☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
District of Columbia | 52-0891669 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. employer identification no.) |
20701 Cooperative Way, Dulles, Virginia, 20166 |
(Address of principal executive offices) (Zip Code) |
Title of Each Class | Name of Each Exchange on Which Registered | |
6.55% Collateral Trust Bonds, due 2018 | New York Stock Exchange | |
7.35% Collateral Trust Bonds, due 2026 | New York Stock Exchange |
Page | ||||
Table | Description | Page | |||
— | MD&A Tables: | ||||
1 | Average Balances, Interest Income/Interest Expense and Average Yield/Cost | 30 | |||
2 | Rate/Volume Analysis of Changes in Interest Income/Interest Expense | 32 | |||
3 | Non-Interest Income | 34 | |||
4 | Derivative Average Notional Amounts and Average Interest Rates | 35 | |||
5 | Derivative Gains (Losses) | 36 | |||
6 | Non-Interest Expense | 37 | |||
7 | Loans Outstanding by Type and Member Class | 38 | |||
8 | Historical Retention Rate and Repricing Selection | 39 | |||
9 | Long-Term Loan Scheduled Repayments | 39 | |||
10 | Debt Product Types | 40 | |||
11 | Total Debt Outstanding and Weighted-Average Interest Rates | 41 | |||
12 | Member Investments | 43 | |||
13 | Collateral Pledged | 44 | |||
14 | Unencumbered Loans | 44 | |||
15 | Equity | 45 | |||
16 | Guarantees Outstanding | 46 | |||
17 | Maturities of Guarantee Obligations | 47 | |||
18 | Unadvanced Loan Commitments | 47 | |||
19 | Notional Maturities of Unadvanced Loan Commitments | 48 | |||
20 | Maturities of Notional Amount of Unconditional Committed Lines of Credit | 49 | |||
21 | Loan Portfolio Security Profile | 51 | |||
22 | Loan Geographic Concentration | 53 | |||
23 | Credit Exposure to 20 Largest Borrowers | 54 | |||
24 | TDR Loans | 55 | |||
25 | Nonperforming Loans | 56 | |||
26 | Net Charge-Offs (Recoveries) | 56 | |||
27 | Allowance for Loan Losses | 57 | |||
28 | Rating Triggers for Derivatives | 59 | |||
29 | Short-Term Borrowings | 60 | |||
30 | Liquidity Reserve | 61 | |||
31 | Committed Bank Revolving Line of Credit Agreements | 62 | |||
32 | Issuances and Maturities of Long-Term and Subordinated Debt | 64 | |||
33 | Credit Ratings | 64 | |||
34 | Projected Sources and Uses of Liquidity | 65 | |||
35 | Contractual Obligations | 66 | |||
36 | Financial Covenant Ratios Under Committed Bank Revolving Line of Credit Agreements | 66 | |||
37 | Financial Ratios Under Debt Indentures | 67 | |||
38 | Interest Rate Gap Analysis | 69 | |||
39 | Financial Instruments | 70 | |||
40 | Loan Repricing | 70 | |||
41 | Adjusted Financial Measures — Income Statement | 73 | |||
42 | TIER and Adjusted TIER | 73 | |||
43 | Adjusted Financial Measures — Balance Sheet | 75 | |||
44 | Leverage and Debt-to-Equity Ratios | 75 |
Item 1. | Business |
OVERVIEW |
OUR BUSINESS |
LOAN PROGRAMS |
• | terms of up to 35 years on a senior secured basis; |
• | amortizing or bullet maturity loans with serial payment structures; |
• | the property, plant and equipment financed by and securing the long-term loan has a useful life equal to or in excess of the loan maturity; |
• | flexibility for the borrower to select a fixed interest rate for periods of one to 35 years or a variable interest rate; and |
• | the ability for the borrower to select various tranches with either a fixed or variable interest rate for each tranche. |
• | terms of up to 35 years on a senior secured or unsecured basis; |
• | amortizing or bullet maturity loans with serial payment structures; |
• | the property, plant and equipment financed by and securing the long-term loan has a useful life equal to or in excess of the loan maturity; |
• | flexibility for the borrower to select a fixed interest rate for periods of one to 35 years or a variable interest rate; and |
• | the ability for the borrower to select various tranches with either a fixed or variable interest rate for each tranche. |
• | terms not exceeding 10 years on a senior secured basis; |
• | the property, plant and equipment financed by and securing the long-term loan has a useful life equal to or in excess of the loan maturity; |
• | flexibility for the borrower to select a fixed interest rate for periods from one year to the final loan maturity or a variable interest rate; and |
• | the ability for the borrower to select various tranches with either a fixed or variable interest rate for each tranche. |
GUARANTEE PROGRAMS |
INVESTMENT POLICY |
INDUSTRY |
• | providing bridge loans required by borrowers in anticipation of receiving RUS funding; |
• | providing financial products not otherwise available from RUS including lines of credit, letters of credit, guarantees on tax-exempt financing, weather-related disaster recovery lines of credit, unsecured loans and investment products such as commercial paper, member capital securities, select notes and medium-term notes; |
• | meeting the financing needs of those rural electric systems that repay or prepay their RUS loans and replace the government loans with private capital; and |
• | providing financing to RUS-eligible rural electric systems for facilities that are not eligible for financing from RUS. |
• | the transmission of electric energy in interstate commerce; |
• | the sale of electric energy at wholesale in interstate commerce; and |
• | the approval and enforcement of reliability standards affecting all users, owners and operators of the bulk power system. |
LENDING COMPETITION |
• | while the underlying data included in the financial and statistical reports may be audited, the preparation of the financial and statistical reports is not audited; |
• | in some cases, not all members provide the annual financial and statistical reports on a timely basis to be included in summarized results; and |
• | the financial and statistical reports do not include comprehensive data on indebtedness by lenders other than RUS. |
December 31, | ||||||||||||||
2016 | 2015 | |||||||||||||
(Dollars in thousands) | Debt Outstanding | % of Total | Debt Outstanding | % of Total | ||||||||||
Total long-term debt reported by members:(1) | ||||||||||||||
Distribution | $ | 47,362,415 | $ | 45,899,178 | ||||||||||
Power supply | 47,853,905 | 46,535,775 | ||||||||||||
Less: Long-term debt funded by RUS | (39,273,545 | ) | (39,008,305 | ) | ||||||||||
Members’ non-RUS long-term debt | $ | 55,942,775 | $ | 53,426,648 | ||||||||||
Funding source of member’s long-term debt: | ||||||||||||||
Long-term debt funded by CFC | $ | 22,083,606 | 39 | % | $ | 20,976,301 | 39 | % | ||||||
Long-term debt funded by other lenders | 33,859,169 | 61 | 32,450,347 | 61 | ||||||||||
Members’ non-RUS long-term debt | $ | 55,942,775 | 100 | % | $ | 53,426,648 | 100 | % |
December 31, | ||||||||||||||
2016 | 2015 | |||||||||||||
(Dollars in thousands) | Debt Outstanding | % of Total | Debt Outstanding | % of Total | ||||||||||
Distribution | $ | 17,825,633 | 81 | % | $ | 16,812,293 | 80 | % | ||||||
Power supply | 4,257,973 | 19 | 4,164,008 | 20 | ||||||||||
Long-term debt funded by CFC | $ | 22,083,606 | 100 | % | $ | 20,976,301 | 100 | % |
REGULATION |
MEMBERS |
• | 839 Class A distribution systems; |
• | 70 Class B power supply systems; |
• | 64 Class C statewide and regional associations, including NCSC; and |
• | 1 Class D national association of cooperatives. |
TAX STATUS |
ALLOCATION AND RETIREMENT OF PATRONAGE CAPITAL |
EMPLOYEES |
AVAILABLE INFORMATION |
Item 1A. | Risk Factors |
RISK FACTORS |
Item 1B. | Unresolved Staff Comments |
Item 2. | Properties |
Item 3. | Legal Proceedings |
Item 4. | Mine Safety Disclosures |
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |
Year Ended May 31, | Increase/(Decrease) | |||||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | 2014 | 2013 | 2017 vs. 2016 | 2016 vs. 2015 | |||||||||||||||||
Statement of operations | ||||||||||||||||||||||||
Interest income | $ | 1,036,634 | $ | 1,012,636 | $ | 952,976 | $ | 957,540 | $ | 955,753 | 2% | 6% | ||||||||||||
Interest expense | (741,738 | ) | (681,850 | ) | (635,684 | ) | (654,655 | ) | (692,025 | ) | 9 | 7 | ||||||||||||
Net interest income | 294,896 | 330,786 | 317,292 | 302,885 | 263,728 | (11) | 4 | |||||||||||||||||
Fee and other income | 19,713 | 21,785 | 36,783 | 17,762 | 38,181 | (10) | (41) | |||||||||||||||||
Total net revenue | 314,609 | 352,571 | 354,075 | 320,647 | 301,909 | (11) | 0 | |||||||||||||||||
Benefit (provision) for loan losses | (5,978 | ) | 646 | 21,954 | (3,498 | ) | 70,091 | ** | (97) | |||||||||||||||
Derivative gains (losses) (1) | 94,903 | (309,841 | ) | (196,999 | ) | (34,421 | ) | 84,843 | ** | 57 | ||||||||||||||
Results of operations of foreclosed assets | (1,749 | ) | (6,899 | ) | (120,148 | ) | (13,494 | ) | (897 | ) | (75) | (94) | ||||||||||||
Operating expenses(2) | (86,226 | ) | (86,343 | ) | (76,530 | ) | (72,566 | ) | (84,182 | ) | 0 | 13 | ||||||||||||
Other non-interest expense | (1,756 | ) | (1,593 | ) | (870 | ) | (1,738 | ) | (10,928 | ) | 10 | 83 | ||||||||||||
Income (loss) before income taxes | 313,803 | (51,459 | ) | (18,518 | ) | 194,930 | 360,836 | ** | 178 | |||||||||||||||
Income tax expense | (1,704 | ) | (57 | ) | (409 | ) | (2,004 | ) | (2,749 | ) | 2,889 | (86) | ||||||||||||
Net income (loss) | $ | 312,099 | $ | (51,516 | ) | $ | (18,927 | ) | $ | 192,926 | $ | 358,087 | ** | 172 | ||||||||||
Adjusted operational financial measures | ||||||||||||||||||||||||
Adjusted interest expense(3) | $ | (826,216 | ) | $ | (770,608 | ) | $ | (718,590 | ) | $ | (728,617 | ) | $ | (748,486 | ) | 7% | 7% | |||||||
Adjusted net interest income(3) | 210,418 | 242,028 | 234,386 | 228,923 | 207,267 | (13) | 3 | |||||||||||||||||
Adjusted net income(3) | 132,718 | 169,567 | 95,166 | 153,385 | 216,783 | (22) | 78 | |||||||||||||||||
May 31, | Increase/(Decrease) | |||||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | 2014 | 2013 | 2017 vs. 2016 | 2016 vs. 2015 | |||||||||||||||||
Balance sheet | ||||||||||||||||||||||||
Cash, investments and time deposits | $ | 485,169 | $ | 632,480 | $ | 818,308 | $ | 943,892 | $ | 908,694 | (23)% | (23)% | ||||||||||||
Loans to members(4) | 24,367,044 | 23,162,696 | 21,469,017 | 20,476,642 | 20,305,874 | 5 | 8 | |||||||||||||||||
Allowance for loan losses | (37,376 | ) | (33,258 | ) | (33,690 | ) | (56,429 | ) | (54,325 | ) | 12 | (1) | ||||||||||||
Loans to members, net | 24,329,668 | 23,129,438 | 21,435,327 | 20,420,213 | 20,251,549 | 5 | 8 | |||||||||||||||||
Total assets | 25,205,692 | 24,270,200 | 22,846,059 | 22,190,685 | 22,032,702 | 4 | 6 | |||||||||||||||||
Short-term borrowings | 3,342,900 | 2,938,848 | 3,127,754 | 4,099,331 | 4,557,434 | 14 | (6) | |||||||||||||||||
Long-term debt | 17,955,594 | 17,473,603 | 16,244,794 | 14,475,635 | 13,787,254 | 3 | 8 | |||||||||||||||||
Subordinated deferrable debt | 742,274 | 742,212 | 395,699 | 395,627 | 395,729 | 0 | 88 | |||||||||||||||||
Members’ subordinated certificates | 1,419,025 | 1,443,810 | 1,505,420 | 1,612,191 | 1,765,776 | (2) | (4) | |||||||||||||||||
Total debt outstanding | 23,459,793 | 22,598,473 | 21,273,667 | 20,582,784 | 20,506,193 | 4 | 6 | |||||||||||||||||
Total liabilities | 24,106,887 | 23,452,822 | 21,934,273 | 21,220,311 | 21,221,441 | 3 | 7 | |||||||||||||||||
Total equity | 1,098,805 | 817,378 | 911,786 | 970,374 | 811,261 | 34 | (10) | |||||||||||||||||
Guarantees(5) | 889,617 | 909,208 | 986,500 | 1,064,822 | 1,112,771 | (2) | (8) | |||||||||||||||||
Selected ratios(6) | ||||||||||||||||||||||||
Fixed-charge coverage ratio/TIER(7) | 1.42 | 0.92 | 0.97 | 1.29 | 1.52 | 50 bps | (5) bps | |||||||||||||||||
Adjusted TIER(3) | 1.16 | 1.22 | 1.13 | 1.21 | 1.29 | (6) | 9 | |||||||||||||||||
Net interest yield(8) | 1.20 | 1.43 | 1.47 | 1.42 | 1.31 | (23) | (4) | |||||||||||||||||
Adjusted net interest yield(9) | 0.86 | 1.05 | 1.08 | 1.07 | 1.03 | (19) | (3) | |||||||||||||||||
Net charge-off (recovery) rate(10) | 0.01 | 0.00 | 0.00 | 0.01 | 0.10 | 1 | 0 | |||||||||||||||||
Allowance coverage ratio(11) | 0.15 | 0.14 | 0.16 | 0.28 | 0.27 | 1 | (2) | |||||||||||||||||
Leverage ratio(12) | 22.75 | 29.81 | 25.14 | 22.97 | 27.53 | (706) | 467 | |||||||||||||||||
Adjusted leverage ratio(3) | 6.19 | 6.08 | 6.58 | 6.24 | 6.11 | 11 | (50) | |||||||||||||||||
Debt-to-equity ratio(13) | 21.94 | 28.69 | 24.06 | 21.87 | 26.16 | (675) | 463 | |||||||||||||||||
Adjusted debt-to-equity ratio(3) | 5.95 | 5.82 | 6.26 | 5.90 | 5.76 | 13 | (44) |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) |
INTRODUCTION |
EXECUTIVE SUMMARY |
CRITICAL ACCOUNTING POLICIES AND ESTIMATES |
• | A 10% increase or decrease in the default rates for all of our portfolio segments would result in a corresponding increase or decrease of approximately $3 million. |
• | A 1% increase or decrease in the recovery rates for all of our portfolio segments would result in a corresponding decrease or increase of approximately $4 million. |
• | A one-notch downgrade in the internal risk ratings for our entire loan portfolio would result in an increase of approximately $48 million, while a one-notch upgrade would result in a decrease of approximately $21 million. |
ACCOUNTING CHANGES AND DEVELOPMENTS |
CONSOLIDATED RESULTS OF OPERATIONS |
Year Ended May 31, | |||||||||||||||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | ||||||||||||||||||||||||||||||
Assets: | Average Balance | Interest Income/Expense | Average Yield/Cost | Average Balance | Interest Income/Expense | Average Yield/Cost | Average Balance | Interest Income/Expense | Average Yield/Cost | ||||||||||||||||||||||||
Long-term fixed-rate loans(1) | $ | 21,896,200 | $ | 980,173 | 4.48 | % | $ | 20,734,387 | $ | 959,701 | 4.63 | % | $ | 18,990,768 | $ | 898,181 | 4.73 | % | |||||||||||||||
Long-term variable-rate loans | 799,412 | 19,902 | 2.49 | 708,801 | 19,858 | 2.80 | 702,397 | 20,184 | 2.87 | ||||||||||||||||||||||||
Line of credit loans | 1,124,471 | 25,389 | 2.26 | 1,031,548 | 24,864 | 2.41 | 1,119,647 | 26,411 | 2.36 | ||||||||||||||||||||||||
TDR loans (2) | 14,349 | 905 | 6.31 | 12,947 | 512 | 3.95 | 7,560 | 15 | 0.20 | ||||||||||||||||||||||||
Nonperforming loans | — | — | — | 3,164 | 142 | 4.49 | 1,572 | — | — | ||||||||||||||||||||||||
Other income, net(3) | — | (1,082 | ) | — | — | (1,088 | ) | — | — | 252 | — | ||||||||||||||||||||||
Total loans | 23,834,432 | 1,025,287 | 4.30 | 22,490,847 | 1,003,989 | 4.46 | 20,821,944 | 945,043 | 4.54 | ||||||||||||||||||||||||
Cash, investments and time deposits | 734,095 | 11,347 | 1.55 | 639,060 | 8,647 | 1.35 | 806,942 | 7,933 | 0.98 | ||||||||||||||||||||||||
Total interest-earning assets | $ | 24,568,527 | $ | 1,036,634 | 4.22 | % | $ | 23,129,907 | $ | 1,012,636 | 4.38 | % | $ | 21,628,886 | $ | 952,976 | 4.41 | % | |||||||||||||||
Other assets, less allowance for loan losses | 574,682 | 808,479 | 944,746 | ||||||||||||||||||||||||||||||
Total assets | $ | 25,143,209 | $ | 23,938,386 | $ | 22,573,632 | |||||||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||||||||||
Short-term debt | $ | 3,185,084 | $ | 26,684 | 0.84 | % | $ | 2,995,530 | $ | 14,728 | 0.49 | % | $ | 3,586,509 | $ | 14,374 | 0.40 | % | |||||||||||||||
Medium-term notes | 3,345,410 | 99,022 | 2.96 | 3,412,061 | 86,270 | 2.53 | 2,926,721 | 71,739 | 2.45 | ||||||||||||||||||||||||
Collateral trust bonds | 7,293,251 | 340,854 | 4.67 | 6,917,265 | 333,338 | 4.82 | 6,288,187 | 315,106 | 5.01 | ||||||||||||||||||||||||
Long-term notes payable | 7,268,158 | 177,929 | 2.45 | 6,818,705 | 165,820 | 2.43 | 5,988,964 | 151,763 | 2.53 | ||||||||||||||||||||||||
Subordinated deferrable debt | 742,203 | 37,657 | 5.07 | 435,488 | 21,245 | 4.88 | 400,000 | 19,143 | 4.79 | ||||||||||||||||||||||||
Subordinated certificates | 1,433,657 | 59,592 | 4.16 | 1,458,376 | 60,449 | 4.14 | 1,488,059 | 63,559 | 4.27 | ||||||||||||||||||||||||
Total interest-bearing liabilities | $ | 23,267,763 | $ | 741,738 | 3.19 | % | $ | 22,037,425 | $ | 681,850 | 3.09 | % | $ | 20,678,440 | $ | 635,684 | 3.07 | % | |||||||||||||||
Other liabilities | 921,749 | 1,036,907 | 954,638 | ||||||||||||||||||||||||||||||
Total liabilities | 24,189,512 | 23,074,332 | 21,633,078 | ||||||||||||||||||||||||||||||
Total equity | 953,697 | 864,054 | 940,554 | ||||||||||||||||||||||||||||||
Total liabilities and equity | $ | 25,143,209 | $ | 23,938,386 | $ | 22,573,632 | |||||||||||||||||||||||||||
Net interest spread(4) | 1.03 | % | 1.29 | % | 1.34 | % | |||||||||||||||||||||||||||
Impact of non-interest bearing funding(5) | 0.17 | 0.14 | 0.13 | ||||||||||||||||||||||||||||||
Net interest income/net interest yield(6) | $ | 294,896 | 1.20 | % | $ | 330,786 | 1.43 | % | $ | 317,292 | 1.47 | % | |||||||||||||||||||||
Adjusted net interest income/adjusted net interest yield: | |||||||||||||||||||||||||||||||||
Interest income | $ | 1,036,634 | 4.22 | % | $ | 1,012,636 | 4.38 | % | $ | 952,976 | 4.41 | % | |||||||||||||||||||||
Interest expense | 741,738 | 3.19 | 681,850 | 3.09 | 635,684 | 3.07 | |||||||||||||||||||||||||||
Add: Net accrued periodic derivative cash settlement(7) | 84,478 | 0.80 | 88,758 | 0.89 | 82,906 | 0.94 | |||||||||||||||||||||||||||
Adjusted interest expense/adjusted average cost(8) | $ | 826,216 | 3.55 | % | $ | 770,608 | 3.50 | % | $ | 718,590 | 3.48 | % | |||||||||||||||||||||
Adjusted net interest spread(4) | 0.67 | % | 0.88 | % | 0.93 | % | |||||||||||||||||||||||||||
Impact of non-interest bearing funding | 0.19 | 0.17 | 0.15 | ||||||||||||||||||||||||||||||
Adjusted net interest income/adjusted net interest yield(9) | $ | 210,418 | 0.86 | % | $ | 242,028 | 1.05 | % | $ | 234,386 | 1.08 | % |
2017 vs. 2016 | 2016 vs. 2015 | |||||||||||||||||||||||
Variance due to:(1) | Variance due to:(1) | |||||||||||||||||||||||
(Dollars in thousands) | Total Variance | Volume | Rate | Total Variance | Volume | Rate | ||||||||||||||||||
Interest income: | ||||||||||||||||||||||||
Long-term fixed-rate loans | $ | 20,472 | $ | 53,775 | $ | (33,303 | ) | $ | 61,520 | $ | 82,466 | $ | (20,946 | ) | ||||||||||
Long-term variable-rate loans | 44 | 2,539 | (2,495 | ) | (326 | ) | 184 | (510 | ) | |||||||||||||||
Line of credit loans | 525 | 2,240 | (1,715 | ) | (1,547 | ) | (2,078 | ) | 531 | |||||||||||||||
Restructured loans | 393 | 55 | 338 | 497 | 11 | 486 | ||||||||||||||||||
Nonperforming loans | (142 | ) | (142 | ) | — | 142 | — | 142 | ||||||||||||||||
Other income, net | 6 | — | 6 | (1,340 | ) | — | (1,340 | ) | ||||||||||||||||
Total loans | 21,298 | 58,467 | (37,169 | ) | 58,946 | 80,583 | (21,637 | ) | ||||||||||||||||
Cash, investments and time deposits | 2,700 | 1,286 | 1,414 | 714 | (1,650 | ) | 2,364 | |||||||||||||||||
Interest income | $ | 23,998 | $ | 59,753 | $ | (35,755 | ) | $ | 59,660 | $ | 78,933 | $ | (19,273 | ) | ||||||||||
Interest expense: | ||||||||||||||||||||||||
Short-term debt | $ | 11,956 | $ | 932 | $ | 11,024 | $ | 354 | $ | (2,369 | ) | $ | 2,723 | |||||||||||
Medium-term notes | 12,752 | (1,685 | ) | 14,437 | 14,531 | 11,897 | 2,634 | |||||||||||||||||
Collateral trust bonds | 7,516 | 18,118 | (10,602 | ) | 18,232 | 31,524 | (13,292 | ) | ||||||||||||||||
Long-term notes payable | 12,109 | 10,930 | 1,179 | 14,057 | 21,026 | (6,969 | ) | |||||||||||||||||
Subordinated deferrable debt | 16,412 | 14,963 | 1,449 | 2,102 | 1,698 | 404 | ||||||||||||||||||
Subordinated certificates | (857 | ) | (1,025 | ) | 168 | (3,110 | ) | (1,268 | ) | (1,842 | ) | |||||||||||||
Interest expense | 59,888 | 42,233 | 17,655 | 46,166 | 62,508 | (16,342 | ) | |||||||||||||||||
Net interest income | $ | (35,890 | ) | $ | 17,520 | $ | (53,410 | ) | $ | 13,494 | $ | 16,425 | $ | (2,931 | ) | |||||||||
Adjusted net interest income: | ||||||||||||||||||||||||
Interest income | $ | 23,998 | $ | 59,753 | $ | (35,755 | ) | $ | 59,660 | $ | 78,933 | $ | (19,273 | ) | ||||||||||
Interest expense | 59,888 | 42,233 | 17,655 | 46,166 | 62,508 | (16,342 | ) | |||||||||||||||||
Net accrued periodic derivative cash settlements(2) | (4,280 | ) | 5,304 | (9,584 | ) | 5,852 | 11,122 | (5,270 | ) | |||||||||||||||
Adjusted interest expense(3) | 55,608 | 47,537 | 8,071 | 52,018 | 73,630 | (21,612 | ) | |||||||||||||||||
Adjusted net interest income | $ | (31,610 | ) | $ | 12,216 | $ | (43,826 | ) | $ | 7,642 | $ | 5,303 | $ | 2,339 |
• | Average Interest-Earning Assets: The increase in average interest-earning assets during fiscal year 2017 was primarily attributable to growth in average total loans of $1,344 million, or 6%, over the prior fiscal year, as members obtained advances to fund capital investments and refinanced with us loans made by other lenders. |
• | Net Interest Yield: The decrease in the net interest yield in fiscal year 2017 reflects the combined impact of a decline in the average yield on interest-earning assets and an increase in our average cost of funds. The average yield on interest-earning assets declined by 16 basis points in fiscal year 2017 to 4.22%. The decrease resulted from repayments on existing long-term loans with higher weighted-average fixed rates than the weighted average fixed rates on new long-term loan advances, coupled with the repricing of higher-rate loans to lower fixed rates. Our average cost of funds increased by 10 basis points in fiscal year 2017 to 3.19%, largely due to an increase in short-term interest rates, as the 3-month London Interbank Offered Rate (“LIBOR”) increased by 52 basis points to 1.21% and the federal funds rate increased by 50 basis points to 1.00% during fiscal year 2017. |
• | Average Interest-Earning Assets: The increase in average interest-earning assets during fiscal year 2016 was primarily attributable to growth in average total loans of $1,669 million, or 8%, over fiscal year 2015, as members refinanced with us loans issued by other lenders and obtained advances to fund capital investments. |
• | Net Interest Yield: The decrease in the net interest yield in fiscal year 2016 reflected the combined impact of a modest decline in the average yield on interest-earning assets and a slight increase in our average cost of funds. The average yield on interest-earning assets decreased by 3 basis points in fiscal year 2016 to 4.38%. The decrease was largely attributable to reduced rates on fixed-rate loans, reflecting the repricing of higher-rate loans to lower interest rates and lower interest rates on new loan originations as a result of the overall low interest rate environment. Our average cost of funds increased by 2 basis points in fiscal year 2016 to 3.09%. This increase was largely due to our decision in the third quarter of fiscal year 2015 to significantly reduce the level of outstanding dealer commercial paper, which has a much lower cost than our other funding options. |
