May 31, 2020 (Dollars in millions) Total Commitment Letters of Credit Outstanding Available Amount Total Commitment Letters of Credit Outstanding Available Amount Maturity Annual Facility Fee (1) 3-year agreement, 2022 1,315 — 1,315 1,315 — 1,315 November 28, 2022 7.5 bps 5-year agreement, 2023 1,410 3 1,407 1,410 3 1,407 November 28, 2023 10 bps Total 2,725 3 2,722 2,725 3 2,722 ____________________________ (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. We had no borrowings outstanding under our committed bank revolving line of credit agreements as of August 31, 2020 or May 31, 2020 , and we were in compliance with all covenants and conditions under the agreements as of each date. |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Aug. 31, 2020 | |
Debt Instruments [Abstract] | |
Long-Term Debt | NOTE 7—LONG-TERM DEBT The following table displays long-term debt outstanding, by debt type, as of August 31, 2020 and May 31, 2020 . Table 7.1: Long-Term Debt by Debt Type (Dollars in thousands) August 31, 2020 May 31, 2020 Secured long-term debt: Collateral trust bonds $ 7,057,711 $ 7,457,711 Unamortized discount (233,748 ) (236,461 ) Debt issuance costs (31,515 ) (32,697 ) Total collateral trust bonds 6,792,448 7,188,553 Guaranteed Underwriter Program notes payable 6,225,855 6,261,312 Farmer Mac notes payable 2,791,843 2,809,637 Other secured notes payable 6,068 6,068 Debt issuance costs (101 ) (117 ) Total other secured notes payable 5,967 5,951 Total secured notes payable 9,023,665 9,076,900 Total secured long-term debt 15,816,113 16,265,453 Unsecured long-term debt: Medium-term notes sold through dealers 3,060,194 3,086,733 Medium-term notes sold to members 316,402 372,117 Subtotal medium-term notes 3,376,596 3,458,850 Unamortized discount (852 ) (997 ) Debt issuance costs (16,019 ) (16,943 ) Total unsecured medium-term notes 3,359,725 3,440,910 Unsecured notes payable 5,794 5,794 Unamortized discount (90 ) (107 ) Debt issuance costs (22 ) (26 ) Total unsecured notes payable 5,682 5,661 Total unsecured long-term debt 3,365,407 3,446,571 Total long-term debt $ 19,181,520 $ 19,712,024 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. In June 2020, we redeemed all $400 million outstanding principal amount of our 2.35% collateral trust bonds due June 15, 2020. On October 1, 2020, we redeemed all $350 million outstanding principal amount of our 2.30% collateral trust bonds, due November 1, 2020 . Secured Notes Payable We had outstanding secured notes payable totaling $6,226 million and $6,261 million as of August 31, 2020 and May 31, 2020 , respectively, under bond purchase agreements with the Federal Financing Bank and a bond guarantee agreement with RUS issued under the Guaranteed Underwriter Program, which provides guarantees to the Federal Financing Bank. We pay RUS a fee of 30 basis points per year on the total amount outstanding. We had up to $900 million available for access under the Guaranteed Underwriter Program as of August 31, 2020 . On September 16, 2020, we received a commitment letter for the guarantee by RUS for a $375 million loan facility from the Federal Financing Bank under the Guaranteed Underwriter Program. The notes outstanding under the Guaranteed Underwriter Program contain a provision that if during any portion of the fiscal year, our senior secured credit ratings do not have at least two of the following ratings: (i) A3 or higher from Moody’s, (ii) A- or higher from S&P, (iii) A- or higher from Fitch, or (iv) an equivalent rating from a successor rating agency to any of the above rating agencies, we may not make cash patronage capital distributions in excess of 5% of total patronage capital. 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 Guaranteed Underwriter Program. See “Note 4—Loans” for additional information on the collateral pledged to secure notes payable under this program. We have a revolving note purchase agreement with Farmer Mac, dated March 24, 2011, as amended, under which we can borrow up to $5,500 million from Farmer Mac at any time, subject to market conditions, through January 11, 2022. This date automatically extends on each anniversary date of the closing for an additional year, unless prior to any such anniversary date, Farmer Mac provides us with a notice that the draw period will not be extended beyond the remaining term. Pursuant to the terms of the Farmer Mac revolving note purchase agreement, we can borrow, repay and re-borrow funds at any time through maturity, as market conditions permit, provided that the outstanding principal amount at any time does not exceed the total available under the agreement. Under this agreement, we had outstanding secured notes payable totaling $2,792 million and $2,810 million as of August 31, 2020 and May 31, 2020 , respectively. The amount available for borrowing under this agreement was $2,458 million as of August 31, 2020 . Pursuant to the Farmer Mac revolving note purchase agreement, we are required to pledge eligible electric distribution system or electric power supply system loans as collateral in an amount at least equal to the total principal amount of notes outstanding. See “Note 4—Loans” for additional information on pledged collateral. We were in compliance with all covenants and conditions under our senior debt indentures as of August 31, 2020 and May 31, 2020 . |
Subordinated Deferrable Debt
Subordinated Deferrable Debt | 3 Months Ended |
Aug. 31, 2020 | |
Subordinated Debt [Abstract] | |
Subordinated Deferrable Debt | NOTE 8—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. The following table presents our issuances of subordinated deferrable debt outstanding as of August 31, 2020 and May 31, 2020 . Table 8.1: Subordinated Deferrable Debt Outstanding (Dollars in thousands) August 31, 2020 May 31, 2020 Subordinated deferrable debt: 4.75% due 2043 with a call date of April 30, 2023 $ 400,000 $ 400,000 5.25% due 2046 with a call date of April 20, 2026 350,000 350,000 5.50% due 2064 with a call date of May 15, 2024 250,000 250,000 Debt issuance costs (13,834 ) (13,881 ) Total subordinated deferrable debt $ 986,166 $ 986,119 See “Note 8—Subordinated Deferrable Debt” in our 2020 Form 10-K for additional information on the terms of our subordinated deferrable debt outstanding. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 3 Months Ended |
Aug. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | NOTE 9—DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES We are an end user of derivative financial instruments and do not engage in derivative trading. Derivatives may be privately negotiated contracts, which are often referred to as other-the-counter (“OTC”) derivatives, or they may be listed and traded on an exchange. We generally engage in OTC derivative transactions. Our derivative instruments are an integral part of our interest rate risk management strategy. Our principal purpose in using derivatives is to manage our aggregate interest rate risk profile within prescribed risk parameters. The derivative instruments we use primarily include interest rate swaps, which we typically hold to maturity. In addition, we may on occasion use treasury locks to manage the interest rate risk associated with debt that is scheduled to reprice in the future. Accounting for Derivatives In accordance with the accounting standards for derivatives and hedging activities, all derivative instruments are recorded at fair value on our consolidated balance sheets and classified as either derivative assets or derivative liabilities. Derivatives in a gain position are reported as derivative assets, while derivatives in a loss position are reported as derivative liabilities. 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. Our derivatives transactions are not collateralized and do not include collateralization agreements with counterparties. Accrued interest related to derivative transactions is reported on our consolidated balance sheets as a component of either accrued interest receivable or accrued interest payable. If we do not elect hedge accounting treatment, changes in the fair value of derivative instruments, which consist of net accrued periodic derivative cash settlements expense 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 recognized in the same line item on our consolidated statements of operations as the earnings effect of the related hedged item. Changes in the fair value of derivatives designated as qualifying cash flow hedges are recorded as a component of AOCI. Those amounts are reclassified into earnings in the same period during which the forecasted transaction impacts earnings and presented in the same line item on our consolidated statements of operations as the earnings effect of the related hedged item. We generally do not designate our interest rate swaps for hedge accounting. Therefore, changes in the fair value of our interest rate swaps are reported on our consolidated statements of operations under derivative gains (losses). If we enter into a treasury lock, we typically designate the treasury lock as a cash flow hedge. We did not have any derivatives designated as accounting hedges as of August 31, 2020 or May 31, 2020 . Outstanding Notional Amount of Derivatives Not Designated as Accounting Hedges 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 August 31, 2020 and May 31, 2020 . The substantial majority of our interest rate swaps use an index based on LIBOR for either the pay or receive leg of the swap agreement. Table 9.1: Derivative Notional Amount and Weighted Average Rates August 31, 2020 May 31, 2020 (Dollars in thousands) Notional Amount Weighted- Average Rate Paid Weighted- Average Rate Received Notional Weighted- Weighted- Pay-fixed swaps $ 6,540,816 2.79 % 0.29 % $ 6,604,808 2.78 % 0.88 % Receive-fixed swaps 2,599,000 1.01 2.76 2,699,000 1.54 2.75 Total interest rate swaps 9,139,816 2.28 0.99 9,303,808 2.42 1.42 Forward pay-fixed swaps 120,000 3,000 Total $ 9,259,816 $ 9,306,808 Impact of Derivatives on Consolidated Balance Sheets The following table displays the fair value of the derivative assets and derivative liabilities, by derivatives type, recorded on our consolidated balance sheets and the related outstanding notional amount as of August 31, 2020 and May 31, 2020 . Table 9.2: Derivative Assets and Liabilities at Fair Value August 31, 2020 May 31, 2020 (Dollars in thousands) Fair Value Notional Amount Fair Value Notional Amount Derivative assets: Interest rate swaps $ 167,463 $ 2,722,000 $ 173,195 $ 2,699,000 Derivative liabilities: Interest rate swaps $ 1,165,585 $ 6,537,816 $ 1,258,459 $ 6,607,808 All of our master swap agreements include 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, we report derivative asset and liability amounts on a gross basis by individual contracts. The following table presents the gross fair value of derivative assets and liabilities reported on our consolidated balance sheets as of August 31, 2020 and May 31, 2020 , and provides information on the impact of netting provisions and collateral pledged, if any. Table 9.3: Derivative Gross and Net Amounts August 31, 2020 Gross Amount of Recognized Assets/ Liabilities Gross Amount Offset in the Balance Sheet Net Amount of Assets/ Liabilities Presented in the Balance Sheet Gross Amount Not Offset in the Balance Sheet (Dollars in thousands) Financial Instruments Cash Collateral Pledged Net Amount Derivative assets: Interest rate swaps $ 167,463 $ — $ 167,463 $ 167,463 $ — $ — Derivative liabilities: Interest rate swaps 1,165,585 — 1,165,585 167,463 — 998,122 May 31, 2020 Gross Amount of Recognized Assets/ Liabilities Gross Amount Offset in the Balance Sheet Net Amount of Assets/ Liabilities Presented in the Balance Sheet Gross Amount Not Offset in the Balance Sheet (Dollars in thousands) Financial Instruments Cash Collateral Pledged Net Amount Derivative assets: Interest rate swaps $ 173,195 $ — $ 173,195 $ 173,195 $ — $ — Derivative liabilities: Interest rate swaps 1,258,459 — 1,258,459 173,195 — 1,085,264 Impact of Derivatives on Consolidated Statements of Operations The primary factors affecting the fair value of our derivatives and the derivative gains (losses) recorded in our consolidated statements of operations include changes in interest rates, the shape of the swap curve and the composition of our derivative portfolio. We generally record derivative losses when interest rates decline and derivative gains when interest rates rise, as our derivative portfolio consists of a higher proportion of pay-fixed swaps than receive-fixed swaps. The following table presents the components of the derivative gains (losses) reported in our consolidated statements of operations for the three months ended August 31, 2020 and 2019 . Derivative cash settlements interest expense represents the net periodic contractual interest amount for our interest-rate swaps during the reporting period. Derivative forward value gains (losses) represent the change in fair value of our interest rate swaps during the reporting period due to changes in expected future interest rates over the remaining life of our derivative contracts. We classify the derivative cash settlement amounts for the net periodic contractual interest expense on our interest rate swaps as an operating activity in our consolidated statements of cash flows. Table 9.4: Derivative Gains (Losses) Three Months Ended August 31, (Dollars in thousands) 2020 2019 Derivative gains (losses) attributable to: Derivative cash settlements interest expense $ (26,972 ) $ (11,043 ) Derivative forward value gains (losses) 87,248 (384,682 ) Derivative gains (losses) $ 60,276 $ (395,725 ) Credit Risk-Related Contingent Features Our derivative contracts typically contain mutual early-termination provisions, generally in the form of a credit rating trigger. Under the mutual credit rating trigger provisions, either counterparty may, but is not obligated to, terminate and settle the agreement if the credit rating of the other counterparty falls below a level specified in the agreement. If a derivative contract is terminated, the amount to be received or paid by us would be equal to the prevailing fair value, as defined in the agreement, as of the termination date. Our senior unsecured credit ratings from Moody’s and S&P were A2 and A, respectively, as of August 31, 2020 . Both Moody’s and S&P had our ratings on stable outlook as of August 31, 2020 . The following table displays the notional amounts of our derivative contracts with rating triggers as of August 31, 2020 , 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 below A3/A-, below Baa1/BBB+, to or below Baa2/BBB, below Baa3/BBB-, or to or below Ba2/BB+ by Moody’s or S&P, respectively. In calculating the payment amounts that would be required upon termination of the derivative contracts, we assume that amounts for each counterparty would be netted in accordance with the provisions of the master netting agreements with the 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. Table 9.5: Derivative Credit Rating Trigger Exposure (Dollars in thousands) Notional Amount Payable Due from CFC Receivable Due to CFC Net (Payable)/Receivable Impact of rating downgrade trigger: Falls below A3/A- (1) $ 45,860 $ (10,614 ) $ — $ (10,614 ) Falls below Baa1/BBB+ 6,029,690 (634,659 ) — (634,659 ) Falls to or below Baa2/BBB (2) 417,041 (31,630 ) — (31,630 ) Falls below Baa3/BBB- 44,877 (15,097 ) — (15,097 ) Total $ 6,537,468 $ (692,000 ) $ — $ (692,000 ) ____________________________ (1) Rating trigger for CFC falls below A3/A-, while rating trigger for counterparty falls below Baa1/BBB+ by Moody’s or S&P, respectively. (2) Rating trigger for CFC falls to or below Baa2/BBB, while rating trigger for counterparty falls to or below Ba2/BB+ by Moody’s or S&P, respectively. We have interest rate swaps with one counterparty that are subject to a ratings trigger and early termination provision in the event of a downgrade of CFC’s senior unsecured credit ratings below Baa3, BBB- or BBB- by Moody’s, S&P or Fitch, respectively. The outstanding notional amount of these swaps, which is not included in the above table, totaled $205 million as of August 31, 2020 . These swaps were in an unrealized loss position of $56 million as of August 31, 2020 . Our largest counterparty exposure, based on the outstanding notional amount, accounted for approximately 25% of the total outstanding notional amount of derivatives as of August 31, 2020 and May 31, 2020 . The aggregate fair value amount, including the credit valuation adjustment, of all interest rate swaps with rating triggers that were in a net liability position was $734 million as of August 31, 2020 . |
Equity
Equity | 3 Months Ended |
Aug. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Equity | NOTE 10—EQUITY Total equity increased $83 million to $732 million as of August 31, 2020 , attributable to the combined impact of our reported net income of $145 million for the three months ended August 31, 2020 , which was partially offset by the retirement of patronage capital of $60 million authorized by the CFC Board of Directors during the current quarter and the decrease to retained earnings of $4 million from the cumulative-effect adjustment recorded at adoption of the CECL accounting standard on June 1, 2020. Allocation of Earnings and Retirement of Patronage Capital In July 2020 , the CFC Board of Directors authorized the allocation of fiscal year 2020 net earnings as follows: $96 million to members in the form of patronage capital, $48 million to the members’ capital reserve and $1 million to the cooperative educational fund. The amount of patronage capital allocated each year by CFC’s Board of Directors is based on adjusted net income, which excludes the impact of derivative forward value gains (losses). See “MD&A—Non-GAAP Financial Measures” for information on adjusted net income. In July 2020 , the CFC Board of Directors authorized the retirement of allocated net earnings totaling $60 million , consisting of $48 million , which represented 50% of the patronage capital allocation for fiscal year 2020 , and $12 million , which represented the portion of the allocation from fiscal year 1995 net earnings that has been held for 25 years pursuant to the CFC Board of Directors policy. The authorized patronage capital retirement amount of $60 million was returned to members in cash in September 2020. The remaining portion of the amount allocated for fiscal year 2020 will be retained by CFC for 25 years under current guidelines adopted by the CFC Board of Directors in June 2009. Accumulated Other Comprehensive Income (Loss) The following table presents, by component, changes in AOCI for the three months ended August 31, 2020 and 2019 and the balance of each component as of the end of each respective period. Table 10.1: Changes in Accumulated Other Comprehensive Income (Loss) Three Months Ended August 31, 2020 (Dollars in thousands) Derivatives Unrealized Gains (1) Defined Benefit Plans Unrealized Losses (2) Total Beginning balance $ 2,130 $ (4,040 ) $ (1,910 ) (Gains) losses reclassified to earnings (105 ) 188 83 Ending balance $ 2,025 $ (3,852 ) $ (1,827 ) Three Months Ended August 31, 2019 (Dollars in thousands) Derivatives Unrealized Gains (1) Defined Benefit Plans Unrealized Losses (2) Total Beginning balance $ 2,571 $ (2,718 ) $ (147 ) (Gains) losses reclassified to earnings (112 ) 145 33 Ending balance $ 2,459 $ (2,573 ) $ (114 ) ____________________________ (1) Reclassified to earnings as a component of the derivative gains (losses) line item presented on our consolidated statements of operations. (2) Reclassified to earnings as component of the other non-interest expense line item presented on our consolidated statements of operations. We expect to reclassify less than $1 million of amounts in AOCI related to unrealized derivative gains to earnings over the next 12 months. |
Guarantees
Guarantees | 3 Months Ended |
Aug. 31, 2020 | |
Guarantees [Abstract] | |
Guarantees | NOTE 11—GUARANTEES The following table displays the notional amount of our outstanding guarantee obligations, by guarantee type and by member class, as of August 31, 2020 and May 31, 2020 . Table 11.1: Guarantees Outstanding by Type and Member Class (Dollars in thousands) August 31, 2020 May 31, 2020 Guarantee type: Long-term tax-exempt bonds (1) $ 186,075 $ 263,875 Letters of credit (2) 353,896 413,839 Other guarantees 143,275 143,072 Total $ 683,246 $ 820,786 Member class: CFC: Distribution $ 258,366 $ 266,301 Power supply 409,001 538,532 Statewide and associate (3) 6,110 5,954 CFC total 673,477 810,787 NCSC 9,769 9,999 Total $ 683,246 $ 820,786 ____________________________ (1) Represents the outstanding principal amount of long-term fixed-rate and variable-rate guaranteed bonds. (2) Reflects our maximum potential exposure for letters of credit. (3) Includes CFC guarantees to NCSC and RTFC members totaling $3 million as of August 31, 2020 and May 31, 2020. Long-term tax-exempt bonds of $186 million and $264 million as of August 31, 2020 and May 31, 2020 , respectively, included $166 million and $244 million , respectively, of adjustable or variable-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 may be required to pay related to the remaining adjustable and variable-rate bonds. Many of these bonds have a call provision that allows us to call the bond in the event of a default, which would limit our exposure to future interest payments on these bonds. Our maximum potential exposure generally is secured by mortgage liens on the members’ assets and future revenue. If a member’s debt is accelerated because of a determination that the interest thereon is not tax-exempt, the member’s obligation to reimburse us for any guarantee payments will be treated as a long-term loan. The remaining long-term tax-exempt bonds of $20 million as of August 31, 2020 are fixed-rate. The maximum potential exposure for these bonds, including the outstanding principal of $20 million and related interest through maturity, totaled $34 million as of August 31, 2020 . The maturities for long-term tax-exempt bonds and the related guarantees extend through calendar year 2040. Of the outstanding letters of credit of $354 million and $414 million as of August 31, 2020 and May 31, 2020 , respectively, $103 million and $106 million , respectively, were secured. We did not have any letters of credit outstanding that provided for standby liquidity for adjustable and floating-rate tax-exempt bonds issued for the benefit of our members as of August 31, 2020 . The maturities for the outstanding letters of credit as of August 31, 2020 extend through calendar year 2039. In addition to the letters of credit listed in the table above, under master letter of credit facilities in place as of August 31, 2020 , we may be required to issue up to an additional $71 million in letters of credit to third parties for the benefit of our members. All of our master letter of credit facilities were subject to material adverse change clauses at the time of issuance as of August 31, 2020 . 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 maximum potential exposure for other guarantees was $143 million as of both August 31, 2020 and May 31, 2020 , of which $25 million was secured as of both August 31, 2020 and May 31, 2020 . The maturities for these other guarantees listed in the table above extend through calendar year 2025. Guarantees under which our right of recovery from our members was not secured totaled $369 million and $426 million and represented 54% and 52% of total guarantees as of August 31, 2020 and May 31, 2020 , respectively. In addition to the guarantees described above, we were also the liquidity provider for $166 million of variable-rate tax-exempt bonds as of August 31, 2020 , 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. We were not required to perform as liquidity provider pursuant to these obligations during the three months ended August 31, 2020 or the prior fiscal year. Guarantee Liability We recorded a total guarantee liability for noncontingent and contingent exposures related to guarantees and liquidity obligations of $10 million and $11 million as of August 31, 2020 and May 31, 2020 , respectively. The noncontingent guarantee liability, which pertains to our obligation to stand ready to perform over the term of our guarantees and liquidity obligations we have entered into or modified since January 1, 2003, was $9 million and $10 million as of August 31, 2020 and May 31, 2020 , respectively. The contingent guarantee liability, which is based on management’s estimate of exposure to losses within our guarantee portfolio, was $1 million as of both August 31, 2020 and May 31, 2020 . |