Year Ended May 31, | ||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | |||||||||
Non-interest income: | ||||||||||||
Fee and other income | $ | 19,713 | $ | 21,785 | $ | 36,783 | ||||||
Derivative gains (losses) | 94,903 | (309,841 | ) | (196,999 | ) | |||||||
Results of operations of foreclosed assets | (1,749 | ) | (6,899 | ) | (120,148 | ) | ||||||
Total non-interest income | $ | 112,867 | $ | (294,955 | ) | $ | (280,364 | ) |
Year Ended May 31, | ||||||||||||||||||||||||||||||
2017 | 2016 | 2015 | ||||||||||||||||||||||||||||
(Dollars in thousands) | Average Notional Balance | Weighted- Average Rate Paid | Weighted- Average Rate Received | Average Notional Balance | Weighted- Average Rate Paid | Weighted- Average Rate Received | Average Notional Balance | Weighted- Average Rate Paid | Weighted- Average Rate Received | |||||||||||||||||||||
Pay-fixed swaps | $ | 6,675,617 | 2.89 | % | 0.90 | % | $ | 6,322,338 | 3.03 | % | 0.45 | % | $ | 5,583,647 | 3.25 | % | 0.25 | % | ||||||||||||
Receive-fixed swaps | 3,914,479 | 1.34 | 2.71 | 3,670,585 | 0.88 | 2.97 | 3,227,288 | 0.83 | 3.45 | |||||||||||||||||||||
Total | $ | 10,590,096 | 2.32 | % | 1.57 | % | $ | 9,992,923 | 2.24 | % | 1.38 | % | $ | 8,810,935 | 2.36 | % | 1.43 | % |
Year Ended May 31, | ||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | |||||||||
Derivative gains (losses) attributable to: | ||||||||||||
Derivative cash settlements | $ | (84,478 | ) | $ | (88,758 | ) | $ | (82,906 | ) | |||
Derivative forward value gains (losses) | 179,381 | (221,083 | ) | (114,093 | ) | |||||||
Derivative gains (losses) | $ | 94,903 | $ | (309,841 | ) | $ | (196,999 | ) |
Year Ended May 31, | ||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | |||||||||
Non Interest Expense: | ||||||||||||
Salaries and employee benefits | $ | (47,769 | ) | $ | (44,590 | ) | $ | (43,845 | ) | |||
Other general and administrative expenses | (38,457 | ) | (41,753 | ) | (32,685 | ) | ||||||
Gains (losses) on early extinguishment of debt | 192 | (333 | ) | (703 | ) | |||||||
Other non-interest expense | (1,948 | ) | (1,260 | ) | (167 | ) | ||||||
Total non-interest expense | $ | (87,982 | ) | $ | (87,936 | ) | $ | (77,400 | ) |
CONSOLIDATED BALANCE SHEET ANALYSIS |
May 31, | |||||||||||||||||||||||||||||||||||
(Dollars in millions) | 2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||||||||||||||||
Loans by type:(1) | Amount | % of Total | Amount | % of Total | Amount | % of Total | Amount | % of Total | Amount | % of Total | |||||||||||||||||||||||||
Long-term loans: | |||||||||||||||||||||||||||||||||||
Long-term fixed-rate loans | $ | 22,137 | 91 | % | $ | 21,391 | 93 | % | $ | 19,722 | 92 | % | $ | 18,360 | 89 | % | $ | 18,108 | 89 | % | |||||||||||||||
Long-term variable-rate loans | 847 | 3 | 757 | 3 | 699 | 3 | 772 | 4 | 803 | 4 | |||||||||||||||||||||||||
Total long-term loans | 22,984 | 94 | 22,148 | 96 | 20,421 | 95 | 19,132 | 93 | 18,911 | 93 | |||||||||||||||||||||||||
Line of credit loans | 1,372 | 6 | 1,005 | 4 | 1,038 | 5 | 1,335 | 7 | 1,385 | 7 | |||||||||||||||||||||||||
Total loans outstanding(2) | $ | 24,356 | 100 | % | $ | 23,153 | 100 | % | $ | 21,459 | 100 | % | $ | 20,467 | 100 | % | $ | 20,296 | 100 | % | |||||||||||||||
Loans by member class:(1) | |||||||||||||||||||||||||||||||||||
CFC: | |||||||||||||||||||||||||||||||||||
Distribution | $ | 18,825 | 77 | % | $ | 17,674 | 77 | % | $ | 16,095 | 75 | % | $ | 15,035 | 74 | % | $ | 14,941 | 74 | % | |||||||||||||||
Power supply | 4,505 | 19 | 4,401 | 19 | 4,181 | 20 | 4,086 | 20 | 4,008 | 20 | |||||||||||||||||||||||||
Statewide and associate | 58 | — | 55 | — | 65 | — | 68 | — | 71 | — | |||||||||||||||||||||||||
CFC total (2) | 23,388 | 96 | 22,130 | 96 | 20,341 | 95 | 19,189 | 94 | 19,020 | 94 | |||||||||||||||||||||||||
NCSC | 614 | 3 | 681 | 3 | 732 | 3 | 828 | 4 | 773 | 4 | |||||||||||||||||||||||||
RTFC | 354 | 1 | 342 | 1 | 386 | 2 | 450 | 2 | 503 | 2 | |||||||||||||||||||||||||
Total loans outstanding(2) | $ | 24,356 | 100 | % | $ | 23,153 | 100 | % | $ | 21,459 | 100 | % | $ | 20,467 | 100 | % | $ | 20,296 | 100 | % |
May 31, | |||||||||||||||||||||
2017 | 2016 | 2015 | |||||||||||||||||||
(Dollars in thousands) | Amount | % of Total | Amount | % of Total | Amount | % of Total | |||||||||||||||
Loans retained: | |||||||||||||||||||||
Long-term fixed rate selected | $ | 824,415 | 84 | % | $ | 1,001,118 | 93 | % | $ | 991,279 | 81 | % | |||||||||
Long-term variable rate selected | 137,835 | 14 | 54,796 | 5 | 154,946 | 13 | |||||||||||||||
Loans repriced and sold by CFC | 1,401 | — | 4,459 | — | 3,904 | — | |||||||||||||||
Total loans retained by CFC | 963,651 | 98 | 1,060,373 | 98 | 1,150,129 | 94 | |||||||||||||||
Total loans repaid | 23,675 | 2 | 17,956 | 2 | 76,380 | 6 | |||||||||||||||
Total | $ | 987,326 | 100 | % | $ | 1,078,329 | 100 | % | $ | 1,226,509 | 100 | % |
Fixed Rate | Variable Rate | ||||||||||||||
(Dollars in thousands) | Scheduled Loan Payments | Weighted-Average Interest Rate | Scheduled Loan Payments | Total Scheduled Loan Payments | |||||||||||
Fiscal year: | |||||||||||||||
2018 | $ | 1,134,595 | 4.29 | % | $ | 56,530 | $ | 1,191,125 | |||||||
2019 | 1,109,672 | 4.35 | 77,246 | 1,186,918 | |||||||||||
2020 | 1,135,806 | 4.42 | 59,292 | 1,195,098 | |||||||||||
2021 | 1,134,674 | 4.46 | 36,322 | 1,170,996 | |||||||||||
2022 | 1,105,570 | 4.51 | 36,930 | 1,142,500 | |||||||||||
Thereafter | 16,516,373 | 4.70 | 581,099 | 17,097,472 | |||||||||||
Total | $ | 22,136,690 | 4.62 | $ | 847,419 | $ | 22,984,109 |
Debt-Product Type: | Maturity Range | Market | Secured/Unsecured | |||
Short-term funding programs: | ||||||
Commercial paper | 1 to 270 days | Capital markets, members and affiliates | Unsecured | |||
Select notes | 30 to 270 days | Members and affiliates | Unsecured | |||
Daily liquidity fund notes | Demand note | Members and affiliates | Unsecured | |||
Other funding programs: | ||||||
Revolving credit agreements | 3 to 5 years | Bank institutions | Unsecured | |||
Collateral trust bonds(1) | Up to 30 years | Capital markets | Secured | |||
Guaranteed Underwriter Program notes payable(2) | Up to 20 years | U.S. government | Secured | |||
Farmer Mac notes payable(3) | Up to 16 years | Private placement | Secured | |||
Medium-term notes | 9 months to 30 years | Capital markets, members and affiliates | Unsecured | |||
Other notes payable(4) | Up to 30 years | Private placement | Both | |||
Subordinated deferrable debt(5) | Up to 30 years | Capital markets | Unsecured | |||
Members’ subordinated certificates(6) | Up to 100 years | Members | Unsecured |
May 31, | |||||||||||||||||||||
2017 | 2016 | 2015 | |||||||||||||||||||
(Dollars in thousands) | Outstanding Amount | Weighted- Average Interest Rate | Outstanding Amount | Weighted- Average Interest Rate | Outstanding Amount | Weighted- Average Interest Rate | |||||||||||||||
Debt product type: | |||||||||||||||||||||
Commercial paper: | |||||||||||||||||||||
Members, at par | $ | 928,158 | 0.95 | % | $ | 848,007 | 0.45 | % | $ | 736,162 | 0.15 | % | |||||||||
Dealer, net of discounts | 999,691 | 0.93 | 659,935 | 0.43 | 984,954 | 0.15 | |||||||||||||||
Total commercial paper | 1,927,849 | 0.94 | 1,507,942 | 0.44 | 1,721,116 | 0.15 | |||||||||||||||
Select notes to members | 696,889 | 1.12 | 701,849 | 0.62 | 671,635 | 0.29 | |||||||||||||||
Daily liquidity fund notes to members | 527,990 | 0.80 | 525,959 | 0.34 | 509,131 | 0.08 | |||||||||||||||
Collateral trust bonds | 7,634,048 | 4.08 | 7,253,096 | 4.28 | 6,755,067 | 4.48 | |||||||||||||||
Guaranteed Underwriter Program notes payable | 4,985,484 | 2.83 | 4,777,111 | 2.98 | 4,406,465 | 3.14 | |||||||||||||||
Farmer Mac notes payable | 2,513,389 | 1.71 | 2,303,123 | 1.15 | 1,910,688 | 0.77 | |||||||||||||||
Medium-term notes: | |||||||||||||||||||||
Members, at par | 612,951 | 1.97 | 654,058 | 1.66 | 618,170 | 1.15 | |||||||||||||||
Dealer, net of discounts | 2,364,671 | 3.48 | 2,648,369 | 3.02 | 2,733,853 | 2.55 | |||||||||||||||
Total medium-term notes | 2,977,622 | 3.17 | 3,302,427 | 2.75 | 3,352,023 | 2.29 | |||||||||||||||
Other notes payable | 35,223 | 3.55 | 40,944 | 3.61 | 46,423 | 3.67 | |||||||||||||||
Subordinated deferrable debt | 742,274 | 4.98 | 742,212 | 4.98 | 395,699 | 4.75 | |||||||||||||||
Members’ subordinated certificates: | |||||||||||||||||||||
Membership subordinated certificates | 630,098 | 4.94 | 630,063 | 4.94 | 645,035 | 4.89 | |||||||||||||||
Loan and guarantee subordinated certificates | 567,830 | 3.02 | 593,701 | 2.99 | 640,889 | 2.94 | |||||||||||||||
Member capital securities | 221,097 | 5.00 | 220,046 | 5.00 | 219,496 | 5.00 | |||||||||||||||
Total members’ subordinated certificates | 1,419,025 | 4.18 | 1,443,810 | 4.14 | 1,505,420 | 4.08 | |||||||||||||||
Total debt outstanding | $ | 23,459,793 | 3.07 | % | $ | 22,598,473 | 3.03 | % | $ | 21,273,667 | 2.93 | % | |||||||||
Security type: | |||||||||||||||||||||
Unsecured debt | 35 | % | 37 | % | 59 | % | |||||||||||||||
Secured debt | 65 | 63 | 41 | ||||||||||||||||||
Total | 100 | % | 100 | % | 100 | % | |||||||||||||||
Borrower type: | |||||||||||||||||||||
Members | 18 | % | 18 | % | 19 | % | |||||||||||||||
Private placement: | |||||||||||||||||||||
Guaranteed Underwriter Program notes payable | 21 | % | 21 | 21 | |||||||||||||||||
Farmer Mac notes payable | 11 | % | 10 | 9 | |||||||||||||||||
Other | — | % | 1 | — | |||||||||||||||||
Total private placement | 32 | 32 | 30 | ||||||||||||||||||
Capital markets | 50 | 50 | 51 | ||||||||||||||||||
Total | 100 | % | 100 | % | 100 | % | |||||||||||||||
Interest rate type: | |||||||||||||||||||||
Fixed rate | 74 | % | 74 | % | 72 | % | |||||||||||||||
Variable rate | 26 | 26 | 28 | ||||||||||||||||||
Total | 100 | % | 100 | % | 100 | % | |||||||||||||||
Interest rate type including impact of interest-rate swaps: | |||||||||||||||||||||
Fixed rate(1) | 87 | % | 88 | % | 81 | % | |||||||||||||||
Variable rate(2) | 13 | 12 | 19 | ||||||||||||||||||
Total | 100 | % | 100 | % | 100 | % | |||||||||||||||
Maturity classification:(3) | |||||||||||||||||||||
Short-term borrowings | 14 | % | 13 | % | 15 | % | |||||||||||||||
Long-term and subordinated debt(4) | 86 | 87 | 85 | ||||||||||||||||||
Total | 100 | % | 100 | % | 100 | % |
• | On August 30, 2016, we received an advance of $100 million at an effective rate of 2.30%, with a maturity date of 2036, under the Guaranteed Underwriter Program. |
• | On November 1, 2016, we issued $300 million aggregate principal amount of 1.50% dealer medium-term notes with a maturity date of 2019. |
• | On November 18, 2016, we amended and restated the three-year and five-year committed bank revolving line of credit agreements to extend the maturity dates to November 19, 2019 and November 19, 2021, respectively, and to terminate certain third-party bank commitments. See “Note 6—Short-Term Borrowings” for additional information. |
• | On December 1, 2016, we closed a $375 million Series L committed loan facility from the Federal Financing Bank guaranteed by RUS pursuant to the Guaranteed Underwriter Program. |
• | On February 7, 2017, we issued $450 million aggregate principal amount of 2.95% collateral trust bonds with a maturity date of 2024. |
• | On February 22, 2017, we received an advance of $150 million at an effective rate of 3.01%, with a maturity date of 2037, under the Guaranteed Underwriter Program. |
• | On February 22, 2017, we received an advance of $250 million, at a variable rate of 3-month LIBOR plus 84 basis points, with a 30-year final maturity, under the $4,500 million revolving note purchase agreement with Farmer Mac. We also received an additional advance of $100 million, at a variable rate of 1-month LIBOR plus 25 basis points, with a maturity of 17 months, under the $300 million committed revolving note purchase agreement with Farmer Mac. The $100 million advance was repaid in full during the fourth quarter of fiscal year 2017. |
• | On April 11, 2017, we issued $350 million aggregate principal amount of dealer medium-term notes at 3-month LIBOR plus 20 basis points with a maturity date of 2019. |
• | On April 25, 2017, we issued $450 million aggregate principal amount of 2.40% collateral trust bonds with a maturity date of 2022 and $350 million aggregate principal amount of 3.05% collateral trust bonds with a maturity date of 2027. |
May 31, | Increase/(Decrease) | |||||||||||||||||
2017 | 2016 | |||||||||||||||||
(Dollars in thousands) | Amount | % of Total (1) | Amount | % of Total (1) | ||||||||||||||
Commercial paper | $ | 928,158 | 48 | % | $ | 848,007 | 56 | % | $ | 80,151 | ||||||||
Select notes | 696,889 | 100 | 701,849 | 100 | (4,960 | ) | ||||||||||||
Daily liquidity fund notes | 527,990 | 100 | 525,959 | 100 | 2,031 | |||||||||||||
Medium-term notes | 612,951 | 20 | 654,058 | 20 | (41,107 | ) | ||||||||||||
Members’ subordinated certificates | 1,419,025 | 100 | 1,443,810 | 100 | (24,785 | ) | ||||||||||||
Total | $ | 4,185,013 | $ | 4,173,683 | $ | 11,330 | ||||||||||||
Percentage of total debt outstanding | 18 | % | 18 | % |
Requirement/Limit | Actual | |||||||||||
Debt Indenture Minimum | Committed Bank Revolving Line of Credit Agreements Maximum | May 31, | ||||||||||
Debt Agreement | 2017 | 2016 | ||||||||||
Collateral trust bonds 1994 indenture | 100 | % | 150 | % | 117 | % | 121 | % | ||||
Collateral trust bonds 2007 indenture | 100 | 150 | 115 | 110 | ||||||||
Guaranteed Underwriter Program notes payable(1) | 100 | 150 | 117 | 110 | ||||||||
Farmer Mac notes payable | 100 | 150 | 117 | 117 | ||||||||
Clean Renewable Energy Bonds Series 2009A | 100 | 150 | 113 | 115 |
May 31, | ||||||||
(Dollars in thousands) | 2017 | 2016 | ||||||
Total loans outstanding (1) | $ | 24,356,330 | $ | 23,152,517 | ||||
Less: Loans required to be pledged for secured debt (2) | (15,435,062 | ) | (14,643,108 | ) | ||||
Loans pledged in excess of requirement(2)(3) | (2,505,804 | ) | (1,673,404 | ) | ||||
Unencumbered loans | $ | 6,415,464 | $ | 6,836,005 | ||||
Unencumbered loans as a percentage of total loans | 26 | % | 30 | % |
• | our distribution and power supply loans are typically amortizing loans that require scheduled principal payments over the life of the loan, whereas the debt securities issued under secured indentures and agreements typically have bullet maturities; |
• | distribution and power supply borrowers have the option to prepay their loans; and |
• | individual loans may become ineligible for various reasons, some of which may be temporary. |
May 31, | Change | |||||||||||
(Dollars in thousands) | 2017 | 2016 | ||||||||||
Membership fees | $ | 971 | $ | 974 | $ | (3 | ) | |||||
Educational fund | 1,929 | 1,798 | 131 | |||||||||
Total membership fees and educational fund | 2,900 | 2,772 | 128 | |||||||||
Patronage capital allocated | 761,701 | 713,853 | 47,848 | |||||||||
Members’ capital reserve | 630,305 | 587,219 | 43,086 | |||||||||
Unallocated net loss: | ||||||||||||
Prior year-end cumulative derivative forward value losses | (507,904 | ) | (287,077 | ) | (220,827 | ) | ||||||
Current year derivative forward value gains (losses)(1) | 175,379 | (220,827 | ) | 396,206 | ||||||||
Current year-end cumulative derivative forward value losses | (332,525 | ) | (507,904 | ) | 175,379 | |||||||
Other unallocated net loss | (5,603 | ) | (5,706 | ) | 103 | |||||||
Unallocated net loss | (338,128 | ) | (513,610 | ) | 175,482 | |||||||
CFC retained equity | 1,056,778 | 790,234 | 266,544 | |||||||||
Accumulated other comprehensive income | 13,175 | 1,058 | 12,117 | |||||||||
Total CFC equity | 1,069,953 | 791,292 | 278,661 | |||||||||
Noncontrolling interests | 28,852 | 26,086 | 2,766 | |||||||||
Total equity | $ | 1,098,805 | $ | 817,378 | $ | 281,427 | ||||||
Members’ equity: | ||||||||||||
Total CFC equity | $ | 1,069,953 | $ | 791,292 | $ | 278,661 | ||||||
Excludes: | ||||||||||||
Accumulated other comprehensive income | 13,175 | 1,058 | 12,117 | |||||||||
Current year-end cumulative derivative forward value losses | (332,525 | ) | (507,904 | ) | 175,379 | |||||||
Subtotal | (319,350 | ) | (506,846 | ) | 187,496 | |||||||
Total members’ equity | $ | 1,389,303 | $ | 1,298,138 | $ | 91,165 |
OFF-BALANCE SHEET ARRANGEMENTS |
May 31, | Increase/ (Decrease) | |||||||||||
(Dollars in thousands) | 2017 | 2016 | ||||||||||
Guarantee type: | ||||||||||||
Long-term tax-exempt bonds | $ | 468,145 | $ | 475,965 | $ | (7,820 | ) | |||||
Letters of credit | 307,321 | 319,596 | (12,275 | ) | ||||||||
Other guarantees | 114,151 | 113,647 | 504 | |||||||||
Total | $ | 889,617 | $ | 909,208 | $ | (19,591 | ) | |||||
Company: | ||||||||||||
CFC | $ | 874,920 | $ | 892,289 | $ | (17,369 | ) | |||||
NCSC | 13,123 | 15,345 | (2,222 | ) | ||||||||
RTFC | 1,574 | 1,574 | — | |||||||||
Total | $ | 889,617 | $ | 909,208 | $ | (19,591 | ) |
Outstanding Balance | Maturities of Guaranteed Obligations | |||||||||||||||||||||||||||
(Dollars in thousands) | 2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | ||||||||||||||||||||||
Guarantees | $ | 889,617 | $ | 367,648 | $ | 26,890 | $ | 58,251 | $ | 109,243 | $ | 38,253 | $ | 289,332 |
May 31, | Increase/ | |||||||||||||||||
(Dollars in thousands) | 2017 | % of Total | 2016 | % of Total | (Decrease) | |||||||||||||
Line of credit commitments: | ||||||||||||||||||
Conditional(1) | $ | 5,170,393 | 41 | % | $ | 6,248,546 | 47 | % | $ | (1,078,153 | ) | |||||||
Unconditional(2) | 2,602,262 | 21 | 2,447,902 | 19 | 154,360 | |||||||||||||
Total line of credit unadvanced commitments | 7,772,655 | 62 | 8,696,448 | 66 | (923,793 | ) | ||||||||||||
Total long-term loan unadvanced commitments(1) | 4,802,319 | 38 | 4,508,562 | 34 | 293,757 | |||||||||||||
Total unadvanced loan commitments | $ | 12,574,974 | 100 | % | $ | 13,205,010 | 100 | % | $ | (630,036 | ) |
Available Balance | Notional Maturities of Unadvanced Loan Commitments | |||||||||||||||||||||||||||
(Dollars in thousands) | 2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | ||||||||||||||||||||||
Line of credit | $ | 7,772,655 | $ | 4,489,826 | $ | 871,557 | $ | 791,825 | $ | 750,419 | $ | 859,028 | $ | 10,000 | ||||||||||||||
Long-term loans | 4,802,319 | 584,142 | 1,005,835 | 718,393 | 751,150 | 1,717,514 | 25,285 | |||||||||||||||||||||
Total | $ | 12,574,974 | $ | 5,073,968 | $ | 1,877,392 | $ | 1,510,218 | $ | 1,501,569 | $ | 2,576,542 | $ | 35,285 |
Available Balance | Notional Maturities of Unconditional Committed Lines of Credit | |||||||||||
(Dollars in thousands) | 2018 | 2019 | 2020 | 2021 | 2022 | |||||||
Committed lines of credit | $2,602,262 | $300,106 | $567,270 | $548,408 | $486,900 | $699,578 |
RISK MANAGEMENT |
• | Credit risk is the risk that a borrower or other counterparty will be unable to meet its obligations in accordance with agreed-upon terms. |
• | Liquidity risk is the risk that we will be unable to fund our operations and meet our contractual obligations or that we will be unable to fund new loans to borrowers at a reasonable cost and tenor in a timely manner. |
• | Market risk is the risk that changes in market variables, such as movements in interest rates, may adversely affect the match between the timing of the contractual maturities, re-pricing and prepayments of our financial assets and the related financial liabilities funding those assets. |
• | Operational risk is the risk of loss resulting from inadequate or failed internal controls, processes, systems, human error or external events. Operational risk also includes compliance risk, fiduciary risk, reputational risk and litigation risk. |
CREDIT RISK |
May 31, 2017 | ||||||||||||||||||
(Dollars in thousands) | Secured | % of Total | Unsecured | % of Total | Total | |||||||||||||
Loan type: | ||||||||||||||||||
Long-term loans: | ||||||||||||||||||
Long-term fixed-rate loans | $ | 21,503,871 | 97 | % | $ | 632,819 | 3 | % | $ | 22,136,690 | ||||||||
Long-term variable-rate loans | 795,326 | 94 | 52,093 | 6 | 847,419 | |||||||||||||
Total long-term loans | 22,299,197 | 97 | 684,912 | 3 | 22,984,109 | |||||||||||||
Line of credit loans | 54,258 | 4 | 1,317,963 | 96 | 1,372,221 | |||||||||||||
Total loans outstanding | $ | 22,353,455 | 92 | $ | 2,002,875 | 8 | $ | 24,356,330 | ||||||||||
Company: | ||||||||||||||||||
CFC | $ | 21,591,723 | 92 | % | $ | 1,796,264 | 8 | % | $ | 23,387,987 | ||||||||
NCSC | 424,636 | 69 | 189,288 | 31 | 613,924 | |||||||||||||
RTFC | 337,096 | 95 | 17,323 | 5 | 354,419 | |||||||||||||
Total loans outstanding | $ | 22,353,455 | 92 | $ | 2,002,875 | 8 | $ | 24,356,330 |
May 31, 2016 | ||||||||||||||||||
(Dollars in thousands) | Secured | % of Total | Unsecured | % of Total | Total | |||||||||||||
Loan type: | ||||||||||||||||||
Long-term loans: | ||||||||||||||||||
Long-term fixed-rate loans | $ | 20,611,221 | 96 | % | $ | 779,355 | 4 | % | $ | 21,390,576 | ||||||||
Long-term variable-rate loans | 688,572 | 91 | 68,928 | 9 | 757,500 | |||||||||||||
Total long-term loans | 21,299,793 | 96 | 848,283 | 4 | 22,148,076 | |||||||||||||
Line of credit loans | 48,256 | 5 | 956,185 | 95 | 1,004,441 | |||||||||||||
Total loans outstanding | $ | 21,348,049 | 92 | % | $ | 1,804,468 | 8 | % | $ | 23,152,517 | ||||||||
Company: | ||||||||||||||||||
CFC | $ | 20,590,529 | 93 | % | $ | 1,539,344 | 7 | % | $ | 22,129,873 | ||||||||
NCSC | 426,824 | 63 | 253,978 | 37 | 680,802 | |||||||||||||
RTFC | 330,696 | 97 | 11,146 | 3 | 341,842 | |||||||||||||
Total loans outstanding | $ | 21,348,049 | 92 | % | $ | 1,804,468 | 8 | % | $ | 23,152,517 |
May 31, | ||||||||||||
2017 | 2016 | |||||||||||
U.S. State/Territory | Number of Borrowers | % of Total Loans Outstanding | Number of Borrowers | % of Total Loans Outstanding | ||||||||
Texas | 73 | 14.86 | % | 73 | 14.83 | % | ||||||
Georgia | 44 | 5.77 | 46 | 5.89 | ||||||||
Missouri | 48 | 5.27 | 50 | 5.28 | ||||||||
Colorado | 26 | 5.27 | 26 | 5.02 | ||||||||
Kansas | 31 | 4.57 | 33 | 4.31 | ||||||||
North Dakota | 18 | 3.62 | 16 | 3.60 | ||||||||
Alaska | 16 | 3.61 | 17 | 3.87 | ||||||||
Illinois | 27 | 3.43 | 27 | 3.58 | ||||||||
Florida | 17 | 3.17 | 16 | 3.00 | ||||||||
North Carolina | 28 | 3.17 | 28 | 2.84 | ||||||||
South Carolina | 23 | 3.12 | 23 | 3.16 | ||||||||
Indiana | 38 | 3.04 | 41 | 2.81 | ||||||||
Kentucky | 24 | 3.02 | 24 | 2.80 | ||||||||
Minnesota | 54 | 2.98 | 56 | 3.17 | ||||||||
Oklahoma | 26 | 2.95 | 27 | 2.92 | ||||||||
Arkansas | 21 | 2.36 | 20 | 2.44 | ||||||||
Alabama | 27 | 2.26 | 25 | 2.43 | ||||||||
Ohio | 28 | 2.14 | 30 | 2.44 | ||||||||
Maryland | 2 | 2.06 | 2 | 1.88 | ||||||||
Pennsylvania | 17 | 2.02 | 17 | 2.25 | ||||||||