Fair Value Measurement
Fair Value Measurement | 3 Months Ended |
Aug. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | NOTE 12—FAIR VALUE MEASUREMENT Fair value, also referred to as an exit price, 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. 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. The 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 levels, in priority order based on the extent to which observable inputs are available to measure fair value, are Level 1, Level 2 and Level 3. The accounting guidance for fair value measurements requires that we maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. The following table presents the carrying value and estimated fair value of all of our financial instruments, including those carried at amortized cost, as of August 31, 2020 and May 31, 2020 . The table also displays the classification level within the fair value hierarchy based on the degree of observability of the inputs used in the valuation technique for estimating fair value. Table 12.1: Fair Value of Financial Instruments August 31, 2020 Fair Value Measurement Level (Dollars in thousands) Carrying Value Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 347,818 $ 347,818 $ 347,818 $ — $ — Restricted cash 9,376 9,376 9,376 — — Equity securities, at fair value 62,266 62,266 62,266 — — Debt securities trading, at fair value 527,526 527,526 — 527,526 — Deferred compensation investments 6,159 6,159 6,159 — — Loans to members, net 26,871,526 30,200,954 — — 30,200,954 Accrued interest receivable 104,762 104,762 — 104,762 — Debt service reserve funds 14,591 14,591 14,591 — — Derivative assets 167,463 167,463 — 167,463 — Total financial assets $ 28,111,487 $ 31,440,915 $ 440,210 $ 799,751 $ 30,200,954 Liabilities: Short-term borrowings $ 4,553,491 $ 4,552,523 $ — $ 4,302,523 $ 250,000 Long-term debt 19,181,520 21,548,208 — 11,759,472 9,788,736 Accrued interest payable 182,166 182,166 — 182,166 — Guarantee liability 10,320 11,322 — — 11,322 Derivative liabilities 1,165,585 1,165,585 — 1,165,585 — Subordinated deferrable debt 986,166 1,064,046 — 1,064,046 — Members’ subordinated certificates 1,298,845 1,298,845 — — 1,298,845 Total financial liabilities $ 27,378,093 $ 29,822,695 $ — $ 18,473,792 $ 11,348,903 May 31, 2020 Fair Value Measurement Level (Dollars in thousands) Carrying Value Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 671,372 $ 671,372 $ 671,372 $ — $ — Restricted cash 8,647 8,647 8,647 — — Equity securities, at fair value 60,735 60,735 60,735 — — Debt securities trading, at fair value 309,400 309,400 — 309,400 — Deferred compensation investments 5,496 5,496 5,496 — — Loans to members, net 26,649,255 29,252,065 — — 29,252,065 Accrued interest receivable 117,138 117,138 — 117,138 — Debt service reserve funds 14,591 14,591 14,591 — — Derivative assets 173,195 173,195 — 173,195 — Total financial assets $ 28,009,829 $ 30,612,639 $ 760,841 $ 599,733 $ 29,252,065 Liabilities: Short-term borrowings $ 3,961,985 $ 3,963,164 $ — $ 3,713,164 $ 250,000 Long-term debt 19,712,024 21,826,337 — 11,981,580 9,844,757 Accrued interest payable 139,619 139,619 — 139,619 — Guarantee liability 10,937 11,948 — — 11,948 Derivative liabilities 1,258,459 1,258,459 — 1,258,459 — Subordinated deferrable debt 986,119 1,030,108 — 1,030,108 — Members’ subordinated certificates 1,339,618 1,339,618 — — 1,339,618 Total financial liabilities $ 27,408,761 $ 29,569,253 $ — $ 18,122,930 $ 11,446,323 For additional information regarding fair value measurements, the fair value hierarchy and a description of the methodologies we use to estimate fair value, see “Note 14—Fair Value Measurement” to the Consolidated Financial Statements in our 2020 Form 10-K. Transfers Between Levels We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy and transfer between Level 1, Level 2, and Level 3 accordingly. Observable market data includes but is not limited to quoted prices and market transactions. Changes in economic conditions or market liquidity generally will drive changes in availability of observable market data. Changes in availability of observable market data, which also may result in changes in the valuation technique used, are generally the cause of transfers between levels. We did not have any transfers between levels for financial instruments measured at fair value on a recurring basis for the three months ended August 31, 2020 and 2019 . Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table presents the carrying value and fair value of financial instruments reported in our consolidated financial statements at fair value on a recurring basis as of August 31, 2020 and May 31, 2020 , and the classification of the valuation technique within the fair value hierarchy. Table 12.2: Assets and Liabilities Measured at Fair Value on a Recurring Basis August 31, 2020 May 31, 2020 (Dollars in thousands) Level 1 Level 2 Total Level 1 Level 2 Total Assets: Equity securities, at fair value $ 62,266 $ — $ 62,266 $ 60,735 $ — $ 60,735 Debt securities trading, at fair value — 527,526 527,526 — 309,400 309,400 Deferred compensation investments 6,159 — 6,159 5,496 — 5,496 Derivative assets — 167,463 167,463 — 173,195 173,195 Liabilities: Derivative liabilities — 1,165,585 1,165,585 — 1,258,459 1,258,459 Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis We may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis on our consolidated balance sheets. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as in the application of lower of cost or fair value accounting or when we evaluate assets for impairment. We did not have any assets measured at fair value on a nonrecurring basis during the three months ended August 31, 2020 or during the three months ended August 31, 2019 . |
Variable Interest Entities
Variable Interest Entities | 3 Months Ended |
Aug. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Variable Interest Entity | NOTE 13—VARIABLE INTEREST ENTITIES NCSC and RTFC meet the definition of a VIE because they do not have sufficient equity investment at risk to finance their activities without financial support. CFC is the primary source of funding for NCSC and the sole source of funding for RTFC. Under the terms of management agreements with each company, CFC manages the business operations of NCSC and RTFC. CFC also unconditionally guarantees full indemnification for any loan losses of NCSC and RTFC pursuant to guarantee agreements with each company. CFC earns management and guarantee fees from its agreements with NCSC and RTFC. NCSC and RTFC creditors have no recourse against CFC in the event of a default by NCSC and RTFC, unless there is a guarantee agreement under which CFC has guaranteed NCSC or RTFC debt obligations to a third party. The following table provides information on incremental consolidated assets and liabilities of VIEs included in CFC’s consolidated financial statements, after intercompany eliminations, as of August 31, 2020 and May 31, 2020 . 13.1: Consolidated Assets and Liabilities of Variable Interest Entities (Dollars in thousands) August 31, 2020 May 31, 2020 Assets: Loans outstanding $ 1,077,439 $ 1,083,197 Other assets 10,371 11,352 Total assets $ 1,087,810 $ 1,094,549 Liabilities: Long-term debt $ — $ — Other liabilities 37,397 38,803 Total liabilities $ 37,397 $ 38,803 The following table provides information on CFC’s credit commitments to NCSC and RTFC and potential exposure to loss under these commitments as of August 31, 2020 and May 31, 2020 . 13.2: CFC Exposure Under Credit Commitments to NCSC and RTFC (Dollars in thousands) August 31, 2020 May 31, 2020 CFC credit commitments to NCSC and RTFC: Total CFC credit commitments $ 5,500,000 $ 5,500,000 Outstanding commitments: Borrowings payable to CFC (1) 1,055,979 1,062,103 Credit enhancements: CFC third-party guarantees 9,769 9,999 Other credit enhancements 11,290 11,755 Total credit enhancements (2) 21,059 21,754 Total outstanding commitments 1,077,038 1,083,857 CFC credit commitments available (3) $ 4,422,962 $ 4,416,143 ____________________________ (1) Borrowings payable to CFC are eliminated in consolidation. (2) Excludes interest due on these instruments. (3) Represents total CFC credit commitments less outstanding commitments as of each period end. CFC loans to NCSC and RTFC are secured by all assets and revenue of NCSC and RTFC. CFC’s maximum potential exposure, including interest due, for the credit enhancements totaled $21 million as of August 31, 2020 . The maturities for obligations guaranteed by CFC extend through 2031. |
Business Segments
Business Segments | 3 Months Ended |
Aug. 31, 2020 | |
Segment Reporting [Abstract] | |
Business Segments | NOTE 14—BUSINESS SEGMENTS Our activities are conducted through three operating segments, which are based on each of the legal entities included in our consolidated financial statements: CFC, NCSC and RTFC. We report segment information for CFC separately, while we aggregate NCSC and RTFC and report combined segment information for these entities. The following table presents our reportable business segment results for the three months ended August 31, 2020 and 2019 , assets attributable to each segment as of August 31, 2020 and 2019 and a reconciliation to amounts reported in our consolidated financial statements. Table 14.1: Business Segment Information Three Months Ended August 31, 2020 (Dollars in thousands) CFC NCSC and RTFC Elimination Consolidated Total Statement of operations: Interest income $ 277,596 $ 11,009 $ (9,021 ) $ 279,584 Interest expense (179,976 ) (9,021 ) 9,021 (179,976 ) Net interest income 97,620 1,988 — 99,608 (Provision) benefit for credit losses (326 ) 1,066 (1,066 ) (326 ) Net interest income after (provision) benefit for credit losses 97,294 3,054 (1,066 ) 99,282 Non-interest income: Fee and other income 4,775 (516 ) (743 ) 3,516 Derivative gains (losses): Derivative cash settlements interest expense (26,563 ) (409 ) — (26,972 ) Derivative forward value gains 86,783 465 — 87,248 Derivative gains 60,220 56 — 60,276 Investment securities gains 4,659 — — 4,659 Total non-interest income 69,654 (460 ) (743 ) 68,451 Non-interest expense: General and administrative expenses (22,200 ) (2,057 ) 1,594 (22,663 ) Other non-interest expense (332 ) (215 ) 215 (332 ) Total non-interest expense (22,532 ) (2,272 ) 1,809 (22,995 ) Income before income taxes 144,416 322 — 144,738 Income tax provision — (151 ) — (151 ) Net income $ 144,416 $ 171 $ — $ 144,587 August 31, 2020 CFC NCSC and RTFC Elimination Consolidated Total Assets: Total loans outstanding $ 26,895,639 $ 1,077,439 $ (1,055,979 ) $ 26,917,099 Deferred loan origination costs 11,778 — — 11,778 Loans to members 26,907,416 1,077,439 (1,055,979 ) 26,928,877 Less: Allowance for credit losses (57,351 ) — — (57,351 ) Loans to members, net 26,850,065 1,077,439 (1,055,979 ) 26,871,526 Other assets 1,380,725 104,924 (94,554 ) 1,391,095 Total assets $ 28,230,790 $ 1,182,363 $ (1,150,533 ) $ 28,262,621 Three Months Ended August 31, 2019 (Dollars in thousands) CFC NCSC and RTFC Elimination Consolidated Total Statement of operations: Interest income $ 287,964 $ 12,347 $ (10,296 ) $ 290,015 Interest expense (213,135 ) (10,432 ) 10,296 (213,271 ) Net interest income 74,829 1,915 — 76,744 Provision for credit losses (30 ) — — (30 ) Net interest income after provision for credit loses 74,799 1,915 — 76,714 Non-interest income: Fee and other income 12,282 7,821 (9,162 ) 10,941 Derivative losses: Derivative cash settlements interest expense (10,801 ) (242 ) — (11,043 ) Derivative forward value losses (382,762 ) (1,920 ) — (384,682 ) Derivative losses (393,563 ) (2,162 ) — (395,725 ) Investment securities gains 1,620 — — 1,620 Total non-interest income (379,661 ) 5,659 (9,162 ) (383,164 ) Non-interest expense: General and administrative expenses (24,739 ) (2,235 ) 1,645 (25,329 ) Other non-interest expense 7,179 (7,517 ) 7,517 7,179 Total non-interest expense (17,560 ) (9,752 ) 9,162 (18,150 ) Loss before income taxes (322,422 ) (2,178 ) — (324,600 ) Income tax benefit — 521 — 521 Net loss $ (322,422 ) $ (1,657 ) $ — $ (324,079 ) August 31, 2019 CFC NCSC and RTFC Elimination Consolidated Total Assets: Total loans outstanding $ 26,258,810 $ 1,048,892 $ (1,019,103 ) $ 26,288,599 Deferred loan origination costs 11,239 — — 11,239 Loans to members 26,270,049 1,048,892 (1,019,103 ) 26,299,838 Less: Allowance for credit losses (17,565 ) — — (17,565 ) Loans to members, net 26,252,484 1,048,892 (1,019,103 ) 26,282,273 Other assets 1,286,409 105,290 (95,216 ) 1,296,483 Total assets $ 27,538,893 $ 1,154,182 $ (1,114,319 ) $ 27,578,756 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies - (Policies) | 3 Months Ended |
Aug. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
The Company | 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 systems, electric generation and transmission (“power supply”) systems 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. |
Basis of Presentation | The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These consolidated financial statements include the accounts of CFC, variable interest entities (“VIEs”) where CFC is the primary beneficiary and subsidiary entities created and controlled by CFC to hold foreclosed assets. National Cooperative Services Corporation (“NCSC”) and Rural Telephone Finance Cooperative (“RTFC”) are VIEs that are required to be consolidated by CFC. NCSC is a taxable member-owned cooperative that may provide financing to members of CFC, government or quasi-government entities which own electric utility systems that meet the Rural Electrification Act definition of “rural,” and for-profit and nonprofit entities that are owned, operated or controlled by, or provide significant benefits to certain members of CFC. RTFC is a taxable Subchapter T cooperative association that provides financing for its rural telecommunications members and their affiliates. CFC has not had entities that held foreclosed assets since fiscal year 2017. All intercompany balances and transactions have been eliminated. |
Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and related disclosures during the period. Management’s most significant estimates and assumptions involve determining the allowance for credit losses and the fair value of financial assets and liabilities. Actual results could differ from these estimates. We believe these financial statements reflect all adjustments of a normal, recurring nature that are, in the opinion of management, necessary for the fair presentation of the results for the interim period. The results of operations in the interim financial statements are not necessarily indicative of results that may be expected for the full fiscal year. |
Principles of Consolidation | Certain reclassifications have been made to prior periods to conform to the current presentation. Unless stated otherwise, references to “we,” “our” or “us” relate to CFC and its consolidated entities. |
Risks and Uncertainties | Risks and Uncertainties We have considered the impact of the emergence in 2019 and continued spread of a novel strain of coronavirus that causes coronavirus disease 2019 (“COVID-19”), which was declared a global pandemic by the World Health Organization (“WHO”) in March 2020, on our consolidated financial statements. Although the effects of COVID-19 and the response to the virus have negatively impacted financial markets and overall economic conditions, we have been able to navigate the challenges of the pandemic reasonably well. We have been monitoring developments closely, and the future impact of COVID-19 on our operations is highly uncertain and cannot be predicted. The extent of the impact of COVID-19 on our operational and financial performance will depend on certain developments, including, among others, the duration and severity of the COVID-19 pandemic, the ultimate impact on our members, potential further disruption and deterioration in the corporate debt markets and additional, or extended, federal, state and local government orders and regulations that might be imposed in response to the pandemic, all of which are uncertain. |
New Accounting Standards | New Accounting Standards Adopted in Fiscal Year 2021 Fair Value Measurement—Changes to the Disclosure Requirements for Fair Value Measurement On June 1, 2020, we adopted Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which removes, adds and modifies certain disclosure requirements on fair value measurements. The adoption of this guidance, which resulted only in certain changes to the fair value measurement disclosures presented in “Note 12—Fair Value Measurement” did not otherwise affect our consolidated financial statements. Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments On June 1, 2020, we adopted ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology for estimating credit losses with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) model. The incurred loss model delayed the recognition of credit losses until it was probable that a loss had occurred, while the CECL model requires the immediate recognition of expected credit losses over the contractual term, adjusted as appropriate for estimated prepayments, of financial instruments that fall within the scope of CECL at the date of origination or purchase of the financial instrument. The CECL model, which is applicable to the measurement of credit losses on financial assets measured at amortized cost and certain off-balance sheet credit exposures, affects our estimates of the allowance for credit losses for our loan portfolio and our off-balance sheet credit exposures related to unadvanced loan commitments and financial guarantees. In measuring lifetime expected credit losses, management is required to take into consideration relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount of the financial instrument. The adoption of CECL resulted in an increase in our allowance for credit losses for our loan portfolio of $4 million and a corresponding decrease to retained earnings of $4 million recorded as a cumulative-effect adjustment. The impact on the allowance for credit losses for our off-balance sheet credit exposures related to unadvanced loan commitments and financial guarantees was not material. The increase in the allowance for credit losses for our loan portfolio was attributable to the transition to measuring the allowance based on expected credit losses over the remaining contractual term of loans in our portfolio as required under the CECL model, whereas the allowance under the incurred model did not consider the remaining contractual term of our loans. The transition adjustment was primarily driven by an increase in the allowances for CFC distribution and CFC power supply loans, which have a much longer remaining contractual term than the estimated loss emergence period of five years we used in estimating probable losses in our loan portfolio under the incurred loss model. While the adoption of CECL had no impact on our earnings, subsequent to our adoption on June 1, 2020, lifetime expected credit losses for newly recognized loans, unadvanced loan commitments and financial guarantees, as well as changes during the period in our estimate of lifetime expected credit losses for existing financial instruments subject to CECL, will be recognized in earnings. In connection with our adoption of CECL, we have provided an update to certain of our significant accounting policies below under “Updates to Significant Accounting Policies.” We present the expanded credit quality disclosures required under CECL for financial instruments measured at amortized cost in “Note 4—Loans” and “Note 5—Allowance for Credit Losses.” Amounts in periods prior to our adoption of CECL on June 1, 2020, continue to be reported in accordance with previously applicable GAAP. New Accounting Standards Issued But Not Yet Adopted Reference Rate Reform On March 12, 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides temporary optional expedients and exceptions for applying GAAP on contracts, hedging relationships and other transactions subject to modification due to the expected discontinuance of the London Interbank Offered Rate (“LIBOR”) and other reference rate reform changes to ease the potential accounting and financial burdens related to the expected transition in market reference rates. This guidance permits entities to elect not to apply certain modification accounting requirements to contracts affected by reference rate transition, if certain criteria are met. An entity that makes this election would not be required to remeasure modified contracts at the modification date or reassess a previous accounting determination. The guidance was effective upon issuance on March 12, 2020, and can generally be applied through December 31, 2022. We expect to apply certain of the practical expedients and are in the process of evaluating the timing and application of those elections. Based on our current assessment, we do not believe that the application of this guidance will have a material impact on our consolidated financial statements. Updates to Significant Accounting Policies Pursuant to our June 1, 2020 adoption of the CECL accounting standard, we have provided an update to the significant accounting policies presented below. Loans to Members We originate loans to members and classify loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff as held for investment. Loans classified as held for investment are reported based on the unpaid principal balance, net of principal charge-offs, and deferred loan origination costs. As permitted by CECL, we elected to continue reporting accrued interest on loans separately on our consolidated balance sheets as a component of the line item accrued interest receivable rather than as a component of loans to member. Accrued interest receivable amounts generally represent three months or less of accrued interest on loans outstanding. Because our policy is to write off past due accrued interest receivable in a timely manner, we elected not to measure an allowance for credit losses for accrued interest receivable on loans outstanding, which totaled $86 million and $96 million as of August 31, 2020 and May 31, 2020 , respectively. We also elected to exclude accrued interest receivable from the credit quality disclosures required under CECL. Interest Income Interest income on performing loans is accrued and recognized as interest income based on the contractual rate of interest. Loan origination costs and nonrefundable loan fees that meet the definition of loan origination fees are deferred and recognized in interest income as yield adjustments over the period to maturity of the loan using the effective interest method. Troubled Debt Restructurings A loan modification is considered a troubled debt restructuring (“TDR”) if the borrower is experiencing financial difficulties and a concession is granted to the borrower that we would not otherwise consider. Under CECL, we are required to estimate an allowance for lifetime expected credit losses for TDR loans. As discussed below under “Allowance for Credit Losses—Loan Portfolio,” TDR loans are evaluated on an individual basis in estimating expected credit losses. Credit losses for anticipated TDRs are accounted for similarly to TDRs and are identified when there is a reasonable expectation that a TDR will be executed with the borrower and when we expect the modification to affect the timing or amount of payments and/or the payment term. We generally classify TDR loans as nonperforming and place the loan on nonaccrual status, although in many cases such loans were already classified as nonperforming prior to modification. These loans may be returned to performing status and the accrual of interest resumed if the borrower performs under the modified terms for an extended period of time, and we expect the borrower to continue to perform in accordance with the modified terms. In certain limited circumstances in which a TDR loan is current at the modification date, the loan may remain on accrual status at the time of modification. Nonperforming Loans We classify loans as nonperforming when contractual principal or interest is 90 days past due or when we believe the collection of principal and interest in full is not reasonably assured. When a loan is classified as nonperforming, we generally place the loan on nonaccrual status. Interest accrued but not collected at the date a loan is placed on nonaccrual status is reversed against current period interest income. Interest income on nonaccrual loans is subsequently recognized only upon the receipt of cash payments. However, if we believe the ultimate collectibility of the loan principal is in doubt, cash received is applied against the principal balance of the loan. Nonaccrual loans generally are returned to accrual status when principal and interest becomes and remains current for a specified period and repayment of the remaining contractual principal and interest is reasonably assured. Charge-Offs We charge off loans or a portion of a loan when we determine that the loan is uncollectible. The charge-off of uncollectible principal amounts result in a reduction to the allowance for credit losses for our loan portfolio. Recoveries of previously charged off principal amounts result in an increase to the allowance. Allowance for Credit Losses—Loan Portfolio We maintain an allowance for credit losses for our loan portfolio that represents management’s current estimate of expected credit losses over the remaining contractual term, adjusted as appropriate for estimated prepayments, of loans in our loan portfolio as of each balance sheet date. The allowance for our loan portfolio is reported on our consolidated balance sheet as a valuation account that is deducted from loans to members to present the net amount we expect to collect over the life of our loans. We are required to immediately recognize an allowance for expected credit losses upon origination of a loan. Adjustments to the allowance each period for changes in our estimate of lifetime expected credit losses for existing loans, or for newly originated loans, are recognized in earnings through the provision for credit losses presented on our consolidated statements of operations. We estimate our allowance for lifetime expected credit losses for our loan portfolio using a using a probability of default/loss given default methodology. Our allowance for credit losses consists of a collective allowance and an asset-specific allowance. The collective allowance is established for loans in our portfolio that share similar risk characteristics and are therefore evaluated on a collective, or pool, basis in measuring expected credit losses. The asset-specific allowance is established for loans in our portfolio that do not share similar risk characteristics with other loans in our portfolio and are therefore evaluated on an individual basis in measuring expected credit losses. Expected credit losses are estimated based on historical experience, current conditions and forecasts, if applicable, that affect the collectibility of the reported amount. Since inception in 1969, CFC has experienced limited defaults and losses as the utility sector generally tends to be less sensitive to changes in the economy than other sectors largely due to the essential nature of the service provided. The losses we have incurred were not tied to economic factors, but rather to distinct operating issues related to each borrower. Given that our loss experience has not correlated to specific underlying macroeconomic variables, such as U.S. unemployment rates or gross national domestic (“GDP”) growth, we have not made adjustments to our historical loss rates for any forecasted period. We consider the need, however, to adjust our historical loss information for differences in the specific characteristics of our existing loan portfolio based on an evaluation of relative qualitative factors, such as differences in the composition of our loan portfolio, our underwriting standards, problem loan trends, the quality of our credit review function, the regulatory environment and other pertinent external factors. Collective Allowance We employ a quantitative methodology and a qualitative framework to measure the collective component of our allowance for expected credit losses. The first element in our quantitative methodology involves the segmentation of our loan into loan pools that share similar risk characteristics. We divide our portfolio into segments that reflect the member borrower type, which is based on the utility sector of the borrower because the key operational, infrastructure, regulatory, environmental, customer and financial risks of each sector are similar in nature. Our primary member borrower types consist of CFC electric distribution, CFC electric power supply, CFC statewide and associate, NCSC and RTFC telecommunications. Our portfolio segments align with the sectors generally seen in the utilities industry. We further stratify each portfolio into loan pools based on our internal borrower risk ratings, as our borrower risk ratings provide important information on the collectibility of each of our loan portfolio segments. We then apply loss factors, consisting of the probability of default and loss given default, to the scheduled loan-level amortization amounts over the life of the loans for each of our loan pools. Below we discuss the source and basis for the key inputs, which include borrower risk ratings and the loss factors, in measuring expected credit losses for our loan portfolio. • Borrower Risk Ratings : We evaluate each borrower and loan facility in our loan portfolio and assign internal borrower and loan facility risk ratings based on consideration of a number of quantitative and qualitative factors. Each risk rating is reassessed annually following the receipt of the borrower’s audited financial statements; however, interim risk-rating adjustments may occur as a result of updated information affecting a borrower’s ability to fulfill its obligations or other significant developments and trends. Our internally assigned borrower risk ratings are intended to assess the general credit worthiness of the borrower and probability of default. We use our internal borrower risk ratings, which we map to the equivalent credit ratings by external rating agencies, to differentiate risk within each of our portfolio segments and loan pools. We provide additional information on our borrower risk ratings below in “Note 4—Loans.” • Probability of Default : The probability of default, or default rate, represents the likelihood that a borrower will default over a particular time horizon. Because of our limited default history, we utilize third-party default data for the utility sector as a proxy to estimate default rates for each of our loan pools. The third-party default data provides historical default rates, based on credit ratings and remaining maturities of outstanding bonds, for the utility sector. Based on the mapping and alignment of our internal borrower risk ratings to equivalent credit ratings provided in the third-party utility default table, we apply the corresponding cumulative default rates to the scheduled amortization amounts over the remaining term of the loans in each of our loan pools. • Loss Given Default : The loss given default, or loss severity, represents the estimated loss, net of recoveries, on a loan that would be realized in the event of a borrower default. While we utilize third-party default data, we utilize our lifetime historical loss experience to estimate loss given default, or the recovery rate, for each of our loan portfolio segments. We believe our internal historical loss severity rates provide a more reliable estimate than third-party loss severity data due to the organizational structure and operating environment of rural utility cooperatives, our lending practice of generally requiring a senior security position on the assets and revenues of borrowers for long-term loans, the investment our member borrowers have in CFC and therefore the collaborative approach we generally take in working with members in the event that a default occurs. In addition to the quantitative methodology used in our collective measurement of expected credit losses, management performs a qualitative evaluation and analyses of relevant factors, such as changes in risk-management practices, current and past underwriting standards, specific industry issues and trends and other subjective factors. Based on our assessment, we did not make a qualitative adjustment to the collective allowance for credit losses measured under our quantitative methodology as of August 31, 2020 or at adoption of CECL on June 1, 2020. Asset-Specific Allowance We generally consider nonperforming loans as well as loans that have been or are anticipated to be modified under a troubled debt restructuring for individual evaluation given the risk characteristics of such loans. Factors we consider in measuring the extent of expected credit loss include the payment status, the collateral value, the borrower’s financial condition, guarantor support, the probability of collecting scheduled principal and interest payments when due, anticipated modifications of payment structure or term for troubled borrowers, and recoveries if they can be reasonably estimated. We measure the expected credit loss as the difference between the amortized cost basis in the loan and the present value of the expected future cash flows from the borrower which is generally discounted at the loan’s effective interest rate, or the fair value of the collateral, if the loan is collateral dependent. Reserve for Credit Losses—Off-Balance Sheet Credit Exposures We also maintain a reserve for credit losses for our off-balance sheet credit exposures related to unadvanced loan commitments and financial guarantees. Because our business processes and credit risks associated with our off-balance sheet credit exposures are essentially the same as for our loans, we utilize similar processes to measure expected credit losses over the contractual period of our exposure to credit risk arising from these obligations. We include the reserve for expected credit losses for our off-balance sheet credit exposures as a component of other liabilities on our consolidated balance sheets. |
Derivatives | Accounting for Derivatives In accordance with the accounting standards for derivatives and hedging activities, all derivative instruments are recorded at fair value on our consolidated balance sheets and classified as either derivative assets or derivative liabilities. Derivatives in a gain position are reported as derivative assets, while derivatives in a loss position are reported as derivative liabilities. 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. Our derivatives transactions are not collateralized and do not include collateralization agreements with counterparties. Accrued interest related to derivative transactions is reported on our consolidated balance sheets as a component of either accrued interest receivable or accrued interest payable. If we do not elect hedge accounting treatment, changes in the fair value of derivative instruments, which consist of net accrued periodic derivative cash settlements expense 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 recognized in the same line item on our consolidated statements of operations as the earnings effect of the related hedged item. Changes in the fair value of derivatives designated as qualifying cash flow hedges are recorded as a component of AOCI. Those amounts are reclassified into earnings in the same period during which the forecasted transaction impacts earnings and presented in the same line item on our consolidated statements of operations as the earnings effect of the related hedged item. We generally do not designate our interest rate swaps for hedge accounting. Therefore, changes in the fair value of our interest rate swaps are reported on our consolidated statements of operations under derivative gains (losses). If we enter into a treasury lock, we typically designate the treasury lock as a cash flow hedge. We did not have any derivatives designated as accounting hedges as of August 31, 2020 or May 31, 2020 . |
Fair Value Measurement | Fair value, also referred to as an exit price, 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. 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. The 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 levels, in priority order based on the extent to which observable inputs are available to measure fair value, are Level 1, Level 2 and Level 3. The accounting guidance for fair value measurements requires that we maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value. We may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis on our consolidated balance sheets. These assets are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as in the application of lower of cost or fair value accounting or when we evaluate assets for impairment. We did not have any assets measured at fair value on a nonrecurring basis during the three months ended August 31, 2020 or during the three months ended August 31, 2019 |
Transfer Between Levels | Transfers Between Levels We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy and transfer between Level 1, Level 2, and Level 3 accordingly. Observable market data includes but is not limited to quoted prices and market transactions. Changes in economic conditions or market liquidity generally will drive changes in availability of observable market data. Changes in availability of observable market data, which also may result in changes in the valuation technique used, are generally the cause of transfers between levels. We did not have any transfers between levels for financial instruments measured at fair value on a recurring basis for the three months ended August 31, 2020 and |
Interest Income and Interest _2
Interest Income and Interest Expense (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Banking and Thrift, Interest [Abstract] | |
Schedule of Interest Income and Interest Expense | The following table presents the components of interest income, by interest-earning asset type, and interest expense, by debt product type, presented on our consolidated statements of operations. Table 2.1: Interest Income and Interest Expense Three Months Ended August 31, (Dollars in thousands) 2020 2019 Interest income: Long-term fixed-rate loans (1) $ 263,184 $ 258,528 Long-term variable-rate loans 4,400 9,756 Line of credit loans 8,242 16,033 Troubled debt restructuring (“TDR”) loans 207 206 Other, net (2) (335 ) (334 ) Total loans 275,698 284,189 Cash, time deposits and investment securities 3,886 5,826 Total interest income 279,584 290,015 Interest expense: (3)(4) Short-term borrowings 4,341 22,822 Medium-term notes 29,887 32,076 Collateral trust bonds 62,593 65,381 Guaranteed Underwriter Program notes payable 42,413 40,433 Farmer Mac notes payable 13,933 25,074 Other notes payable 87 254 Subordinated deferrable debt 12,890 12,882 Subordinated certificates 13,832 14,349 Total interest expense 179,976 213,271 Net interest income $ 99,608 $ 76,744 ____________________________ (1) Includes loan conversion fees, which are generally deferred and recognized in interest income over the period to maturity using the effective interest method. (2) Consists of late payment fees, commitment fees and net amortization of deferred loan fees and loan origination costs. (3) Includes amortization of debt discounts and debt issuance costs, which are generally deferred and recognized as interest expense over the period to maturity using the effective interest method. Issuance costs related to dealer commercial paper, however, are recognized in interest expense immediately as incurred. (4) Includes fees related to funding arrangements, such as up-front fees paid to banks participating in our committed bank revolving line of credit agreements. Based on the nature of the fees, the amount is either recognized immediately as incurred or deferred and recognized in interest expense ratably over the term of the arrangement. |
Investment Securities - (Tables
Investment Securities - (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Investments [Abstract] | |
Equity Securities | The following table presents the composition of our equity security holdings and the fair value as of August 31, 2020 and May 31, 2020 . Table 3.1: Investments in Equity Securities, at Fair Value (Dollars in thousands) August 31, 2020 May 31, 2020 Equity securities, at fair value: Farmer Mac—Series A and Series C non-cumulative preferred stock $ 57,376 $ 55,640 Farmer Mac—Class A common stock 4,890 5,095 Total equity securities, at fair value $ 62,266 $ 60,735 |
Debt Securities Trading, at Fair Value | (Dollars in thousands) August 31, 2020 May 31, 2020 Debt securities, at fair value: Certificates of deposit $ 5,007 $ 5,585 Commercial paper 5,993 — Corporate debt securities 454,286 253,153 Commercial mortgage-backed securities (“MBS”): Agency 7,703 7,655 Non-agency 1,321 3,207 Total commercial MBS 9,024 10,862 U.S. state and municipality debt securities 8,423 8,296 Other asset-backed securities (1) 44,793 31,504 Total debt securities, at fair value $ 527,526 $ 309,400 ____________________________ (1) Consists primarily of securities backed by auto lease loans, equipment-backed loans, auto loans and credit card loans. |
Loans - (Tables)
Loans - (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Receivables [Abstract] | |
Summary of loans outstanding to members and unadvanced commitments by loan type and by member class | Table 4.1: Loans to Members by Member Class and Loan Type August 31, 2020 May 31, 2020 (Dollars in thousands) Loans Outstanding Unadvanced Commitments (1) Loans Outstanding Unadvanced Commitments (1) Member class: CFC: Distribution $ 21,012,216 $ 8,970,802 $ 20,769,653 $ 8,992,457 Power supply 4,730,101 3,673,711 4,731,506 3,409,227 Statewide and associate 97,343 155,041 106,498 153,626 Total CFC 25,839,660 12,799,554 25,607,657 12,555,310 NCSC 681,321 557,550 697,862 551,674 RTFC 396,118 297,538 385,335 281,642 Total loans outstanding (2) 26,917,099 13,654,642 26,690,854 13,388,626 Deferred loan origination costs 11,778 — 11,526 — Loans to members $ 26,928,877 $ 13,654,642 $ 26,702,380 $ 13,388,626 Loan type: Long-term loans: Fixed rate $ 24,817,328 $ — $ 24,472,003 $ — Variable rate 695,400 5,461,029 655,704 5,458,676 Total long-term loans 25,512,728 5,461,029 25,127,707 5,458,676 Lines of credit 1,404,371 8,193,613 1,563,147 7,929,950 Total loans outstanding (2) 26,917,099 13,654,642 26,690,854 13,388,626 Deferred loan origination costs 11,778 — 11,526 — Loans to members $ 26,928,877 $ 13,654,642 $ 26,702,380 $ 13,388,626 ____________________________ (1) The interest rate on unadvanced loan commitments is not set until an advance is made; therefore, all unadvanced long-term loan commitments are reported as variable rate. However, the borrower may select either a fixed or a variable rate when an advance is drawn under a loan commitment. (2) Represents the unpaid principal balance, net of charge-offs and recoveries, of loans as of the end of each period. |