Iowa | 39 | 1.90 | 40 | 2.02 | ||||||||
Wisconsin | 24 | 1.68 | 26 | 1.72 | ||||||||
Utah | 6 | 1.61 | 6 | 1.76 | ||||||||
Mississippi | 18 | 1.56 | 18 | 1.58 | ||||||||
Oregon | 22 | 1.43 | 22 | 1.52 | ||||||||
Virginia | 18 | 1.42 | 18 | 1.46 | ||||||||
Nevada | 5 | 1.35 | 5 | 1.47 | ||||||||
Washington | 11 | 1.32 | 11 | 1.43 | ||||||||
Louisiana | 10 | 1.21 | 10 | 1.29 | ||||||||
Wyoming | 15 | 1.09 | 14 | 1.18 | ||||||||
South Dakota | 32 | 0.93 | 32 | 0.99 | ||||||||
Arizona | 11 | 0.81 | 11 | 0.59 | ||||||||
Montana | 25 | 0.71 | 25 | 0.77 | ||||||||
Michigan | 14 | 0.62 | 15 | 0.58 | ||||||||
Hawaii | 2 | 0.60 | 2 | 0.19 | ||||||||
Idaho | 12 | 0.56 | 13 | 0.57 | ||||||||
Delaware | 3 | 0.48 | 2 | 0.49 | ||||||||
New Hampshire | 1 | 0.37 | 1 | 0.41 | ||||||||
Tennessee | 17 | 0.36 | 19 | 0.40 | ||||||||
New Mexico | 16 | 0.29 | 16 | 0.27 | ||||||||
Massachusetts | 1 | 0.25 | — | — | ||||||||
Vermont | 4 | 0.19 | 4 | 0.19 | ||||||||
California | 4 | 0.14 | 4 | 0.15 | ||||||||
Nebraska | 16 | 0.13 | 17 | 0.13 | ||||||||
New York | 6 | 0.12 | 5 | 0.13 | ||||||||
New Jersey | 2 | 0.07 | 2 | 0.07 | ||||||||
West Virginia | 2 | 0.06 | 2 | 0.07 | ||||||||
Maine | 3 | 0.04 | 4 | 0.05 | ||||||||
District of Columbia | 1 | 0.01 | — | — | ||||||||
Total | 928 | 100.00 | % | 941 | 100.00 | % |
May 31, | Change | |||||||||||||||||
2017 | 2016 | |||||||||||||||||
(Dollars in thousands) | Amount | % of Total | Amount | % of Total | ||||||||||||||
By exposure type: | ||||||||||||||||||
Loans | $ | 5,749,885 | 23 | % | $ | 5,638,217 | 23 | % | $ | 111,668 | ||||||||
Guarantees | 354,619 | 1 | 365,457 | 2 | (10,838 | ) | ||||||||||||
Total exposure to 20 largest borrowers | 6,104,504 | 24 | 6,003,674 | 25 | 100,830 | |||||||||||||
Less: Loans covered under Farmer Mac standby purchase commitment | (351,699 | ) | (1 | ) | (402,244 | ) | (2 | ) | 50,545 | |||||||||
Net exposure to 20 largest borrowers | $ | 5,752,805 | 23 | % | $ | 5,601,430 | 23 | % | $ | 151,375 | ||||||||
By company: | ||||||||||||||||||
CFC | $ | 5,899,709 | 23 | % | $ | 5,991,674 | 25 | % | $ | (91,965 | ) | |||||||
NCSC | 204,795 | 1 | 12,000 | — | 192,795 | |||||||||||||
Total exposure to 20 largest borrowers | 6,104,504 | 24 | 6,003,674 | 25 | 100,830 | |||||||||||||
Less: Loans covered under Farmer Mac standby purchase commitment | (351,699 | ) | (1 | ) | (402,244 | ) | (2 | ) | 50,545 | |||||||||
Net exposure to 20 largest borrowers | $ | 5,752,805 | 23 | % | $ | 5,601,430 | 23 | % | $ | 151,375 |
May 31, | |||||||||||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||||||||||
(Dollars in thousands) | Amount | % of Total Loans | Amount | % of Total Loans | Amount | % of Total Loans | Amount | % of Total Loans | Amount | % of Total Loans | |||||||||||||||||||||||||
TDR loans: | |||||||||||||||||||||||||||||||||||
CFC | $ | 6,581 | 0.02 | % | $ | 6,716 | 0.03 | % | $ | 7,221 | 0.03 | % | $ | 7,584 | 0.04 | % | $ | 46,953 | 0.23 | % | |||||||||||||||
NCSC | — | — | — | — | 294 | — | — | — | — | — | |||||||||||||||||||||||||
RTFC | 6,592 | 0.03 | 10,598 | 0.04 | 4,221 | 0.02 | — | — | — | — | |||||||||||||||||||||||||
Total TDR loans | $ | 13,173 | 0.05 | % | $ | 17,314 | 0.07 | % | $ | 11,736 | 0.05 | % | $ | 7,584 | 0.04 | % | $ | 46,953 | 0.23 | % | |||||||||||||||
Performance status of TDR loans: | |||||||||||||||||||||||||||||||||||
Performing TDR loans | $ | 13,173 | 0.05 | % | $ | 13,808 | 0.06 | % | $ | 11,736 | 0.05 | % | $ | 7,584 | 0.04 | % | $ | 46,953 | 0.23 | % | |||||||||||||||
Nonperforming TDR loans | — | — | 3,506 | 0.01 | — | — | — | — | — | — | |||||||||||||||||||||||||
Total TDR loans | $ | 13,173 | 0.05 | % | $ | 17,314 | 0.07 | % | $ | 11,736 | 0.05 | % | $ | 7,584 | 0.04 | % | $ | 46,953 | 0.23 | % |
May 31, | |||||||||||||||||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||||||||||||||||||
(Dollars in thousands) | Amount | % of Total Loans | Amount | % of Total Loans | Amount | % of Total Loans | Amount | % of Total Loans | Amount | % of Total Loans | |||||||||||||||||||||||||
Nonperforming loans: | |||||||||||||||||||||||||||||||||||
CFC | $ | — | — | % | $ | — | — | % | $ | — | — | % | $ | — | — | % | $ | 5,000 | 0.02 | % | |||||||||||||||
NCSC | — | — | — | — | — | — | 400 | — | — | — | |||||||||||||||||||||||||
RTFC | — | — | — | — | — | — | 1,695 | 0.01 | 10,497 | 0.06 | |||||||||||||||||||||||||
Total | $ | — | — | % | $ | — | — | % | $ | — | — | % | $ | 2,095 | 0.01 | % | $ | 15,497 | 0.08 | % |
Year Ended May 31, | ||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Charge-offs: | ||||||||||||||||||||
CFC | $ | — | $ | — | $ | — | $ | — | $ | 19,122 | ||||||||||
RTFC | 2,119 | — | 999 | 1,606 | — | |||||||||||||||
Total charge-offs | 2,119 | — | 999 | 1,606 | 19,122 | |||||||||||||||
Recoveries: | ||||||||||||||||||||
CFC | (159 | ) | (214 | ) | (214 | ) | (212 | ) | (212 | ) | ||||||||||
RTFC | (100 | ) | — | — | — | — | ||||||||||||||
Total recoveries | (259 | ) | (214 | ) | (214 | ) | (212 | ) | (212 | ) | ||||||||||
Net charge-offs (recoveries) | $ | 1,860 | $ | (214 | ) | $ | 785 | $ | 1,394 | $ | 18,910 | |||||||||
Average total loans outstanding | $ | 23,834,432 | $ | 22,490,847 | $ | 20,821,944 | $ | 20,412,340 | $ | 19,396,464 | ||||||||||
Net charge-off (recovery) rate(1) | 0.01 | % | — | % | — | % | 0.01 | % | 0.10 | % |
Year Ended May 31, | ||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Beginning balance | $ | 33,258 | $ | 33,690 | $ | 56,429 | $ | 54,325 | $ | 143,326 | ||||||||||
Provision (benefit) for loan losses | 5,978 | (646 | ) | (21,954 | ) | 3,498 | (70,091 | ) | ||||||||||||
Net (charge-offs) recoveries | (1,860 | ) | 214 | (785 | ) | (1,394 | ) | (18,910 | ) | |||||||||||
Ending balance | $ | 37,376 | $ | 33,258 | $ | 33,690 | $ | 56,429 | $ | 54,325 |
Allowance for loan losses by company: | ||||||||||||||||||||
CFC | $ | 29,499 | $ | 24,559 | $ | 23,716 | $ | 45,600 | $ | 41,246 | ||||||||||
NCSC | 2,910 | 3,134 | 5,441 | 6,547 | 3,921 | |||||||||||||||
RTFC | 4,967 | 5,565 | 4,533 | 4,282 | 9,158 | |||||||||||||||
Total | $ | 37,376 | $ | 33,258 | $ | 33,690 | $ | 56,429 | $ | 54,325 | ||||||||||
Allowance coverage ratios: | ||||||||||||||||||||
Total loans outstanding | $ | 24,356,330 | $ | 23,152,517 | $ | 21,459,220 | $ | 20,466,925 | $ | 20,296,317 | ||||||||||
Percentage of total loans outstanding | 0.15 | % | 0.14 | % | 0.16 | % | 0.28 | % | 0.27 | % | ||||||||||
Percentage of total nonperforming loans outstanding | — | — | — | 2,693.51 | 350.55 | |||||||||||||||
Percentage of total performing TDR loans outstanding | 283.73 | 240.86 | 287.07 | 744.05 | 115.70 | |||||||||||||||
Percentage of total nonperforming TDR loans outstanding | — | 948.60 | — | — | — | |||||||||||||||
Percentage of loans on nonaccrual status | — | 948.60 | 287.07 | 583.00 | 235.37 |
(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) | $ | 59,165 | $ | (13,713 | ) | $ | — | $ | (13,713 | ) | ||||||
Falls below Baa1/BBB+ | 7,008,763 | (208,022 | ) | — | (208,022 | ) | ||||||||||
Falls to or below Baa2/BBB (2) | 459,106 | (646 | ) | — | (646 | ) | ||||||||||
Falls below Baa3/BBB- | 268,691 | (23,581 | ) | — | (23,581 | ) | ||||||||||
Total | $ | 7,795,725 | $ | (245,962 | ) | $ | — | $ | (245,962 | ) |
LIQUIDITY RISK |
May 31, 2017 | |||||||||||||||||
(Dollars in thousands) | Amount Outstanding | Weighted- Average Interest Rate | Weighted-Average Maturity | Maximum Month-End Outstanding Amount | Average Outstanding Amount | ||||||||||||
Short-term borrowings: | |||||||||||||||||
Commercial paper | $ | 1,927,849 | 0.94 | % | 18 days | $ | 3,006,148 | $ | 1,916,620 | ||||||||
Select notes | 696,889 | 1.12 | 43 days | 840,990 | 726,276 | ||||||||||||
Daily liquidity fund notes | 527,990 | 0.80 | 1 day | 687,807 | 542,188 | ||||||||||||
Medium-term notes sold to members | 190,172 | 1.50 | 144 days | 203,246 | 194,045 | ||||||||||||
Total short-term borrowings | $ | 3,342,900 | 0.99 | % | 28 days | $ | 3,379,129 |
May 31, 2016 | |||||||||||||||||
(Dollars in thousands) | Amount Outstanding | Weighted- Average Interest Rate | Weighted-Average Maturity | Maximum Month-End Outstanding Amount | Average Outstanding Amount | ||||||||||||
Short-term borrowings: | |||||||||||||||||
Commercial paper | $ | 1,507,942 | 0.44 | % | 17 days | $ | 2,445,894 | $ | 1,734,651 | ||||||||
Select notes | 701,849 | 0.62 | 43 days | 845,805 | 709,285 | ||||||||||||
Daily liquidity fund notes | 525,959 | 0.34 | 1 day | 740,142 | 551,594 | ||||||||||||
Medium-term notes sold to members | 203,098 | 1.05 | 161 days | 213,260 | 199,078 | ||||||||||||
Total short-term borrowings | $ | 2,938,848 | 0.51 | % | 31 days | $ | 3,194,608 |
May 31, 2015 | |||||||||||||||||
(Dollars in thousands) | Amount Outstanding | Weighted- Average Interest Rate | Weighted-Average Maturity | Maximum Month-End Outstanding Amount | Average Outstanding Amount | ||||||||||||
Short-term borrowings: | |||||||||||||||||
Commercial paper | $ | 1,721,116 | 0.15 | % | 19 days | $ | 3,184,166 | $ | 2,493,040 | ||||||||
Select notes | 671,635 | 0.29 | 41 days | 671,635 | 587,971 | ||||||||||||
Daily liquidity fund notes | 509,131 | 0.08 | 1 day | 588,872 | 505,060 | ||||||||||||
Bank bid notes | — | — | — | — | 438 | ||||||||||||
Medium-term notes sold to members | 225,872 | 0.65 | 160 days | 229,160 | 216,335 | ||||||||||||
Total short-term borrowings | $ | 3,127,754 | 0.20 | % | 31 days | $ | 3,802,844 |
May 31, | ||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||
(Dollars in millions) | Total | Accessed | Available | Total | Accessed | Available | ||||||||||||||||||
Cash and cash equivalents and time deposits | $ | 393 | $ | — | $ | 393 | $ | 545 | $ | — | $ | 545 | ||||||||||||
Committed bank revolving line of credit agreements—unsecured(1) | 3,165 | 1 | 3,164 | 3,310 | 1 | 3,309 | ||||||||||||||||||
Guaranteed Underwriter Program committed facilities—secured(2) | 5,798 | 5,073 | 725 | 5,423 | 4,823 | 600 | ||||||||||||||||||
Farmer Mac revolving note purchase agreement, dated March 24, 2011—secured(3) | 4,500 | 2,513 | 1,987 | 4,500 | 2,303 | 2,197 | ||||||||||||||||||
Farmer Mac revolving note purchase agreement, dated July 31, 2015—secured | 300 | — | 300 | 300 | — | 300 | ||||||||||||||||||
Total | $ | 14,156 | $ | 7,587 | $ | 6,569 | $ | 14,078 | $ | 7,127 | $ | 6,951 |
May 31, 2017 | ||||||||||||||||
(Dollars in millions) | Total Commitment | Letters of Credit Outstanding | Net Available for Advance | Maturity | Annual Facility Fee (1) | |||||||||||
3-year agreement | $ | 1,533 | $ | — | $ | 1,533 | November 19, 2019 | 7.5 bps | ||||||||
5-year agreement | 1,632 | 1 | 1,631 | November 19, 2021 | 10 bps | |||||||||||
Total | $ | 3,165 | $ | 1 | $ | 3,164 |
• | an unlimited amount of collateral trust bonds until September 2019; |
• | an unlimited amount of senior and subordinated debt securities, including medium-term notes, member capital securities and subordinated deferrable debt, until November 2017; and |
• | daily liquidity fund notes up to $20,000 million in the aggregate—with a $3,000 million limit on the aggregate principal amount outstanding at any time—until March 2019. |
Year Ended May 31, 2017 | ||||||||||||
(Dollars in thousands) | Issuances | Maturities | Increase/Decrease | |||||||||
Long-term and subordinated debt activity: | ||||||||||||
Collateral trust bonds | $ | 1,250,000 | $ | 875,000 | $ | 375,000 | ||||||
Guaranteed Underwriter Program notes payable | 250,000 | 41,655 | 208,345 | |||||||||
Farmer Mac notes payable | 350,000 | 139,734 | 210,266 | |||||||||
Medium-term notes sold to members | 242,004 | 270,185 | (28,181 | ) | ||||||||
Medium-term notes sold to dealers | 846,886 | 1,128,206 | (281,320 | ) | ||||||||
Other notes payable | — | 5,950 | (5,950 | ) | ||||||||
Members’ subordinated certificates | 3,626 | 28,220 | (24,594 | ) | ||||||||
Total (1) | $ | 2,942,516 | $ | 2,488,950 | $ | 453,566 |
May 31, 2017 | ||||||
Moody’s | S&P | Fitch | ||||
Long-term issuer credit rating(1) | A2 | A | A | |||
Senior secured debt(2) | A1 | A | A+ | |||
Senior unsecured debt(3) | A2 | A | A | |||
Commercial paper | P-1 | A-1 | F1 | |||
Outlook | Stable | Stable | Stable |
Projected Sources of Liquidity | Projected Uses of Liquidity | |||||||||||||||||||||||||||||||
(Dollars in millions) | Long-Term Debt Issuance | Anticipated Loan Repayments(2) | Total Projected Sources of Liquidity | Long-Term Debt Maturities(3) | Long-Term Loan Advances | Total Projected Uses of Liquidity | Other(4) | Cumulative Excess Sources/(Uses) of Liquidity (5) | ||||||||||||||||||||||||
4Q17 | $ | 393 | ||||||||||||||||||||||||||||||
1Q18 | $ | 190 | $ | 311 | $ | 501 | $ | 167 | $ | 494 | $ | 661 | $ | (40 | ) | 193 | ||||||||||||||||
2Q18 | 340 | 293 | 633 | 174 | 349 | 523 | (110 | ) | 193 | |||||||||||||||||||||||
3Q18 | 1,115 | 292 | 1,407 | 813 | 496 | 1,309 | (100 | ) | 191 | |||||||||||||||||||||||
4Q18 | 490 | 306 | 796 | 307 | 257 | 564 | (250 | ) | 173 | |||||||||||||||||||||||
1Q19 | 90 | 297 | 387 | 50 | 390 | 440 | — | 120 | ||||||||||||||||||||||||
2Q19 | 1,615 | 300 | 1,915 | 1,492 | 363 | 1,855 | — | 180 | ||||||||||||||||||||||||
Total | $ | 3,840 | $ | 1,799 | $ | 5,639 | $ | 3,003 | $ | 2,349 | $ | 5,352 | $ | (500 | ) |
(Dollars in millions) | 2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | Total | |||||||||||||||||||||
Short-term borrowings | $ | 3,343 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 3,343 | ||||||||||||||
Long-term debt | 1,258 | 2,604 | 1,368 | 1,271 | 1,560 | 9,895 | 17,956 | |||||||||||||||||||||
Subordinated deferrable debt | — | — | — | — | — | 742 | 742 | |||||||||||||||||||||
Members’ subordinated certificates(2) | 10 | 14 | 16 | 55 | 16 | 1,307 | 1,418 | |||||||||||||||||||||
Total long-term and subordinated debt | 1,268 | 2,618 | 1,384 | 1,326 | 1,576 | 11,944 | 20,116 | |||||||||||||||||||||
Contractual interest on long-term debt(3) | 674 | 565 | 488 | 452 | 430 | 4,854 | 7,463 | |||||||||||||||||||||
Total specified contractual obligations | $ | 5,285 | $ | 3,183 | $ | 1,872 | $ | 1,778 | $ | 2,006 | $ | 16,798 | $ | 30,922 |
Actual | ||||||
May 31, | ||||||
Requirement | 2017 | 2016 | ||||
Minimum average adjusted TIER over the six most recent fiscal quarters | 1.025 | 1.18 | 1.26 | |||
Minimum adjusted TIER for the most recent fiscal year | 1.05 | 1.16 | 1.21 | |||
Maximum ratio of adjusted senior debt-to-total equity | 10.00 | 5.67 | 5.52 |
• | under terms of our indentures, |
• | related to taxes that are being contested or are not delinquent, |
• | stemming from certain legal proceedings that are being contested in good faith, |
• | created by CFC to secure guarantees by CFC of indebtedness, the interest on which is excludable from the gross income of the recipient for federal income tax purposes, |
• | granted by any subsidiary to CFC and |
• | to secure other indebtedness of CFC of up to $10,000 million plus an amount equal to the incremental increase in CFC’s allocated Guaranteed Underwriter Program obligations, provided that the aggregate amount of such indebtedness may not exceed $12,500 million. The amount of our secured indebtedness under this provision for all of our committed bank revolving line of credit agreements was $7,512 million as of May 31, 2017. |
Actual | ||||||
May 31, | ||||||
Requirement | 2017 | 2016 | ||||
Maximum ratio of adjusted senior debt to total equity (1) | 20.00 | 6.95 | 7.33 |
MARKET RISK |
(Dollars in millions) | Prior to 5/31/18 | Two Years 6/1/18 to 5/31/20 | Two Years 6/1/20 to 5/31/22 | Five Years 6/1/22 to 5/31/27 | 10 Years 6/1/27 to 5/31/37 | 6/1/37 and Thereafter | Total | |||||||||||||||||||||
Asset amortization and repricing | $ | 2,120 | $ | 3,279 | $ | 2,694 | $ | 5,252 | $ | 6,181 | $ | 2,611 | $ | 22,137 | ||||||||||||||
Liabilities and members’ equity: | ||||||||||||||||||||||||||||
Long-term debt | $ | 2,393 | $ | 3,033 | $ | 2,538 | $ | 5,020 | $ | 4,133 | $ | 1,074 | $ | 18,191 | ||||||||||||||
Subordinated certificates | 21 | 37 | 71 | 993 | 169 | 662 | 1,953 | |||||||||||||||||||||
Members’ equity(1) | — | 15 | 25 | 110 | 325 | 829 | 1,304 | |||||||||||||||||||||
Total liabilities and members’ equity(2) | $ | 2,414 | $ | 3,085 | $ | 2,634 | $ | 6,123 | $ | 4,627 | $ | 2,565 | $ | 21,448 | ||||||||||||||
Gap (3) | $ | (294 | ) | $ | 194 | $ | 60 | $ | (871 | ) | $ | 1,554 | $ | 46 | $ | 689 | ||||||||||||
Cumulative gap | (294 | ) | (100 | ) | (40 | ) | (911 | ) | 643 | 689 | ||||||||||||||||||
Cumulative gap as a % of total assets | (1.17 | )% | (0.40 | )% | (0.16 | )% | (3.61 | )% | 2.55 | % | 2.73 | % | ||||||||||||||||
Cumulative gap as a % of adjusted total assets (4) | (1.17 | ) | (0.40 | ) | (0.16 | ) | (3.62 | ) | 2.56 | 2.74 |
Principal Amortization and Maturities | ||||||||||||||||||||||||||||||||
Outstanding Balance | Fair Value | Remaining Years | ||||||||||||||||||||||||||||||
(Dollars in millions) | 2018 | 2019 | 2020 | 2021 | 2022 | |||||||||||||||||||||||||||
Instruments: | ||||||||||||||||||||||||||||||||
Assets: | ||||||||||||||||||||||||||||||||
Investments in time deposits | $ | 226 | $ | 226 | $ | 226 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Investments in equity securities | $ | 93 | $ | 93 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 93 | ||||||||||||||||
Long-term fixed-rate loans (1) | $ | 22,137 | $ | 21,999 | $ | 1,135 | $ | 1,110 | $ | 1,136 | $ | 1,135 | $ | 1,105 | $ | 16,516 | ||||||||||||||||
Average rate | 4.62 | % | 4.29 | % | 4.35 | % | 4.42 | % | 4.46 | % | 4.51 | % | 4.70 | % | ||||||||||||||||||
Long-term variable-rate loans | $ | 847 | $ | 847 | $ | 57 | $ | 77 | $ | 59 | $ | 36 | $ | 37 | $ | 581 | ||||||||||||||||
Average rate | 2.59 | % | — | — | — | — | — | — | ||||||||||||||||||||||||
Line of credit loans | $ | 1,372 | $ | 1,372 | $ | 1,372 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Average rate | 2.32 | % | 2.32 | % | — | — | — | — | — | |||||||||||||||||||||||
Liabilities and equity: | ||||||||||||||||||||||||||||||||
Short-term borrowings (2) | $ | 3,343 | $ | 3,343 | $ | 3,343 | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||||
Average rate | 0.99 | % | 0.99 | % | — | — | — | — | — | |||||||||||||||||||||||
Long-term debt | $ | 17,956 | $ | 18,744 | $ | 1,258 | $ | 2,604 | $ | 1,368 | $ | 1,271 | $ | 1,560 | $ | 9,895 | ||||||||||||||||
Average rate | 3.29 | % | 3.80 | % | 5.40 | % | 2.04 | % | 2.28 | % | 2.37 | % | 3.12 | % | ||||||||||||||||||
Subordinated deferrable debt | $ | 742 | $ | 788 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 742 | ||||||||||||||||
Average rate | 4.98 | % | — | % | — | — | — | — | 4.98 | % | ||||||||||||||||||||||
Membership subordinated certificates (3) | $ | 1,418 | $ | 1,418 | $ | 10 | $ | 14 | $ | 16 | $ | 55 | $ | 16 | $ | 1,307 | ||||||||||||||||
Average rate | 4.18 | % | 2.26 | % | 2.98 | % | 2.98 | % | 3.85 | % | 3.08 | % | 4.25 | % |
(Dollars in thousands) | Repricing Amount | Weighted-Average Interest Rate | |||||
2018 | $ | 1,012,713 | 4.27 | % | |||
2019 | 725,800 | 4.60 | |||||
2020 | 499,630 | 4.74 | |||||
2021 | 403,425 | 4.49 | |||||
2022 | 350,175 | 4.76 | |||||
Thereafter | 1,476,349 | 5.12 | |||||
Total | $ | 4,468,092 |
OPERATIONAL RISK |
NON-GAAP FINANCIAL MEASURES |
Year Ended May 31, | ||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Interest expense | $ | (741,738 | ) | $ | (681,850 | ) | $ | (635,684 | ) | $ | (654,655 | ) | $ | (692,025 | ) | |||||
Include: Derivative cash settlements | (84,478 | ) | (88,758 | ) | (82,906 | ) | (73,962 | ) | (56,461 | ) | ||||||||||
Adjusted interest expense | $ | (826,216 | ) | $ | (770,608 | ) | $ | (718,590 | ) | $ | (728,617 | ) | $ | (748,486 | ) | |||||
Net interest income | $ | 294,896 | $ | 330,786 | $ | 317,292 | $ | 302,885 | $ | 263,728 | ||||||||||
Include: Derivative cash settlements | (84,478 | ) | (88,758 | ) | (82,906 | ) | (73,962 | ) | (56,461 | ) | ||||||||||
Adjusted net interest income | $ | 210,418 | $ | 242,028 | $ | 234,386 | $ | 228,923 | $ | 207,267 | ||||||||||
Net income (loss) | $ | 312,099 | $ | (51,516 | ) | $ | (18,927 | ) | $ | 192,926 | $ | 358,087 | ||||||||
Exclude: Derivative forward value gains (losses) | 179,381 | (221,083 | ) | (114,093 | ) | 39,541 | 141,304 | |||||||||||||
Adjusted net income | $ | 132,718 | $ | 169,567 | $ | 95,166 | $ | 153,385 | $ | 216,783 |
Year Ended May 31, | |||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||
TIER (1) | 1.42 | 0.92 | 0.97 | 1.29 | 1.52 | ||||||||||
Adjusted TIER (2) | 1.16 | 1.22 | 1.13 | 1.21 | 1.29 |
• | exclude debt used to fund loans that are guaranteed by RUS from total liabilities; |
• | exclude from total liabilities, and add to total equity, debt with equity characteristics issued to our members and in the capital markets; and |
• | exclude the noncash impact of derivative financial instruments and foreign currency adjustments from total liabilities and total equity. |
May 31, | ||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Total liabilities | $ | 24,106,887 | $ | 23,452,822 | $ | 21,934,273 | $ | 21,220,311 | $ | 21,221,441 | ||||||||||
Exclude: | ||||||||||||||||||||
Derivative liabilities | 385,337 | 594,820 | 408,382 | 388,208 | 475,278 | |||||||||||||||
Debt used to fund loans guaranteed by RUS | 167,395 | 173,514 | 179,241 | 201,863 | 210,815 | |||||||||||||||
Subordinated deferrable debt | 742,274 | 742,212 | 395,699 | 395,627 | 395,729 | |||||||||||||||
Subordinated certificates | 1,419,025 | 1,443,810 | 1,505,420 | 1,612,191 | 1,765,776 | |||||||||||||||
Adjusted total liabilities | $ | 21,392,856 | $ | 20,498,466 | $ | 19,445,531 | $ | 18,622,422 | $ | 18,373,843 | ||||||||||
Total equity | $ | 1,098,805 | $ | 817,378 | $ | 911,786 | $ | 970,374 | $ | 811,261 | ||||||||||
Exclude: | ||||||||||||||||||||
Prior-year cumulative derivative forward value losses | (520,357 | ) | (299,274 | ) | (185,181 | ) | (224,722 | ) | (366,026 | ) | ||||||||||
Current-year cumulative derivative forward value (gains) losses | 179,381 | (221,083 | ) | (114,093 | ) | 39,541 | 141,304 | |||||||||||||
Accumulated other comprehensive income (1) | 3,702 | 4,487 | 5,371 | 6,320 | 7,287 | |||||||||||||||
Include: | ||||||||||||||||||||
Subordinated certificates | 1,419,025 | 1,443,810 | 1,505,420 | 1,612,191 | 1,765,776 | |||||||||||||||
Subordinated deferrable debt | 742,274 | 742,212 | 395,699 | 395,627 | 395,729 | |||||||||||||||
Adjusted total equity | $ | 3,597,378 | $ | 3,519,270 | $ | 3,106,808 | $ | 3,157,053 | $ | 3,190,201 | ||||||||||
Guarantees (2) | $ | 889,617 | $ | 909,208 | $ | 986,500 | $ | 1,064,822 | $ | 1,112,771 |
May 31, | |||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||
Leverage ratio (1) | 22.75 | 29.81 | 25.14 | 22.97 | 27.53 | ||||||||||
Adjusted leverage ratio (2) | 6.19 | 6.08 | 6.58 | 6.24 | 6.11 | ||||||||||
Debt-to-equity ratio (3) | 21.94 | 28.69 | 24.06 | 21.87 | 26.16 | ||||||||||
Adjusted debt-to-equity ratio (4) | 5.95 | 5.82 | 6.26 | 5.90 | 5.76 |
• | Adjusted TIER, as defined in our revolving credit agreements, is calculated based on the sum of (i) interest expense, adjusted to include (ii) derivative cash settlements and (iii) net income prior to the cumulative effect of change in accounting principle, divided by interest expense adjusted to include derivative cash settlements. |
• | The adjusted debt-to-total equity ratio is calculated based on (i) senior debt, adjusted to exclude (ii) RUS-guaranteed loans, subordinated deferrable debt and members’ subordinated certificates divided by (iii) total equity, adjusted to include (iv) subordinated deferrable debt and members’ subordinated certificates. Senior debt includes guarantees; however, it excludes: |
◦ | guarantees for members where the long-term unsecured debt of the member is rated at least BBB+ by S&P or Baa1 by Moody’s; and |
◦ | the payment of principal and interest by the member on the guaranteed indebtedness if covered by insurance or reinsurance provided by an insurer having an insurance financial strength rating of AAA by S&P or Aaa by Moody’s. |
• | Results of operations related to CAH, including impairment and other comprehensive income amounts, are excluded in calculating both adjusted TIER and the adjusted senior debt-to-total equity ratio. |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
Item 8. | Financial Statements and Supplementary Data |
Page | |||
Year Ended May 31, | ||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | |||||||||
Interest income | $ | 1,036,634 | $ | 1,012,636 | $ | 952,976 | ||||||
Interest expense | (741,738 | ) | (681,850 | ) | (635,684 | ) | ||||||
Net interest income | 294,896 | 330,786 | 317,292 | |||||||||
Benefit (provision) for loan losses | (5,978 | ) | 646 | 21,954 | ||||||||
Net interest income after benefit (provision) for loan losses | 288,918 | 331,432 | 339,246 | |||||||||
Non-interest income: | ||||||||||||
Fee and other income | 19,713 | 21,785 | 36,783 | |||||||||
Derivative gains (losses) | 94,903 | (309,841 | ) | (196,999 | ) | |||||||
Results of operations of foreclosed assets | (1,749 | ) | (6,899 | ) | (120,148 | ) | ||||||
Total non-interest income | 112,867 | (294,955 | ) | (280,364 | ) | |||||||
Non-interest expense: | ||||||||||||
Salaries and employee benefits | (47,769 | ) | (44,590 | ) | (43,845 | ) | ||||||
Other general and administrative expenses | (38,457 | ) | (41,753 | ) | (32,685 | ) | ||||||
Gains (losses) on early extinguishment of debt | 192 | (333 | ) | (703 | ) | |||||||
Other non-interest expense | (1,948 | ) | (1,260 | ) | (167 | ) | ||||||
Total non-interest expense | (87,982 | ) | (87,936 | ) | (77,400 | ) | ||||||
Income (loss) before income taxes | 313,803 | (51,459 | ) | (18,518 | ) | |||||||
Income tax expense | (1,704 | ) | (57 | ) | (409 | ) | ||||||
Net income (loss) | 312,099 | (51,516 | ) | (18,927 | ) | |||||||
Less: Net (income) loss attributable to noncontrolling interests | (2,193 | ) | 1,863 | (105 | ) | |||||||
Net income (loss) attributable to CFC | $ | 309,906 | $ | (49,653 | ) | $ | (19,032 | ) | ||||
See accompanying notes to consolidated financial statements. |
Year Ended May 31, | ||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | |||||||||
Net income (loss) | $ | 312,099 | $ | (51,516 | ) | $ | (18,927 | ) | ||||
Other comprehensive income (loss): | ||||||||||||
Unrealized gains on available-for-sale investment securities | 4,614 | 3,468 | 4,295 | |||||||||
Unrealized losses on foreclosed assets | — | (5,575 | ) | (1,938 | ) | |||||||
Reclassification of losses on foreclosed assets to net income | 9,823 | — | — | |||||||||
Reclassification of derivative gains to net income | (785 | ) | (888 | ) | (959 | ) | ||||||
Defined benefit plan adjustments | (1,535 | ) | (31 | ) | (977 | ) | ||||||
Other comprehensive income (loss) | 12,117 | (3,026 | ) | 421 | ||||||||
Total comprehensive income (loss) | 324,216 | (54,542 | ) | (18,506 | ) | |||||||
Less: Total comprehensive (income) loss attributable to noncontrolling interests | (2,193 | ) | 1,867 | (95 | ) | |||||||
Total comprehensive income (loss) attributable to CFC | $ | 322,023 | $ | (52,675 | ) | $ | (18,601 | ) | ||||
See accompanying notes to consolidated financial statements. |
May 31, | ||||||||
(Dollars in thousands) | 2017 | 2016 | ||||||
Assets: | ||||||||
Cash and cash equivalents | $ | 166,615 | $ | 204,540 | ||||
Restricted cash | 21,806 | 4,628 | ||||||
Time deposits | 226,000 | 340,000 | ||||||
Investment securities available for sale, at fair value | 92,554 | 87,940 | ||||||
Loans to members | 24,367,044 | 23,162,696 | ||||||
Less: Allowance for loan losses | (37,376 | ) | (33,258 | ) | ||||
Loans to members, net | 24,329,668 | 23,129,438 | ||||||
Accrued interest receivable | 111,493 | 113,272 | ||||||
Other receivables | 45,469 | 51,478 | ||||||
Fixed assets, net | 122,260 | 112,563 | ||||||
Foreclosed assets, net | — | 102,967 | ||||||
Derivative assets | 49,481 | 80,095 | ||||||
Other assets | 40,346 | 43,279 | ||||||
Total assets | $ | 25,205,692 | $ | 24,270,200 | ||||
Liabilities: | ||||||||
Accrued interest payable | $ | 137,476 | $ | 132,996 | ||||
Debt outstanding: | ||||||||
Short-term borrowings | 3,342,900 | 2,938,848 | ||||||
Long-term debt | 17,955,594 | 17,473,603 | ||||||
Subordinated deferrable debt | 742,274 | 742,212 | ||||||
Members’ subordinated certificates: | ||||||||
Membership subordinated certificates | 630,098 | 630,063 | ||||||
Loan and guarantee subordinated certificates | 567,830 | 593,701 | ||||||
Member capital securities | 221,097 | 220,046 | ||||||
Total members’ subordinated certificates | 1,419,025 | 1,443,810 | ||||||
Total debt outstanding | 23,459,793 | 22,598,473 | ||||||
Deferred income | 73,972 | 78,651 | ||||||
Derivative liabilities | 385,337 | 594,820 | ||||||
Other liabilities | 50,309 | 47,882 | ||||||
Total liabilities | 24,106,887 | 23,452,822 | ||||||
Commitments and contingencies | ||||||||
Equity: | ||||||||
CFC equity: | ||||||||
Retained equity | 1,056,778 | 790,234 | ||||||
Accumulated other comprehensive income | 13,175 | 1,058 | ||||||
Total CFC equity | 1,069,953 | 791,292 | ||||||
Noncontrolling interests | 28,852 | 26,086 | ||||||
Total equity | 1,098,805 | 817,378 | ||||||
Total liabilities and equity | $ | 25,205,692 | $ | 24,270,200 | ||||
See accompanying notes to consolidated financial statements. |
(Dollars in thousands) | Membership Fees and Educational Fund | Patronage Capital Allocated | Members’ Capital Reserve | Unallocated Net Income (Loss) | CFC Retained Equity | Accumulated Other Comprehensive Income | Total CFC Equity | Non-controlling Interests | Total Equity | |||||||||||||||||||||||||||
Balance as of May 31, 2014 | $ | 2,751 | $ | 630,340 | $ | 485,447 | $ | (178,650 | ) | $ | 939,888 | $ | 3,649 | $ | 943,537 | $ | 26,837 | $ | 970,374 | |||||||||||||||||
Net income (loss) | 927 | 78,420 | 16,283 | (114,662 | ) | (19,032 | ) | — | (19,032 | ) | 105 | (18,927 | ) | |||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 431 | 431 | (10 | ) | 421 | ||||||||||||||||||||||||||
Patronage capital retirement | — | (39,779 | ) | — | — | (39,779 | ) | — | (39,779 | ) | (362 | ) | (40,141 | ) | ||||||||||||||||||||||
Other | (935 | ) | (1 | ) | 1 | 100 | (835 | ) | — | (835 | ) | 894 | 59 | |||||||||||||||||||||||
Balance as of May 31, 2015 | $ | 2,743 | $ | 668,980 | $ | 501,731 | $ | (293,212 | ) | $ | 880,242 | $ | 4,080 | $ | 884,322 | $ | 27,464 | $ | 911,786 | |||||||||||||||||
Net income (loss) | 1,000 | 84,257 | 85,917 | (220,827 | ) | (49,653 | ) | — | (49,653 | ) | (1,863 | ) | (51,516 | ) | ||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | (3,022 | ) | (3,022 | ) | (4 | ) | (3,026 | ) | |||||||||||||||||||||||
Patronage capital retirement | — | (39,384 | ) | — | — | (39,384 | ) | — | (39,384 | ) | — | (39,384 | ) | |||||||||||||||||||||||
Other | (971 | ) | (429 | ) | 429 | (971 | ) | — | (971 | ) | 489 | (482 | ) | |||||||||||||||||||||||
Balance as of May 31, 2016 | $ | 2,772 | $ | 713,853 | $ | 587,219 | $ | (513,610 | ) | $ | 790,234 | $ | 1,058 | $ | 791,292 | $ | 26,086 | $ | 817,378 | |||||||||||||||||
Net income | 1,000 | 90,441 | 43,086 | 175,379 | 309,906 | — | 309,906 | 2,193 | 312,099 | |||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | — | 12,117 | 12,117 | — | 12,117 | |||||||||||||||||||||||||||
Patronage capital retirement | — | (42,593 | ) | — | 103 | (42,490 | ) | — | (42,490 | ) | — | (42,490 | ) | |||||||||||||||||||||||
Other | (872 | ) | — | — | — | (872 | ) | — | (872 | ) | 573 | (299 | ) | |||||||||||||||||||||||
Balance as of May 31, 2017 | $ | 2,900 | $ | 761,701 | $ | 630,305 | $ | (338,128 | ) | $ | 1,056,778 | $ | 13,175 | $ | 1,069,953 | $ | 28,852 | $ | 1,098,805 | |||||||||||||||||
See accompanying notes to consolidated financial statements. |
Year Ended May 31, | ||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | |||||||||
Cash flows from operating activities: | ||||||||||||
Net income (loss) | $ | 312,099 | $ | (51,516 | ) | $ | (18,927 | ) | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Amortization of deferred income | (14,072 | ) | (18,751 | ) | (11,582 | ) | ||||||
Amortization of debt issuance costs and deferred charges | 9,484 | 8,478 | 7,351 | |||||||||
Amortization of discount on long-term debt | 9,501 | 8,693 | 7,939 | |||||||||
Amortization of issuance costs for revolving bank lines of credit | 5,531 | 5,535 | 5,238 | |||||||||
Depreciation and amortization | 7,173 | 7,327 | 6,497 | |||||||||
Provision (benefit) for loan losses | 5,978 | (646 | ) | (21,954 | ) | |||||||
Results of operations of foreclosed assets | 1,749 | 6,899 | 120,148 | |||||||||
Derivative forward value (gains) losses | (179,381 | ) | 221,083 | 114,093 | ||||||||
Changes in operating assets and liabilities: | ||||||||||||
Accrued interest receivable | 1,778 | (6,225 | ) | (6,705 | ) | |||||||
Accrued interest payable | 4,480 | 9,299 | 5,316 | |||||||||
Deferred income | 9,393 | 21,822 | 9,122 | |||||||||
Other | 5,855 | 15,560 | 2,442 | |||||||||
Net cash provided by operating activities | 179,568 | 227,558 | 218,978 | |||||||||
Cash flows from investing activities: | ||||||||||||
Advances on loans | (7,762,423 | ) | (8,484,794 | ) | (8,333,180 | ) | ||||||
Principal collections on loans | 6,616,750 | 6,791,710 | 7,339,378 | |||||||||
Net investment in fixed assets | (17,793 | ) | (9,806 | ) | (9,940 | ) | ||||||
Net cash proceeds from sale of foreclosed assets | 51,042 | 5,414 | 16,709 | |||||||||
Proceeds from foreclosed assets | — | (4,349 | ) | (9,651 | ) | |||||||
Proceeds from time deposits, net | 114,000 | 145,000 | 65,000 | |||||||||
Investments in securities available for sale | — | — | (25,000 | ) | ||||||||
Change in restricted cash | (17,178 | ) | (4,143 | ) | 35 | |||||||
Net cash used in investing activities | (1,015,602 | ) | (1,560,968 | ) | (956,649 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Proceeds from (repayments of) short-term borrowings, net | 409,871 | (154,072 | ) | (1,042,483 | ) | |||||||
Proceeds from short-term borrowings with original maturity greater than 90 days | 1,003,185 | 890,242 | 574,187 | |||||||||
Repayments of short term-debt with original maturity greater than 90 days | (1,009,004 | ) | (925,076 | ) | (503,281 | ) | ||||||
Payments for issuance costs for revolving bank lines of credit | (2,548 | ) | (3,009 | ) | (3,249 | ) | ||||||
Proceeds from issuance of long-term debt, net of issuance costs | 2,923,868 | 2,920,669 | 3,049,869 | |||||||||
Payments for retirement of long-term debt | (2,460,730 | ) | (1,709,283 | ) | (1,296,620 | ) | ||||||
Payments for issuance costs for subordinated deferrable debt | (68 | ) | — | — | ||||||||
Proceeds from issuance of subordinated debt | — | 346,433 | — | |||||||||
Proceeds from issuance of members’ subordinated certificates | 3,626 | 5,654 | 74,842 | |||||||||
Payments for retirement of members’ subordinated certificates | (28,220 | ) | (43,596 | ) | (166,275 | ) | ||||||
Payments for retirement of patronage capital | (41,871 | ) | (38,848 | ) | (39,198 | ) | ||||||
Net cash provided by financing activities | 798,109 | 1,289,114 | 647,792 | |||||||||
Net decrease in cash and cash equivalents | (37,925 | ) | (44,296 | ) | (89,879 | ) | ||||||
Beginning cash and cash equivalents | 204,540 | 248,836 | 338,715 | |||||||||
Ending cash and cash equivalents | $ | 166,615 | $ | 204,540 | $ | 248,836 | ||||||
See accompanying notes to consolidated financial statements. |
Year Ended May 31, | ||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | |||||||||
Supplemental disclosure of cash flow information: | ||||||||||||
Cash paid for interest | $ | 712,742 | $ | 649,845 | $ | 609,840 | ||||||
Cash paid for income taxes | 407 | 72 | 210 | |||||||||
See accompanying notes to consolidated financial statements. |
NOTE 1—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
(1) | the collective loan portfolio, which consists of loans that are performing according to the contractual agreements; and |
(2) | the impaired portfolio, which consists of loans that (i) are not currently performing or (ii) for various reasons we do not expect to collect all amounts as and when due and payable under the loan agreement or (iii) are performing according to a restructured loan agreement, but as a result of the troubled debt restructuring are required to be classified as impaired. |
• | Internal risk ratings system. We maintain risk ratings for our borrowers that are updated at least annually and are based on the following: |
◦ | general financial condition of the borrower; |
◦ | our judgment of the quality of the borrower’s management; |
◦ | our judgment of the borrower’s competitive position within its service territory and industry; |
◦ | our estimate of the potential impact of proposed regulation and litigation; and |
◦ | other factors specific to individual borrowers or classes of borrowers. |
• | S&P Global Inc. (“S&P”) historical utility sector default table. The table provides expected default rates for the utility sector based on rating level and the remaining maturity. We correlate our internal risk ratings to the ratings used in the utility sector default table. We use the default table to assist in estimating our allowance for loan losses because we have limited history from which to develop loss expectations. |
• | Loss Emergence Period. Based on the estimated time between the loss-causing event(s) and the date that we charge off the unrecoverable portion of the loan. |
• | Recovery rates. Estimated recovery rates are based on our historical recovery experience by member class calculated by comparing loan balances at the time of default to the total loss recorded on the loan. We have been lending to our electric cooperative members since our incorporation in 1969. |
• | the review of the borrower’s audited financial statements and interim financial statements if available, |
• | the borrower’s payment history, |
• | communication with the borrower, |
• | economic conditions in the borrower’s service territory, |
• | pending legal action involving the borrower, |
• | restructure agreements between us and the borrower and |
• | estimates of the value of the borrower’s assets that have been pledged as collateral to secure our loans. |
• | interest or principal on the loan is past due 90 days or more; |
• | as a result of court proceedings, the collection of interest or principal based on the original contractual terms is not expected; or |
• | the full and timely collection of interest or principal is otherwise uncertain. |
May 31, | ||||||||
(Dollars in thousands) | 2017 | 2016 | ||||||
Building and building equipment | $ | 50,236 | $ | 50,156 | ||||
Furniture and fixtures | 5,852 | 5,455 | ||||||
Computer software and hardware | 40,469 | 36,378 | ||||||
Other | 1,034 | 1,018 | ||||||
Depreciable fixed assets | 97,591 | 93,007 | ||||||
Less: Accumulated depreciation | (41,274 | ) | (35,592 | ) | ||||
Net depreciable fixed assets | 56,317 | 57,415 | ||||||
Land | 37,847 | 37,847 | ||||||
Software development | 28,096 | 17,301 | ||||||
Fixed assets, net | $ | 122,260 | $ | 112,563 |
• | Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities |
• | Level 2: Observable market-based inputs, other than quoted prices in active markets for identical assets or liabilities |
• | Level 3: Unobservable inputs |
Year Ended May 31, | ||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | |||||||||
Interest income on loans and investments: | ||||||||||||
Long-term fixed-rate loans(1) | $ | 980,173 | $ | 959,701 | $ | 898,181 | ||||||
Long-term variable-rate loans | 19,902 | 19,858 | 20,184 | |||||||||
Line of credit loans | 25,389 | 24,864 | 26,411 | |||||||||
TDR loans(2) | 905 | 512 | 15 | |||||||||
Nonperforming loans | — | 142 | — | |||||||||
Investments | 11,347 | 8,647 | 7,933 | |||||||||
Other income, net(3) | (1,082 | ) | (1,088 | ) | 252 | |||||||
Total interest income | $ | 1,036,634 | $ | 1,012,636 | $ | 952,976 |
Year Ended May 31, | ||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | |||||||||
Interest expense on debt:(1)(2)(3) | ||||||||||||
Short-term borrowings | $ | 26,684 | $ | 14,728 | $ | 14,374 | ||||||
Medium-term notes | 99,022 | 86,270 | 71,739 | |||||||||
Collateral trust bonds | 340,854 | 333,338 | 315,106 | |||||||||
Long-term notes payable | 177,929 | 165,820 | 151,763 | |||||||||
Subordinated deferrable debt | 37,657 | 21,245 | 19,143 | |||||||||
Subordinated certificates | 59,592 | 60,449 | 63,559 | |||||||||
Total interest expense | $ | 741,738 | $ | 681,850 | $ | 635,684 |
NOTE 2—VARIABLE INTEREST ENTITIES |
May 31, 2017 | |||
Members: | |||
Distribution systems | 839 | ||
Power supply systems | 70 | ||
Telecommunications members | 488 | ||
Statewide and regional associations | 63 | ||
National association of cooperatives | 1 | ||
Total members | 1,461 | ||
Associates | 219 | ||
Total | 1,680 |
NOTE 3—INVESTMENT SECURITIES |
May 31, 2017 | ||||||||||||||||
(Dollars in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Farmer Mac—Series A Non-Cumulative Preferred Stock | $ | 30,000 | $ | 1,585 | $ | — | $ | 31,585 | ||||||||
Farmer Mac—Series B Non-Cumulative Preferred Stock | 25,000 | 1,940 | — | 26,940 | ||||||||||||
Farmer Mac—Series C Non-Cumulative Preferred Stock | 25,000 | 4,150 | — | 29,150 | ||||||||||||
Farmer Mac—Class A Common Stock | 538 | 4,341 | — | 4,879 | ||||||||||||
Total investment securities, available-for-sale | $ | 80,538 | $ | 12,016 | $ | — | $ | 92,554 |
May 31, 2016 | ||||||||||||||||
(Dollars in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
Farmer Mac—Series A Non-Cumulative Preferred Stock | $ | 30,000 | $ | 780 | $ | — | $ | 30,780 | ||||||||
Farmer Mac—Series B Non-Cumulative Preferred Stock | 25,000 | 2,600 | — | 27,600 | ||||||||||||
Farmer Mac—Series C Non-Cumulative Preferred Stock | 25,000 | 1,650 | — | 26,650 | ||||||||||||
Farmer Mac—Class A Common Stock | 538 | 2,372 | — | 2,910 | ||||||||||||
Total investment securities, available-for-sale | $ | 80,538 | $ | 7,402 | $ | — | $ | 87,940 |
NOTE 4—LOANS AND COMMITMENTS |
May 31, | ||||||||||||||||
2017 | 2016 | |||||||||||||||
(Dollars in thousands) | Loans Outstanding | Unadvanced Commitments (1) | Loans Outstanding | Unadvanced Commitments (1) | ||||||||||||
Loan type: (2) | ||||||||||||||||
Long-term loans: | ||||||||||||||||
Long-term fixed-rate loans | $ | 22,136,690 | $ | — | $ | 21,390,576 | $ | — | ||||||||
Long-term variable-rate loans | 847,419 | 4,802,319 | 757,500 | 4,508,562 | ||||||||||||
Total long-term loans | 22,984,109 | 4,802,319 | 22,148,076 | 4,508,562 | ||||||||||||
Line of credit loans | 1,372,221 | 7,772,655 | 1,004,441 | 8,696,448 | ||||||||||||
Total loans outstanding (3) | 24,356,330 | 12,574,974 | 23,152,517 | 13,205,010 | ||||||||||||
Deferred loan origination costs | 10,714 | — | 10,179 | — | ||||||||||||
Loans to members | $ | 24,367,044 | $ | 12,574,974 | $ | 23,162,696 | $ | 13,205,010 | ||||||||
Member class:(2) | ||||||||||||||||
CFC: | ||||||||||||||||
Distribution | $ | 18,825,366 | $ | 8,295,146 | $ | 17,674,335 | $ | 8,967,730 | ||||||||
Power supply | 4,504,791 | 3,276,113 | 4,401,185 | 3,191,873 | ||||||||||||
Statewide and associate | 57,830 | 144,406 | 54,353 | 155,129 | ||||||||||||
CFC total(3) | 23,387,987 | 11,715,665 | 22,129,873 | 12,314,732 | ||||||||||||
NCSC | 613,924 | 584,944 | 680,802 | 643,621 | ||||||||||||
RTFC | 354,419 | 274,365 | 341,842 | 246,657 | ||||||||||||
Total loans outstanding(3) | $ | 24,356,330 | $ | 12,574,974 | $ | 23,152,517 | $ | 13,205,010 |
Available Balance | Notional Maturities of Unadvanced Loan Commitments | |||||||||||||||||||||||||||
(Dollars in thousands) | 2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | ||||||||||||||||||||||
Line of credit loans | $ | 7,772,655 | $ | 4,489,826 | $ | 871,557 | $ | 791,825 | $ | 750,419 | $ | 859,028 | $ | 10,000 | ||||||||||||||
Long-term loans | 4,802,319 | 584,142 | 1,005,835 | 718,393 | 751,150 | 1,717,514 | 25,285 | |||||||||||||||||||||
Total | $ | 12,574,974 | $ | 5,073,968 | $ | 1,877,392 | $ | 1,510,218 | $ | 1,501,569 | $ | 2,576,542 | $ | 35,285 |
Available Balance | Notional Maturities of Unconditional Committed Lines of Credit | |||||||||||
(Dollars in thousands) | 2018 | 2019 | 2020 | 2021 | 2022 | |||||||
Committed lines of credit | $2,602,262 | $300,106 | $567,270 | $548,408 | $486,900 | $699,578 |
May 31, 2017 | ||||||||||||||||||||||||
(Dollars in thousands) | Current | 30-89 Days Past Due | 90 Days or More Past Due (1) | Total Past Due | Total Financing Receivables | Nonaccrual Loans | ||||||||||||||||||
CFC: | ||||||||||||||||||||||||
Distribution | $ | 18,825,366 | $ | — | $ | — | $ | — | $ | 18,825,366 | $ | — | ||||||||||||
Power supply | 4,504,791 | — | — | — | 4,504,791 | — | ||||||||||||||||||
Statewide and associate | 57,830 | — | — | — | 57,830 | — | ||||||||||||||||||
CFC total | 23,387,987 | — | — | — | 23,387,987 | — | ||||||||||||||||||
NCSC | 613,924 | — | — | — | 613,924 | — | ||||||||||||||||||
RTFC | 354,419 | — | — | — | 354,419 | — | ||||||||||||||||||
Total loans outstanding | $ | 24,356,330 | $ | — | $ | — | $ | — | $ | 24,356,330 | $ | — | ||||||||||||
As a % of total loans | 100.00 | % | — | % | — | % | — | % | 100.00 | % | — | % |
May 31, 2016 | ||||||||||||||||||||||||