Schedule of available balance and maturities of lines of credit | The following table displays, by loan type, the available balance under unadvanced loan commitments as of August 31, 2020 , and the related maturities in each fiscal year during the five fiscal-year period ended May 31, 2025, and thereafter. Table 4.2: Unadvanced Loan Commitments Available Balance Notional Maturities of Unadvanced Loan Commitments (Dollars in thousands) 2021 2022 2023 2024 2025 Thereafter Line of credit loans $ 8,193,613 $ 487,556 $ 4,047,076 $ 1,357,059 $ 1,063,694 $ 1,079,137 $ 159,091 Long-term loans 5,461,029 312,622 1,273,237 906,698 1,633,259 1,018,758 316,455 Total $ 13,654,642 $ 800,178 $ 5,320,313 $ 2,263,757 $ 2,696,953 $ 2,097,895 $ 475,546 |
Summary of available balance under committed lines of credit and the related maturities by fiscal year | The table below displays the amount available for advance under unconditional committed lines of credit as of August 31, 2020 , and the maturities in each fiscal year during the five-year period ended May 31, 2025, and thereafter. Table 4.3: Unconditional Committed Lines of Credit—Available Balance Available Balance Notional Maturities of Unconditional Committed Lines of Credit (Dollars in thousands) 2021 2022 2023 2024 2025 Thereafter Committed lines of credit $ 3,074,095 $ 120,020 $ 242,006 $ 1,068,391 $ 716,378 $ 927,300 $ — |
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 loans outstanding pledged as collateral to secure our collateral trust bonds, notes payable under the United States Department of Agriculture (“USDA”) Guaranteed Underwriter Program (“Guaranteed Underwriter Program”), notes payable under the revolving note purchase agreement with Farmer Mac and Clean Renewable Energy Bonds, and the corresponding debt outstanding as of August 31, 2020 and May 31, 2020 . See “Note 6—Short-Term Borrowings” and “Note 7—Long-Term Debt” for information on our borrowings. Table 4.4: Pledged Loans (Dollars in thousands) August 31, 2020 May 31, 2020 Collateral trust bonds: 2007 indenture: Distribution system mortgage notes pledged $ 8,162,005 $ 8,244,202 RUS-guaranteed loans qualifying as permitted investments 126,722 128,361 Total pledged collateral $ 8,288,727 $ 8,372,563 Collateral trust bonds outstanding 7,022,711 7,422,711 1994 indenture: Distribution system mortgage notes pledged $ 39,016 $ 39,785 Collateral trust bonds outstanding 35,000 35,000 Guaranteed Underwriter Program: Distribution and power supply system mortgage notes pledged $ 7,457,756 $ 7,535,931 Notes payable outstanding 6,225,855 6,261,312 Farmer Mac: Distribution and power supply system mortgage notes pledged $ 3,665,038 $ 3,687,418 Notes payable outstanding 3,041,843 3,059,637 Clean Renewable Energy Bonds Series 2009A: Distribution and power supply system mortgage notes pledged $ 6,787 $ 7,269 Cash 708 395 Total pledged collateral $ 7,495 $ 7,664 Notes payable outstanding 6,068 6,068 |
Past Due Financing Receivables | The following table presents the payment status, by member class, of loans outstanding as of August 31, 2020 and May 31, 2020 . Table 4.5: Payment Status of Loans Outstanding August 31, 2020 (Dollars in thousands) Current 30-89 Days Past Due 90 Days or More Past Due Total Past Due Total Loans Outstanding Nonaccrual Loans (1) CFC: Distribution $ 21,012,216 $ — $ — $ — $ 21,012,216 $ — Power supply 4,730,101 — — — 4,730,101 161,477 Statewide and associate 97,343 — — — 97,343 — CFC total 25,839,660 — — — 25,839,660 161,477 NCSC 681,321 — — — 681,321 — RTFC 396,118 — — — 396,118 — Total loans outstanding $ 26,917,099 $ — $ — $ — $ 26,917,099 $ 161,477 Percentage of total loans 100.00 % — % — % — % 100.00 % 0.60 % May 31, 2020 (Dollars in thousands) Current 30-89 Days Past Due 90 Days or More Past Due (1) Total Total Loans Outstanding Nonaccrual Loans (1) CFC: Distribution $ 20,769,653 $ — $ — $ — $ 20,769,653 $ — Power supply 4,731,506 — — — 4,731,506 167,708 Statewide and associate 106,498 — — — 106,498 — CFC total 25,607,657 — — — 25,607,657 167,708 NCSC 697,862 — — — 697,862 — RTFC 385,335 — — — 385,335 — Total loans outstanding $ 26,690,854 $ — $ — $ — $ 26,690,854 $ 167,708 Percentage of total loans 100.00 % — % — % — % 100.00 % 0.63 % ____________________________ (1) Consists of one loan to a CFC power supply borrower that was classified as nonperforming in the fourth quarter of fiscal year 2020. |
Schedule of Troubled Debt Restructured loans | August 31, 2020 May 31, 2020 (Dollars in thousands) Number of Borrowers Outstanding Amount (1) % of Total Loans Outstanding Number of Borrowers Outstanding Amount (1) % of Total Loans Outstanding TDR loans: CFC—Distribution 1 $ 5,379 0.02 % 1 $ 5,755 0.02 % RTFC 1 4,967 0.02 1 5,092 0.02 Total TDR loans 2 $ 10,346 0.04 % 2 $ 10,847 0.04 % Performance status of TDR loans: Performing TDR loans 2 $ 10,346 0.04 % 2 $ 10,847 0.04 % Total TDR loans 2 $ 10,346 0.04 % 2 $ 10,847 0.04 % ____________________________ (1) Represents the unpaid principal balance net of charge-offs and recoveries as of the end of each period. |
Schedule of loan portfolio by risk rating category and member class based on available data | August 31, 2020 Term Loans by Fiscal Year of Origination (Dollars in thousands) Q1 2021 2020 2019 2018 2017 Prior Revolving Loans Total May 31, 2020 Pass CFC: Distribution $ 468,438 $ 1,978,080 $ 1,264,632 $ 1,533,073 $ 1,563,130 $ 13,160,291 $ 921,764 $ 20,889,408 $ 20,643,737 Power supply 294,223 210,030 451,539 257,350 259,332 2,703,549 345,634 4,521,657 4,516,595 Statewide and associate 75 24,537 3,978 — 718 27,508 24,356 81,172 90,274 CFC total 762,736 2,212,647 1,720,149 1,790,423 1,823,180 15,891,348 1,291,754 25,492,237 25,250,606 NCSC 12,476 248,220 4,603 58,797 15,587 271,827 69,813 681,323 697,862 RTFC 31,977 74,146 13,653 31,086 65,921 142,064 22,638 381,485 371,507 Total pass 807,189 2,535,013 1,738,405 1,880,306 1,904,688 16,305,239 1,384,205 26,555,045 26,319,975 Special mention CFC: Distribution — — — — 4,694 99,198 18,916 122,808 7,743 Power supply — — — 2,362 8,293 36,309 — 46,964 — Statewide and associate — — 5,000 4,000 5,963 1,208 — 16,171 16,224 CFC total — — 5,000 6,362 18,950 136,715 18,916 185,943 23,967 RTFC — — 1,596 3,334 3,487 — 1,250 9,667 8,736 Total special mention — — 6,596 9,696 22,437 136,715 20,166 195,610 32,703 Substandard CFC: Distribution — — — — — — — — 118,173 Power supply — — — — — — — — 47,203 CFC total — — — — — — — — 165,376 RTFC — — — — — 4,967 — 4,967 5,092 Total substandard — — — — — 4,967 — 4,967 170,468 Doubtful CFC: Power supply — — — — — 161,477 — 161,477 167,708 CFC total — — — — — 161,477 — 161,477 167,708 Total doubtful — — — — — 161,477 — 161,477 167,708 Total loans outstanding $ 807,189 $ 2,535,013 $ 1,745,001 $ 1,890,002 $ 1,927,125 $ 16,608,398 $ 1,404,371 $ 26,917,099 $ 26,690,854 |
Allowance for Credit Losses - (
Allowance for Credit Losses - (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Credit Loss [Abstract] | |
Allowance for Credit Losses on Financing Receivables | Table 5.1: Changes in Allowance for Credit Losses Three Months Ended August 31, 2020 (Dollars in thousands) CFC NCSC RTFC Total Balance as of May 31, 2020 $ 47,438 $ 806 $ 4,881 $ 53,125 Cumulative-effect adjustment from adoption of CECL accounting standard 5,645 (15 ) (1,730 ) 3,900 Balance as of June 1, 2020 53,083 791 3,151 57,025 (Benefit) provision for credit losses (353 ) 38 641 326 Balance as of August 31, 2020 $ 52,730 $ 829 $ 3,792 $ 57,351 Three Months Ended August 31, 2019 (Dollars in thousands) CFC NCSC RTFC Total Balance as of May 31, 2019 $ 13,120 $ 2,007 $ 2,408 $ 17,535 (Benefit) provision for credit losses (158 ) 70 118 30 Balance as of August 31, 2019 $ 12,962 2,077 2,526 17,565 |
Allowance for Credit Losses and Recorded Investment in Financing Receivables | Table 5.2: Allowance for Credit Losses Components August 31, 2020 (Dollars in thousands) CFC NCSC RTFC Total Allowance components: Collective allowance $ 19,914 $ 829 $ 2,776 $ 23,519 Asset-specific allowance 32,816 — 1,016 33,832 Total allowance for credit losses $ 52,730 $ 829 $ 3,792 $ 57,351 Loans outstanding: (1) Collectively evaluated loans $ 25,672,804 $ 681,321 $ 391,151 $ 26,745,276 Individually evaluated loans 166,856 — 4,967 171,823 Total loans outstanding $ 25,839,660 $ 681,321 $ 396,118 $ 26,917,099 Allowance ratios: Collective allowance coverage ratio (2) 0.08 % 0.12 % 0.71 % 0.09 % Asset-specific allowance coverage ratio (3) 19.67 — 20.46 19.69 Total allowance coverage ratio (4) 0.20 0.12 0.96 0.21 May 31, 2020 (Dollars in thousands) CFC NCSC RTFC Total Allowance components: Collective allowance $ 13,584 $ 806 $ 3,902 $ 18,292 Asset-specific allowance 33,854 — 979 34,833 Total allowance for credit losses $ 47,438 $ 806 $ 4,881 $ 53,125 Loans outstanding: (1) Collectively evaluated loans $ 25,434,193 $ 697,862 $ 380,243 $ 26,512,298 Individually evaluated loans 173,464 — 5,092 178,556 Total loans outstanding $ 25,607,657 $ 697,862 $ 385,335 $ 26,690,854 Allowance coverage ratios: Collective allowance coverage ratio (2) 0.05 % 0.12 % 1.03 % 0.07 % Asset-specific allowance coverage ratio (3) 19.52 — 19.23 19.51 Total allowance coverage ratio (4) 0.19 0.12 1.27 0.20 ____________________________ (1) Represents the unpaid principal amount of loans as of the end of each period. Excludes unamortized deferred loan origination costs of $12 million as of both August 31, 2020 and May 31, 2020 . (2) Calculated based on the collective allowance component at period end divided by collectively evaluated loans outstanding at period end. (3) Calculated based on the asset-specific allowance component at period end divided by individually evaluated loans outstanding at period end. (4) Calculated based on the total allowance for credit losses at period end divided by total loans outstanding at period end. |
Impaired Financing Receivable Average Recorded Investment and Interest Income Recognized | May 31, 2020 Three Months Ended August 31, 2019 (Dollars in thousands) Recorded Invested Related Allowance With Specific Allowance With No Specific Allowance Average Recorded Investment Interest Income Recognized Individually impaired loans: CFC $ 173,463 $ 33,854 $ 167,708 $ 5,755 $ 6,239 $ 137 RTFC 5,092 979 5,092 — 5,547 69 Total $ 178,555 $ 34,833 $ 172,800 $ 5,755 $ 11,786 $ 206 |
Short-Term Borrowings - (Tables
Short-Term Borrowings - (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of Short-term Debt | The following table provides comparative information on our short-term borrowings as of August 31, 2020 and May 31, 2020 . Table 6.1: Short-Term Borrowings Sources (Dollars in thousands) August 31, 2020 May 31, 2020 Short-term borrowings: Commercial paper: Commercial paper sold through dealers, net of discounts $ 299,998 $ — Commercial paper sold directly to members, at par 1,421,582 1,318,566 Total commercial paper 1,721,580 1,318,566 Select notes to members 1,655,029 1,597,959 Daily liquidity fund notes 645,036 508,618 Medium-term notes sold to members 281,846 286,842 Farmer Mac notes payable (1) 250,000 250,000 Total short-term borrowings $ 4,553,491 $ 3,961,985 ____________________________ (1) Advanced under the revolving purchase agreement with Farmer Mac dated March 24, 2011. See “Note 7—Long-Term Debt” for additional information on this revolving note purchase agreement. |
Schedule of Line of Credit Facilities | The following table presents the total commitment, letters of credit outstanding and the amount available for access as of August 31, 2020 and May 31, 2020 . Table 6.1: Committed Bank Revolving Line of Credit Agreements Available Amounts August 31, 2020 May 31, 2020 (Dollars in millions) Total Commitment Letters of Credit Outstanding Available Amount Total Commitment Letters of Credit Outstanding Available Amount Maturity Annual Facility Fee (1) 3-year agreement, 2022 1,315 — 1,315 1,315 — 1,315 November 28, 2022 7.5 bps 5-year agreement, 2023 1,410 3 1,407 1,410 3 1,407 November 28, 2023 10 bps Total 2,725 3 2,722 2,725 3 2,722 ____________________________ (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. |
Long-Term Debt - (Tables)
Long-Term Debt - (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Debt Instruments [Abstract] | |
Summary of long-term debt outstanding | The following table displays long-term debt outstanding, by debt type, as of August 31, 2020 and May 31, 2020 . Table 7.1: Long-Term Debt by Debt Type (Dollars in thousands) August 31, 2020 May 31, 2020 Secured long-term debt: Collateral trust bonds $ 7,057,711 $ 7,457,711 Unamortized discount (233,748 ) (236,461 ) Debt issuance costs (31,515 ) (32,697 ) Total collateral trust bonds 6,792,448 7,188,553 Guaranteed Underwriter Program notes payable 6,225,855 6,261,312 Farmer Mac notes payable 2,791,843 2,809,637 Other secured notes payable 6,068 6,068 Debt issuance costs (101 ) (117 ) Total other secured notes payable 5,967 5,951 Total secured notes payable 9,023,665 9,076,900 Total secured long-term debt 15,816,113 16,265,453 Unsecured long-term debt: Medium-term notes sold through dealers 3,060,194 3,086,733 Medium-term notes sold to members 316,402 372,117 Subtotal medium-term notes 3,376,596 3,458,850 Unamortized discount (852 ) (997 ) Debt issuance costs (16,019 ) (16,943 ) Total unsecured medium-term notes 3,359,725 3,440,910 Unsecured notes payable 5,794 5,794 Unamortized discount (90 ) (107 ) Debt issuance costs (22 ) (26 ) Total unsecured notes payable 5,682 5,661 Total unsecured long-term debt 3,365,407 3,446,571 Total long-term debt $ 19,181,520 $ 19,712,024 |
Subordinated Deferrable Debt -
Subordinated Deferrable Debt - (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Subordinated Debt [Abstract] | |
Schedule of Subordinated Borrowing | The following table presents our issuances of subordinated deferrable debt outstanding as of August 31, 2020 and May 31, 2020 . Table 8.1: Subordinated Deferrable Debt Outstanding (Dollars in thousands) August 31, 2020 May 31, 2020 Subordinated deferrable debt: 4.75% due 2043 with a call date of April 30, 2023 $ 400,000 $ 400,000 5.25% due 2046 with a call date of April 20, 2026 350,000 350,000 5.50% due 2064 with a call date of May 15, 2024 250,000 250,000 Debt issuance costs (13,834 ) (13,881 ) Total subordinated deferrable debt $ 986,166 $ 986,119 See “Note 8—Subordinated Deferrable Debt” in our 2020 Form 10-K for additional information on the terms of our subordinated deferrable debt outstanding. |
Derivative Instruments and He_2
Derivative Instruments and Hedging Activities - (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of notional amounts and weighted average rates paid and received | 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 August 31, 2020 and May 31, 2020 . The substantial majority of our interest rate swaps use an index based on LIBOR for either the pay or receive leg of the swap agreement. Table 9.1: Derivative Notional Amount and Weighted Average Rates August 31, 2020 May 31, 2020 (Dollars in thousands) Notional Amount Weighted- Average Rate Paid Weighted- Average Rate Received Notional Weighted- Weighted- Pay-fixed swaps $ 6,540,816 2.79 % 0.29 % $ 6,604,808 2.78 % 0.88 % Receive-fixed swaps 2,599,000 1.01 2.76 2,699,000 1.54 2.75 Total interest rate swaps 9,139,816 2.28 0.99 9,303,808 2.42 1.42 Forward pay-fixed swaps 120,000 3,000 Total $ 9,259,816 $ 9,306,808 |
Schedule of fair values and notional amounts of outstanding derivatives | The following table displays the fair value of the derivative assets and derivative liabilities, by derivatives type, recorded on our consolidated balance sheets and the related outstanding notional amount as of August 31, 2020 and May 31, 2020 . Table 9.2: Derivative Assets and Liabilities at Fair Value August 31, 2020 May 31, 2020 (Dollars in thousands) Fair Value Notional Amount Fair Value Notional Amount Derivative assets: Interest rate swaps $ 167,463 $ 2,722,000 $ 173,195 $ 2,699,000 Derivative liabilities: Interest rate swaps $ 1,165,585 $ 6,537,816 $ 1,258,459 $ 6,607,808 |
Schedule of offsetting assets and liabilities | The following table presents the gross fair value of derivative assets and liabilities reported on our consolidated balance sheets as of August 31, 2020 and May 31, 2020 , and provides information on the impact of netting provisions and collateral pledged, if any. Table 9.3: Derivative Gross and Net Amounts August 31, 2020 Gross Amount of Recognized Assets/ Liabilities Gross Amount Offset in the Balance Sheet Net Amount of Assets/ Liabilities Presented in the Balance Sheet Gross Amount Not Offset in the Balance Sheet (Dollars in thousands) Financial Instruments Cash Collateral Pledged Net Amount Derivative assets: Interest rate swaps $ 167,463 $ — $ 167,463 $ 167,463 $ — $ — Derivative liabilities: Interest rate swaps 1,165,585 — 1,165,585 167,463 — 998,122 May 31, 2020 Gross Amount of Recognized Assets/ Liabilities Gross Amount Offset in the Balance Sheet Net Amount of Assets/ Liabilities Presented in the Balance Sheet Gross Amount Not Offset in the Balance Sheet (Dollars in thousands) Financial Instruments Cash Collateral Pledged Net Amount Derivative assets: Interest rate swaps $ 173,195 $ — $ 173,195 $ 173,195 $ — $ — Derivative liabilities: Interest rate swaps 1,258,459 — 1,258,459 173,195 — 1,085,264 |
Schedule of offsetting assets and liabilities | The following table presents the gross fair value of derivative assets and liabilities reported on our consolidated balance sheets as of August 31, 2020 and May 31, 2020 , and provides information on the impact of netting provisions and collateral pledged, if any. Table 9.3: Derivative Gross and Net Amounts August 31, 2020 Gross Amount of Recognized Assets/ Liabilities Gross Amount Offset in the Balance Sheet Net Amount of Assets/ Liabilities Presented in the Balance Sheet Gross Amount Not Offset in the Balance Sheet (Dollars in thousands) Financial Instruments Cash Collateral Pledged Net Amount Derivative assets: Interest rate swaps $ 167,463 $ — $ 167,463 $ 167,463 $ — $ — Derivative liabilities: Interest rate swaps 1,165,585 — 1,165,585 167,463 — 998,122 May 31, 2020 Gross Amount of Recognized Assets/ Liabilities Gross Amount Offset in the Balance Sheet Net Amount of Assets/ Liabilities Presented in the Balance Sheet Gross Amount Not Offset in the Balance Sheet (Dollars in thousands) Financial Instruments Cash Collateral Pledged Net Amount Derivative assets: Interest rate swaps $ 173,195 $ — $ 173,195 $ 173,195 $ — $ — Derivative liabilities: Interest rate swaps 1,258,459 — 1,258,459 173,195 — 1,085,264 |
Summary of gains and losses recorded on the consolidated statements of operations for the entity's interest rate swaps | The following table presents the components of the derivative gains (losses) reported in our consolidated statements of operations for the three months ended August 31, 2020 and 2019 . Derivative cash settlements interest expense represents the net periodic contractual interest amount for our interest-rate swaps during the reporting period. Derivative forward value gains (losses) represent the change in fair value of our interest rate swaps during the reporting period due to changes in expected future interest rates over the remaining life of our derivative contracts. We classify the derivative cash settlement amounts for the net periodic contractual interest expense on our interest rate swaps as an operating activity in our consolidated statements of cash flows. Table 9.4: Derivative Gains (Losses) Three Months Ended August 31, (Dollars in thousands) 2020 2019 Derivative gains (losses) attributable to: Derivative cash settlements interest expense $ (26,972 ) $ (11,043 ) Derivative forward value gains (losses) 87,248 (384,682 ) Derivative gains (losses) $ 60,276 $ (395,725 ) |
Schedule of notional amounts of derivative instruments having rating triggers | The following table displays the notional amounts of our derivative contracts with rating triggers as of August 31, 2020 , 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 below A3/A-, below Baa1/BBB+, to or below Baa2/BBB, below Baa3/BBB-, or to or below Ba2/BB+ by Moody’s or S&P, respectively. In calculating the payment amounts that would be required upon termination of the derivative contracts, we assume that amounts for each counterparty would be netted in accordance with the provisions of the master netting agreements with the 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. Table 9.5: Derivative Credit Rating Trigger Exposure (Dollars in thousands) Notional Amount Payable Due from CFC Receivable Due to CFC Net (Payable)/Receivable Impact of rating downgrade trigger: Falls below A3/A- (1) $ 45,860 $ (10,614 ) $ — $ (10,614 ) Falls below Baa1/BBB+ 6,029,690 (634,659 ) — (634,659 ) Falls to or below Baa2/BBB (2) 417,041 (31,630 ) — (31,630 ) Falls below Baa3/BBB- 44,877 (15,097 ) — (15,097 ) Total $ 6,537,468 $ (692,000 ) $ — $ (692,000 ) ____________________________ (1) Rating trigger for CFC falls below A3/A-, while rating trigger for counterparty falls below Baa1/BBB+ by Moody’s or S&P, respectively. (2) Rating trigger for CFC falls to or below Baa2/BBB, while rating trigger for counterparty falls to or below Ba2/BB+ by Moody’s or S&P, respectively. |
Equity - (Tables)
Equity - (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table presents, by component, changes in AOCI for the three months ended August 31, 2020 and 2019 and the balance of each component as of the end of each respective period. Table 10.1: Changes in Accumulated Other Comprehensive Income (Loss) Three Months Ended August 31, 2020 (Dollars in thousands) Derivatives Unrealized Gains (1) Defined Benefit Plans Unrealized Losses (2) Total Beginning balance $ 2,130 $ (4,040 ) $ (1,910 ) (Gains) losses reclassified to earnings (105 ) 188 83 Ending balance $ 2,025 $ (3,852 ) $ (1,827 ) Three Months Ended August 31, 2019 (Dollars in thousands) Derivatives Unrealized Gains (1) Defined Benefit Plans Unrealized Losses (2) Total Beginning balance $ 2,571 $ (2,718 ) $ (147 ) (Gains) losses reclassified to earnings (112 ) 145 33 Ending balance $ 2,459 $ (2,573 ) $ (114 ) ____________________________ (1) Reclassified to earnings as a component of the derivative gains (losses) line item presented on our consolidated statements of operations. (2) Reclassified to earnings as component of the other non-interest expense line item presented on our consolidated statements of operations. |