(Dollars in thousands) | Current | 30-89 Days Past Due | 90 Days or More Past Due (1) | Total Past Due | Total Financing Receivables | Nonaccrual Loans | ||||||||||||||||||
CFC: | ||||||||||||||||||||||||
Distribution | $ | 17,674,335 | $ | — | $ | — | $ | — | $ | 17,674,335 | $ | — | ||||||||||||
Power supply | 4,401,185 | — | — | — | 4,401,185 | — | ||||||||||||||||||
Statewide and associate | 54,353 | — | — | — | 54,353 | — | ||||||||||||||||||
CFC total | 22,129,873 | — | — | — | 22,129,873 | — | ||||||||||||||||||
NCSC | 680,802 | — | — | — | 680,802 | — | ||||||||||||||||||
RTFC | 338,336 | — | 3,506 | 3,506 | 341,842 | 3,506 | ||||||||||||||||||
Total loans outstanding | $ | 23,149,011 | $ | — | $ | 3,506 | $ | 3,506 | $ | 23,152,517 | $ | 3,506 | ||||||||||||
As a % of total loans | 99.98 | % | — | % | 0.02 | % | 0.02 | % | 100.00 | % | 0.02 | % |
• | Special mention: Borrowers that may be characterized by a potential credit weakness or deteriorating financial condition that is not sufficiently serious to warrant a classification of substandard or doubtful. |
• | Substandard: Borrowers that display a well-defined credit weakness that may jeopardize the full collection of principal and interest. |
• | Doubtful: Borrowers that have a well-defined weakness and the full collection of principal and interest is questionable or improbable. |
May 31, | ||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||
(Dollars in thousands) | Pass | Criticized | Total | Pass | Criticized | Total | ||||||||||||||||||
CFC: | ||||||||||||||||||||||||
Distribution | $ | 18,715,810 | $ | 109,556 | $ | 18,825,366 | $ | 17,640,928 | $ | 33,407 | $ | 17,674,335 | ||||||||||||
Power supply | 4,504,791 | — | 4,504,791 | 4,401,185 | — | 4,401,185 | ||||||||||||||||||
Statewide and associate | 56,654 | 1,176 | 57,830 | 54,100 | 253 | 54,353 | ||||||||||||||||||
CFC total | 23,277,255 | 110,732 | 23,387,987 | 22,096,213 | 33,660 | 22,129,873 | ||||||||||||||||||
NCSC | 612,592 | 1,332 | 613,924 | 678,552 | 2,250 | 680,802 | ||||||||||||||||||
RTFC | 346,944 | 7,475 | 354,419 | 330,167 | 11,675 | 341,842 | ||||||||||||||||||
Total loans outstanding | $ | 24,236,791 | $ | 119,539 | $ | 24,356,330 | $ | 23,104,932 | $ | 47,585 | $ | 23,152,517 |
May 31, | ||||||||||||||
2017 | 2016 | |||||||||||||
(Dollars in thousands) | Amount | % | Amount | % | ||||||||||
By exposure type: | ||||||||||||||
Loans | $ | 5,749,885 | 23 | % | $ | 5,638,217 | 23 | % | ||||||
Guarantees | 354,619 | 1 | 365,457 | 2 | ||||||||||
Total exposure to 20 largest borrowers | 6,104,504 | 24 | 6,003,674 | 25 | ||||||||||
Less: Loans covered under Farmer Mac standby purchase commitment | (351,699 | ) | (1 | ) | (402,244 | ) | (2 | ) | ||||||
Net exposure to 20 largest borrowers | $ | 5,752,805 | 23 | % | $ | 5,601,430 | 23 | % | ||||||
By company: | ||||||||||||||
CFC | $ | 5,899,709 | 23 | % | $ | 5,991,674 | 25 | % | ||||||
NCSC | 204,795 | 1 | 12,000 | — | ||||||||||
Total exposure to 20 largest borrowers | 6,104,504 | 24 | 6,003,674 | 25 | ||||||||||
Less: Loans covered under Farmer Mac standby purchase commitment | (351,699 | ) | (1 | ) | (402,244 | ) | (2 | ) | ||||||
Net exposure to 20 largest borrowers | $ | 5,752,805 | 23 | % | $ | 5,601,430 | 23 | % |
Year Ended May 31, 2017 | ||||||||||||||||
(Dollars in thousands) | CFC | NCSC | RTFC | Total | ||||||||||||
Balance as of May 31, 2016 | $ | 24,559 | $ | 3,134 | $ | 5,565 | $ | 33,258 | ||||||||
Provision for loan losses | 4,781 | (224 | ) | 1,421 | 5,978 | |||||||||||
Charge-offs | — | — | (2,119 | ) | (2,119 | ) | ||||||||||
Recoveries | 159 | — | 100 | 259 | ||||||||||||
Balance as of May 31, 2017 | $ | 29,499 | $ | 2,910 | $ | 4,967 | $ | 37,376 |
Year Ended May 31, 2016 | ||||||||||||||||
(Dollars in thousands) | CFC | NCSC | RTFC | Total | ||||||||||||
Balance as of May 31, 2015 | $ | 23,716 | $ | 5,441 | $ | 4,533 | $ | 33,690 | ||||||||
Provision for loan losses | 629 | (2,307 | ) | 1,032 | (646 | ) | ||||||||||
Recoveries | 214 | — | — | 214 | ||||||||||||
Balance as of May 31, 2016 | $ | 24,559 | $ | 3,134 | $ | 5,565 | $ | 33,258 |
Year Ended May 31, 2015 | ||||||||||||||||
(Dollars in thousands) | CFC | NCSC | RTFC | Total | ||||||||||||
Balance as of May 31, 2014 | $ | 45,600 | $ | 6,547 | $ | 4,282 | $ | 56,429 | ||||||||
Provision for loan losses | (22,098 | ) | (1,106 | ) | 1,250 | (21,954 | ) | |||||||||
Charge-offs | — | — | (999 | ) | (999 | ) | ||||||||||
Recoveries | 214 | — | — | 214 | ||||||||||||
Balance as of May 31, 2015 | $ | 23,716 | $ | 5,441 | $ | 4,533 | $ | 33,690 |
May 31, 2017 | ||||||||||||||||
(Dollars in thousands) | CFC | NCSC | RTFC | Total | ||||||||||||
Ending balance of the allowance: | ||||||||||||||||
Collectively evaluated loans | $ | 29,499 | $ | 2,910 | $ | 3,327 | $ | 35,736 | ||||||||
Individually evaluated loans | — | — | 1,640 | 1,640 | ||||||||||||
Total ending balance of the allowance | $ | 29,499 | $ | 2,910 | $ | 4,967 | $ | 37,376 | ||||||||
Recorded investment in loans: | ||||||||||||||||
Collectively evaluated loans | $ | 23,381,406 | $ | 613,924 | $ | 347,827 | $ | 24,343,157 | ||||||||
Individually evaluated loans | 6,581 | — | 6,592 | 13,173 | ||||||||||||
Total recorded investment in loans | $ | 23,387,987 | $ | 613,924 | $ | 354,419 | $ | 24,356,330 | ||||||||
Loans to members, net (1) | $ | 23,358,488 | $ | 611,014 | $ | 349,452 | $ | 24,318,954 |
May 31, 2016 | ||||||||||||||||
(Dollars in thousands) | CFC | NCSC | RTFC | Total | ||||||||||||
Ending balance of the allowance: | ||||||||||||||||
Collectively evaluated loans | $ | 24,559 | $ | 3,134 | $ | 2,465 | $ | 30,158 | ||||||||
Individually evaluated loans | — | — | 3,100 | 3,100 | ||||||||||||
Total ending balance of the allowance | $ | 24,559 | $ | 3,134 | $ | 5,565 | $ | 33,258 | ||||||||
Recorded investment in loans: | ||||||||||||||||
Collectively evaluated loans | $ | 22,123,157 | $ | 680,802 | $ | 331,244 | $ | 23,135,203 | ||||||||
Individually evaluated loans | 6,716 | — | 10,598 | 17,314 | ||||||||||||
Total recorded investment in loans | $ | 22,129,873 | $ | 680,802 | $ | 341,842 | $ | 23,152,517 | ||||||||
Loans to members, net(1) | $ | 22,105,314 | $ | 677,668 | $ | 336,277 | $ | 23,119,259 |
May 31, | ||||||||||||||||
2017 | 2016 | |||||||||||||||
(Dollars in thousands) | Recorded Investment | Related Allowance | Recorded Investment | Related Allowance | ||||||||||||
With no specific allowance recorded: | ||||||||||||||||
CFC | $ | 6,581 | $ | — | $ | 6,716 | $ | — | ||||||||
With a specific allowance recorded: | ||||||||||||||||
RTFC | 6,592 | 1,640 | 10,598 | 3,100 | ||||||||||||
Total impaired loans | $ | 13,173 | $ | 1,640 | $ | 17,314 | $ | 3,100 |
Average Recorded Investment | Interest Income Recognized | |||||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | 2017 | 2016 | 2015 | ||||||||||||||||||
CFC | $ | 6,613 | $ | 6,842 | $ | 7,312 | $ | 562 | $ | 390 | $ | — | ||||||||||||
NCSC | — | — | 325 | — | — | 15 | ||||||||||||||||||
RTFC | 7,736 | 9,823 | 1,438 | 343 | 264 | — | ||||||||||||||||||
Total impaired loans | $ | 14,349 | $ | 16,665 | $ | 9,075 | $ | 905 | $ | 654 | $ | 15 |
May 31, | ||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||
(Dollars in thousands) | Loans Outstanding | % of Total Loans | Unadvanced Commitments | Loans Outstanding | % of Total Loans | Unadvanced Commitments | ||||||||||||||||
TDR loans: | ||||||||||||||||||||||
Nonperforming TDR loans: | ||||||||||||||||||||||
RTFC | $ | — | $ | — | $ | 3,506 | 0.01 | % | $ | — | ||||||||||||
Performing TDR loans: | ||||||||||||||||||||||
CFC/Distribution(1) | 6,581 | — | 6,716 | — | ||||||||||||||||||
RTFC | 6,592 | — | 7,092 | — | ||||||||||||||||||
Total performing TDR loans | 13,173 | 0.05 | % | — | 13,808 | 0.06 | % | — | ||||||||||||||
Total TDR loans | $ | 13,173 | 0.05 | % | $ | — | $ | 17,314 | 0.07 | % | $ | — |
Year Ended May 31, | ||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | |||||||||
Performing TDR loans | $ | — | $ | 166 | $ | 532 | ||||||
Nonperforming TDR loans | 31 | 109 | — | |||||||||
Nonperforming loans | — | — | 123 | |||||||||
Total | $ | 31 | $ | 275 | $ | 655 |
May 31, | ||||||||
(Dollars in thousands) | 2017 | 2016 | ||||||
Collateral trust bonds: | ||||||||
2007 indenture: | ||||||||
Distribution system mortgage notes | $ | 8,740,572 | $ | 7,246,973 | ||||
RUS-guaranteed loans qualifying as permitted investments | 146,373 | 151,687 | ||||||
Total pledged collateral | $ | 8,886,945 | $ | 7,398,660 | ||||
Collateral trust bonds outstanding | 7,697,711 | 6,747,711 | ||||||
1994 indenture: | ||||||||
Distribution system mortgage notes | $ | 263,007 | $ | 968,030 | ||||
Collateral trust bonds outstanding | 225,000 | 800,000 | ||||||
Farmer Mac: | ||||||||
Distribution and power supply system mortgage notes | $ | 2,942,456 | $ | 2,683,806 | ||||
Notes payable outstanding | 2,513,389 | 2,303,122 | ||||||
Clean Renewable Energy Bonds Series 2009A: | ||||||||
Distribution and power supply system mortgage notes | $ | 14,943 | $ | 17,081 | ||||
Cash | 481 | — | ||||||
Total pledged collateral | $ | 15,424 | $ | 17,081 | ||||
Notes payable outstanding | 13,214 | 14,871 | ||||||
Federal Financing Bank: | ||||||||
Distribution and power supply system mortgage notes | $ | 5,833,515 | $ | 5,248,935 | ||||
Notes payable outstanding | 4,985,748 | 4,777,404 |
NOTE 5—FORECLOSED ASSETS |
NOTE 6—SHORT-TERM BORROWINGS |
May 31, | ||||||||||||||
2017 | 2016 | |||||||||||||
(Dollars in thousands) | Amount | Weighted- Average Interest Rate | Amount | Weighted-Average Interest Rate | ||||||||||
Short-term borrowings: | ||||||||||||||
Commercial paper sold through dealers, net of discounts | $ | 999,691 | 0.93 | % | $ | 659,935 | 0.43 | % | ||||||
Commercial paper sold directly to members, at par | 928,158 | 0.95 | 848,007 | 0.45 | ||||||||||
Select notes | 696,889 | 1.12 | 701,849 | 0.62 | ||||||||||
Daily liquidity fund notes | 527,990 | 0.80 | 525,959 | 0.34 | ||||||||||
Medium-term notes sold to members | 190,172 | 1.50 | 203,098 | 1.05 | ||||||||||
Total short-term borrowings | $ | 3,342,900 | 0.99 | $ | 2,938,848 | 0.51 |
May 31, | ||||||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||||||
(Dollars in millions) | Total Commitment | Letters of Credit Outstanding | Net Available for Use(1) | Total Commitment | Letters of Credit Outstanding | Net Available for Use(1) | Maturity | Annual Facility Fee (2) | ||||||||||||||||||||
3-year agreement | $ | — | $ | — | $ | — | $ | 25 | $ | — | $ | 25 | October 28, 2017 | 7.5 bps | ||||||||||||||
3-year agreement | — | — | — | 1,640 | — | 1,640 | November 19, 2018 | 7.5 bps | ||||||||||||||||||||
3-year agreement | 1,533 | — | 1,533 | — | — | — | November 19, 2019 | 7.5 bps | ||||||||||||||||||||
Total 3-year agreement | 1,533 | — | 1,533 | 1,665 | — | 1,665 | ||||||||||||||||||||||
5-year agreement | — | — | — | 45 | — | 45 | October 28, 2019 | 10 bps | ||||||||||||||||||||
5-year agreement | — | — | — | 1,600 | 1 | 1,599 | November 19, 2020 | 10 bps | ||||||||||||||||||||
5-year agreement | 1,632 | 1 | 1,631 | — | — | — | November 19, 2021 | 10 bps | ||||||||||||||||||||
Total 5-year agreement | 1,632 | 1 | 1,631 | 1,645 | 1 | 1,644 | ||||||||||||||||||||||
Total | $ | 3,165 | $ | 1 | $ | 3,164 | $ | 3,310 | $ | 1 | $ | 3,309 |
NOTE 7—LONG-TERM DEBT |
May 31, | ||||||||||||||||||
2017 | 2016 | |||||||||||||||||
(Dollars in thousands) | Amount | Weighted- Average Interest Rate | Maturity Date | Amount | Weighted- Average Interest Rate | Maturity Date | ||||||||||||
Unsecured long-term debt: | ||||||||||||||||||
Medium-term notes sold through dealers | $ | 2,386,956 | 3.48 | % | 2018-2032 | $ | 2,668,276 | 3.02 | % | 2016-2032 | ||||||||
Medium-term notes sold to members | 422,779 | 2.18 | 2017-2037 | 450,960 | 1.93 | 2016-2037 | ||||||||||||
Subtotal medium-term notes | 2,809,735 | 3.29 | 3,119,236 | 2.86 | ||||||||||||||
Unamortized discount | (382 | ) | (537 | ) | ||||||||||||||
Debt issuance costs | (21,903 | ) | (19,370 | ) | ||||||||||||||
Total unsecured medium-term notes | 2,787,450 | 3,099,329 | ||||||||||||||||
Unsecured notes payable: | 22,799 | 3.98 | 2022-2023 | 27,092 | 4.02 | 2022-2023 | ||||||||||||
Unamortized discount | (379 | ) | (496 | ) | ||||||||||||||
Debt issuance costs | (94 | ) | (123 | ) | ||||||||||||||
Total unsecured notes payable | 22,326 | 3.98 | 26,473 | 4.02 | ||||||||||||||
Total unsecured long-term debt | 2,809,776 | 3.29 | 3,125,802 | 2.87 | ||||||||||||||
Secured long-term debt: | ||||||||||||||||||
Collateral trust bonds | 7,922,711 | 4.08 | 2018-2032 | 7,547,711 | 4.28 | 2017-2032 | ||||||||||||
Unamortized discount | (258,329 | ) | (265,837 | ) | ||||||||||||||
Debt issuance costs | (30,334 | ) | (28,778 | ) | ||||||||||||||
Total collateral trust bonds | 7,634,048 | 7,253,096 | ||||||||||||||||
Guaranteed Underwriter Program notes payable | 4,985,748 | 2.83 | 2025-2037 | 4,777,404 | 2.98 | 2025-2036 | ||||||||||||
Debt issuance costs | (264 | ) | (293 | ) | ||||||||||||||
Total Guaranteed Underwriter Program notes payable | 4,985,484 | 4,777,111 | ||||||||||||||||
Farmer Mac notes payable | 2,513,389 | 1.71 | 2018-2047 | 2,303,123 | 1.15 | 2018-2045 | ||||||||||||
Other secured notes payable | 13,214 | 2.81 | 2024 | 14,871 | 2.86 | 2024 | ||||||||||||
Debt issuance costs | (317 | ) | (400 | ) | ||||||||||||||
Total other secured notes payable | 12,897 | 14,471 | ||||||||||||||||
Total secured notes payable | 7,511,770 | 2.45 | 7,094,705 | 2.39 | ||||||||||||||
Total secured long-term debt | 15,145,818 | 3.29 | 14,347,801 | 3.36 | ||||||||||||||
Total long-term debt | $ | 17,955,594 | 3.29 | $ | 17,473,603 | 3.28 |
(Dollars in thousands) | Amount Maturing | Weighted-Average Interest Rate | |||||
2018 | $ | 1,258,058 | 3.80 | % | |||
2019 | 2,603,992 | 5.40 | |||||
2020 | 1,367,922 | 2.04 | |||||
2021 | 1,270,604 | 2.28 | |||||
2022 | 1,559,515 | 2.37 | |||||
Thereafter | 9,895,503 | 3.12 | |||||
Total | $ | 17,955,594 | 3.29 |
NOTE 8—SUBORDINATED DEFERRABLE DEBT |
May 31, | ||||||||||||||
2017 | 2016 | |||||||||||||
(Dollars in thousands) | Amount | Weighted- Average Interest Rate | Amount | Weighted-Average Interest Rate | ||||||||||
4.75% due 2043 with a call date of April 30, 2023 | $ | 400,000 | 4.75 | % | $ | 400,000 | 4.75 | % | ||||||
5.25% due 2046 with a call date of April 20, 2026 | 350,000 | 5.25 | 350,000 | 5.25 | ||||||||||
Debt issuance costs | (7,726 | ) | (7,788 | ) | ||||||||||
Total subordinated deferrable debt | $ | 742,274 | 4.98 | $ | 742,212 | 4.98 |
NOTE 9—MEMBERS’ SUBORDINATED CERTIFICATES |
May 31, | ||||||||||||||
2017 | 2016 | |||||||||||||
(Dollars in thousands) | Amounts Outstanding | Weighted- Average Interest Rate | Amounts Outstanding | Weighted- Average Interest Rate | ||||||||||
Membership subordinated certificates: | ||||||||||||||
Certificates maturing 2020 through 2095 | $ | 629,011 | $ | 629,114 | ||||||||||
Subscribed and unissued (1) | 1,087 | 949 | ||||||||||||
Total membership subordinated certificates | 630,098 | 4.94 | % | 630,063 | 4.94 | % | ||||||||
Loan and guarantee subordinated certificates: | ||||||||||||||
3% certificates maturing through 2040 | 110,164 | 110,164 | ||||||||||||
2% to 10% certificates maturing through 2045 | 268,592 | 279,823 | ||||||||||||
Non-interest bearing certificates maturing through 2047 | 189,013 | 203,463 | ||||||||||||
Subscribed and unissued (1) | 61 | 251 | ||||||||||||
Total loan and guarantee subordinated certificates | 567,830 | 3.02 | 593,701 | 2.99 | ||||||||||
Member capital securities: | ||||||||||||||
Securities maturing through 2048 | 221,097 | 5.00 | 220,046 | 5.00 | ||||||||||
Total members’ subordinated certificates | $ | 1,419,025 | 4.18 | $ | 1,443,810 | 4.14 |
(Dollars in thousands) | Amount Maturing(1) | Weighted-Average Interest Rate | |||||
2018 | $ | 10,379 | 2.26 | % | |||
2019 | 13,592 | 2.98 | |||||
2020 | 16,383 | 2.98 | |||||
2021 | 54,713 | 3.85 | |||||
2022 | 16,216 | 3.08 | |||||
Thereafter | 1,306,617 | 4.25 | |||||
Total | $ | 1,417,900 | 4.18 |
NOTE 10—DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
May 31, | ||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||
(Dollars in thousands) | Notional Amount | Weighted- Average Rate Paid | Weighted- Average Rate Received | Notional Amount | Weighted- Average Rate Paid | Weighted- Average Rate Received | ||||||||||||||
Pay fixed swaps | $ | 6,807,013 | 2.85 | % | 1.16 | % | $ | 6,661,471 | 2.95 | % | 0.63 | % | ||||||||
Receive fixed swaps | 3,699,000 | 1.72 | 2.64 | 3,499,000 | 1.02 | 2.82 | ||||||||||||||
Total interest rate swaps | 10,506,013 | 2.46 | 1.68 | 10,160,471 | 2.29 | 1.39 | ||||||||||||||
Forward pay-fixed swaps | 285,383 | 40,000 | ||||||||||||||||||
Total | $ | 10,791,396 | $ | 10,200,471 |
Notional Amount | Notional Amortization and Maturities | |||||||||||||
(Dollars in thousands) | 2018 | 2019 | 2020 | 2021 | 2022 | Thereafter | ||||||||
Interest rate swaps | $10,791,396 | $647,080 | $511,117 | $1,329,870 | $483,062 | $522,072 | $7,298,195 |
May 31, | ||||||||||||||||
2017 | 2016 | |||||||||||||||
(Dollars in thousands) | Fair Value | Notional Balance | Fair Value | Notional Balance | ||||||||||||
Derivative assets | $ | 49,481 | $ | 3,754,120 | $ | 80,095 | $ | 2,879,567 | ||||||||
Derivative liabilities | (385,337 | ) | 7,037,276 | (594,820 | ) | 7,320,904 | ||||||||||
Total | $ | (335,856 | ) | $ | 10,791,396 | $ | (514,725 | ) | $ | 10,200,471 |
May 31, 2017 | ||||||||||||||||||||||||
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 | $ | 49,481 | $ | — | $ | 49,481 | $ | 49,481 | $ | — | $ | — | ||||||||||||
Derivative liabilities: | ||||||||||||||||||||||||
Interest rate swaps | 385,337 | — | 385,337 | 49,481 | — | 335,856 |
May 31, 2016 | ||||||||||||||||||||||||
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 | $ | 80,095 | $ | — | $ | 80,095 | $ | 80,095 | $ | — | $ | — | ||||||||||||
Derivative liabilities: | ||||||||||||||||||||||||
Interest rate swaps | 594,820 | — | 594,820 | 80,095 | — | 514,725 |
Year Ended May 31, | ||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | |||||||||
Derivative cash settlements | $ | (84,478 | ) | $ | (88,758 | ) | $ | (82,906 | ) | |||
Derivative forward value gains (losses) | 179,381 | (221,083 | ) | (114,093 | ) | |||||||
Derivative gains (losses) | $ | 94,903 | $ | (309,841 | ) | $ | (196,999 | ) |
(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) | $ | 59,165 | $ | (13,713 | ) | $ | — | $ | (13,713 | ) | ||||||
Falls below Baa1/BBB+ | 7,008,763 | (208,022 | ) | — | (208,022 | ) | ||||||||||
Falls to or below Baa2/BBB (2) | 459,106 | (646 | ) | — | (646 | ) | ||||||||||
Falls below Baa3/BBB- | 268,691 | (23,581 | ) | — | (23,581 | ) | ||||||||||
Total | $ | 7,795,725 | $ | (245,962 | ) | $ | — | $ | (245,962 | ) |
NOTE 11—EQUITY |
May 31, | ||||||||
(Dollars in thousands) | 2017 | 2016 | ||||||
Membership fees | $ | 971 | $ | 974 | ||||
Educational fund | 1,929 | 1,798 | ||||||
Total membership fees and educational fund | 2,900 | 2,772 | ||||||
Patronage capital allocated | 761,701 | 713,853 | ||||||
Members’ capital reserve | 630,305 | 587,219 | ||||||
Unallocated net loss: | ||||||||
Prior year-end cumulative derivative forward value losses | (507,904 | ) | (287,077 | ) | ||||
Current year derivative forward value gains (losses)(1) | 175,379 | (220,827 | ) | |||||
Current year-end cumulative derivative forward value losses | (332,525 | ) | (507,904 | ) | ||||
Other unallocated net loss | (5,603 | ) | (5,706 | ) | ||||
Unallocated net loss | (338,128 | ) | (513,610 | ) | ||||
CFC retained equity | 1,056,778 | 790,234 | ||||||
Accumulated other comprehensive income | 13,175 | 1,058 | ||||||
Total CFC equity | 1,069,953 | 791,292 | ||||||
Noncontrolling interests | 28,852 | 26,086 | ||||||
Total equity | $ | 1,098,805 | $ | 817,378 |
Year Ended May 31, 2017 | ||||||||||||||||||||
(Dollars in thousands) | Unrealized Gains (Losses) AFS Securities | Unrealized Gains Derivatives | Unrealized Losses Foreclosed Assets | Unrealized Losses Defined Benefit Plan | Total | |||||||||||||||
Beginning balance | $ | 7,402 | $ | 4,487 | $ | (9,823 | ) | $ | (1,008 | ) | $ | 1,058 | ||||||||
Unrealized gains | 4,614 | — | — | — | 4,614 | |||||||||||||||
Unrealized losses | — | — | — | (1,535 | ) | (1,535 | ) | |||||||||||||
Losses reclassified into earnings | — | — | 9,823 | — | 9,823 | |||||||||||||||
Gains reclassified into earnings | — | (785 | ) | — | — | (785 | ) | |||||||||||||
Other comprehensive income | 4,614 | (785 | ) | 9,823 | (1,535 | ) | 12,117 | |||||||||||||
Ending balance | $ | 12,016 | $ | 3,702 | $ | — | $ | (2,543 | ) | $ | 13,175 |
Year Ended May 31, 2016 | ||||||||||||||||||||
(Dollars in thousands) | Unrealized Gains (Losses) AFS Securities | Unrealized Gains Derivatives | Unrealized Losses Foreclosed Assets | Unrealized Losses Defined Benefit Plan | Total | |||||||||||||||
Beginning balance | $ | 3,934 | $ | 5,371 | $ | (4,248 | ) | $ | (977 | ) | $ | 4,080 | ||||||||
Unrealized gains | 3,468 | — | — | — | 3,468 | |||||||||||||||
Unrealized losses | — | — | (5,575 | ) | (206 | ) | (5,781 | ) | ||||||||||||
Losses reclassified into earnings | — | — | — | 175 | 175 | |||||||||||||||
Gains reclassified into earnings | — | (884 | ) | — | — | (884 | ) | |||||||||||||
Other comprehensive income | 3,468 | (884 | ) | (5,575 | ) | (31 | ) | (3,022 | ) | |||||||||||
Ending balance | $ | 7,402 | $ | 4,487 | $ | (9,823 | ) | $ | (1,008 | ) | $ | 1,058 |
NOTE 12—EMPLOYEE BENEFITS |
• | Assets contributed to the multiple-employer plan by one participating employer may be used to provide benefits to employees of other participating employers. |
• | If a participating employer stops contributing to the Plan, the unfunded obligations of the Plan may be borne by the remaining participating employers. |
• | If CFC chooses to stop participating in the Plan, CFC may be required to pay a withdrawal liability representing an amount based on the underfunded status of the Plan. |
NOTE 13—GUARANTEES |
May 31, | ||||||||
(Dollars in thousands) | 2017 | 2016 | ||||||
Total by type: | ||||||||
Long-term tax-exempt bonds | $ | 468,145 | $ | 475,965 | ||||
Letters of credit | 307,321 | 319,596 | ||||||
Other guarantees | 114,151 | 113,647 | ||||||
Total | $ | 889,617 | $ | 909,208 | ||||
Total by member class: | ||||||||
CFC: | ||||||||
Distribution | $ | 126,188 | $ | 127,890 | ||||
Power supply | 743,678 | 759,345 | ||||||
Statewide and associate | 5,054 | 5,054 | ||||||
CFC total | 874,920 | 892,289 | ||||||
NCSC | 13,123 | 15,345 | ||||||
RTFC | 1,574 | 1,574 | ||||||
Total | $ | 889,617 | $ | 909,208 |
(Dollars in thousands) | Amount Maturing | |||