Guarantees - (Tables)
Guarantees - (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Guarantees [Abstract] | |
Summary of total guarantees by type of guarantee and member class | The following table displays the notional amount of our outstanding guarantee obligations, by guarantee type and by member class, as of August 31, 2020 and May 31, 2020 . Table 11.1: Guarantees Outstanding by Type and Member Class (Dollars in thousands) August 31, 2020 May 31, 2020 Guarantee type: Long-term tax-exempt bonds (1) $ 186,075 $ 263,875 Letters of credit (2) 353,896 413,839 Other guarantees 143,275 143,072 Total $ 683,246 $ 820,786 Member class: CFC: Distribution $ 258,366 $ 266,301 Power supply 409,001 538,532 Statewide and associate (3) 6,110 5,954 CFC total 673,477 810,787 NCSC 9,769 9,999 Total $ 683,246 $ 820,786 ____________________________ (1) Represents the outstanding principal amount of long-term fixed-rate and variable-rate guaranteed bonds. (2) Reflects our maximum potential exposure for letters of credit. (3) Includes CFC guarantees to NCSC and RTFC members totaling $3 million as of August 31, 2020 and May 31, 2020. |
Fair Value Measurement - (Table
Fair Value Measurement - (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Fair Value Disclosures [Abstract] | |
Fair Value, by Balance Sheet Grouping | The table also displays the classification level within the fair value hierarchy based on the degree of observability of the inputs used in the valuation technique for estimating fair value. Table 12.1: Fair Value of Financial Instruments August 31, 2020 Fair Value Measurement Level (Dollars in thousands) Carrying Value Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 347,818 $ 347,818 $ 347,818 $ — $ — Restricted cash 9,376 9,376 9,376 — — Equity securities, at fair value 62,266 62,266 62,266 — — Debt securities trading, at fair value 527,526 527,526 — 527,526 — Deferred compensation investments 6,159 6,159 6,159 — — Loans to members, net 26,871,526 30,200,954 — — 30,200,954 Accrued interest receivable 104,762 104,762 — 104,762 — Debt service reserve funds 14,591 14,591 14,591 — — Derivative assets 167,463 167,463 — 167,463 — Total financial assets $ 28,111,487 $ 31,440,915 $ 440,210 $ 799,751 $ 30,200,954 Liabilities: Short-term borrowings $ 4,553,491 $ 4,552,523 $ — $ 4,302,523 $ 250,000 Long-term debt 19,181,520 21,548,208 — 11,759,472 9,788,736 Accrued interest payable 182,166 182,166 — 182,166 — Guarantee liability 10,320 11,322 — — 11,322 Derivative liabilities 1,165,585 1,165,585 — 1,165,585 — Subordinated deferrable debt 986,166 1,064,046 — 1,064,046 — Members’ subordinated certificates 1,298,845 1,298,845 — — 1,298,845 Total financial liabilities $ 27,378,093 $ 29,822,695 $ — $ 18,473,792 $ 11,348,903 May 31, 2020 Fair Value Measurement Level (Dollars in thousands) Carrying Value Fair Value Level 1 Level 2 Level 3 Assets: Cash and cash equivalents $ 671,372 $ 671,372 $ 671,372 $ — $ — Restricted cash 8,647 8,647 8,647 — — Equity securities, at fair value 60,735 60,735 60,735 — — Debt securities trading, at fair value 309,400 309,400 — 309,400 — Deferred compensation investments 5,496 5,496 5,496 — — Loans to members, net 26,649,255 29,252,065 — — 29,252,065 Accrued interest receivable 117,138 117,138 — 117,138 — Debt service reserve funds 14,591 14,591 14,591 — — Derivative assets 173,195 173,195 — 173,195 — Total financial assets $ 28,009,829 $ 30,612,639 $ 760,841 $ 599,733 $ 29,252,065 Liabilities: Short-term borrowings $ 3,961,985 $ 3,963,164 $ — $ 3,713,164 $ 250,000 Long-term debt 19,712,024 21,826,337 — 11,981,580 9,844,757 Accrued interest payable 139,619 139,619 — 139,619 — Guarantee liability 10,937 11,948 — — 11,948 Derivative liabilities 1,258,459 1,258,459 — 1,258,459 — Subordinated deferrable debt 986,119 1,030,108 — 1,030,108 — Members’ subordinated certificates 1,339,618 1,339,618 — — 1,339,618 Total financial liabilities $ 27,408,761 $ 29,569,253 $ — $ 18,122,930 $ 11,446,323 |
Schedule of the entity's assets and liabilities that are measured at fair value on a recurring basis | The following table presents the carrying value and fair value of financial instruments reported in our consolidated financial statements at fair value on a recurring basis as of August 31, 2020 and May 31, 2020 , and the classification of the valuation technique within the fair value hierarchy. Table 12.2: Assets and Liabilities Measured at Fair Value on a Recurring Basis August 31, 2020 May 31, 2020 (Dollars in thousands) Level 1 Level 2 Total Level 1 Level 2 Total Assets: Equity securities, at fair value $ 62,266 $ — $ 62,266 $ 60,735 $ — $ 60,735 Debt securities trading, at fair value — 527,526 527,526 — 309,400 309,400 Deferred compensation investments 6,159 — 6,159 5,496 — 5,496 Derivative assets — 167,463 167,463 — 173,195 173,195 Liabilities: Derivative liabilities — 1,165,585 1,165,585 — 1,258,459 1,258,459 |
Variable Interest Entities - (T
Variable Interest Entities - (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Variable Interest Entities | The following table provides information on incremental consolidated assets and liabilities of VIEs included in CFC’s consolidated financial statements, after intercompany eliminations, as of August 31, 2020 and May 31, 2020 . 13.1: Consolidated Assets and Liabilities of Variable Interest Entities (Dollars in thousands) August 31, 2020 May 31, 2020 Assets: Loans outstanding $ 1,077,439 $ 1,083,197 Other assets 10,371 11,352 Total assets $ 1,087,810 $ 1,094,549 Liabilities: Long-term debt $ — $ — Other liabilities 37,397 38,803 Total liabilities $ 37,397 $ 38,803 |
Schedule of Variable Interest Entities, Credit Commitments | The following table provides information on CFC’s credit commitments to NCSC and RTFC and potential exposure to loss under these commitments as of August 31, 2020 and May 31, 2020 . 13.2: CFC Exposure Under Credit Commitments to NCSC and RTFC (Dollars in thousands) August 31, 2020 May 31, 2020 CFC credit commitments to NCSC and RTFC: Total CFC credit commitments $ 5,500,000 $ 5,500,000 Outstanding commitments: Borrowings payable to CFC (1) 1,055,979 1,062,103 Credit enhancements: CFC third-party guarantees 9,769 9,999 Other credit enhancements 11,290 11,755 Total credit enhancements (2) 21,059 21,754 Total outstanding commitments 1,077,038 1,083,857 CFC credit commitments available (3) $ 4,422,962 $ 4,416,143 ____________________________ (1) Borrowings payable to CFC are eliminated in consolidation. (2) Excludes interest due on these instruments. (3) Represents total CFC credit commitments less outstanding commitments as of each period end. |
Business Segments - (Tables)
Business Segments - (Tables) | 3 Months Ended |
Aug. 31, 2020 | |
Segment Reporting [Abstract] | |
Schedule of segment presentation for the consolidated statements of operations and consolidated balance sheets | The following table presents our reportable business segment results for the three months ended August 31, 2020 and 2019 , assets attributable to each segment as of August 31, 2020 and 2019 and a reconciliation to amounts reported in our consolidated financial statements. Table 14.1: Business Segment Information Three Months Ended August 31, 2020 (Dollars in thousands) CFC NCSC and RTFC Elimination Consolidated Total Statement of operations: Interest income $ 277,596 $ 11,009 $ (9,021 ) $ 279,584 Interest expense (179,976 ) (9,021 ) 9,021 (179,976 ) Net interest income 97,620 1,988 — 99,608 (Provision) benefit for credit losses (326 ) 1,066 (1,066 ) (326 ) Net interest income after (provision) benefit for credit losses 97,294 3,054 (1,066 ) 99,282 Non-interest income: Fee and other income 4,775 (516 ) (743 ) 3,516 Derivative gains (losses): Derivative cash settlements interest expense (26,563 ) (409 ) — (26,972 ) Derivative forward value gains 86,783 465 — 87,248 Derivative gains 60,220 56 — 60,276 Investment securities gains 4,659 — — 4,659 Total non-interest income 69,654 (460 ) (743 ) 68,451 Non-interest expense: General and administrative expenses (22,200 ) (2,057 ) 1,594 (22,663 ) Other non-interest expense (332 ) (215 ) 215 (332 ) Total non-interest expense (22,532 ) (2,272 ) 1,809 (22,995 ) Income before income taxes 144,416 322 — 144,738 Income tax provision — (151 ) — (151 ) Net income $ 144,416 $ 171 $ — $ 144,587 August 31, 2020 CFC NCSC and RTFC Elimination Consolidated Total Assets: Total loans outstanding $ 26,895,639 $ 1,077,439 $ (1,055,979 ) $ 26,917,099 Deferred loan origination costs 11,778 — — 11,778 Loans to members 26,907,416 1,077,439 (1,055,979 ) 26,928,877 Less: Allowance for credit losses (57,351 ) — — (57,351 ) Loans to members, net 26,850,065 1,077,439 (1,055,979 ) 26,871,526 Other assets 1,380,725 104,924 (94,554 ) 1,391,095 Total assets $ 28,230,790 $ 1,182,363 $ (1,150,533 ) $ 28,262,621 Three Months Ended August 31, 2019 (Dollars in thousands) CFC NCSC and RTFC Elimination Consolidated Total Statement of operations: Interest income $ 287,964 $ 12,347 $ (10,296 ) $ 290,015 Interest expense (213,135 ) (10,432 ) 10,296 (213,271 ) Net interest income 74,829 1,915 — 76,744 Provision for credit losses (30 ) — — (30 ) Net interest income after provision for credit loses 74,799 1,915 — 76,714 Non-interest income: Fee and other income 12,282 7,821 (9,162 ) 10,941 Derivative losses: Derivative cash settlements interest expense (10,801 ) (242 ) — (11,043 ) Derivative forward value losses (382,762 ) (1,920 ) — (384,682 ) Derivative losses (393,563 ) (2,162 ) — (395,725 ) Investment securities gains 1,620 — — 1,620 Total non-interest income (379,661 ) 5,659 (9,162 ) (383,164 ) Non-interest expense: General and administrative expenses (24,739 ) (2,235 ) 1,645 (25,329 ) Other non-interest expense 7,179 (7,517 ) 7,517 7,179 Total non-interest expense (17,560 ) (9,752 ) 9,162 (18,150 ) Loss before income taxes (322,422 ) (2,178 ) — (324,600 ) Income tax benefit — 521 — 521 Net loss $ (322,422 ) $ (1,657 ) $ — $ (324,079 ) August 31, 2019 CFC NCSC and RTFC Elimination Consolidated Total Assets: Total loans outstanding $ 26,258,810 $ 1,048,892 $ (1,019,103 ) $ 26,288,599 Deferred loan origination costs 11,239 — — 11,239 Loans to members 26,270,049 1,048,892 (1,019,103 ) 26,299,838 Less: Allowance for credit losses (17,565 ) — — (17,565 ) Loans to members, net 26,252,484 1,048,892 (1,019,103 ) 26,282,273 Other assets 1,286,409 105,290 (95,216 ) 1,296,483 Total assets $ 27,538,893 $ 1,154,182 $ (1,114,319 ) $ 27,578,756 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | Aug. 31, 2019 | May 31, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Allowance for loan loss | $ 57,351 | $ 53,125 | $ 17,565 | $ 17,535 |
Equity | 731,504 | 648,822 | 918,428 | 1,303,882 |
Allowance for credit losses for accrued interest receivable | 86,000 | 96,000 | ||
Unallocated Net (Loss) Income | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Equity | $ (936,032) | (1,076,548) | $ (668,197) | $ (345,775) |
Cumulative-effect adjustment from adoption of new accounting standard | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Equity | (3,900) | |||
Cumulative-effect adjustment from adoption of new accounting standard | Unallocated Net (Loss) Income | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Equity | (3,900) | |||
CECL | Cumulative-effect adjustment from adoption of new accounting standard | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Allowance for loan loss | $ 3,900 |
Interest Income and Interest _3
Interest Income and Interest Expense - Schedule of Interest Income and Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Aug. 31, 2020 | Aug. 31, 2019 | ||
Interest income: | |||
Long-term fixed-rate loans | [1] | $ 263,184 | $ 258,528 |
Long-term variable-rate loans | 4,400 | 9,756 | |
Line of credit loans | 8,242 | 16,033 | |
Troubled debt restructuring (“TDR”) loans | 207 | 206 | |
Other, net | [2] | (335) | (334) |
Total loans | 275,698 | 284,189 | |
Cash, time deposits and investment securities | 3,886 | 5,826 | |
Total interest income | 279,584 | 290,015 | |
Interest expense: | |||
Short-term borrowings | [3],[4] | 4,341 | 22,822 |
Medium-term notes | [3],[4] | 29,887 | 32,076 |
Collateral trust bonds | [3],[4] | 62,593 | 65,381 |
Guaranteed Underwriter Program notes payable | [3],[4] | 42,413 | 40,433 |
Farmer Mac notes payable | [3],[4] | 13,933 | 25,074 |
Other notes payable | [3],[4] | 87 | 254 |
Subordinated deferrable debt | [3],[4] | 12,890 | 12,882 |
Subordinated certificates | [3],[4] | 13,832 | 14,349 |
Total interest expense | [3],[4] | 179,976 | 213,271 |
Net interest income | $ 99,608 | $ 76,744 | |
[1] | Includes loan conversion fees, which are generally deferred and recognized in interest income over the period to maturity using the effective interest method. | ||
[2] | Consists of late payment fees, commitment fees and net amortization of deferred loan fees and loan origination costs. | ||
[3] | Includes amortization of debt discounts and debt issuance costs, which are generally deferred and recognized as interest expense over the period to maturity using the effective interest method. Issuance costs related to dealer commercial paper, however, are recognized in interest expense immediately as incurred. | ||
[4] | Includes fees related to funding arrangements, such as up-front fees paid to banks participating in our committed bank revolving line of credit agreements. Based on the nature of the fees, the amount is either recognized immediately as incurred or deferred and recognized in interest expense ratably over the term of the arrangement. |
Investment Securities - Equity
Investment Securities - Equity Securities (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 |
Debt and Equity Securities, FV-NI [Line Items] | ||
Equity securities | $ 62,266 | $ 60,735 |
Preferred Stock | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Equity securities | 57,376 | 55,640 |
Common Stock | ||
Debt and Equity Securities, FV-NI [Line Items] | ||
Equity securities | $ 4,890 | $ 5,095 |
Interest Income and Interest _4
Interest Income and Interest Expense - Additional Information (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 |
Banking and Thrift, Interest [Abstract] | ||
Deferred income | $ 57,225 | $ 59,303 |
Deferred loan conversion fees | $ 51,000 | $ 53,000 |
Investment Securities - Additio
Investment Securities - Additional Information (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | Sep. 19, 2020 | Aug. 31, 2020 | Aug. 31, 2019 |
Debt and Equity Securities, FV-NI [Line Items] | |||
Unrealized gain | $ 2 | $ 2 | |
Proceeds from sale of trading securities | 3 | ||
Realized gains | 1 | ||
Unrealized gains | $ 3 | ||
Series A Preferred Stock | Subsequent Event | |||
Debt and Equity Securities, FV-NI [Line Items] | |||
Preferred stock percentage | 5.875% | ||
Preferred stock, redemption price (USD per share) | $ 25 | ||
Preferred stock, shares held (in shares) | 1.2 | ||
Preferred stock, amortized cost (USD per share) | $ 25 |
Investment Securities - Debt Se
Investment Securities - Debt Securities Trading, at Fair Value (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | |
Debt and Equity Securities, FV-NI [Line Items] | |||
Debt securities trading, at fair value | $ 527,526 | $ 309,400 | |
Certificates of deposit | |||
Debt and Equity Securities, FV-NI [Line Items] | |||
Debt securities trading, at fair value | 5,007 | 5,585 | |
Commercial paper | |||
Debt and Equity Securities, FV-NI [Line Items] | |||
Debt securities trading, at fair value | 5,993 | 0 | |
Corporate debt securities | |||
Debt and Equity Securities, FV-NI [Line Items] | |||
Debt securities trading, at fair value | 454,286 | 253,153 | |
Agency | |||
Debt and Equity Securities, FV-NI [Line Items] | |||
Debt securities trading, at fair value | 7,703 | 7,655 | |
Non-agency | |||
Debt and Equity Securities, FV-NI [Line Items] | |||
Debt securities trading, at fair value | 1,321 | 3,207 | |
Total commercial MBS | |||
Debt and Equity Securities, FV-NI [Line Items] | |||
Debt securities trading, at fair value | 9,024 | 10,862 | |
U.S. state and municipality debt securities | |||
Debt and Equity Securities, FV-NI [Line Items] | |||
Debt securities trading, at fair value | 8,423 | 8,296 | |
Other ABS | |||
Debt and Equity Securities, FV-NI [Line Items] | |||
Debt securities trading, at fair value | [1] | $ 44,793 | $ 31,504 |
[1] | Consists primarily of securities backed by auto lease loans, equipment-backed loans, auto loans and credit card loans. |
Loans - Outstanding Principal B
Loans - Outstanding Principal Balance and Unadvanced Commitments (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | Aug. 31, 2019 | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | $ 26,917,099 | [1],[2] | $ 26,690,854 | [1],[2] | $ 26,288,599 | |
Deferred loan origination costs | 11,778 | 11,526 | 11,239 | |||
Loans to members | 26,928,877 | 26,702,380 | $ 26,299,838 | |||
Unadvanced commitments | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | [2],[3] | 13,654,642 | 13,388,626 | |||
Long Term Fixed Rate Loans | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 24,817,328 | 24,472,003 | ||||
Long-term variable-rate loans | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 695,400 | 655,704 | ||||
Long-term variable-rate loans | Unadvanced commitments | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | [3] | 5,461,029 | 5,458,676 | |||
Long Term Loans | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 25,512,728 | 25,127,707 | ||||
Long Term Loans | Unadvanced commitments | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | [3] | 5,461,029 | 5,458,676 | |||
Line of credit loans | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 1,404,371 | 1,563,147 | ||||
Line of credit loans | Unadvanced commitments | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | 8,193,613 | 7,929,950 | [3] | |||
CFC | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | [1] | 25,839,660 | 25,607,657 | |||
CFC | Unadvanced commitments | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | [3] | 12,799,554 | 12,555,310 | |||
CFC | Distribution | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 21,012,216 | 20,769,653 | ||||
CFC | Distribution | Unadvanced commitments | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | [3] | 8,970,802 | 8,992,457 | |||
CFC | Power supply | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 4,730,101 | 4,731,506 | ||||
CFC | Power supply | Unadvanced commitments | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | [3] | 3,673,711 | 3,409,227 | |||
CFC | Statewide and associate | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 97,343 | 106,498 | ||||
CFC | Statewide and associate | Unadvanced commitments | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | [3] | 155,041 | 153,626 | |||
NCSC | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | [1] | 681,321 | 697,862 | |||
NCSC | Unadvanced commitments | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | [3] | 557,550 | 551,674 | |||
RTFC | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | [1] | 396,118 | 385,335 | |||
RTFC | Unadvanced commitments | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | [3] | $ 297,538 | $ 281,642 | |||
[1] | Represents the unpaid principal amount of loans as of the end of each period. Excludes unamortized deferred loan origination costs of $12 million as of both August 31, 2020 and May 31, 2020. | |||||
[2] | Represents the unpaid principal balance, net of charge-offs and recoveries, of loans as of the end of each period. | |||||
[3] | The interest rate on unadvanced loan commitments is not set until an advance is made; therefore, all unadvanced long-term loan commitments are reported as variable rate. However, the borrower may select either a fixed or a variable rate when an advance is drawn under a loan commitment. |
Loans - Available Balance Under
Loans - Available Balance Under Unadvanced Commitments and Maturity (Details) - Unadvanced commitments - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Available Balance | [1],[2] | $ 13,654,642 | $ 13,388,626 | |
2021 | 800,178 | |||
2022 | 5,320,313 | |||
2023 | 2,263,757 | |||
2024 | 2,696,953 | |||
2025 | 2,097,895 | |||
Thereafter | 475,546 | |||
Line of credit loans | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Available Balance | 8,193,613 | 7,929,950 | [2] | |
2021 | 487,556 | |||
2022 | 4,047,076 | |||
2023 | 1,357,059 | |||
2024 | 1,063,694 | |||
2025 | 1,079,137 | |||
Thereafter | 159,091 | |||
Long-term variable-rate loans | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Available Balance | [2] | 5,461,029 | $ 5,458,676 | |
2021 | 312,622 | |||
2022 | 1,273,237 | |||
2023 | 906,698 | |||
2024 | 1,633,259 | |||
2025 | 1,018,758 | |||
Thereafter | $ 316,455 | |||
[1] | Represents the unpaid principal balance, net of charge-offs and recoveries, of loans as of the end of each period. | |||
[2] | The interest rate on unadvanced loan commitments is not set until an advance is made; therefore, all unadvanced long-term loan commitments are reported as variable rate. However, the borrower may select either a fixed or a variable rate when an advance is drawn under a loan commitment. |
Loans - Additional Information
Loans - Additional Information (Details) | 3 Months Ended | 12 Months Ended | ||||
Aug. 31, 2020USD ($)statedistribution_systemborrowermemberpower_supply_systemloan | Aug. 31, 2019USD ($) | May 31, 2020USD ($)distribution_systemborrowermemberpower_supply_systemloan | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Line of Credit Commitments as percentage of unadvanced loan commitment | 60.00% | |||||
Long-term loan commitments as percentage of unadvanced loan commitment | 40.00% | |||||
Loans receivable cost of loans sold | $ 85,000,000 | $ 20,000,000 | ||||
Loans Outstanding | $ 26,917,099,000 | [1],[2] | 26,288,599,000 | $ 26,690,854,000 | [1],[2] | |
Number of borrowers | member | 888 | 889,000 | ||||
Number of states in which electric and telecommunications borrowers are located | state | 49 | |||||
Number of borrowers with TDR loans | borrower | 1 | |||||
Asset-specific balance | $ 34,833,000 | |||||
Nonperforming TDR loans | 172,800,000 | |||||
Loans originated prior to 2017 | $ 16,608,398,000 | |||||
Percentage of loans originated prior to 2017 | 62.00% | |||||
Term of loans | 35 years | |||||
Loan defaults | $ 0 | 0 | ||||
Charge-offs | 0 | 0 | ||||
Substandard | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 4,967,000 | 170,468,000 | ||||
Loans originated prior to 2017 | 4,967,000 | |||||