2018 | $ | 367,648 | ||
2019 | 26,890 | |||
2020 | 58,251 | |||
2021 | 109,243 | |||
2022 | 38,253 | |||
Thereafter | 289,332 | |||
Total | $ | 889,617 |
NOTE 14—FAIR VALUE MEASUREMENT |
May 31, 2017 | Fair Value Measurements Using | |||||||||||||||||||
(Dollars in thousands) | Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 166,615 | $ | 166,615 | $ | 166,615 | $ | — | $ | — | ||||||||||
Restricted cash | 21,806 | 21,806 | 21,806 | — | — | |||||||||||||||
Time deposits | 226,000 | 226,000 | — | 226,000 | — | |||||||||||||||
Investment securities, available for sale | 92,554 | 92,554 | 92,554 | — | — | |||||||||||||||
Deferred compensation investments | 4,693 | 4,693 | 4,693 | — | — | |||||||||||||||
Loans to members, net | 24,329,668 | 24,182,724 | — | — | 24,182,724 | |||||||||||||||
Accrued interest receivable | 111,493 | 111,493 | — | 111,493 | — | |||||||||||||||
Debt service reserve funds | 17,151 | 17,151 | 17,151 | — | — | |||||||||||||||
Derivative assets | 49,481 | 49,481 | — | 49,481 | — | |||||||||||||||
Liabilities: | ||||||||||||||||||||
Short-term borrowings | $ | 3,342,900 | $ | 3,342,990 | $ | 1,527,990 | $ | 1,815,000 | $ | — | ||||||||||
Long-term debt | 17,955,594 | 18,744,331 | — | 11,215,290 | 7,529,041 | |||||||||||||||
Accrued interest payable | 137,476 | 137,476 | — | 137,476 | — | |||||||||||||||
Guarantee liability | 15,241 | 16,204 | — | — | 16,204 | |||||||||||||||
Derivative liabilities | 385,337 | 385,337 | — | 385,337 | — | |||||||||||||||
Subordinated deferrable debt | 742,274 | 788,079 | — | 788,079 | — | |||||||||||||||
Members’ subordinated certificates | 1,419,025 | 1,419,048 | — | — | 1,419,048 |
May 31, 2016 | Fair Value Measurements Using | |||||||||||||||||||
(Dollars in thousands) | Carrying Value | Fair Value | Level 1 | Level 2 | Level 3 | |||||||||||||||
Assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 204,540 | $ | 204,540 | $ | 204,540 | $ | — | $ | — | ||||||||||
Restricted cash | 4,628 | 4,628 | 4,628 | — | — | |||||||||||||||
Time deposits | 340,000 | 340,000 | — | 340,000 | — | |||||||||||||||
Investment securities, available for sale | 87,940 | 87,940 | 87,940 | — | — | |||||||||||||||
Deferred compensation investments | 4,326 | 4,326 | 4,326 | — | — | |||||||||||||||
Loans to members, net | 23,129,438 | 23,297,924 | — | — | 23,297,924 | |||||||||||||||
Accrued interest receivable | 113,272 | 113,272 | — | 113,272 | — | |||||||||||||||
Debt service reserve funds | 17,151 | 17,151 | 17,151 | — | — | |||||||||||||||
Derivative assets | 80,095 | 80,095 | — | 80,095 | — | |||||||||||||||
Liabilities: | ||||||||||||||||||||
Short-term borrowings | $ | 2,938,848 | $ | 2,938,716 | $ | 1,185,959 | $ | 1,752,757 | $ | — | ||||||||||
Long-term debt | 17,473,603 | 18,577,261 | — | 11,327,004 | 7,250,257 | |||||||||||||||
Accrued interest payable | 132,996 | 132,996 | — | 132,996 | — | |||||||||||||||
Guarantee liability | 17,109 | 19,019 | — | — | 19,019 | |||||||||||||||
Derivative liabilities | 594,820 | 594,820 | — | 594,820 | — | |||||||||||||||
Subordinated deferrable debt | 742,212 | 751,395 | — | 751,395 | — | |||||||||||||||
Members’ subordinated certificates | 1,443,810 | 1,443,834 | — | — | 1,443,834 |
May 31, | ||||||||||||||||||||||||
2017 | 2016 | |||||||||||||||||||||||
(Dollars in thousands) | Level 1 | Level 2 | Total | Level 1 | Level 2 | Total | ||||||||||||||||||
Investment securities available for sale | $ | 92,554 | $ | — | $ | 92,554 | $ | 87,940 | $ | — | $ | 87,940 | ||||||||||||
Deferred compensation investments | 4,693 | — | 4,693 | 4,326 | — | 4,326 | ||||||||||||||||||
Derivative assets | — | 49,481 | 49,481 | — | 80,095 | 80,095 | ||||||||||||||||||
Derivative liabilities | — | 385,337 | 385,337 | — | 594,820 | 594,820 |
Level 3 Fair Value | Unrealized Losses Year Ended May 31, | |||||||||||||||
(Dollars in thousands) | May 31, 2017 | May 31, 2016 | 2017 | 2016 | ||||||||||||
Impaired loans, net of specific reserves (1) | $ | — | $ | 7,498 | $ | — | $ | (4,273 | ) |
NOTE 15—BUSINESS SEGMENTS |
Year Ended May 31, 2017 | ||||||||||||||||
(Dollars in thousands) | CFC | Other | Elimination | Consolidated | ||||||||||||
Statement of operations: | ||||||||||||||||
Interest income | $ | 1,026,302 | $ | 43,502 | $ | (33,170 | ) | $ | 1,036,634 | |||||||
Interest expense | (740,695 | ) | (34,250 | ) | 33,207 | (741,738 | ) | |||||||||
Net interest income | 285,607 | 9,252 | 37 | 294,896 | ||||||||||||
Provision for loan losses | (5,978 | ) | — | — | (5,978 | ) | ||||||||||
Net interest income after provision for loan losses | 279,629 | 9,252 | 37 | 288,918 | ||||||||||||
Non-interest income: | ||||||||||||||||
Fee and other income | 18,858 | 3,528 | (2,673 | ) | 19,713 | |||||||||||
Derivative gains (losses): | ||||||||||||||||
Derivative cash settlements | (81,489 | ) | (2,989 | ) | — | (84,478 | ) | |||||||||
Derivative forward value gains | 175,379 | 4,002 | — | 179,381 | ||||||||||||
Derivative gains | 93,890 | 1,013 | — | 94,903 | ||||||||||||
Results of operations of foreclosed assets | (1,749 | ) | — | — | (1,749 | ) | ||||||||||
Total non-interest income | 110,999 | 4,541 | (2,673 | ) | 112,867 | |||||||||||
Non-interest expense: | ||||||||||||||||
General and administrative expenses | (78,965 | ) | (7,261 | ) | — | (86,226 | ) | |||||||||
Gains on early extinguishment of debt | 192 | — | — | 192 | ||||||||||||
Other non-interest expense | (1,949 | ) | (2,635 | ) | 2,636 | (1,948 | ) | |||||||||
Total non-interest expense | (80,722 | ) | (9,896 | ) | 2,636 | (87,982 | ) | |||||||||
Income before income taxes | 309,906 | 3,897 | — | 313,803 | ||||||||||||
Income tax expense | — | (1,704 | ) | — | (1,704 | ) | ||||||||||
Net income | $ | 309,906 | $ | 2,193 | $ | — | $ | 312,099 | ||||||||
May 31, 2017 | ||||||||||||||||
CFC | Other | Elimination | Consolidated | |||||||||||||
Assets: | ||||||||||||||||
Total loans outstanding | $ | 24,319,673 | $ | 968,343 | $ | (931,686 | ) | $ | 24,356,330 | |||||||
Deferred loan origination costs | 10,714 | — | — | 10,714 | ||||||||||||
Less: Allowance for loan losses | (37,376 | ) | — | — | (37,376 | ) | ||||||||||
Loans to members, net | 24,293,011 | 968,343 | (931,686 | ) | 24,329,668 | |||||||||||
Other assets | 865,867 | 104,643 | (94,486 | ) | 876,024 | |||||||||||
Total assets | $ | 25,158,878 | $ | 1,072,986 | $ | (1,026,172 | ) | $ | 25,205,692 |
Year Ended May 31, 2016 | ||||||||||||||||
(Dollars in thousands) | CFC | Other | Elimination | Consolidated | ||||||||||||
Statement of operations: | ||||||||||||||||
Interest income | $ | 1,001,241 | $ | 45,798 | $ | (34,403 | ) | $ | 1,012,636 | |||||||
Interest expense | (680,661 | ) | (35,665 | ) | 34,476 | (681,850 | ) | |||||||||
Net interest income | 320,580 | 10,133 | 73 | 330,786 | ||||||||||||
Benefit for loan losses | 646 | — | — | 646 | ||||||||||||
Net interest income after benefit for loan losses | 321,226 | 10,133 | 73 | 331,432 | ||||||||||||
Non-interest income: | ||||||||||||||||
Fee and other income | 21,164 | 4,350 | (3,729 | ) | 21,785 | |||||||||||
Derivative losses: | ||||||||||||||||
Derivative cash settlements | (85,316 | ) | (3,442 | ) | — | (88,758 | ) | |||||||||
Derivative forward value losses | (220,827 | ) | (256 | ) | — | (221,083 | ) | |||||||||
Derivative losses | (306,143 | ) | (3,698 | ) | — | (309,841 | ) | |||||||||
Results of operations of foreclosed assets | (6,899 | ) | — | — | (6,899 | ) | ||||||||||
Total non-interest income | (291,878 | ) | 652 | (3,729 | ) | (294,955 | ) | |||||||||
Non-interest expense: | ||||||||||||||||
General and administrative expenses | (77,407 | ) | (8,936 | ) | — | (86,343 | ) | |||||||||
Losses on early extinguishment of debt | (333 | ) | — | — | (333 | ) | ||||||||||
Other non-interest expense | (1,261 | ) | (3,655 | ) | 3,656 | (1,260 | ) | |||||||||
Total non-interest expense | (79,001 | ) | (12,591 | ) | 3,656 | (87,936 | ) | |||||||||
Loss before income taxes | (49,653 | ) | (1,806 | ) | — | (51,459 | ) | |||||||||
Income tax expense | — | (57 | ) | — | (57 | ) | ||||||||||
Net loss | $ | (49,653 | ) | $ | (1,863 | ) | $ | — | $ | (51,516 | ) | |||||
May 31, 2016 | ||||||||||||||||
CFC | Other | Elimination | Consolidated | |||||||||||||
Assets: | ||||||||||||||||
Total loans outstanding | $ | 23,112,714 | $ | 1,022,644 | $ | (982,841 | ) | $ | 23,152,517 | |||||||
Deferred loan origination costs | 10,179 | — | — | 10,179 | ||||||||||||
Less: Allowance for loan losses | (33,258 | ) | — | — | (33,258 | ) | ||||||||||
Loans to members, net | 23,089,635 | 1,022,644 | (982,841 | ) | 23,129,438 | |||||||||||
Other assets | 1,129,138 | 111,789 | (100,165 | ) | 1,140,762 | |||||||||||
Total assets | $ | 24,218,773 | $ | 1,134,433 | $ | (1,083,006 | ) | $ | 24,270,200 |
Year Ended May 31, 2015 | ||||||||||||||||
(Dollars in thousands) | CFC | Other | Elimination | Consolidated | ||||||||||||
Statement of operations: | ||||||||||||||||
Interest income | $ | 940,541 | $ | 46,666 | $ | (34,231 | ) | $ | 952,976 | |||||||
Interest expense | (634,287 | ) | (35,628 | ) | 34,231 | (635,684 | ) | |||||||||
Net interest income | 306,254 | 11,038 | — | 317,292 | ||||||||||||
Provision for loan losses | 21,954 | — | — | 21,954 | ||||||||||||
Net interest income after provision for loan losses | 328,208 | 11,038 | — | 339,246 | ||||||||||||
Non-interest income: | ||||||||||||||||
Fee and other income | 36,215 | 3,447 | (2,879 | ) | 36,783 | |||||||||||
Derivative gains (losses): | ||||||||||||||||
Derivative cash settlements | (78,624 | ) | (4,282 | ) | — | (82,906 | ) | |||||||||
Derivative forward value gains (losses) | (114,665 | ) | 572 | — | (114,093 | ) | ||||||||||
Derivative losses | (193,289 | ) | (3,710 | ) | — | (196,999 | ) | |||||||||
Results of operations from foreclosed assets | (120,148 | ) | — | — | (120,148 | ) | ||||||||||
Total non-interest income | (277,222 | ) | (263 | ) | (2,879 | ) | (280,364 | ) | ||||||||
Non-interest expense: | ||||||||||||||||
General and administrative expenses | (69,129 | ) | (8,370 | ) | 969 | (76,530 | ) | |||||||||
Losses on early extinguishment of debt | (703 | ) | — | — | (703 | ) | ||||||||||
Other non-interest expense | (186 | ) | (1,891 | ) | 1,910 | (167 | ) | |||||||||
Total non-interest expense | (70,018 | ) | (10,261 | ) | 2,879 | (77,400 | ) | |||||||||
Income (loss) before income taxes | (19,032 | ) | 514 | — | (18,518 | ) | ||||||||||
Income tax expense | — | (409 | ) | — | (409 | ) | ||||||||||
Net income (loss) | $ | (19,032 | ) | $ | 105 | $ | — | $ | (18,927 | ) |
SUPPLEMENTARY DATA |
Fiscal Year May 31, 2017 | ||||||||||||||||||||
(Dollars in thousands) | Aug 31, 2016 | Nov 30, 2016 | Feb 28, 2017 | May 31, 2017 | Total | |||||||||||||||
Interest income | $ | 256,835 | $ | 257,156 | $ | 259,920 | $ | 262,723 | $ | 1,036,634 | ||||||||||
Interest expense | (181,080 | ) | (183,654 | ) | (186,740 | ) | (190,264 | ) | (741,738 | ) | ||||||||||
Net interest income | 75,755 | 73,502 | 73,180 | 72,459 | 294,896 | |||||||||||||||
Provision for loan losses | (1,928 | ) | (738 | ) | (2,065 | ) | (1,247 | ) | (5,978 | ) | ||||||||||
Net interest income after provision for loan losses | 73,827 | 72,764 | 71,115 | 71,212 | 288,918 | |||||||||||||||
Non-interest income: | ||||||||||||||||||||
Derivative gains (losses) | (188,293 | ) | 340,660 | 42,455 | (99,919 | ) | 94,903 | |||||||||||||
Other non-interest income | 3,418 | 4,548 | 5,781 | 4,217 | 17,964 | |||||||||||||||
Total non-interest income | (184,875 | ) | 345,208 | 48,236 | (95,702 | ) | 112,867 | |||||||||||||
Non-interest expense | (21,302 | ) | (21,149 | ) | (21,004 | ) | (24,527 | ) | (87,982 | ) | ||||||||||
Income (loss) before income taxes | (132,350 | ) | 396,823 | 98,347 | (49,017 | ) | 313,803 | |||||||||||||
Income tax (expense) benefit | 89 | (1,519 | ) | (385 | ) | 111 | (1,704 | ) | ||||||||||||
Net income (loss) | (132,261 | ) | 395,304 | 97,962 | (48,906 | ) | 312,099 | |||||||||||||
Less: Net (income) loss attributable to noncontrolling interests | 690 | (2,575 | ) | (404 | ) | 96 | (2,193 | ) | ||||||||||||
Net income (loss) attributable to CFC | $ | (131,571 | ) | $ | 392,729 | $ | 97,558 | $ | (48,810 | ) | $ | 309,906 |
Fiscal Year May 31, 2016 | ||||||||||||||||||||
(Dollars in thousands) | Aug 31, 2015 | Nov 30, 2015 | Feb 29, 2016 | May 31, 2016 | Total | |||||||||||||||
Interest income | $ | 246,116 | $ | 256,325 | $ | 253,633 | $ | 256,562 | $ | 1,012,636 | ||||||||||
Interest expense | (165,700 | ) | (167,124 | ) | (171,189 | ) | (177,837 | ) | (681,850 | ) | ||||||||||
Net interest income | 80,416 | 89,201 | 82,444 | 78,725 | 330,786 | |||||||||||||||
Provision for loan losses | (4,562 | ) | (1,240 | ) | 1,735 | 4,713 | 646 | |||||||||||||
Net interest income after provision for loan losses | 75,854 | 87,961 | 84,179 | 83,438 | 331,432 | |||||||||||||||
Non-interest income: | ||||||||||||||||||||
Derivative gains (losses) | (12,017 | ) | (101,184 | ) | (243,036 | ) | 46,396 | (309,841 | ) | |||||||||||
Other non-interest income | 2,780 | 9,085 | 7,076 | (4,055 | ) | 14,886 | ||||||||||||||
Total non-interest income | (9,237 | ) | (92,099 | ) | (235,960 | ) | 42,341 | (294,955 | ) | |||||||||||
Non-interest expense | (23,192 | ) | (20,240 | ) | (23,194 | ) | (21,310 | ) | (87,936 | ) | ||||||||||
Income (loss) before income taxes | 43,425 | (24,378 | ) | (174,975 | ) | 104,469 | (51,459 | ) | ||||||||||||
Income tax benefit (expense) | (330 | ) | (110 | ) | 593 | (210 | ) | (57 | ) | |||||||||||
Net income (loss) | 43,095 | (24,488 | ) | (174,382 | ) | 104,259 | (51,516 | ) | ||||||||||||
Less: Net (income) loss attributable to noncontrolling interest | 230 | 351 | 1,401 | (119 | ) | 1,863 | ||||||||||||||
Net income (loss) attributable to CFC | $ | 43,325 | $ | (24,137 | ) | $ | (172,981 | ) | $ | 104,140 | $ | (49,653 | ) |
(i) | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets; |
(ii) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and that receipts and expenditures of ours are being made only in accordance with authorizations of management and our directors; and |
(iii) | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or dispositions of our assets. |
By: | /s/ SHELDON C. PETERSEN | By: | /s/ J. ANDREW DON | ||
Sheldon C. Petersen Chief Executive Officer | J. Andrew Don Senior Vice President and Chief Financial Officer | ||||
August 1, 2017 | August 1, 2017 | ||||
By: | /s/ ROBERT E. GEIER | ||||
Robert E. Geier Vice President and Controller | |||||
August 1, 2017 |
Item 10. | Directors, Executive Officers and Corporate Governance |
(a) Directors | ||||||
Name | Age | Director Since | Date Present Term Expires | |||
Mike Campbell (President of CFC) | 69 | 2012 | 2018 | |||
Harry N. Park (Vice President of CFC) | 82 | 2013 | 2019 | |||
Kent D. Farmer (Secretary-Treasurer of CFC) | 59 | 2014 | 2020 | |||
Patrick L. Bridges | 58 | 2013 | 2019 | |||
Robert Brockman | 67 | 2015 | 2019 | |||
Phillip A. Carson | 66 | 2015 | 2018 | |||
Roman E. Gillen | 56 | 2013 | 2019 | |||
Doyle Jay Hanson | 71 | 2015 | 2018 | |||
Thomas L. Hayes | 61 | 2014 | 2020 | |||
Robert M. Hill | 69 | 2013 | 2019 | |||
Jimmy A. LaFoy | 76 | 2015 | 2018 | |||
Curtin R. Rakestraw II | 64 | 2013 | 2019 | |||
Debra L. Robinson | 59 | 2016 | 2019 | |||
Bradley J. Schardin | 57 | 2015 | 2018 | |||
Mark D. Snowden | 42 | 2015 | 2018 | |||
Dean R. Tesch | 55 | 2015 | 2018 | |||
Marsha L. Thompson | 62 | 2017 | 2020 | |||
Stephen C. Vail | 58 | 2014 | 2020 | |||
Bruce A. Vitosh | 51 | 2017 | 2020 | |||
Todd P. Ware | 51 | 2015 | 2018 | |||
Alan W. Wattles | 51 | 2016 | 2019 | |||
Gregory D. Williams | 58 | 2015 | 2018 | |||
Curtis Wynn | 53 | 2017 | 2020 |
• | 20 directors, which must include one general manager and one director of a member system from each of 10 districts (but no more than one director from each state except in a district where only one state has members); |
• | two directors designated by NRECA; and |
• | if the board determines at its discretion that an at-large director shall be elected, one at-large director who satisfies the requirements of an Audit Committee financial expert as defined by the Sarbanes-Oxley Act of 2002 and is a trustee, director, manager, Chief Executive Officer or Chief Financial Officer of a member. |
(b) Executive Officers | |||||||
Title | Name | Age | Held Present Office Since(1) | ||||
President and Director | Mike Campbell | 69 | 2017 | ||||
Vice President and Director | Harry N. Park | 82 | 2017 | ||||
Secretary-Treasurer and Director | Kent D. Farmer | 59 | 2017 | ||||
Chief Executive Officer | Sheldon C. Petersen | 64 | 1995 | ||||
Executive Vice President and Chief Operating Officer | John T. Evans | 67 | 2011 | ||||
Senior Vice President and Chief Financial Officer | J. Andrew Don | 57 | 2014 | ||||
Senior Vice President, Credit Risk Management | John M. Borak | 72 | 2003 | ||||
Senior Vice President, Member Services | Joel Allen | 51 | 2014 | ||||
Senior Vice President and General Counsel | Roberta B. Aronson | 59 | 2014 | ||||
Senior Vice President, Corporate Relations | Brad L. Captain | 47 | 2014 | ||||
Senior Vice President, Corporate Services | Graceann D. Clendenen | 59 | 2014 | ||||
Senior Vice President, Strategic Services | Steven M. Kettler | 58 | 2014 | ||||
Senior Vice President, Loan Operations | Robin C. Reed | 55 | 2016 | ||||
Senior Vice President, Business and Industry Development | Gregory Starheim | 54 | 2016 |
Item 11. | Executive Compensation |
• | annual base pay; |
• | an annual cash incentive that is based on the achievement of short-term (one-year) corporate goals; |
• | a three-year cash incentive that is based on the achievement of long-term corporate goals; and |
• | retirement, health and welfare and other benefit programs. |
• | current base salary; |
• | target and actual annual incentive paid in fiscal year 2015; |
• | actual long-term incentive granted, which includes restricted stock awards (valued at face value on the date of grant), stock option awards (valued at grant date utilizing the Black-Scholes option pricing model), other long-term incentive target awards (valued at target value on date of award), and cash long-term incentive payouts (valued at actual payout on date of award if target value is not disclosed); |
• | sign-on awards, special awards and mega-grants annualized over the term of the employment contract or the vesting schedule; and |
• | annualized value of retirement, perquisites and other noncash compensation. |
• | Customer Engagement: Two goals supporting efforts to maintain or increase market share of borrowers in key segments of the loan portfolio. |
• | Internal Process and Operations: One goal focused on managing CFC’s operating expense levels. |
• | Financial Ratios: Two goals supporting efforts to meet or exceed established financial targets to maintain CFC’s financial strength. |
• | Learning, Growth & Innovation: One goal focused on the development of programs and staff training in the area of enhanced industry knowledge and employee engagement. |
Rating | A | A+ | AA- | |||||||||||
Outlook | Negative | Stable | Positive | Negative | Stable | Positive | ||||||||
Numerical Score | 1 | 2 | 3 | 4 | 5 | 6 | ||||||||
Plan Pay-Out Unit Value | $— | $20 | $60 | $60 | $100 | $120 | $150 |
Name and Principal Position | Year | Salary | Bonus(1) | Non-Equity Incentive Plan Compensation(2)(6) | Change in Pension Value and Nonqualified Deferred Compensation Earnings (3) | All Other Compensation (4) | Total | |||||||||||||||||||
Sheldon C. Petersen | 2017 | $ | 1,017,563 | $ | — | $ | 275,172 | $ | 443,017 | $ | 42,747 | $ | 1,778,499 | |||||||||||||
Chief Executive | 2016 | 987,500 | — | 275,180 | 264,155 | 151,957 | 1,678,792 | |||||||||||||||||||
Officer | 2015 | 945,833 | — | 253,435 | 858,490 | 240,000 | 2,297,758 | |||||||||||||||||||
J. Andrew Don | 2017 | 440,000 | 5,000 | 119,500 | 288,597 | 7,925 | 861,022 | |||||||||||||||||||
Senior Vice President | 2016 | 422,500 | 10,000 | 120,938 | 224,406 | 7,925 | 785,769 | |||||||||||||||||||
and Chief Financial | 2015 | 410,000 | 15,000 | 111,010 | 344,608 | 7,783 | 888,401 | |||||||||||||||||||
Officer | ||||||||||||||||||||||||||
John T. Evans | 2017 | 550,000 | 15,000 | 149,750 | 160,950 | 5,425 | 881,125 | |||||||||||||||||||
Executive Vice | 2016 | 532,500 | 15,000 | 151,303 | 136,833 | 6,800 | 842,436 | |||||||||||||||||||
President and Chief | 2015 | 520,000 | — | 139,920 | 238,043 | 6,992 | 904,955 | |||||||||||||||||||
Operating Officer | ||||||||||||||||||||||||||
Gregory J. Starheim(5) | 2017 | 410,000 | 10,000 | 92,250 | 337,809 | 44,370 | 894,429 | |||||||||||||||||||
Senior Vice President, | 2016 | 371,364 | — | 88,084 | 101,819 | 83,678 | 644,945 | |||||||||||||||||||
Business and Industry | ||||||||||||||||||||||||||
Development | ||||||||||||||||||||||||||
Roberta B. Aronson | 2017 | 375,000 | 3,600 | 101,495 | 262,477 | 5,425 | 747,997 | |||||||||||||||||||
Senior Vice President, | ||||||||||||||||||||||||||
and General Counsel | ||||||||||||||||||||||||||
Name | Year | Short-Term Incentive Plan | Long-Term Incentive Plan | |||||||
Sheldon C. Petersen | 2017 | $ | 228,932 | $ | 46,240 | |||||
2016 | 234,500 | 40,680 | ||||||||
2015 | 212,755 | 40,680 | ||||||||
J. Andrew Don | 2017 | 99,000 | 20,500 | |||||||
2016 | 100,938 | 20,000 | ||||||||
2015 | 92,250 | 18,760 | ||||||||
John T. Evans | 2017 | 123,750 | 26,000 | |||||||
2016 | 127,063 | 24,240 | ||||||||
2015 | 117,000 | 22,920 | ||||||||
Gregory J. Starheim | 2017 | 92,250 | — | |||||||
2016 | 88,084 | — | ||||||||
Roberta B. Aronson | 2017 | 84,375 | 17,120 |
Estimated Future Payouts Under Non-Equity Incentive Plan Awards | ||||||||||||
Name | Threshold | Target | Maximum | |||||||||
Sheldon C. Petersen | ||||||||||||
Long-Term Incentive Plan (1) | $ | — | $ | 251,300 | $ | 376,950 | ||||||
Short-Term Incentive Plan (2) | — | 258,788 | 258,788 | |||||||||
J. Andrew Don | ||||||||||||
Long-Term Incentive Plan (1) | — | 110,000 | 165,000 | |||||||||
Short-Term Incentive Plan (2) | — | 110,000 | 110,000 | |||||||||
John T. Evans | ||||||||||||
Long-Term Incentive Plan (1) | — | 137,500 | 206,250 | |||||||||
Short-Term Incentive Plan (2) | — | 137,500 | 137,500 | |||||||||
Gregory J. Starheim | ||||||||||||
Long-Term Incentive Plan (1) | — | 102,500 | 153,750 | |||||||||
Short-Term Incentive Plan (2) | — | 102,500 | 102,500 | |||||||||
Roberta B. Aronson | ||||||||||||
Long-Term Incentive Plan (1) | — | 93,800 | 140,700 | |||||||||
Short-Term Incentive Plan (2) | — | 93,750 | 93,750 |
Name | Plan Name | Number of Years of Credited Service (1) | Present Value of Accumulated Benefit (2) | Payments During Last Fiscal Year(3) | |||||||||
Sheldon C. Petersen (4) | NRECA Retirement Security Plan | 6.75 | $ | 438,306 | $ | 278,421 | |||||||
SERP | — | — | 114,403 | ||||||||||
J. Andrew Don | NRECA Retirement Security Plan | 16.66 | 1,716,618 | — | |||||||||
John T. Evans (4) | NRECA Retirement Security Plan | 7.33 | 579,793 | 81,436 | |||||||||
Gregory J. Starheim | NRECA Retirement Security Plan | 11.25 | 806,032 | — | |||||||||
Roberta B. Aronson | NRECA Retirement Security Plan | 20.83 | 1,485,255 | — |
Name | Executive Contributions in Last Fiscal Year (1) | Registrant Contributions in Last Fiscal Year | Aggregate Earnings in Last Fiscal Year | Aggregate Withdrawals/ Distributions | Aggregate Balance at Last Fiscal Year End | |||||||||||||||
Sheldon C. Petersen | $ | 18,000 | $ | — | $ | 73,904 | $ | — | $ | 683,883 | ||||||||||
J. Andrew Don | 14,750 | — | 2,030 | — | 16,780 | |||||||||||||||
John T. Evans | 18,000 | — | 30,016 | — | 396,832 | |||||||||||||||
Gregory J. Starheim | 18,000 | — | 22,171 | — | 167,857 | |||||||||||||||
Roberta B. Aronson | 22,737 | (2) | — | 10,168 | — | 75,400 |
Name | Total Fees Earned | |||
Alan W. Wattles | $ | 55,000 | ||
Bradley J. Schardin | 55,000 | |||
Bruce A. Vitosh | 13,750 | |||
Curtin R. Rakestraw II | 55,000 | |||
Curtis Wynn | 13,750 | |||
Dean R. Tesch | 55,000 | |||
Debra L. Robinson | 55,000 | |||
Doyle Jay Hanson | 55,000 | |||
Gregory D. Williams | 55,000 | |||
Harry N. Park | 61,000 | |||
Jimmy A. LaFoy | 55,000 | |||
Kent D. Farmer | 56,500 | |||
Kirk A. Thompson | 41,250 | |||
Mark D. Snowden | 55,000 | |||
Marsha L. Thompson | 13,750 | |||
Mel Coleman | 41,250 | |||
Mike Campbell | 61,000 | |||
Patrick L. Bridges | 55,000 | |||
Philip A. Carson | 55,000 | |||
R. Grant Clawson | 45,750 | |||
Robert Brockman | 55,000 | |||
Robert M. Hill | 55,000 | |||
Roman E. Gillen | 55,000 | |||
Stephen C. Vail | 55,000 | |||
Thomas L. Hayes | 55,000 | |||
Todd P. Ware | 55,000 |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
Item 13. | Certain Relationships and Related Transactions, and Director Independence |
Name and Principal Position | Total Compensation | |||
Graceann D. Clendenen | ||||
Senior Vice President, Corporate Services | $ | 863,978 | ||
Joel Allen | ||||
Senior Vice President, Member Services | 740,175 | |||
Robin C. Reed | ||||
Senior Vice President, Loan Operations | 634,879 | |||
Steven M. Kettler | ||||
Senior Vice President, Strategic Services | 548,565 | |||
Steven L. Lilly(1) | ||||
Senior Vice President, Special Asset Management | 476,834 | |||
Brad L. Captain | ||||
Senior Vice President, Corporate Relations | 470,970 | |||
John M. Borak | ||||
Senior Vice President, Credit Risk Management | 449,293 |
(i) | the director is, or has been within the last three years, an employee of CFC or an immediate family member is, or has been within the last three years, an executive officer of CFC; |
(ii) | the director has received, or has an immediate family member who has received, during any 12-month period within the last three years, more than $120,000 in direct compensation from CFC, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided that such compensation is not contingent in any way on continued service); |
(iii) | (a) the director or an immediate family member is a current partner of a firm that is CFC’s internal or external auditor; (b) the director is a current employee of such a firm; (c) the director has an immediate family member who is a current employee of such a firm and personally works on CFC’s audit; or (d) the director or an immediate |
(iv) | the director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of CFC’s present executive officers at the same time serves or served on that company’s compensation committee; or |
(v) | the director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, CFC for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenue. |
Independent Directors | ||
Patrick L. Bridges | Robert Brockman | Mike Campbell |
Philip A. Carson | R. Grant Clawson(1) | Mel Coleman(1) |
Kent D. Farmer | Doyle Jay Hanson | Thomas L. Hayes |
Robert M. Hill | Jimmy A. LaFoy | Harry N. Park |
Curtin R. Rakestraw II | Bradley J. Schardin | Dean R. Tesch |
Marsha L. Thompson | Stephen C. Vail | Bruce A. Vitosh |
Gregory D. Williams | Curtis Wynn | |
____________________________ | ||
(1) This director served during the year ended May 31, 2017; however, he was no longer a director as of May 31, 2017. |
Item 14. | Principal Accounting Fees and Services |
May 31, | ||||||||
(Dollars in thousands) | 2017 | 2016 | ||||||
Description of fees: | ||||||||
Audit fees(1) | $ | 1,480 | $ | 1,623 | ||||
Tax fees(2) | 23 | 17 | ||||||
All other fees(3) | 29 | 28 | ||||||
Total | $ | 1,532 | $ | 1,668 |
(a) | Financial Statement Schedules | |
The following documents are filed as part of this Report in Part II, Item 8 and are incorporated herein by reference. | ||
1. | Consolidated Financial Statements | Page |
2. | Schedules | |
None. | ||
(b) | Exhibits | |
An Exhibit Index has been filed as part of this Form 10-K and is incorporated herein by reference. | ||
NATIONAL RURAL UTILITIES COOPERATIVE | |
FINANCE CORPORATION | |
By: | /s/ SHELDON C. PETERSEN |
Sheldon C. Petersen | |
Chief Executive Officer |
Signature | Title | Date | ||
/s/ SHELDON C. PETERSEN | Chief Executive Officer | August 1, 2017 | ||
Sheldon C. Petersen | ||||
/s/ J. ANDREW DON | Senior Vice President and Chief Financial Officer | August 1, 2017 | ||
J. Andrew Don | ||||
/s/ ROBERT E. GEIER | Vice President and Controller | August 1, 2017 | ||
Robert E. Geier | ||||
/s/ MIKE CAMPBELL | President and Director | August 1, 2017 | ||
Mike Campbell | ||||
/s/ HARRY N. PARK | Vice President and Director | August 1, 2017 | ||
Harry N. Park | ||||
/s/ KENT D. FARMER | Secretary-Treasurer and Director | August 1, 2017 | ||
Kent D. Farmer | ||||
/s/ PATRICK L. BRIDGES | Director | August 1, 2017 | ||
Patrick L. Bridges | ||||
/s/ ROBERT BROCKMAN | Director | August 1, 2017 | ||
Robert Brockman | ||||
/s/ PHILIP A. CARSON | Director | August 1, 2017 | ||
Philip A. Carson | ||||
/s/ ROMAN E. GILLEN | Director | August 1, 2017 | ||
Roman E. Gillen | ||||
/s/ DOYLE JAY HANSON | Director | August 1, 2017 | ||
Doyle Jay Hanson | ||||
/s/ THOMAS L. HAYES | Director | August 1, 2017 | ||
Thomas L. Hayes | ||||
/s/ ROBERT M. HILL | Director | August 1, 2017 | ||
Robert M. Hill | ||||
/s/ JIMMY A. LAFOY | Director | August 1, 2017 | ||
Jimmy A. LaFoy |
/s/ CURTIN R. RAKESTRAW II | Director | August 1, 2017 | ||
Curtin R. Rakestraw II | ||||
/s/ DEBRA L. ROBINSON | Director | August 1, 2017 | ||
Debra L. Robinson | ||||
/s/ BRADLEY J. SCHARDIN | Director | August 1, 2017 | ||
Bradley J. Schardin | ||||
/s/ MARK D. SNOWDEN | Director | August 1, 2017 | ||
Mark D. Snowden | ||||
/s/ DEAN R. TESCH | Director | August 1, 2017 | ||
Dean R. Tesch | ||||
/s/ MARSHA L. THOMPSON | Director | August 1, 2017 | ||
Marsha L. Thompson | ||||
/s/ STEPHEN C. VAIL | Director | August 1, 2017 | ||
Stephen C. Vail | ||||
/s/ BRUCE A. VITOSH | Director | August 1, 2017 | ||
Bruce A. Vitosh | ||||
/s/ TODD P. WARE | Director | August 1, 2017 | ||
Todd P. Ware | ||||
/s/ ALAN W. WATTLES | Director | August 1, 2017 | ||
Alan W. Wattles | ||||
/s/ GREGORY D. WILLIAMS | Director | August 1, 2017 | ||
Gregory D. Williams | ||||
/s/ CURTIS WYNN | Director | August 1, 2017 | ||
Curtis Wynn | ||||
Exhibit No. | Description | |
3.1 | — | Articles of Incorporation. Incorporated by reference to Exhibit 3.1 to our Form 10-K filed on August 28, 2014. |
3.2 | — | Amended Bylaws as approved by the CFC Board of Directors and members on March 7, 2011. Incorporated by reference to Exhibit 3.2 to our Form 10-Q filed on April 13, 2011. |
4.1 | — | Form of Capital Term Certificate. Incorporated by reference to Exhibit 4.3 to Registration Statement No. 2-46018 filed October 12, 1972. |
4.2 | — | Indenture dated February 15, 1994, between the Registrant and First Bank National Association as trustee. Incorporated by reference to Exhibit 4.2 to our Form 10-Q filed on October 15, 2007. |
4.3 | — | Form of indenture between CFC and Mellon Bank, N.A., as Trustee. Incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-3 filed on November 14, 1995 (Registration No. 33-64231). |
4.4 | — | Indenture dated as of December 15,1987, between CFC and Chemical Bank, as Trustee. Incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-3ASR filed on November 24, 2008 (Registration No. 333-155631). |
4.5 | — | First Supplemental Indenture between CFC and Chemical Bank, as Trustee. Incorporated by reference to Exhibit 4.2 to Registration Statement on Form S-3 filed on April 5, 1995 (Registration No. 33-58445). |
4.6 | — | Form of indenture dated May 15, 2000, between the Registrant and Bank One Trust Company, National Association, as trustee. Incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-3 filed on May 25, 2000 (Registration No. 333-37940). |
4.7 | — | First Supplemental Indenture dated March 12, 2007, between the Registrant and U.S. Bank National Association, as successor trustee. Incorporated by reference to Exhibit 4.2 to Registration Statement on Form S-3ASR filed on April 19, 2007 (Registration No. 333-142230). |
4.8 | — | Indenture dated October 25, 2007, between the Registrant and U.S. Bank National Association, as trustee. Incorporated by reference to Exhibit 4.1 to Registration Statement on Form S-3ASR filed on October 26, 2007 (Registration No. 333-146960). |
10.1^ | — | Plan Document for CFC’s Deferred Compensation Program amended and restated July 1, 2003. Incorporated by reference to Exhibit 10.1 to our Form 10-K filed on August 24, 2005. |
10.2^ | — | Employment Contract between CFC and John T. Evans, dated September 17, 1997. Incorporated by reference to Exhibit 10.4 to our Form 10-K filed on August 27, 2007. |
10.3^ | — | Plan Document for CFC’s Deferred Compensation Pension Restoration Plan dated January 1, 2005. Incorporated by reference to Exhibit 10.16 to our Form 10-K filed on August 17, 2009. |
10.4^ | — | Plan Document for CFC’s Deferred Compensation Program amended and restated February 1, 2014. Incorporated by reference to Exhibit 10.6 to our Form 10-K filed on August 28, 2014. |
10.5^ | — | Plan Document for CFC's Executive Benefit Restoration Plan dated December 9, 2014. Incorporated by reference to Exhibit 10.1 to our Form 10-Q filed on April 13, 2015. |
10.6^ | — | Employment Agreement between the Company and Sheldon C. Petersen, effective January 1, 2015. Incorporated by reference to Exhibit 10.1 to our Form 8-K filed on December 23, 2014. |
10.7^ | — | Supplemental Executive Retirement Plan of the Company, effective January 1, 2015. Incorporated by reference to Exhibit 10.2 to our Form 8-K filed on December 23, 2014. |
10.8 | — | Amended and Restated Revolving Credit Agreement dated November 19, 2015 maturing on November 19, 2018. Incorporated by reference to Exhibit 10.1 to our Form 10-Q filed on January 13, 2016. |
10.9 | — | Amended and Restated Revolving Credit Agreement dated November 19, 2015 maturing on November 19, 2020. Incorporated by reference to Exhibit 10.2 to our Form 10-Q filed on January 13, 2016. |
10.10 | — | Amendment No.1 dated as of November 18, 2016 to the Amended and Restated Revolving Credit Agreement dated as of November 19, 2015 maturing on November 19, 2019. Incorporated by reference to Exhibit 10.1 to our Form 10-Q filed on January 13, 2017. |
Exhibit No. | Description | |
10.11 | — | Amendment No.1 dated as of November 18, 2016 to the Amended and Restated Revolving Credit Agreement dated as of November 19, 2015 maturing on November 19, 2021. Incorporated by reference to Exhibit 10.2 to our Form 10-Q filed on January 13, 2017. |
10.12 | — | Bond Purchase Agreement between the Registrant, Federal Financing Bank and Rural Utilities Service dated June 14, 2005 for up to $1,000,000,000. Incorporated by reference to Exhibit 4.12 to our Form 10-K filed on August 24, 2005. |
10.13 | — | Series A Future Advance Bond from the Registrant to the Federal Financing Bank dated June 14, 2005 for up to $1,000,000,000 maturing on July 15, 2028. Incorporated by reference to Exhibit 4.15 to our Form 10-K filed on August 24, 2005. |
10.14 | — | Bond Purchase Agreement between the Registrant, Federal Financing Bank and Rural Utilities Service dated April 28, 2006 for up to $1,500,000,000. Incorporated by reference to Exhibit 4.11 to our Form 10-K filed on August 25, 2006. |
10.15 | — | Series B Future Advance Bond from the Registrant to the Federal Financing Bank dated April 28, 2006 for up to $1,500,000,000 maturing on July 15, 2029. Incorporated by reference to Exhibit 4.14 to our Form 10-K filed on August 25, 2006. |
10.16 | — | Series C Bond Purchase Agreement between the Registrant, Federal Financing Bank and Rural Utilities Service dated September 19, 2008 for up to $500,000,000. Incorporated by reference to Exhibit 4.29 to our Form 10-Q filed on October 14, 2008. |
10.17 | — | Series C Future Advance Bond from the Registrant to the Federal Financing Bank dated September 19, 2008 for up to $500,000,000 maturing on October 15, 2031. Incorporated by reference to Exhibit 4.32 to our Form 10-Q filed on October 14, 2008. |
10.18 | — | Series D Bond Purchase Agreement between the Registrant, Federal Financing Bank and Rural Utilities Service dated as of November 10, 2010 for up to $500,000,000. Incorporated by reference to Exhibit 4.1 to our Form 10-Q filed on January 14, 2011. |
10.19 | — | Series D Future Advance Bond from the Registrant to the Federal Financing Bank dated as of November 10, 2010 for up to $500,000,000 maturing on October 15, 2033. Incorporated by reference to Exhibit 4.4 to our Form 10-Q filed on January 14, 2011. |
10.20 | — | Series E Bond Purchase Agreement between the Registrant, Federal Financing Bank and Rural Utilities Service dated as of December 1, 2011 for up to $499,000,000. Incorporated by reference to Exhibit 10.3 to our Form 10-Q filed on January 17, 2012. |
10.21 | — | Series E Future Advance Bond from the Registrant to the Federal Financing Bank dated as of December 1, 2011 for up to $499,000,000 maturing on October 15, 2034. Incorporated by reference to Exhibit 10.6 to our Form 10-Q filed on January 17, 2012. |
10.22 | — | Series F Bond Purchase Agreement between the Registrant, Federal Financing Bank and Rural Utilities Service dated as of December 13, 2012 for up to $424,286,000. Incorporated by reference to Exhibit 10.1 to our Form 10-Q filed in January 14, 2013. |
10.23 | — | Series F Future Advance Bond from the Registrant to the Federal Financing Bank dated as of December 13, 2012 for up to $424,286,000 maturing on October 15, 2035. Incorporated by reference to Exhibit 10.4 to our Form 10-Q filed in January 14, 2013. |
10.24 | — | Series G Bond Purchase Agreement between the Registrant, Federal Financing Bank and Rural Utilities Service dated as of November 21, 2013 for up to $500,000,000. Incorporated by reference to Exhibit 10.1 to our Form 10-Q filed in January 13, 2014. |
10.25 | — | Series G Future Advance Bond from the Registrant to the Federal Financing Bank dated as of November 21, 2013 for up to $500,000,000 maturing on October 15, 2036. Incorporated by reference to Exhibit 10.3 to our Form 10-Q filed in January 13, 2014. |
10.26 | — | Series H Bond Purchase Agreement between the Registrant, Federal Financing Bank and Rural Utilities Service dated as of November 18, 2014 for up to $250,000,000. Incorporated by reference to Exhibit 10.1 to our Form 10-Q filed on April 13, 2015. |
10.27 | — | Series H Future Advance Bond from the Registrant to the Federal Financing Bank dated as of November 18, 2014 for up to $250,000,000 maturing on October 15, 2034. Incorporated by reference to Exhibit 10.1 to our Form 10-Q filed on April 13, 2015. |
10.28 | — | Series K Bond Purchase Agreement between the Registrant, Federal Financing Bank and Rural Utilities Service dated as of March 29, 2016 for up to $250,000,000. Incorporated by reference to Exhibit 10.1 to our Form 10-Q filed on April 4, 2016. |
Exhibit No. | Description | |
10.29 | — | Series K Future Advance Bond from the Registrant to the Federal Financing Bank dated as of March 29, 2016 for up to $250,000,000 maturing on January 15, 2039. Incorporated by reference to Exhibit 10.2 to our Form 10-Q filed on April 4, 2016. |
10.30 | — | Series L Bond Purchase Agreement between the Registrant, Federal Financing Bank and Rural Utilities Service dated as of December 1, 2016 for up to $375,000,000. Incorporated by reference to Exhibit 10.3 to our Form 10-Q filed on January 13, 2017. |
10.31 | — | Series L Future Advance Bond from the Registrant to the Federal Financing Bank dated as of December 1, 2016 for up to $375,000,000 maturing on October 15, 2039. Incorporated by reference to Exhibit 10.4 to our Form 10-Q filed on January 13, 2017. |
10.32 | — | Second Amended, Restated and Consolidated Pledge Agreement dated as of March 29, 2016 between the Registrant, the Rural Utilities Service and U.S. Bank National Association. Incorporated by reference to Exhibit 10.3 to our Form 10-Q filed on April 4, 2016. |
10.33 | — | Second Amended, Restated and Consolidated Bond Guarantee Agreement dated as of March 29, 2016 between the Registrant and the Rural Utilities Service. Incorporated by reference to Exhibit 10.4 to our Form 10-Q filed on April 4, 2016. |
10.34 | — | Third Amended, Restated and Consolidated Pledge Agreement dated as of December 1, 2016 between the Registrant, the Rural Utilities Service and U.S. Bank National Association. Incorporated by reference to Exhibit 10.5 to our Form 10-Q filed on January 13, 2017. |
10.35 | — | Third Amended, Restated and Consolidated Bond Guarantee Agreement dated as of December 1, 2016 between the Registrant and the Rural Utilities Service. Incorporated by reference to Exhibit 10.6 to our Form 10-Q filed on January 13, 2017. |
10.36 | — | Master Sale and Servicing Agreement dated July 24, 2009, between the Registrant and Federal Agricultural Mortgage Corporation. Incorporated by reference to Exhibit 4.47 to our Form 10-K filed on August 17, 2009. |
10.37 | — | Amended and Restated Master Sale and Servicing Agreement, dated as of August 12, 2011, by and between the Registrant and the Federal Agricultural Mortgage Corporation, as amended by Amendment No. 1 dated as of November 28, 2016. Incorporated by reference to Exhibit 10.7 to our Form 10-Q filed on January 13, 2017. |
10.38 | — | Amended and Restated Master Note Purchase Agreement dated March 24, 2011 between the Registrant and Federal Agricultural Mortgage Corporation. Incorporated by reference to Exhibit 4.4 to our Form 10-Q filed on April 13, 2011. |
10.39 | — | First Supplemental Note Purchase Agreement dated March 24, 2011 for $3,900,000,000 between the Registrant and Federal Agricultural Mortgage Corporation. Incorporated by reference to Exhibit 4.6 to our Form 10-Q filed on April 13, 2011. |
10.40 | — | Amended and Restated First Supplemental Note Purchase Agreement dated January 8, 2015, between the Registrant and Federal Agricultural Mortgage Corporation. Incorporated by reference to Exhibit 10.6 to our Form 10-Q filed on January 14, 2015. |
10.41 | — | Second Amended, Restated and Consolidated Pledge Agreement dated July 31, 2015, between the Registrant, Federal Agricultural Mortgage Corporation and U.S. Bank Trust National Association. Incorporated by reference to Exhibit 10.48 to our Form 10-K filed on August 26, 2015. |
10.42 | — | Long Term Standby Commitment to Purchase dated August 31, 2015, between the Registrant and Federal Agricultural Mortgage Corporation. Incorporated by reference to Exhibit 10.1 to our Form 10-Q filed on October 14, 2015. |
10.43 | — | Amendment No. 1 to Long Term Standby Commitment to Purchase, dated as of May 31, 2016, between the Registrant and Federal Agricultural Mortgage Corporation. Incorporated by reference to Exhibit 10.38 to our Form 10-K filed on August 25, 2016. |
10.44 | — | Purchase Agreement dated September 30, 2015, between the Registrant, Caribbean Asset Holdings, LLC, ATN VI Holdings, LLC and Atlantic Tele-Network, Inc. Incorporated by reference to Exhibit 10.2 to our Form 10-Q filed on October 14, 2015. |
10.45 | — | Amendment to Purchase Agreement dated July 1 2016, between the Registrant, Caribbean Asset Holdings, LLC, ATN VI Holdings, LLC and ATN International (formerly Atlantic Tele-Network, Inc.). Incorporated by reference to Exhibit 10.40 to our Form 10-K filed on August 25, 2016. |
Registrant agrees to furnish to the Securities and Exchange Commission a copy of all other instruments defining the rights of holders of its long-term debt upon request. | ||
12* | — | Computations of ratio of earnings to fixed charges. |
Exhibit No. | Description | |
23.1* | — | Consent of KPMG LLP. |
31.1* | — | Certification of the Chief Executive Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. |
31.2* | — | Certification of the Chief Financial Officer required by Section 302 of the Sarbanes-Oxley Act of 2002. |
32.1† | — | Certification of the Chief Executive Officer required by Section 906 of the Sarbanes-Oxley Act of 2002. |
32.2† | — | Certification of the Chief Financial Officer required by Section 906 of the Sarbanes-Oxley Act of 2002. |
101.INS* | — | XBRL Instance Document. |
101.SCH* | — | XBRL Taxonomy Extension Schema Document. |
101.CAL* | — | XBRL Taxonomy Calculation Linkbase Document. |
101.LAB* | — | XBRL Taxonomy Label Linkbase Document. |
101.PRE* | — | XBRL Taxonomy Presentation Linkbase Document |
101.DEF* | — | XBRL Taxonomy Definition Linkbase Document |
Year Ended May 31, | ||||||||||||||||||||
(Dollars in thousands) | 2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
Earnings: | ||||||||||||||||||||
Net income (loss) | $ | 312,099 | $ | (51,516 | ) | $ | (18,927 | ) | $ | 192,926 | $ | 358,087 | ||||||||
Include: Fixed charges | 741,738 | 681,850 | 635,684 | 654,655 | 692,025 | |||||||||||||||
Income available for fixed charges | $ | 1,053,837 | $ | 630,334 | $ | 616,757 | $ | 847,581 | $ | 1,050,112 | ||||||||||
Fixed charges: | ||||||||||||||||||||
Interest on all borrowings(1) | $ | 741,738 | $ | 681,850 | $ | 635,684 | $ | 654,655 | $ | 692,025 | ||||||||||
Ratio of earnings to fixed charges | 1.42 | 0.92 | 0.97 | 1.29 | 1.52 |
1. | I have reviewed this report on Form 10-K of National Rural Utilities Cooperative Finance Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s board of directors: |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ SHELDON C. PETERSEN |