Special mention | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 195,610,000 | 32,703,000 | ||||
Loans originated prior to 2017 | 136,715,000 | |||||
Special mention | Electric Utility | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 164,000,000 | |||||
Nonperforming TDR loans | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Nonperforming TDR loans | 0 | 0 | ||||
Forgone interest income | 0 | $ 0 | ||||
Nonperforming Financial Instruments | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Nonperforming TDR loans | 0 | 0 | ||||
Doubtful | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 161,477,000 | 167,708,000 | ||||
Loans originated prior to 2017 | 161,477,000 | |||||
CFC | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | [1] | $ 25,839,660,000 | 25,607,657,000 | |||
Number of loans outstanding | loan | 16,569 | |||||
Number of loans outstanding per borrower | loan | 19 | |||||
Asset-specific balance | $ 33,000,000 | 33,854,000 | ||||
Nonperforming TDR loans | 167,708,000 | |||||
CFC | Electric Utility | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Lending and repayment term extension | 51 years | |||||
Loan commitment term | 5 years | |||||
CFC | Distribution | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | $ 21,012,216,000 | 20,769,653,000 | ||||
CFC | Power supply | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 4,730,101,000 | 4,731,506,000 | ||||
CFC | Substandard | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 0 | $ 165,376,000 | ||||
Number of borrowers | borrower | 1 | |||||
Loans originated prior to 2017 | 0 | |||||
CFC | Substandard | Distribution | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 0 | $ 118,173,000 | ||||
Loans originated prior to 2017 | 0 | |||||
CFC | Substandard | Power supply | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 0 | 47,203,000 | ||||
Loans originated prior to 2017 | 0 | |||||
CFC | Special mention | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 185,943,000 | 23,967,000 | ||||
Loans originated prior to 2017 | 136,715,000 | |||||
CFC | Special mention | Distribution | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 122,808,000 | 7,743,000 | ||||
Loans originated prior to 2017 | 99,198,000 | |||||
CFC | Special mention | Power supply | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 46,964,000 | $ 0 | ||||
Loans originated prior to 2017 | 36,309,000 | |||||
CFC | Nonperforming Financial Instruments | Power supply | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Number of loans impaired | loan | 1 | |||||
Nonperforming TDR loans | 161,000,000 | $ 168,000,000 | ||||
CFC | Doubtful | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 161,477,000 | 167,708,000 | ||||
Loans originated prior to 2017 | 161,477,000 | |||||
CFC | Doubtful | Power supply | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 161,477,000 | 167,708,000 | ||||
Loans originated prior to 2017 | 161,477,000 | |||||
RTFC | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | [1] | 396,118,000 | 385,335,000 | |||
Asset-specific balance | 979,000 | |||||
Nonperforming TDR loans | 5,092,000 | |||||
RTFC | Substandard | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 4,967,000 | 5,092,000 | ||||
Loans originated prior to 2017 | 4,967,000 | |||||
RTFC | Special mention | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 9,667,000 | 8,736,000 | ||||
Loans originated prior to 2017 | 0 | |||||
Unadvanced commitments | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | [2],[3] | 13,654,642,000 | 13,388,626,000 | |||
Unadvanced commitments | CFC | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | [3] | 12,799,554,000 | 12,555,310,000 | |||
Unadvanced commitments | CFC | Distribution | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | [3] | 8,970,802,000 | 8,992,457,000 | |||
Unadvanced commitments | CFC | Power supply | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | [3] | 3,673,711,000 | 3,409,227,000 | |||
Unadvanced commitments | RTFC | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | [3] | 297,538,000 | 281,642,000 | |||
Commitments to Extend Credit Subject to Material Adverse Change Clause | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | 10,581,000,000 | 10,532,000,000 | ||||
Unadvanced commitments not subject to material adverse change clauses | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | 3,074,095,000 | 2,857,000,000 | ||||
Long-term variable-rate loans | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | 695,400,000 | 655,704,000 | ||||
Long-term variable-rate loans | Unadvanced commitments | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Unadvanced commitments | [3] | $ 5,461,029,000 | $ 5,458,676,000 | |||
Loans Receivable Commercial and Industrial | Geographic Concentration Risk | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Concentration risk, percentage | 16.00% | 16.00% | ||||
Loans Receivable Commercial and Industrial | Product Concentration Risk | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Concentration risk, percentage | 99.00% | 99.00% | ||||
Loans Receivable Commercial and Industrial | Product Concentration Risk | Electric Utility | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | $ 26,521,000,000 | $ 26,306,000,000 | ||||
Loans Receivable Commercial and Industrial | Credit Concentration Risk | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | $ 5,910,000,000 | $ 5,877,000,000 | ||||
Concentration risk, percentage | 2.00% | 2.00% | ||||
Concentration risk, number of borrowers | borrower | 20 | |||||
Loans Receivable Commercial and Industrial | Credit Concentration Risk | Distribution | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Concentration risk, number of borrowers | distribution_system | 12 | 11 | ||||
Loans Receivable Commercial and Industrial | Credit Concentration Risk | Power supply | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Concentration risk, number of borrowers | power_supply_system | 8 | 9 | ||||
Loans Receivable Commercial and Industrial | Customer Concentration Risk | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Concentration risk, percentage | 22.00% | |||||
Loans Guaranteed by Farmer Mac | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | $ 551,000,000 | $ 569,000,000 | ||||
Loans Guaranteed by Farmer Mac | Credit Concentration Risk | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | $ 285,000,000 | 314,000,000 | ||||
Concentration risk, number of borrowers | borrower | 20 | |||||
Loans Guaranteed by Rural Utilities Service | ||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||
Loans Outstanding | $ 145,000,000 | $ 147,000,000 | ||||
[1] | Represents the unpaid principal amount of loans as of the end of each period. Excludes unamortized deferred loan origination costs of $12 million as of both August 31, 2020 and May 31, 2020. | |||||
[2] | Represents the unpaid principal balance, net of charge-offs and recoveries, of loans as of the end of each period. | |||||
[3] | The interest rate on unadvanced loan commitments is not set until an advance is made; therefore, all unadvanced long-term loan commitments are reported as variable rate. However, the borrower may select either a fixed or a variable rate when an advance is drawn under a loan commitment. |
Loans - Unconditional Committed
Loans - Unconditional Committed Lines of Credit and Maturity (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | |
Unadvanced commitments | |||
Notional maturities of committed lines of credit | |||
Available Balance | [1],[2] | $ 13,654,642 | $ 13,388,626 |
2021 | 800,178 | ||
2022 | 5,320,313 | ||
2023 | 2,263,757 | ||
2024 | 2,696,953 | ||
2025 | 2,097,895 | ||
Thereafter | 475,546 | ||
Unadvanced commitments not subject to material adverse change clauses | |||
Notional maturities of committed lines of credit | |||
Available Balance | 3,074,095 | $ 2,857,000 | |
2021 | 120,020 | ||
2022 | 242,006 | ||
2023 | 1,068,391 | ||
2024 | 716,378 | ||
2025 | 927,300 | ||
Thereafter | $ 0 | ||
[1] | Represents the unpaid principal balance, net of charge-offs and recoveries, of loans as of the end of each period. | ||
[2] | The interest rate on unadvanced loan commitments is not set until an advance is made; therefore, all unadvanced long-term loan commitments are reported as variable rate. However, the borrower may select either a fixed or a variable rate when an advance is drawn under a loan commitment. |
Loans - Outstanding Pledged as
Loans - Outstanding Pledged as Collateral (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | |
Pledging of Loans and Loans on Deposit | |||
Cash | [1] | $ 9,376 | $ 8,647 |
Collateral trust bonds 2007 indenture | |||
Pledging of Loans and Loans on Deposit | |||
Loans outstanding and pledged as collateral | 8,288,727 | 8,372,563 | |
Collateral trust bonds outstanding | 7,022,711 | 7,422,711 | |
Collateral trust bonds 1994 indenture | |||
Pledging of Loans and Loans on Deposit | |||
Collateral trust bonds outstanding | 35,000 | 35,000 | |
Notes payable | Federal Financing Bank | |||
Pledging of Loans and Loans on Deposit | |||
Collateral trust bonds outstanding | 6,225,855 | 6,261,312 | |
Notes payable | Federal Agricultural Mortgage Corporation | |||
Pledging of Loans and Loans on Deposit | |||
Collateral trust bonds outstanding | 3,041,843 | 3,059,637 | |
Clean Renewable Energy Bonds Series 2009A | |||
Pledging of Loans and Loans on Deposit | |||
Collateral trust bonds outstanding | 6,068 | 6,068 | |
Cash | 708 | 395 | |
Total pledged collateral | 7,495 | 7,664 | |
Mortgage notes | Distribution system mortgage notes | Collateral trust bonds 2007 indenture | |||
Pledging of Loans and Loans on Deposit | |||
Loans outstanding and pledged as collateral | 8,162,005 | 8,244,202 | |
Mortgage notes | Distribution system mortgage notes | Collateral trust bonds 1994 indenture | |||
Pledging of Loans and Loans on Deposit | |||
Loans outstanding and pledged as collateral | 39,016 | 39,785 | |
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 | 3,665,038 | 3,687,418 | |
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 | 6,787 | 7,269 | |
Loans Guaranteed by Rural Utilities Service | Collateral trust bonds 2007 indenture | |||
Pledging of Loans and Loans on Deposit | |||
Loans outstanding and pledged as collateral | 126,722 | 128,361 | |
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 | $ 7,457,756 | $ 7,535,931 | |
[1] | Restricted cash consists primarily of member funds held in escrow for certain specifically designed cooperative programs. |
Loans - Payment Status of Loans
Loans - Payment Status of Loans Outstanding (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | Aug. 31, 2019 | |||
Payment Status of Loans | ||||||
Past due | $ 0 | $ 0 | ||||
Total loans outstanding | 26,917,099 | [1],[2] | 26,690,854 | [1],[2] | $ 26,288,599 | |
Non-accrual loans | [3] | $ 161,477 | $ 167,708 | |||
Percentage of total loans | 0.00% | 0.00% | ||||
Total Loans Outstanding | 100.00% | 100.00% | ||||
Non-accrual loans (percent) | [3] | 0.60% | 0.63% | |||
CFC | ||||||
Payment Status of Loans | ||||||
Past due | $ 0 | $ 0 | ||||
Total loans outstanding | [1] | 25,839,660 | 25,607,657 | |||
Non-accrual loans | [3] | 161,477 | 167,708 | |||
CFC | Distribution | ||||||
Payment Status of Loans | ||||||
Past due | 0 | 0 | ||||
Total loans outstanding | 21,012,216 | 20,769,653 | ||||
Non-accrual loans | [3] | 0 | 0 | |||
CFC | Power supply | ||||||
Payment Status of Loans | ||||||
Past due | 0 | 0 | ||||
Total loans outstanding | 4,730,101 | 4,731,506 | ||||
Non-accrual loans | [3] | 161,477 | 167,708 | |||
CFC | Statewide and associate | ||||||
Payment Status of Loans | ||||||
Past due | 0 | 0 | ||||
Total loans outstanding | 97,343 | 106,498 | ||||
Non-accrual loans | [3] | 0 | 0 | |||
NCSC | ||||||
Payment Status of Loans | ||||||
Past due | 0 | 0 | ||||
Total loans outstanding | [1] | 681,321 | 697,862 | |||
Non-accrual loans | [3] | 0 | 0 | |||
RTFC | ||||||
Payment Status of Loans | ||||||
Past due | 0 | 0 | ||||
Total loans outstanding | [1] | 396,118 | 385,335 | |||
Non-accrual loans | [3] | 0 | 0 | |||
Current | ||||||
Payment Status of Loans | ||||||
Current | $ 26,917,099 | $ 26,690,854 | ||||
Percentage of total loans | 100.00% | 100.00% | ||||
Current | CFC | ||||||
Payment Status of Loans | ||||||
Current | $ 25,839,660 | $ 25,607,657 | ||||
Current | CFC | Distribution | ||||||
Payment Status of Loans | ||||||
Current | 21,012,216 | 20,769,653 | ||||
Current | CFC | Power supply | ||||||
Payment Status of Loans | ||||||
Current | 4,730,101 | 4,731,506 | ||||
Current | CFC | Statewide and associate | ||||||
Payment Status of Loans | ||||||
Current | 97,343 | 106,498 | ||||
Current | NCSC | ||||||
Payment Status of Loans | ||||||
Current | 681,321 | 697,862 | ||||
Current | RTFC | ||||||
Payment Status of Loans | ||||||
Current | 396,118 | 385,335 | ||||
30-89 Days Past Due | ||||||
Payment Status of Loans | ||||||
Past due | $ 0 | $ 0 | ||||
Percentage of total loans | 0.00% | 0.00% | ||||
30-89 Days Past Due | CFC | ||||||
Payment Status of Loans | ||||||
Past due | $ 0 | $ 0 | ||||
30-89 Days Past Due | CFC | Distribution | ||||||
Payment Status of Loans | ||||||
Past due | 0 | 0 | ||||
30-89 Days Past Due | CFC | Power supply | ||||||
Payment Status of Loans | ||||||
Past due | 0 | 0 | ||||
30-89 Days Past Due | CFC | Statewide and associate | ||||||
Payment Status of Loans | ||||||
Past due | 0 | 0 | ||||
30-89 Days Past Due | NCSC | ||||||
Payment Status of Loans | ||||||
Past due | 0 | 0 | ||||
30-89 Days Past Due | RTFC | ||||||
Payment Status of Loans | ||||||
Past due | 0 | 0 | ||||
90 Days or More Past Due | ||||||
Payment Status of Loans | ||||||
Past due | [3] | $ 0 | $ 0 | |||
Percentage of total loans | [3] | 0.00% | 0.00% | |||
90 Days or More Past Due | CFC | ||||||
Payment Status of Loans | ||||||
Past due | [3] | $ 0 | $ 0 | |||
90 Days or More Past Due | CFC | Distribution | ||||||
Payment Status of Loans | ||||||
Past due | [3] | 0 | 0 | |||
90 Days or More Past Due | CFC | Power supply | ||||||
Payment Status of Loans | ||||||
Past due | [3] | 0 | 0 | |||
90 Days or More Past Due | CFC | Statewide and associate | ||||||
Payment Status of Loans | ||||||
Past due | [3] | 0 | 0 | |||
90 Days or More Past Due | NCSC | ||||||
Payment Status of Loans | ||||||
Past due | [3] | 0 | 0 | |||
90 Days or More Past Due | RTFC | ||||||
Payment Status of Loans | ||||||
Past due | [3] | $ 0 | $ 0 | |||
[1] | Represents the unpaid principal amount of loans as of the end of each period. Excludes unamortized deferred loan origination costs of $12 million as of both August 31, 2020 and May 31, 2020. | |||||
[2] | Represents the unpaid principal balance, net of charge-offs and recoveries, of loans as of the end of each period. | |||||
[3] | Consists of one loan to a CFC power supply borrower that was classified as nonperforming in the fourth quarter of fiscal year 2020. |
Loans - Troubled Debt Restructu
Loans - Troubled Debt Restructured Loans (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Aug. 31, 2020USD ($)borrower | May 31, 2020USD ($)borrower | Aug. 31, 2019USD ($) | ||||
Financing Receivable, Troubled Debt Restructuring [Line Items] | ||||||
Total loans outstanding | $ 26,917,099 | [1],[2] | $ 26,690,854 | [1],[2] | $ 26,288,599 | |
Total Loans Outstanding | 100.00% | 100.00% | ||||
Performing TDR loans | ||||||
Financing Receivable, Troubled Debt Restructuring [Line Items] | ||||||
Number of Borrowers | borrower | 2 | 2 | ||||
Loans outstanding | [3] | $ 10,346 | $ 10,847 | |||
Performing TDR Loans As Percentage of Total Loans | 0.04% | 0.04% | ||||
Total TDR loans | ||||||
Financing Receivable, Troubled Debt Restructuring [Line Items] | ||||||
Number of Borrowers | borrower | 2 | 2 | ||||
Loans outstanding | [3] | $ 10,346 | $ 10,847 | |||
Performing TDR Loans As Percentage of Total Loans | 0.04% | 0.04% | ||||
Total loans outstanding | [3] | $ 10,346 | $ 10,847 | |||
Total Loans Outstanding | 0.04% | 0.04% | ||||
CFC | ||||||
Financing Receivable, Troubled Debt Restructuring [Line Items] | ||||||
Number of Borrowers | borrower | 1 | 1 | ||||
Loans outstanding | [3] | $ 5,379 | $ 5,755 | |||
Performing TDR Loans As Percentage of Total Loans | 0.02% | 0.02% | ||||
Total loans outstanding | [1] | $ 25,839,660 | $ 25,607,657 | |||
RTFC | ||||||
Financing Receivable, Troubled Debt Restructuring [Line Items] | ||||||
Number of Borrowers | borrower | 1 | 1 | ||||
Loans outstanding | [3] | $ 4,967 | $ 5,092 | |||
Performing TDR Loans As Percentage of Total Loans | 0.02% | 0.02% | ||||
Total loans outstanding | [1] | $ 396,118 | $ 385,335 | |||
[1] | Represents the unpaid principal amount of loans as of the end of each period. Excludes unamortized deferred loan origination costs of $12 million as of both August 31, 2020 and May 31, 2020. | |||||
[2] | Represents the unpaid principal balance, net of charge-offs and recoveries, of loans as of the end of each period. | |||||
[3] | Represents the unpaid principal balance net of charge-offs and recoveries as of the end of each period. |
Loans - Internal Risk Rating (D
Loans - Internal Risk Rating (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | Aug. 31, 2019 | |||
Credit Quality | ||||||
2021 | $ 807,189 | |||||
2020 | 2,535,013 | |||||
2019 | 1,745,001 | |||||
2018 | 1,890,002 | |||||
2017 | 1,927,125 | |||||
Prior | 16,608,398 | |||||
Revolving Loans | 1,404,371 | |||||
Total | 26,917,099 | [1],[2] | $ 26,690,854 | [1],[2] | $ 26,288,599 | |
Loans Outstanding | 26,917,099 | [1],[2] | 26,690,854 | [1],[2] | $ 26,288,599 | |
CFC | ||||||
Credit Quality | ||||||
Total | [1] | 25,839,660 | 25,607,657 | |||
Loans Outstanding | [1] | 25,839,660 | 25,607,657 | |||
CFC | Distribution | ||||||
Credit Quality | ||||||
Total | 21,012,216 | 20,769,653 | ||||
Loans Outstanding | 21,012,216 | 20,769,653 | ||||
CFC | Power supply | ||||||
Credit Quality | ||||||
Total | 4,730,101 | 4,731,506 | ||||
Loans Outstanding | 4,730,101 | 4,731,506 | ||||
CFC | Statewide and associate | ||||||
Credit Quality | ||||||
Total | 97,343 | 106,498 | ||||
Loans Outstanding | 97,343 | 106,498 | ||||
NCSC | ||||||
Credit Quality | ||||||
Total | [1] | 681,321 | 697,862 | |||
Loans Outstanding | [1] | 681,321 | 697,862 | |||
RTFC | ||||||
Credit Quality | ||||||
Total | [1] | 396,118 | 385,335 | |||
Loans Outstanding | [1] | 396,118 | 385,335 | |||
Pass | ||||||
Credit Quality | ||||||
2021 | 807,189 | |||||
2020 | 2,535,013 | |||||
2019 | 1,738,405 | |||||
2018 | 1,880,306 | |||||
2017 | 1,904,688 | |||||
Prior | 16,305,239 | |||||
Revolving Loans | 1,384,205 | |||||
Total | 26,555,045 | 26,319,975 | ||||
Loans Outstanding | 26,555,045 | 26,319,975 | ||||
Pass | CFC | ||||||
Credit Quality | ||||||
2021 | 762,736 | |||||
2020 | 2,212,647 | |||||
2019 | 1,720,149 | |||||
2018 | 1,790,423 | |||||
2017 | 1,823,180 | |||||
Prior | 15,891,348 | |||||
Revolving Loans | 1,291,754 | |||||
Total | 25,492,237 | 25,250,606 | ||||
Loans Outstanding | 25,492,237 | 25,250,606 | ||||
Pass | CFC | Distribution | ||||||
Credit Quality | ||||||
2021 | 468,438 | |||||
2020 | 1,978,080 | |||||
2019 | 1,264,632 | |||||
2018 | 1,533,073 | |||||
2017 | 1,563,130 | |||||
Prior | 13,160,291 | |||||
Revolving Loans | 921,764 | |||||
Total | 20,889,408 | 20,643,737 | ||||
Loans Outstanding | 20,889,408 | 20,643,737 | ||||
Pass | CFC | Power supply | ||||||
Credit Quality | ||||||
2021 | 294,223 | |||||
2020 | 210,030 | |||||
2019 | 451,539 | |||||
2018 | 257,350 | |||||
2017 | 259,332 | |||||
Prior | 2,703,549 | |||||
Revolving Loans | 345,634 | |||||
Total | 4,521,657 | 4,516,595 | ||||
Loans Outstanding | 4,521,657 | 4,516,595 | ||||
Pass | CFC | Statewide and associate | ||||||
Credit Quality | ||||||
2021 | 75 | |||||
2020 | 24,537 | |||||
2019 | 3,978 | |||||
2018 | 0 | |||||
2017 | 718 | |||||
Prior | 27,508 | |||||
Revolving Loans | 24,356 | |||||
Total | 81,172 | 90,274 | ||||
Loans Outstanding | 81,172 | 90,274 | ||||
Pass | NCSC | ||||||
Credit Quality | ||||||
2021 | 12,476 | |||||
2020 | 248,220 | |||||
2019 | 4,603 | |||||
2018 | 58,797 | |||||
2017 | 15,587 | |||||
Prior | 271,827 | |||||
Revolving Loans | 69,813 | |||||
Total | 681,323 | 697,862 | ||||
Loans Outstanding | 681,323 | 697,862 | ||||
Pass | RTFC | ||||||
Credit Quality | ||||||
2021 | 31,977 | |||||
2020 | 74,146 | |||||
2019 | 13,653 | |||||
2018 | 31,086 | |||||
2017 | 65,921 | |||||
Prior | 142,064 | |||||
Revolving Loans | 22,638 | |||||
Total | 381,485 | 371,507 | ||||
Loans Outstanding | 381,485 | 371,507 | ||||
Special mention | ||||||
Credit Quality | ||||||
2021 | 0 | |||||
2020 | 0 | |||||
2019 | 6,596 | |||||
2018 | 9,696 | |||||
2017 | 22,437 | |||||
Prior | 136,715 | |||||
Revolving Loans | 20,166 | |||||
Total | 195,610 | 32,703 | ||||
Loans Outstanding | 195,610 | 32,703 | ||||
Special mention | CFC | ||||||
Credit Quality | ||||||
2021 | 0 | |||||
2020 | 0 | |||||
2019 | 5,000 | |||||
2018 | 6,362 | |||||
2017 | 18,950 | |||||
Prior | 136,715 | |||||
Revolving Loans | 18,916 | |||||
Total | 185,943 | 23,967 | ||||
Loans Outstanding | 185,943 | 23,967 | ||||
Special mention | CFC | Distribution | ||||||
Credit Quality | ||||||
2021 | 0 | |||||
2020 | 0 | |||||
2019 | 0 | |||||
2018 | 0 | |||||
2017 | 4,694 | |||||
Prior | 99,198 | |||||
Revolving Loans | 18,916 | |||||
Total | 122,808 | 7,743 | ||||
Loans Outstanding | 122,808 | 7,743 | ||||
Special mention | CFC | Power supply | ||||||
Credit Quality | ||||||
2021 | 0 | |||||
2020 | 0 | |||||
2019 | 0 | |||||
2018 | 2,362 | |||||
2017 | 8,293 | |||||
Prior | 36,309 | |||||
Revolving Loans | 0 | |||||
Total | 46,964 | 0 | ||||
Loans Outstanding | 46,964 | 0 | ||||
Special mention | CFC | Statewide and associate | ||||||
Credit Quality | ||||||
2021 | 0 | |||||
2020 | 0 | |||||
2019 | 5,000 | |||||
2018 | 4,000 | |||||
2017 | 5,963 | |||||
Prior | 1,208 | |||||
Revolving Loans | 0 | |||||
Total | 16,171 | 16,224 | ||||
Loans Outstanding | 16,171 | 16,224 | ||||
Special mention | RTFC | ||||||
Credit Quality | ||||||
2021 | 0 | |||||
2020 | 0 | |||||
2019 | 1,596 | |||||
2018 | 3,334 | |||||
2017 | 3,487 | |||||
Prior | 0 | |||||
Revolving Loans | 1,250 | |||||
Total | 9,667 | 8,736 | ||||
Loans Outstanding | 9,667 | 8,736 | ||||
Substandard | ||||||
Credit Quality | ||||||
2021 | 0 | |||||
2020 | 0 | |||||
2019 | 0 | |||||
2018 | 0 | |||||
2017 | 0 | |||||
Prior | 4,967 | |||||
Revolving Loans | 0 | |||||
Total | 4,967 | 170,468 | ||||
Loans Outstanding | 4,967 | 170,468 | ||||
Substandard | CFC | ||||||
Credit Quality | ||||||
2021 | 0 | |||||
2020 | 0 | |||||
2019 | 0 | |||||
2018 | 0 | |||||
2017 | 0 | |||||
Prior | 0 | |||||
Revolving Loans | 0 | |||||
Total | 0 | 165,376 | ||||
Loans Outstanding | 0 | 165,376 | ||||
Substandard | CFC | Distribution | ||||||
Credit Quality | ||||||
2021 | 0 | |||||
2020 | 0 | |||||
2019 | 0 | |||||
2018 | 0 | |||||
2017 | 0 | |||||
Prior | 0 | |||||
Revolving Loans | 0 | |||||
Total | 0 | 118,173 | ||||
Loans Outstanding | 0 | 118,173 | ||||
Substandard | CFC | Power supply | ||||||
Credit Quality | ||||||
2021 | 0 | |||||
2020 | 0 | |||||
2019 | 0 | |||||
2018 | 0 | |||||
2017 | 0 | |||||
Prior | 0 | |||||
Revolving Loans | 0 | |||||
Total | 0 | 47,203 | ||||
Loans Outstanding | 0 | 47,203 | ||||
Substandard | RTFC | ||||||
Credit Quality | ||||||
2021 | 0 | |||||
2020 | 0 | |||||
2019 | 0 | |||||
2018 | 0 | |||||
2017 | 0 | |||||
Prior | 4,967 | |||||
Revolving Loans | 0 | |||||
Total | 4,967 | 5,092 | ||||
Loans Outstanding | 4,967 | 5,092 | ||||
Doubtful | ||||||
Credit Quality | ||||||
2021 | 0 | |||||
2020 | 0 | |||||
2019 | 0 | |||||
2018 | 0 | |||||
2017 | 0 | |||||
Prior | 161,477 | |||||
Revolving Loans | 0 | |||||
Total | 161,477 | 167,708 | ||||
Loans Outstanding | 161,477 | 167,708 | ||||
Doubtful | CFC | ||||||
Credit Quality | ||||||
2021 | 0 | |||||
2020 | 0 | |||||
2019 | 0 | |||||
2018 | 0 | |||||
2017 | 0 | |||||
Prior | 161,477 | |||||
Revolving Loans | 0 | |||||
Total | 161,477 | 167,708 | ||||
Loans Outstanding | 161,477 | 167,708 | ||||
Doubtful | CFC | Power supply | ||||||
Credit Quality | ||||||
2021 | 0 | |||||
2020 | 0 | |||||
2019 | 0 | |||||
2018 | 0 | |||||
2017 | 0 | |||||
Prior | 161,477 | |||||
Revolving Loans | 0 | |||||
Total | 161,477 | 167,708 | ||||
Loans Outstanding | $ 161,477 | $ 167,708 | ||||
[1] | Represents the unpaid principal amount of loans as of the end of each period. Excludes unamortized deferred loan origination costs of $12 million as of both August 31, 2020 and May 31, 2020. | |||||
[2] | Represents the unpaid principal balance, net of charge-offs and recoveries, of loans as of the end of each period. |
Allowance for Credit Losses -
Allowance for Credit Losses - Additional Information (Details) | 12 Months Ended | |||
May 31, 2020USD ($)loan | Aug. 31, 2020USD ($) | Aug. 31, 2019USD ($) | May 31, 2019USD ($) | |
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Allowance for loan loss | $ 53,125,000 | $ 57,351,000 | $ 17,565,000 | $ 17,535,000 |
Nonperforming TDR loans | 172,800,000 | |||
Asset-specific balance | 34,833,000 | |||
Credit reserve for unadvanced loan commitments | 1,000,000 | 1,000,000 | ||
Nonperforming Financial Instruments | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Nonperforming TDR loans | 0 | 0 | ||
CFC | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Allowance for loan loss | 47,438,000 | 52,730,000 | $ 12,962,000 | $ 13,120,000 |
Nonperforming TDR loans | 167,708,000 | |||
Asset-specific balance | $ 33,854,000 | 33,000,000 | ||
Power supply | CFC | Nonperforming Financial Instruments | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Number of loans impaired | loan | 1 | |||
Nonperforming TDR loans | $ 168,000,000 | $ 161,000,000 | ||
Cumulative-effect adjustment from adoption of new accounting standard | CFC | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Allowance for loan loss | 5,645,000 | |||
CECL | Cumulative-effect adjustment from adoption of new accounting standard | ||||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||||
Allowance for loan loss | $ 3,900,000 |
Allowance for Credit Losses _2
Allowance for Credit Losses - Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2020 | Aug. 31, 2019 | |
Allowance for Loan and Lease Losses [Roll Forward] | ||
Allowance for loan loss | $ 53,125 | $ 17,535 |
(Benefit) provision for credit losses | 326 | 30 |
Allowance for loan loss | 57,351 | 17,565 |
CFC | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Allowance for loan loss | 47,438 | 13,120 |
(Benefit) provision for credit losses | (353) | (158) |
Allowance for loan loss | 52,730 | 12,962 |
NCSC | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Allowance for loan loss | 806 | 2,007 |
(Benefit) provision for credit losses | 38 | 70 |
Allowance for loan loss | 829 | 2,077 |
RTFC | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Allowance for loan loss | 4,881 | 2,408 |
(Benefit) provision for credit losses | 641 | 118 |
Allowance for loan loss | 3,792 | $ 2,526 |
Cumulative-effect adjustment from adoption of new accounting standard | CFC | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Allowance for loan loss | 5,645 | |
Cumulative-effect adjustment from adoption of new accounting standard | NCSC | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Allowance for loan loss | (15) | |
Cumulative-effect adjustment from adoption of new accounting standard | RTFC | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Allowance for loan loss | (1,730) | |
Balance as of June 1, 2020 | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Allowance for loan loss | 57,025 | |
Balance as of June 1, 2020 | CFC | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Allowance for loan loss | 53,083 | |
Balance as of June 1, 2020 | NCSC | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Allowance for loan loss | 791 | |
Balance as of June 1, 2020 | RTFC | ||
Allowance for Loan and Lease Losses [Roll Forward] | ||
Allowance for loan loss | $ 3,151 |
Allowance for Credit Losses _3
Allowance for Credit Losses - Recorded Investments (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | Aug. 31, 2019 | May 31, 2019 | |||
Allowance components: | |||||||
Collectively evaluated loans | $ 23,519 | $ 18,292 | |||||
Asset-specific allowance | 33,832 | 34,833 | |||||
Total allowance for credit losses | 57,351 | 53,125 | $ 17,565 | $ 17,535 | |||
Loans outstanding: | |||||||
Collectively evaluated loans | [1] | 26,745,276 | 26,512,298 | ||||
Individually evaluated loans | [1] | 171,823 | 178,556 | ||||
Total loans outstanding | $ 26,917,099 | [1],[2] | $ 26,690,854 | [1],[2] | 26,288,599 | ||
Collective allowance coverage ratio | [3] | 0.09% | 0.07% | ||||
Asset-specific allowance coverage ratio | [4] | 19.69% | 19.51% | ||||
Total allowance coverage ratio | [5] | 0.21% | 0.20% | ||||
Deferred loan origination costs | $ 11,778 | $ 11,526 | 11,239 | ||||
CFC | |||||||
Allowance components: | |||||||
Collectively evaluated loans | 19,914 | 13,584 | |||||
Asset-specific allowance | 32,816 | 33,854 | |||||
Total allowance for credit losses | 52,730 | 47,438 | 12,962 | 13,120 | |||
Loans outstanding: | |||||||
Collectively evaluated loans | [1] | 25,672,804 | 25,434,193 | ||||
Individually evaluated loans | [1] | 166,856 | 173,464 | ||||
Total loans outstanding | [1] | $ 25,839,660 | $ 25,607,657 | ||||
Collective allowance coverage ratio | [3] | 0.08% | 0.05% | ||||
Asset-specific allowance coverage ratio | [4] | 19.67% | 19.52% | ||||
Total allowance coverage ratio | [5] | 0.20% | 0.19% | ||||
NCSC | |||||||
Allowance components: | |||||||
Collectively evaluated loans | $ 829 | $ 806 | |||||
Asset-specific allowance | 0 | 0 | |||||
Total allowance for credit losses | 829 | 806 | 2,077 | 2,007 | |||
Loans outstanding: | |||||||
Collectively evaluated loans | [1] | 681,321 | 697,862 | ||||
Individually evaluated loans | [1] | 0 | 0 | ||||
Total loans outstanding | [1] | $ 681,321 | $ 697,862 | ||||
Collective allowance coverage ratio | [3] | 0.12% | 0.12% | ||||
Asset-specific allowance coverage ratio | [4] | 0.00% | 0.00% | ||||
Total allowance coverage ratio | [5] | 0.12% | 0.12% | ||||
RTFC | |||||||
Allowance components: | |||||||
Collectively evaluated loans | $ 2,776 | $ 3,902 | |||||
Asset-specific allowance | 1,016 | 979 | |||||
Total allowance for credit losses | 3,792 | 4,881 | $ 2,526 | $ 2,408 | |||
Loans outstanding: | |||||||
Collectively evaluated loans | [1] | 391,151 | 380,243 | ||||
Individually evaluated loans | [1] | 4,967 | 5,092 | ||||
Total loans outstanding | [1] | $ 396,118 | $ 385,335 | ||||
Collective allowance coverage ratio | [3] | 0.71% | 1.03% | ||||
Asset-specific allowance coverage ratio | [4] | 20.46% | 19.23% | ||||
Total allowance coverage ratio | [5] | 0.96% | 1.27% | ||||
[1] | Represents the unpaid principal amount of loans as of the end of each period. Excludes unamortized deferred loan origination costs of $12 million as of both August 31, 2020 and May 31, 2020. | ||||||
[2] | Represents the unpaid principal balance, net of charge-offs and recoveries, of loans as of the end of each period. | ||||||
[3] | Calculated based on the collective allowance component at period end divided by collectively evaluated loans outstanding at period end. | ||||||
[4] | Calculated based on the asset-specific allowance component at period end divided by individually evaluated loans outstanding at period end. | ||||||
[5] | Calculated based on the total allowance for credit losses at period end divided by total loans outstanding at period end. |
Allowance for Credit Losses - I
Allowance for Credit Losses - Individually Impaired Loans-Incurred Loss Model (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2020 | May 31, 2020 | |
Impaired Loans | ||
Recorded Invested | $ 178,555 | |
Related Allowance | 34,833 | |
With Specific Allowance | 172,800 | |
With No Specific Allowance | 5,755 | |
Average Recorded Investment | $ 11,786 | |
Interest Income Recognized | 206 | |
CFC | ||
Impaired Loans | ||
Recorded Invested | 173,463 | |
Related Allowance | 33,000 | 33,854 |
With Specific Allowance | 167,708 | |
With No Specific Allowance | 5,755 | |
Average Recorded Investment | 6,239 | |
Interest Income Recognized | 137 | |
RTFC | ||
Impaired Loans | ||
Recorded Invested | 5,092 | |
Related Allowance | 979 | |
With Specific Allowance | 5,092 | |
With No Specific Allowance | $ 0 | |
Average Recorded Investment | 5,547 | |
Interest Income Recognized | $ 69 |
Short-Term Borrowings - Additio
Short-Term Borrowings - Additional Information (Details) - USD ($) | Aug. 31, 2020 | May 31, 2020 |
Short-term Debt [Line Items] | ||
Short-term borrowings | $ 4,553,491,000 | $ 3,961,985,000 |
Percentage of debt outstanding, short-term debt | 17.00% | 15.00% |
Revolving credit agreements | ||
Short-term Debt [Line Items] | ||
Short-term borrowings | $ 0 | $ 0 |
Maximum borrowing capacity | 2,725,000,000 | $ 2,725,000,000 |
Letter of credit, maximum amount available | $ 300,000,000 |
Short-Term Borrowings - Outsta
Short-Term Borrowings - Outstanding (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | |
Short-term Debt [Line Items] | |||
Short-term borrowings | $ 4,553,491 | $ 3,961,985 | |
Commercial paper sold through dealers, net of discounts | |||
Short-term Debt [Line Items] | |||
Short-term borrowings | 299,998 | 0 | |
Commercial paper sold directly to members, at par | |||
Short-term Debt [Line Items] | |||
Short-term borrowings | 1,421,582 | 1,318,566 | |
Commercial paper | |||
Short-term Debt [Line Items] | |||
Short-term borrowings | 1,721,580 | 1,318,566 | |
Select notes to members | |||
Short-term Debt [Line Items] | |||
Short-term borrowings | 1,655,029 | 1,597,959 | |
Daily liquidity fund notes | |||
Short-term Debt [Line Items] | |||
Short-term borrowings | 645,036 | 508,618 | |
Medium-term notes sold to members | |||
Short-term Debt [Line Items] | |||
Short-term borrowings | 281,846 | 286,842 | |
Farmer Mac notes payable | |||
Short-term Debt [Line Items] | |||
Short-term borrowings | [1] | $ 250,000 | $ 250,000 |
[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. |
Short-Term Borrowings - Commitm
Short-Term Borrowings - Commitments under Revolving Credit Agreements (Details) - Revolving credit agreements - USD ($) | 3 Months Ended | 12 Months Ended | |
Aug. 31, 2020 | May 31, 2020 | ||
Revolving Credit Agreements | |||
Maximum borrowing capacity | $ 2,725,000,000 | $ 2,725,000,000 | |
Letters of credit outstanding | 3,000,000 | 3,000,000 | |
Total available | 2,722,000,000 | 2,722,000,000 | |
Three Year Agreement | |||
Revolving Credit Agreements | |||
Maximum borrowing capacity | 1,315,000,000 | 1,315,000,000 | |
Letters of credit outstanding | 0 | 0 | |
Total available | $ 1,315,000,000 | $ 1,315,000,000 | |
Maturity | Nov. 28, 2022 | ||
Annual facility fee | [1] | 0.075% | 0.075% |
Five Year Agreement | |||
Revolving Credit Agreements | |||
Maximum borrowing capacity | $ 1,410,000,000 | $ 1,410,000,000 | |
Letters of credit outstanding | 3,000,000 | 3,000,000 | |
Total available | $ 1,407,000,000 | $ 1,407,000,000 | |
Maturity | Nov. 28, 2023 | ||
Annual facility fee | [1] | 0.10% | 0.10% |
[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. |
Long-Term Debt - Long-Term Debt
Long-Term Debt - Long-Term Debt Outstanding (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 |
Long-term debt | ||
Long-term debt | $ 19,181,520 | $ 19,712,024 |
Collateral trust bonds | ||
Long-term debt | ||
Long-term debt, gross | 7,057,711 | 7,457,711 |
Unamortized discount | (233,748) | (236,461) |
Debt issuance costs | (31,515) | (32,697) |
Long-term debt | 6,792,448 | 7,188,553 |
Guaranteed Underwriter Program notes payable | ||
Long-term debt | ||
Long-term debt | 6,225,855 | 6,261,312 |
Farmer Mac notes payable | ||
Long-term debt | ||
Long-term debt, gross | 2,791,843 | 2,809,637 |
Other secured notes payable | ||
Long-term debt | ||
Long-term debt, gross | 6,068 | 6,068 |
Debt issuance costs | (101) | (117) |
Long-term debt | 5,967 | 5,951 |
Notes payable | ||
Long-term debt | ||
Long-term debt | 9,023,665 | 9,076,900 |
Secured Debt | ||
Long-term debt | ||
Long-term debt | 15,816,113 | 16,265,453 |
Medium-term notes sold through dealers | ||
Long-term debt | ||
Long-term debt, gross | 3,060,194 | 3,086,733 |
Medium-term notes sold to members | ||
Long-term debt | ||
Long-term debt, gross | 316,402 | 372,117 |
Unsecured Medium Term Notes | ||
Long-term debt | ||
Long-term debt, gross | 3,376,596 | 3,458,850 |
Unamortized discount | (852) | (997) |
Debt issuance costs | (16,019) | (16,943) |
Long-term debt | 3,359,725 | 3,440,910 |
Other Unsecured Notes Payable | ||
Long-term debt | ||
Long-term debt, gross | 5,794 | 5,794 |
Unamortized discount | (90) | (107) |
Debt issuance costs | (22) | (26) |
Unsecured notes payable | ||
Long-term debt | ||
Long-term debt | 5,682 | 5,661 |
Unsecured Debt | ||
Long-term debt | ||
Long-term debt | $ 3,365,407 | $ 3,446,571 |
Long-Term Debt - Additional Inf
Long-Term Debt - Additional Information (Details) - USD ($) | Oct. 01, 2020 | Jun. 30, 2020 | Aug. 31, 2020 | May 31, 2020 | Sep. 16, 2020 | Jun. 01, 2020 |
Long-term debt | ||||||
Long-term debt | $ 19,181,520,000 | $ 19,712,024,000 | ||||
Fee percentage | 3000.00% | 0.30% | ||||
Maximum percentage of patronage capital distribution allowed | 5.00% | |||||
Short-term borrowings | $ 4,553,491,000 | $ 3,961,985,000 | ||||
Federal Agricultural Mortgage Corporation | ||||||
Long-term debt | ||||||
Maximum borrowing capacity | 5,500,000,000 | |||||
Collateral trust bonds | ||||||
Long-term debt | ||||||
Debt redeemed | $ 400,000,000 | |||||
Stated interest rate | 2.35% | |||||
Long-term debt | 6,792,448,000 | 7,188,553,000 | ||||
Long-term debt, gross | 7,057,711,000 | 7,457,711,000 | ||||
2.30% Collateral Trust Bonds | Subsequent Event | ||||||
Long-term debt | ||||||
Debt redeemed | $ 350,000,000 | |||||
Stated interest rate | 2.30% | |||||
Guaranteed Underwriter Program notes payable | ||||||
Long-term debt | ||||||
Long-term debt | 6,225,855,000 | 6,261,312,000 | ||||
Available under committed loan facilities | 900,000,000 | |||||
Guaranteed Underwriter Program notes payable | Subsequent Event | ||||||
Long-term debt | ||||||
Long-term debt | $ 375,000,000 | |||||
Federal Agricultural Mortgage Corporation First Revolving Note Purchase Agreement | Federal Agricultural Mortgage Corporation | ||||||
Long-term debt | ||||||
Long-term debt | $ 2,810,000,000 | |||||
Available under committed loan facilities | $ 2,458,000,000 |
Subordinated Deferrable Debt _2
Subordinated Deferrable Debt - Debt Outstanding (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 |
Subordinated Deferrable Debt | ||
Subordinated Debt | $ 986,166 | $ 986,119 |
4.75 percent due 2043 | ||
Subordinated Deferrable Debt | ||
Subordinated Debt | $ 400,000 | $ 400,000 |
Stated interest rate | 4.75% | 4.75% |
5.25 Percent Due 2046 | ||
Subordinated Deferrable Debt | ||
Subordinated Debt | $ 350,000 | $ 350,000 |
Stated interest rate | 5.25% | 5.25% |
5.50 Percent Due 2064 | ||
Subordinated Deferrable Debt | ||
Subordinated Debt | $ 250,000 | $ 250,000 |
Stated interest rate | 5.50% | 5.50% |
Subordinated Debt | ||
Subordinated Deferrable Debt | ||
Debt issuance costs | $ (13,834) | $ (13,881) |
Derivative Instruments and He_3
Derivative Instruments and Hedging Activities - Derivative Notional Amounts and Weighted-Average Rate (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 |
Derivative [Line Items] | ||
Notional Amount | $ 9,259,816 | $ 9,306,808 |
Pay-fixed swaps | ||
Derivative [Line Items] | ||
Notional Amount | $ 6,540,816 | $ 6,604,808 |
Derivative, Average Fixed Interest Rate | 2.79% | 2.78% |
Derivative, Average Variable Interest Rate | 0.29% | 0.88% |
Receive-fixed swaps | ||
Derivative [Line Items] | ||
Notional Amount | $ 2,599,000 | $ 2,699,000 |
Derivative, Average Fixed Interest Rate | 2.76% | 2.75% |
Derivative, Average Variable Interest Rate | 1.01% | 1.54% |
Interest Rate Swap | ||
Derivative [Line Items] | ||
Notional Amount | $ 9,139,816 | $ 9,303,808 |
Derivative Weighted Average Interest Rate Paid Percentage | 2.28% | 2.42% |
Derivative Weighted Average Interest Rate Received Percentage | 0.99% | 1.42% |
Forward pay-fixed swaps | ||
Derivative [Line Items] | ||
Notional Amount | $ 120,000 | $ 3,000 |
Derivative Instruments and He_4
Derivative Instruments and Hedging Activities - Balance Sheet Impact (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative assets | $ 167,463 | $ 173,195 |
Derivative liabilities | 1,165,585 | 1,258,459 |
Derivative Asset, Notional Amount | 2,722,000 | 2,699,000 |
Derivative Liability, Notional Amount | $ 6,537,816 | $ 6,607,808 |
Derivative Instruments and He_5
Derivative Instruments and Hedging Activities - Derivatives Offsetting (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative Asset, Fair Value, Gross Asset | $ 167,463 | $ 173,195 |
Derivative Asset, Fair Value, Gross Liability | 0 | 0 |
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 167,463 | 173,195 |
Derivative, Collateral, Obligation to Return Securities | 167,463 | 173,195 |
Derivative, Collateral, Obligation to Return Cash | 0 | 0 |
Derivative Asset, Fair Value, Amount Offset Against Collateral | 0 | 0 |
Derivative Liability, Fair Value, Gross Liability | 1,165,585 | 1,258,459 |
Derivative Liability, Fair Value, Gross Asset | 0 | 0 |
Derivative liabilities | 1,165,585 | 1,258,459 |
Derivative, Collateral, Right to Reclaim Securities | 167,463 | 173,195 |
Derivative, Collateral, Right to Reclaim Cash | 0 | 0 |
Derivative Liability, Fair Value, Amount Offset Against Collateral | $ 998,122 | $ 1,085,264 |
Derivative Instruments and He_6
Derivative Instruments and Hedging Activities - Income Statement Impact (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Aug. 31, 2020 | Aug. 31, 2019 | ||
Derivative [Line Items] | |||
Derivative cash settlements interest expense | [1],[2] | $ (179,976) | $ (213,271) |
Derivative forward value gains (losses) | 87,248 | (384,682) | |
Derivative gains (losses) | 60,276 | (395,725) | |
Interest Rate Swap | |||
Derivative [Line Items] | |||
Derivative cash settlements interest expense | (26,972) | (11,043) | |
Derivative forward value gains (losses) | 87,248 | (384,682) | |
Derivative gains (losses) | $ 60,276 | $ (395,725) | |
[1] | Includes amortization of debt discounts and debt issuance costs, which are generally deferred and recognized as interest expense over the period to maturity using the effective interest method. Issuance costs related to dealer commercial paper, however, are recognized in interest expense immediately as incurred. | ||
[2] | Includes fees related to funding arrangements, such as up-front fees paid to banks participating in our committed bank revolving line of credit agreements. Based on the nature of the fees, the amount is either recognized immediately as incurred or deferred and recognized in interest expense ratably over the term of the arrangement. |
Derivative Instruments and He_7
Derivative Instruments and Hedging Activities - Rating Triggers (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | |
Derivative [Line Items] | |||
Notional Amount | $ 9,259,816 | $ 9,306,808 | |
Interest rate swaps | |||
Derivative [Line Items] | |||
Notional Amount | 6,537,468 | ||
Payable Due from CFC | (692,000) | ||
Receivable Due to CFC | 0 | ||
Net (Payable)/Receivable | (692,000) | ||
Moody's, A3 Rating Standard Poor's A- rating | Interest rate swaps | |||
Derivative [Line Items] | |||
Notional Amount | [1] | 45,860 | |
Payable Due from CFC | [1] | (10,614) | |
Receivable Due to CFC | [1] | 0 | |
Net (Payable)/Receivable | [1] | (10,614) | |
Moodys Baa 1 Rating Standard Poor's BBB Plus Rating | Interest rate swaps | |||
Derivative [Line Items] | |||
Notional Amount | 6,029,690 | ||
Payable Due from CFC | (634,659) | ||
Receivable Due to CFC | 0 | ||
Net (Payable)/Receivable | (634,659) | ||
Moody's Baa 2 Rating Standard Poor's BBB Rating | Interest rate swaps | |||
Derivative [Line Items] | |||
Notional Amount | [2] | 417,041 | |
Payable Due from CFC | [2] | (31,630) | |
Receivable Due to CFC | [2] | 0 | |
Net (Payable)/Receivable | [2] | (31,630) | |
Moodys Baa3 Rating Standard Poor's BB Rating | Interest rate swaps | |||
Derivative [Line Items] | |||
Notional Amount | 44,877 | ||
Payable Due from CFC | (15,097) | ||
Receivable Due to CFC | 0 | ||
Net (Payable)/Receivable | $ (15,097) | ||
[1] | Rating trigger for CFC falls below A3/A-, while rating trigger for counterparty falls below Baa1/BBB+ by Moody’s or S&P, respectively. | ||
[2] | Rating trigger for CFC falls to or below Baa2/BBB, while rating trigger for counterparty falls to or below Ba2/BB+ by Moody’s or S&P, respectively. |
Derivative Instruments and He_8
Derivative Instruments and Hedging Activities - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Aug. 31, 2020 | May 31, 2020 | |
Derivative [Line Items] | ||
Notional Amount | $ 9,259,816 | $ 9,306,808 |
Interest Rate Contracts and Treasury Lock | ||
Derivative [Line Items] | ||
Notional Amount | 205,000 | |
Unrealized loss position | $ 56,000 | |
Interest Rate Swaps and Treasury Lock | ||
Derivative [Line Items] | ||
Concentration risk, percentage | 25.00% | |
Net liability position | $ 734,000 |
Equity - Additional Information
Equity - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Aug. 31, 2020 | Aug. 31, 2019 | May 31, 2020 | May 31, 2019 | |
Stockholder's Equity [Line Items] | ||||
Equity increase (decrease) | $ 83,000 | |||
Equity | 731,504 | $ 918,428 | $ 648,822 | $ 1,303,882 |
Net income (loss) | 144,587 | (324,079) | ||
Patronage capital retirement | 59,857 | 62,822 | ||
Expected reclassification from AOCI over 12 months (less than) | 1,000 | |||
Cumulative-effect adjustment from adoption of new accounting standard | ||||
Stockholder's Equity [Line Items] | ||||
Equity | (3,900) | |||
Patronage Capital Allocated | ||||
Stockholder's Equity [Line Items] | ||||
Equity | 834,209 | 797,756 | 894,066 | 860,578 |
Patronage capital retirement | 59,857 | 62,822 | ||
Members’ Capital Reserve | ||||
Stockholder's Equity [Line Items] | ||||
Equity | $ 807,320 | $ 759,097 | 807,320 | $ 759,097 |
CFC | Patronage Capital Allocated | ||||
Stockholder's Equity [Line Items] | ||||
Patronage capital retirement | 60,000 | |||
Net income allocations | $ 96,000 | |||
Percentage of patronage capital allocation | 50.00% | |||
CFC | Cooperative Educational Fund | ||||
Stockholder's Equity [Line Items] | ||||
Net income allocations | $ 1,000 | |||
CFC | Members’ Capital Reserve | ||||
Stockholder's Equity [Line Items] | ||||
Net income allocations | 48,000 | |||
CFC | Retained Earnings Allocation of 50% of Prior Year Patronage Capital Allocation | ||||
Stockholder's Equity [Line Items] | ||||
Patronage capital retirement | 48,000 | |||
CFC | Retained Earnings Allocation Held for Twenty Five Years | ||||
Stockholder's Equity [Line Items] | ||||
Patronage capital retirement | $ 12,000 | |||
Period for which prior years allocated patronage capital is required to be held | 25 years |
Equity - Accumulated Other Comp
Equity - Accumulated Other Comprehensive Income Rollforward (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Aug. 31, 2020 | Aug. 31, 2019 | ||
AOCI, Net of Tax | |||
Beginning balance | $ 648,822 | $ 1,303,882 | |
(Gains) losses reclassified to earnings | 83 | 33 | |
Ending balance | 731,504 | 918,428 | |
Total | |||
AOCI, Net of Tax | |||
Beginning balance | (1,910) | (147) | |
Ending balance | (1,827) | (114) | |
Derivatives Unrealized Gains | |||
AOCI, Net of Tax | |||
Beginning balance | [1] | 2,130 | 2,571 |
(Gains) losses reclassified to earnings | [1] | (105) | (112) |
Ending balance | [1] | 2,025 | 2,459 |
Defined Benefit Plans Unrealized Losses | |||
AOCI, Net of Tax | |||
Beginning balance | [2] | (4,040) | (2,718) |
(Gains) losses reclassified to earnings | [2] | 188 | 145 |
Ending balance | [2] | $ (3,852) | $ (2,573) |
[1] | Reclassified to earnings as a component of the derivative gains (losses) line item presented on our consolidated statements of operations. | ||
[2] | Reclassified to earnings as component of the other non-interest expense line item presented on our consolidated statements of operations. |
Guarantees - Guarantees Outstan
Guarantees - Guarantees Outstanding (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | |
Guarantees | |||
Guarantor obligations | $ 683,246 | $ 820,786 | |
CFC | |||
Guarantees | |||
Guarantor obligations | 673,477 | 810,787 | |
CFC | Distribution | |||
Guarantees | |||
Guarantor obligations | 258,366 | 266,301 | |
CFC | Power supply | |||
Guarantees | |||
Guarantor obligations | 409,001 | 538,532 | |
CFC | Statewide and associate | |||
Guarantees | |||
Guarantor obligations | [1] | 6,110 | 5,954 |
NCSC | |||
Guarantees | |||
Guarantor obligations | 9,769 | 9,999 | |
Variable Interest Entity, Primary Beneficiary | |||
Guarantees | |||
Guarantor obligations | 9,769 | 9,999 | |
Variable Interest Entity, Primary Beneficiary | Statewide and associate | |||
Guarantees | |||
Guarantor obligations | 3,000 | 3,000 | |
Long-term tax-exempt bonds | |||
Guarantees | |||
Guarantor obligations | [2] | 186,075 | 263,875 |
Letters of credit | |||
Guarantees | |||
Guarantor obligations | [3] | 353,896 | 413,839 |
Other guarantees | |||
Guarantees | |||
Guarantor obligations | $ 143,275 | $ 143,072 | |
[1] | Includes CFC guarantees to NCSC and RTFC members totaling $3 million as of August 31, 2020 and May 31, 2020. | ||
[2] | Represents the outstanding principal amount of long-term fixed-rate and variable-rate guaranteed bonds. | ||
[3] | Reflects our maximum potential exposure for letters of credit. |
Guarantees - Additional Informa
Guarantees - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Aug. 31, 2020 | May 31, 2020 | ||
Guarantees | |||
Guarantor obligations | $ 683,246,000 | $ 820,786,000 | |
Percentage of total commitment | 54.00% | 52.00% | |
Guarantee obligations unsecured | $ 369,000,000 | $ 426,000,000 | |
Guarantee liability recorded | 10,000,000 | 11,000,000 | |
Guaranty liabilities contingent | 1,000,000 | 1,000,000 | |
Guaranty liabilities | 9,000,000 | 10,000,000 | |
Long-term variable-rate loans | |||
Guarantees | |||
Guarantee obligations liquidity provided to member carrying value | 166,000,000 | ||
Long-term tax-exempt bonds | |||
Guarantees | |||
Guarantor obligations | [1] | 186,075,000 | 263,875,000 |
Financial Guarantee | Long-term fixed-rate bonds | |||
Guarantees | |||
Guarantor obligations | 20,000,000 | ||
Financial Guarantee | Long Term Fixed Rate Loans | |||
Guarantees | |||
Guarantor obligations, maximum exposure, undiscounted | 34,000,000 | ||
Financial Guarantee | Long-term variable-rate loans | |||
Guarantees | |||
Guarantor obligations | 166,000,000 | 244,000,000 | |
Letters of credit | |||
Guarantees | |||
Guarantor obligations | [2] | 353,896,000 | 413,839,000 |
Guarantee obligations secured | 103,000,000 | 106,000,000 | |
Master Letter of Credit | Master Letter of Credit | |||
Guarantees | |||
Maximum additional amount potentially required to be issued | 71,000,000 | ||
Other guarantees | |||
Guarantees | |||
Guarantor obligations | 143,275,000 | 143,072,000 | |
Guarantor obligations, maximum exposure, undiscounted | 143,000,000 | 143,000,000 | |
Other secured guarantees | |||
Guarantees | |||
Guarantor obligations, maximum exposure, undiscounted | $ 25,000,000 | $ 25,000,000 | |
[1] | Represents the outstanding principal amount of long-term fixed-rate and variable-rate guaranteed bonds. | ||
[2] | Reflects our maximum potential exposure for letters of credit. |
Fair Value Measurement - Fair V
Fair Value Measurement - Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | Aug. 31, 2019 | |
Assets: | ||||
Cash and cash equivalents | $ 347,818 | $ 671,372 | ||
Cash and cash equivalents | 347,818 | 671,372 | ||
Restricted cash | [1] | 9,376 | 8,647 | |
Equity securities, at fair value | 62,266 | 60,735 | ||
Debt securities trading, at fair value | 527,526 | 309,400 | ||
Deferred compensation investments | 6,159 | 5,496 | ||
Loans to members, net | 26,871,526 | 26,649,255 | $ 26,282,273 | |
Loans to members, net | 30,200,954 | 29,252,065 | ||
Accrued interest receivable | 104,762 | 117,138 | ||
Debt service reserve funds | 14,591 | 14,591 | ||
Derivative assets | 167,463 | 173,195 | ||
Total financial assets | 28,111,487 | 28,009,829 | ||
Total financial assets | 31,440,915 | 30,612,639 | ||
Liabilities: | ||||
Short-term borrowings | 4,553,491 | 3,961,985 | ||
Short-term borrowings | 4,552,523 | 3,963,164 | ||
Long-term debt | 19,181,520 | 19,712,024 | ||
Long-term debt | 21,548,208 | 21,826,337 | ||
Accrued interest payable | 182,166 | 139,619 | ||
Guarantee liability | 10,320 | 10,937 | ||
Guarantee liability | 11,322 | 11,948 | ||
Derivative liabilities | 1,165,585 | 1,258,459 | ||
Subordinated deferrable debt | 986,166 | 986,119 | ||
Subordinated deferrable debt | 1,064,046 | 1,030,108 | ||
Members’ subordinated certificates | 1,298,845 | 1,339,618 | ||
Members’ subordinated certificates | 1,298,845 | 1,339,618 | ||
Total financial liabilities | 27,378,093 | 27,408,761 | ||
Total financial liabilities | 29,822,695 | 29,569,253 | ||
Level 1 | ||||
Assets: | ||||
Cash and cash equivalents | 347,818 | 671,372 | ||
Restricted cash | 9,376 | 8,647 | ||
Equity securities, at fair value | 62,266 | 60,735 | ||
Debt securities trading, at fair value | 0 | 0 | ||
Deferred compensation investments | 6,159 | 5,496 | ||
Loans to members, net | 0 | 0 | ||
Accrued interest receivable | 0 | 0 | ||
Debt service reserve funds | 14,591 | 14,591 | ||
Derivative assets | 0 | 0 | ||
Total financial assets | 440,210 | 760,841 | ||
Liabilities: | ||||
Short-term borrowings | 0 | 0 | ||
Long-term debt | 0 | 0 | ||
Accrued interest payable | 0 | 0 | ||
Guarantee liability | 0 | 0 | ||
Derivative liabilities | 0 | 0 | ||
Subordinated deferrable debt | 0 | 0 | ||
Members’ subordinated certificates | 0 | 0 | ||
Total financial liabilities | 0 | 0 | ||
Level 2 | ||||
Assets: | ||||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Equity securities, at fair value | 0 | 0 | ||
Debt securities trading, at fair value | 527,526 | 309,400 | ||
Deferred compensation investments | 0 | 0 | ||
Loans to members, net | 0 | 0 | ||
Accrued interest receivable | 104,762 | 117,138 | ||
Debt service reserve funds | 0 | 0 | ||
Derivative assets | 167,463 | 173,195 | ||
Total financial assets | 799,751 | 599,733 | ||
Liabilities: | ||||
Short-term borrowings | 4,302,523 | 3,713,164 | ||
Long-term debt | 11,759,472 | 11,981,580 | ||
Accrued interest payable | 182,166 | 139,619 | ||
Guarantee liability | 0 | 0 | ||
Derivative liabilities | 1,165,585 | 1,258,459 | ||
Subordinated deferrable debt | 1,064,046 | 1,030,108 | ||
Members’ subordinated certificates | 0 | 0 | ||
Total financial liabilities | 18,473,792 | 18,122,930 | ||
Level 3 | ||||
Assets: | ||||
Cash and cash equivalents | 0 | 0 | ||
Restricted cash | 0 | 0 | ||
Equity securities, at fair value | 0 | 0 | ||
Debt securities trading, at fair value | 0 | 0 | ||
Deferred compensation investments | 0 | 0 | ||
Loans to members, net | 30,200,954 | 29,252,065 | ||
Accrued interest receivable | 0 | 0 | ||
Debt service reserve funds | 0 | 0 | ||
Derivative assets | 0 | 0 | ||
Total financial assets | 30,200,954 | 29,252,065 | ||
Liabilities: | ||||
Short-term borrowings | 250,000 | 250,000 | ||
Long-term debt | 9,788,736 | 9,844,757 | ||
Accrued interest payable | 0 | 0 | ||
Guarantee liability | 11,322 | 11,948 | ||
Derivative liabilities | 0 | 0 | ||
Subordinated deferrable debt | 0 | 0 | ||
Members’ subordinated certificates | 1,298,845 | 1,339,618 | ||
Total financial liabilities | $ 11,348,903 | $ 11,446,323 | ||
[1] | Restricted cash consists primarily of member funds held in escrow for certain specifically designed cooperative programs. |
Fair Value Measurement - Recurr
Fair Value Measurement - Recurring Fair Value Measurements (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | $ 62,266 | $ 60,735 |
Debt securities trading, at fair value | 527,526 | 309,400 |
Deferred compensation investments | 6,159 | 5,496 |
Derivative assets | 167,463 | 173,195 |
Derivative liabilities | 1,165,585 | 1,258,459 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 62,266 | 60,735 |
Debt securities trading, at fair value | 0 | 0 |
Deferred compensation investments | 6,159 | 5,496 |
Derivative assets | 0 | 0 |
Derivative liabilities | 0 | 0 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 0 | 0 |
Debt securities trading, at fair value | 527,526 | 309,400 |
Deferred compensation investments | 0 | 0 |
Derivative assets | 167,463 | 173,195 |
Derivative liabilities | 1,165,585 | 1,258,459 |
Recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 62,266 | 60,735 |
Debt securities trading, at fair value | 527,526 | 309,400 |
Deferred compensation investments | 6,159 | 5,496 |
Derivative assets | 167,463 | 173,195 |
Derivative liabilities | 1,165,585 | 1,258,459 |
Recurring basis | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 62,266 | 60,735 |
Debt securities trading, at fair value | 0 | 0 |
Deferred compensation investments | 6,159 | 5,496 |
Derivative assets | 0 | 0 |
Derivative liabilities | 0 | 0 |
Recurring basis | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Equity securities | 0 | 0 |
Debt securities trading, at fair value | 527,526 | 309,400 |
Deferred compensation investments | 0 | 0 |
Derivative assets | 167,463 | 173,195 |
Derivative liabilities | $ 1,165,585 | $ 1,258,459 |
Fair Value Measurement - Additi
Fair Value Measurement - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Aug. 31, 2020 | Aug. 31, 2019 | May 31, 2020 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Change in unrealized gain (loss) recorded in earnings | $ 0 | $ 0 | |
Total individually evaluated loans | $ 178,555,000 | ||
Collateral Pledged | |||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||
Total individually evaluated loans | $ 0 | $ 0 |
Variable Interest Entities - Co
Variable Interest Entities - Consolidated Assets and Liabilities of VIEs included in CFCs Condensed Consolidated Financial Statements (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | Aug. 31, 2019 |
Variable Interest Entity [Line Items] | |||
Loans to members | $ 26,928,877 | $ 26,702,380 | $ 26,299,838 |
Other assets | 43,938 | 37,627 | |
Total assets | 28,262,621 | 28,157,605 | $ 27,578,756 |
Long-term debt | 19,181,520 | 19,712,024 | |
Other liabilities | 48,284 | 51,656 | |
Total liabilities | 27,531,117 | 27,508,783 | |
Variable Interest Entity, Primary Beneficiary | |||
Variable Interest Entity [Line Items] | |||
Loans to members | 1,077,439 | 1,083,197 | |
Other assets | 10,371 | 11,352 | |
Total assets | 1,087,810 | 1,094,549 | |
Long-term debt | 0 | 0 | |
Other liabilities | 37,397 | 38,803 | |
Total liabilities | $ 37,397 | $ 38,803 |
Variable Interest Entities - In
Variable Interest Entities - Information on CFCs Credit Commitments to NCSC and RTFC (Details) - USD ($) $ in Thousands | Aug. 31, 2020 | May 31, 2020 | |
Variable Interest Entity [Line Items] | |||
CFC third-party guarantees | $ 683,246 | $ 820,786 | |
Variable Interest Entity, Primary Beneficiary | |||
Variable Interest Entity [Line Items] | |||
Total CFC credit commitments | 5,500,000 | 5,500,000 | |
Borrowings payable to CFC | [1] | 1,055,979 | 1,062,103 |
CFC third-party guarantees | 9,769 | 9,999 | |
Other credit enhancements | 11,290 | 11,755 | |
Total credit enhancements | [2] | 21,059 | 21,754 |
CFC credit commitments available(3) | 1,077,038 | 1,083,857 | |
CFC credit commitments available(3) | [3] | $ 4,422,962 | $ 4,416,143 |
[1] | Borrowings payable to CFC are eliminated in consolidation. | ||
[2] | Excludes interest due on these instruments. | ||
[3] | Represents total CFC credit commitments less outstanding commitments as of each period end. |
Variable Interest Entities - Ad
Variable Interest Entities - Additional Information (Details) $ in Millions | Aug. 31, 2020USD ($) |
Variable Interest Entity, Primary Beneficiary | |
Variable Interest Entity [Line Items] | |
Maximum potential exposure credit enhancements | $ 21 |
Business Segments - Segment Res
Business Segments - Segment Results and Total Assets (Details) $ in Thousands | 3 Months Ended | ||||||
Aug. 31, 2020USD ($)operating_segment | Aug. 31, 2019USD ($) | May 31, 2020USD ($) | May 31, 2019USD ($) | ||||
Segment Information | |||||||
Number of operating segments | operating_segment | 3 | ||||||
Statement of operations: | |||||||
Interest income | $ 279,584 | $ 290,015 | |||||
Interest expense | [1],[2] | (179,976) | (213,271) | ||||
Net interest income | 99,608 | 76,744 | |||||
(Provision) benefit for credit losses | (326) | (30) | |||||
Net interest income after provision for credit losses | 99,282 | 76,714 | |||||
Fee and other income | 3,516 | 10,941 | |||||
Non-interest income: | |||||||
Derivative forward value gains (losses) | 87,248 | (384,682) | |||||
Derivative gains (losses) | 60,276 | (395,725) | |||||
Investment securities gains | 4,659 | 1,620 | |||||
Total non-interest income | 68,451 | (383,164) | |||||
Non-interest expense: | |||||||
General and administrative expenses | (22,663) | (25,329) | |||||
Other non-interest expense | (332) | 7,179 | |||||
Total non-interest expense | (22,995) | (18,150) | |||||
Income (loss) before income taxes | 144,738 | (324,600) | |||||
Income tax (provision) benefit | (151) | 521 | |||||
Net income (loss) | 144,587 | (324,079) | |||||
Assets: | |||||||
Total loans outstanding | 26,917,099 | [3],[4] | 26,288,599 | $ 26,690,854 | [3],[4] | ||
Deferred loan origination costs | 11,778 | 11,239 | 11,526 | ||||
Loans to members | 26,928,877 | 26,299,838 | 26,702,380 | ||||
Less: Allowance for credit losses | (57,351) | (17,565) | (53,125) | $ (17,535) | |||
Loans to members, net | 26,871,526 | 26,282,273 | 26,649,255 | ||||
Other assets | 1,391,095 | 1,296,483 | |||||
Total assets | 28,262,621 | 27,578,756 | $ 28,157,605 | ||||
Interest Rate Swap | |||||||
Statement of operations: | |||||||
Interest expense | (26,972) | (11,043) | |||||
Non-interest income: | |||||||
Derivative forward value gains (losses) | 87,248 | (384,682) | |||||
Derivative gains (losses) | 60,276 | (395,725) | |||||
Elimination | |||||||
Statement of operations: | |||||||
Interest income | (9,021) | (10,296) | |||||
Interest expense | 9,021 | 10,296 | |||||
Net interest income | 0 | 0 | |||||
(Provision) benefit for credit losses | (1,066) | 0 | |||||
Net interest income after provision for credit losses | (1,066) | 0 | |||||
Fee and other income | (743) | (9,162) | |||||
Non-interest income: | |||||||
Derivative gains (losses) | 0 | 0 | |||||
Investment securities gains | 0 | 0 | |||||
Total non-interest income | (743) | (9,162) | |||||
Non-interest expense: | |||||||
General and administrative expenses | 1,594 | 1,645 | |||||
Other non-interest expense | 215 | 7,517 | |||||
Total non-interest expense | 1,809 | 9,162 | |||||
Income (loss) before income taxes | 0 | 0 | |||||
Income tax (provision) benefit | 0 | 0 | |||||
Net income (loss) | 0 | 0 | |||||
Assets: | |||||||
Total loans outstanding | (1,055,979) | (1,019,103) | |||||
Deferred loan origination costs | 0 | 0 | |||||
Loans to members | (1,055,979) | (1,019,103) | |||||
Less: Allowance for credit losses | 0 | 0 | |||||
Loans to members, net | (1,055,979) | (1,019,103) | |||||
Other assets | (94,554) | (95,216) | |||||
Total assets | (1,150,533) | (1,114,319) | |||||
Elimination | Interest Rate Swap | |||||||
Statement of operations: | |||||||
Interest expense | 0 | 0 | |||||
Non-interest income: | |||||||
Derivative forward value gains (losses) | 0 | 0 | |||||
CFC | Operating Segments | |||||||
Statement of operations: | |||||||
Interest income | 277,596 | 287,964 | |||||
Interest expense | (179,976) | (213,135) | |||||
Net interest income | 97,620 | 74,829 | |||||
(Provision) benefit for credit losses | (326) | (30) | |||||
Net interest income after provision for credit losses | 97,294 | 74,799 | |||||
Fee and other income | 4,775 | 12,282 | |||||
Non-interest income: | |||||||
Derivative gains (losses) | 60,220 | (393,563) | |||||
Investment securities gains | 4,659 | 1,620 | |||||
Total non-interest income | 69,654 | (379,661) | |||||
Non-interest expense: | |||||||
General and administrative expenses | (22,200) | (24,739) | |||||
Other non-interest expense | (332) | 7,179 | |||||
Total non-interest expense | (22,532) | (17,560) | |||||
Income (loss) before income taxes | 144,416 | (322,422) | |||||
Income tax (provision) benefit | 0 | 0 | |||||
Net income (loss) | 144,416 | (322,422) | |||||
Assets: | |||||||
Total loans outstanding | 26,895,639 | 26,258,810 | |||||
Deferred loan origination costs | 11,778 | 11,239 | |||||
Loans to members | 26,907,416 | 26,270,049 | |||||
Less: Allowance for credit losses | (57,351) | (17,565) | |||||
Loans to members, net | 26,850,065 | 26,252,484 | |||||
Other assets | 1,380,725 | 1,286,409 | |||||
Total assets | 28,230,790 | 27,538,893 | |||||
CFC | Operating Segments | Interest Rate Swap | |||||||
Statement of operations: | |||||||
Interest expense | (26,563) | (10,801) | |||||
Non-interest income: | |||||||
Derivative forward value gains (losses) | 86,783 | (382,762) | |||||
NCSC and RTFC | Operating Segments | |||||||
Statement of operations: | |||||||
Interest income | 11,009 | 12,347 | |||||
Interest expense | (9,021) | (10,432) | |||||
Net interest income | 1,988 | 1,915 | |||||
(Provision) benefit for credit losses | 1,066 | 0 | |||||
Net interest income after provision for credit losses | 3,054 | 1,915 | |||||
Fee and other income | (516) | 7,821 | |||||
Non-interest income: | |||||||
Derivative gains (losses) | 56 | (2,162) | |||||
Investment securities gains | 0 | 0 | |||||
Total non-interest income | (460) | 5,659 | |||||
Non-interest expense: | |||||||
General and administrative expenses | (2,057) | (2,235) | |||||
Other non-interest expense | (215) | (7,517) | |||||
Total non-interest expense | (2,272) | (9,752) | |||||
Income (loss) before income taxes | 322 | (2,178) | |||||
Income tax (provision) benefit | (151) | 521 | |||||
Net income (loss) | 171 | (1,657) | |||||
Assets: | |||||||
Total loans outstanding | 1,077,439 | 1,048,892 | |||||
Deferred loan origination costs | 0 | 0 | |||||
Loans to members | 1,077,439 | 1,048,892 | |||||
Less: Allowance for credit losses | 0 | 0 | |||||
Loans to members, net | 1,077,439 | 1,048,892 | |||||
Other assets | 104,924 | 105,290 | |||||
Total assets | 1,182,363 | 1,154,182 | |||||
NCSC and RTFC | Operating Segments | Interest Rate Swap | |||||||
Statement of operations: | |||||||
Interest expense | (409) | (242) | |||||
Non-interest income: | |||||||
Derivative forward value gains (losses) | $ 465 | $ (1,920) | |||||
[1] | Includes amortization of debt discounts and debt issuance costs, which are generally deferred and recognized as interest expense over the period to maturity using the effective interest method. Issuance costs related to dealer commercial paper, however, are recognized in interest expense immediately as incurred. | ||||||
[2] | Includes fees related to funding arrangements, such as up-front fees paid to banks participating in our committed bank revolving line of credit agreements. Based on the nature of the fees, the amount is either recognized immediately as incurred or deferred and recognized in interest expense ratably over the term of the arrangement. | ||||||
[3] | Represents the unpaid principal amount of loans as of the end of each period. Excludes unamortized deferred loan origination costs of $12 million as of both August 31, 2020 and May 31, 2020. | ||||||
[4] | Represents the unpaid principal balance, net of charge-offs and recoveries, of loans as of the end of each period. |