Sheldon C. Petersen | |
Chief Executive Officer |
1. | I have reviewed this report on Form 10-K of National Rural Utilities Cooperative Finance Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s board of directors: |
a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
By: | /s/ J. ANDREW DON |
J. Andrew Don | |
Chief Financial Officer |
1. | CFC’s Annual Report on Form 10-K for the fiscal year ended May 31, 2017 filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of CFC. |
By: | /s/ SHELDON C. PETERSEN |
Sheldon C. Petersen | |
Chief Executive Officer |
1. | CFC’s Annual Report on Form 10-K for the fiscal year ended May 31, 2017 filed with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of CFC. |
By: | /s/ J. ANDREW DON |
J. Andrew Don | |
Chief Financial Officer |
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Document and Entity Information |
12 Months Ended |
---|---|
May 31, 2017
USD ($)
shares
| |
Document and Entity Information | |
Entity Registrant Name | NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORP /DC/ |
Entity Central Index Key | 0000070502 |
Document Type | 10-K |
Document Period End Date | May 31, 2017 |
Amendment Flag | false |
Current Fiscal Year End Date | --05-31 |
Entity Well-known Seasoned Issuer | Yes |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Public Float | $ | $ 0 |
Entity Common Stock, Shares Outstanding | shares | 0 |
Document Fiscal Year Focus | 2017 |
Document Fiscal Period Focus | FY |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands |
12 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
|||||||
Income Statement [Abstract] | |||||||||
Interest income | $ 1,036,634 | $ 1,012,636 | $ 952,976 | ||||||
Interest expense | [1],[2],[3] | (741,738) | (681,850) | (635,684) | |||||
Net interest income | 294,896 | 330,786 | 317,292 | ||||||
Benefit (provision) for loan losses | (5,978) | 646 | 21,954 | ||||||
Net interest income after benefit (provision) for loan losses | 288,918 | 331,432 | 339,246 | ||||||
Non-interest income: | |||||||||
Fee and other income | 19,713 | 21,785 | 36,783 | ||||||
Derivative gains (losses) | 94,903 | (309,841) | (196,999) | ||||||
Results of operations of foreclosed assets | (1,749) | (6,899) | (120,148) | ||||||
Total non-interest income | 112,867 | (294,955) | (280,364) | ||||||
Non-interest expense: | |||||||||
Salaries and employee benefits | (47,769) | (44,590) | (43,845) | ||||||
Other general and administrative expenses | (38,457) | (41,753) | (32,685) | ||||||
Gains (losses) on early extinguishment of debt | 192 | (333) | (703) | ||||||
Other non-interest expense | (1,948) | (1,260) | (167) | ||||||
Total non-interest expense | (87,982) | (87,936) | (77,400) | ||||||
Income (loss) before income taxes | 313,803 | (51,459) | (18,518) | ||||||
Income tax expense | (1,704) | (57) | (409) | ||||||
Net income (loss) | 312,099 | (51,516) | (18,927) | ||||||
Less: Net (income) loss attributable to noncontrolling interests | (2,193) | 1,863 | (105) | ||||||
Net income (loss) attributable to CFC | $ 309,906 | $ (49,653) | $ (19,032) | ||||||
|
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
|
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 312,099 | $ (51,516) | $ (18,927) |
Other comprehensive income (loss): | |||
Unrealized gains on available-for-sale investment securities | 4,614 | 3,468 | 4,295 |
Unrealized losses on foreclosed assets | 0 | (5,575) | (1,938) |
Reclassification of losses on foreclosed assets to net income | 9,823 | ||
Reclassification of derivative gains to net income | (785) | (888) | (959) |
Defined benefit plan adjustments | (1,535) | (31) | (977) |
Other comprehensive income (loss) | 12,117 | (3,026) | 421 |
Total comprehensive income (loss) | 324,216 | (54,542) | (18,506) |
Less: Total comprehensive (income) loss attributable to noncontrolling interests | (2,193) | 1,867 | (95) |
Total comprehensive income (loss) attributable to CFC | $ 322,023 | $ (52,675) | $ (18,601) |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - USD ($) $ in Thousands |
Total |
Noncontrolling interest |
Total CFC equity |
CFC Accumulated other comprehensive income |
CFC retained equity |
Unallocated net income (loss) |
Members' capital reserve |
Patronage capital allocated |
Membership fees and education fund |
---|---|---|---|---|---|---|---|---|---|
Balance at May. 31, 2014 | $ 970,374 | $ 26,837 | $ 943,537 | $ 3,649 | $ 939,888 | $ (178,650) | $ 485,447 | $ 630,340 | $ 2,751 |
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | (18,927) | 105 | (19,032) | (19,032) | (114,662) | 16,283 | 78,420 | 927 | |
Other comprehensive loss | 421 | (10) | 431 | 431 | |||||
Patronage capital retirement | (40,141) | (362) | (39,779) | (39,779) | (39,779) | ||||
Other | 59 | 894 | (835) | (835) | 100 | 1 | (1) | (935) | |
Balance at May. 31, 2015 | 911,786 | 27,464 | 884,322 | 4,080 | 880,242 | (293,212) | 501,731 | 668,980 | 2,743 |
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | (51,516) | (1,863) | (49,653) | (49,653) | (220,827) | 85,917 | 84,257 | 1,000 | |
Other comprehensive loss | (3,026) | (4) | (3,022) | (3,022) | |||||
Patronage capital retirement | (39,384) | 0 | (39,384) | (39,384) | 0 | (39,384) | |||
Other | (482) | 489 | (971) | (971) | 429 | (429) | (971) | ||
Balance at May. 31, 2016 | 817,378 | 26,086 | 791,292 | 1,058 | 790,234 | (513,610) | 587,219 | 713,853 | 2,772 |
Increase (Decrease) in Stockholders' Equity | |||||||||
Net income (loss) | 312,099 | 2,193 | 309,906 | 309,906 | 175,379 | 43,086 | 90,441 | 1,000 | |
Other comprehensive loss | 12,117 | 0 | 12,117 | 12,117 | |||||
Patronage capital retirement | (42,490) | 0 | (42,490) | (42,490) | 103 | (42,593) | |||
Other | (299) | 573 | (872) | (872) | 0 | 0 | 0 | (872) | |
Balance at May. 31, 2017 | $ 1,098,805 | $ 28,852 | $ 1,069,953 | $ 13,175 | $ 1,056,778 | $ (338,128) | $ 630,305 | $ 761,701 | $ 2,900 |
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands |
12 Months Ended | ||
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May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
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CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net income (loss) | $ 312,099 | $ (51,516) | $ (18,927) |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Amortization of deferred income | (14,072) | (18,751) | (11,582) |
Amortization of debt issuance costs and deferred charges | 9,484 | 8,478 | 7,351 |
Amortization of discount on long-term debt | 9,501 | 8,693 | 7,939 |
Amortization of issuance costs for revolving bank lines of credit | 5,531 | 5,535 | 5,238 |
Depreciation and amortization | 7,173 | 7,327 | 6,497 |
Provision (benefit) for loan losses | 5,978 | (646) | (21,954) |
Results of operations of foreclosed assets | 1,749 | 6,899 | 120,148 |
Derivative forward value (gains) losses | (179,381) | 221,083 | 114,093 |
Changes in operating assets and liabilities: | |||
Accrued interest receivable | 1,778 | (6,225) | (6,705) |
Accrued interest payable | 4,480 | 9,299 | 5,316 |
Deferred income | 9,393 | 21,822 | 9,122 |
Other | 5,855 | 15,560 | 2,442 |
Net cash provided by operating activities | 179,568 | 227,558 | 218,978 |
Cash flows from investing activities: | |||
Advances on loans | (7,762,423) | (8,484,794) | (8,333,180) |
Principal collections on loans | 6,616,750 | 6,791,710 | 7,339,378 |
Net investment in fixed assets | (17,793) | (9,806) | (9,940) |
Net cash proceeds from sale of foreclosed assets | 51,042 | 5,414 | 16,709 |
Proceeds from foreclosed assets | 0 | (4,349) | (9,651) |
Proceeds from time deposits, net | 114,000 | 145,000 | 65,000 |
Investments in securities available for sale | 0 | 0 | (25,000) |
Change in restricted cash | (17,178) | (4,143) | 35 |
Net cash used in investing activities | (1,015,602) | (1,560,968) | (956,649) |
Cash flows from financing activities: | |||
Proceeds from (repayments of) short-term borrowings, net | 409,871 | (154,072) | (1,042,483) |
Proceeds from short-term borrowings with original maturity greater than 90 days | 1,003,185 | 890,242 | 574,187 |
Repayments of short term-debt with original maturity greater than 90 days | (1,009,004) | (925,076) | (503,281) |
Payments for issuance costs for revolving bank lines of credit | (2,548) | (3,009) | (3,249) |
Proceeds from issuance of long-term debt, net of issuance costs | 2,923,868 | 2,920,669 | 3,049,869 |
Payments for retirement of long-term debt | (2,460,730) | (1,709,283) | (1,296,620) |
Payment for Issuance Costs of Subordinated Deferrable Debt | (68) | ||
Proceeds from issuance of subordinated debt | 0 | 346,433 | 0 |
Proceeds from issuance of members’ subordinated certificates | 3,626 | 5,654 | 74,842 |
Payments for retirement of members’ subordinated certificates | (28,220) | (43,596) | (166,275) |
Payments for retirement of patronage capital | (41,871) | (38,848) | (39,198) |
Net cash provided by financing activities | 798,109 | 1,289,114 | 647,792 |
Net decrease in cash and cash equivalents | (37,925) | (44,296) | (89,879) |
Beginning cash and cash equivalents | 204,540 | 248,836 | 338,715 |
Ending cash and cash equivalents | 166,615 | 204,540 | 248,836 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 712,742 | 649,845 | 609,840 |
Cash paid for income taxes | $ 407 | $ 72 | $ 210 |
Summary of Significant Accounting Policies (Notes) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
The Company National Rural Utilities Cooperative Finance Corporation (“CFC”) is a member-owned cooperative association incorporated under the laws of the District of Columbia in April 1969. CFC’s principal purpose is to provide its members with financing to supplement the loan programs of the Rural Utilities Service (“RUS”) of the United States Department of Agriculture (“USDA”). CFC makes loans to its rural electric members so they can acquire, construct and operate electric distribution, generation, transmission and related facilities. CFC also provides its members with credit enhancements in the form of letters of credit and guarantees of debt obligations. As a cooperative, CFC is owned by and exclusively serves its membership, which consists of not-for-profit entities or subsidiaries or affiliates of not-for-profit entities. CFC is exempt from federal income taxes. National Cooperative Services Corporation (“NCSC”) is a taxable cooperative incorporated in 1981 in the District of Columbia as a member-owned cooperative association. NCSC’s principal purpose is to provide financing to members of CFC, entities eligible to be members of CFC and the for-profit and nonprofit entities that are owned, operated or controlled by or provide significant benefit to certain members of CFC. NCSC’s membership consists of distribution systems, power supply systems and statewide and regional associations that are members of CFC. CFC is the primary source of funding for NCSC and manages NCSC’s business operations under a management agreement that is automatically renewable on an annual basis unless terminated by either party. NCSC pays CFC a fee and, in exchange, CFC reimburses NCSC for loan losses under a guarantee agreement. As a taxable cooperative, NCSC pays income tax based on its reported taxable income and deductions. NCSC is headquartered with CFC in Dulles, Virginia. Rural Telephone Finance Cooperative (“RTFC”) is a taxable Subchapter T cooperative association originally incorporated in South Dakota in 1987 and reincorporated as a member-owned cooperative association in the District of Columbia in 2005. RTFC’s principal purpose is to provide financing for its rural telecommunications members and their affiliates. RTFC’s membership consists of a combination of not-for-profit and for-profit entities. CFC is the sole lender to and manages the business operations of RTFC through a management agreement that is automatically renewable on an annual basis unless terminated by either party. Under a guarantee agreement, RTFC pays CFC a fee and, in exchange, CFC reimburses RTFC for loan losses. As permitted under Subchapter T of the Internal Revenue Code, RTFC pays income tax based on its net income, excluding patronage-sourced earnings allocated to its patrons. RTFC is headquartered with CFC in Dulles, Virginia. Basis of Presentation and Use of Estimates The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and related disclosures. The most significant estimates and assumptions involve establishing the allowance for loan losses and determining the fair value of financial instruments and other assets and liabilities. While management makes its best judgment, actual amounts or results could differ from these estimates. Certain reclassifications have been made to previously reported amounts to conform to the current-period presentation. Principles of Consolidation Our accompanying consolidated financial statements include the accounts of CFC, RTFC, NCSC and subsidiaries created and controlled by CFC to hold foreclosed assets. All intercompany balances and transactions have been eliminated. We consolidate entities in which CFC has a controlling financial interest. We determine whether CFC has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (“VIE”). CFC established limited liability corporations and partnerships to hold foreclosed assets resulting from defaulted loans or bankruptcy. CFC owns and controls all of these entities and, therefore, consolidates their financial results. CFC presents the companies established to hold foreclosed assets in one line on the consolidated balance sheets and the consolidated statements of operations. Unless stated otherwise, references to “we, “our” or “us” relate to CFC and its consolidated entities. Variable Interest Entities A VIE is an entity that has a total equity investment at risk that is not sufficient to finance its activities without additional subordinated financial support provided by another party, or where the group of equity holders does not have: (i) the ability to make decisions about the entity’s activities that most significantly impact its economic performance; (ii) the obligation to absorb the entity’s expected losses; or (iii) the right to receive the entity’s expected residual returns. NCSC and RTFC meet the definition of variable interest entities because they do not have sufficient equity investment at risk to finance their activities without additional financial support. When evaluating an entity for possible consolidation, we must determine whether or not we have a variable interest in the entity. If it is determined that we do not have a variable interest in the entity, no further analysis is required and we do not consolidate the entity. If we have a variable interest in the entity, we must evaluate whether we are the primary beneficiary based on an assessment of quantitative and qualitative factors. We are considered the primary beneficiary holder if we have a controlling financial interest in the VIE that provides (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. We consolidate the results of NCSC and RTFC with CFC because CFC is the primary beneficiary holder. Cash and Cash Equivalents Cash, certificates of deposit, due from banks and other investments with original maturities of less than 90 days are classified as cash and cash equivalents. Restricted Cash Restricted cash consists of cash and cash equivalents for which the use is contractually restricted. Time Deposits Time deposits are deposits that we make with financial institutions in interest-bearing accounts. These deposits have a maturity of less than one year as of the reporting date and are valued at carrying value, which approximates fair value. Investment Securities Available for Sale Our investment securities, which are classified as available for sale, consist of investments in Federal Agricultural Mortgage Corporation (“Farmer Mac”) Series A Common Stock and Farmer Mac Series A, Series B and Series C Non-Cumulative Preferred Stock. Available-for-sale securities are carried at fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive income. We regularly evaluate our investment securities whose fair value has declined below the amortized cost to assess whether the decline in fair value is other than temporary. We recognize any other-than-temporary impairment amounts in earnings. Loans to Members Loans to members are classified as held for investment and reported at amortized cost, which is measured based on the outstanding principal balance net of unamortized deferred loan origination costs. Deferred loan origination costs are amortized using the straight-line method, which approximates the effective interest method, over the life of the loan as a reduction to interest income. Allowance for Loan Losses We maintain an allowance for loan losses at a level estimated by management to provide for probable losses inherent in the loan portfolio. The allowance for loan losses is reported separately on the consolidated balance sheet, and the provision for loan losses is reported as a separate line item on the consolidated statement of operations. We review the estimates and assumptions used in the calculations of the allowance for loan losses on a quarterly basis. The estimate of the allowance for loan losses is based on a review of the composition of the loan portfolio, past loss experience, specific problem loans, current economic conditions, available market data and/or projection of future cash flows and other pertinent factors that in management’s judgment may contribute to incurred losses. The allowance is based on estimates and, accordingly, actual losses may differ from the allowance amount. The methodology used to calculate the allowance for loan losses is summarized below. The allowance for loan losses is calculated by dividing the portfolio into two categories of loans:
Collective Allowance The collective, or general, loan portfolio consists of loans not specifically identified in the impaired category. We disaggregate the loans in the general portfolio by company: CFC, RTFC and NCSC. We further disaggregate the CFC loan portfolio by member class: distribution, power supply and statewide and associates. We use the following factors to determine the allowance for loan losses for the general portfolio category:
Management also evaluates certain qualitative factors, such as current economic and other conditions and trends that may affect the collectibility of our loan portfolio but are not yet reflected in our model-generated allowance for loan losses and applies judgment to assess the impact of these factors on the allowance. Specific Allowance A loan is considered to be impaired when we do not expect to collect all principal and interest payments as scheduled by the original loan terms, other than an insignificant delay or an insignificant shortfall in amount. Factors considered in determining impairment may include, but are not limited to:
We generally measure impairment for individually impaired loans based on the difference between the recorded investment of the loan and the present value of the expected future cash flows discounted at the loan’s effective interest rate. If the loan is collateral dependent, we measure impairment based upon the fair value of the underlying collateral, which we determine based on the current fair value of the collateral less estimated selling costs. Loans are considered to be collateral dependent if repayment of the loan is expected to be provided solely by the underlying collateral and there are no other available and reliable sources of repayment. In calculating the impairment on a loan, the estimates of the expected future cash flows or collateral value are the key estimates made by management. Changes in the estimated future cash flows or collateral value affect the amount of the calculated impairment. The change in cash flows required to make the change in the calculated impairment material will be different for each borrower and depend on the period covered, the effective interest rate at the time the loan became impaired and the amount of the loan outstanding. Estimates are not used to determine our investment in the receivables or the discount rate since, in all cases, the investment is equal to the loan balance outstanding at the reporting date, and the discount rate is equal to the effective interest rate on the loan at the time the loan became impaired. We recognize interest income on impaired loans on a case-by-case basis. An impaired loan to a borrower that is nonperforming will typically be placed on nonaccrual status and we will reverse all accrued and unpaid interest. We generally apply all cash received during the nonaccrual period to the reduction of principal, thereby foregoing interest income recognition. Interest income may be recognized on an accrual basis for restructured impaired loans where the borrower is performing and is expected to continue to perform based on agreed-upon terms. All of our restructured loans are troubled debt restructurings. All loans are written off in the period that it becomes evident that collectability is highly unlikely; however, our efforts to recover all charged-off amounts may continue. The determination to write off all or a portion of a loan balance is made based on various factors on a case-by-case basis including, but not limited to, cash flow analysis and the fair value of collateral securing the borrower’s loans. Unadvanced Loan Commitments Unadvanced commitments represent amounts for which we have approved and executed loan contracts, but the funds have not been advanced. The majority of the unadvanced commitments reported represent amounts that are subject to material adverse change clauses at the time of the loan advance. Prior to making an advance on these facilities, 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 loan terms and conditions. The remaining unadvanced commitments relate to line of credit loans that are not subject to a material adverse change clause at the time of each loan advance. As such, we would be required to advance amounts on these committed facilities as long as the borrower is in compliance with the terms and conditions of the loan commitment. Unadvanced loan commitments related to line of credit loans are typically for periods not to exceed five years and are generally revolving facilities used for working capital and backup liquidity purposes. Historically, we have experienced a very low utilization rate on line of credit loan facilities, whether or not there is a material adverse change clause. Since we generally do not charge a fee on the unadvanced portion of the majority of our loan facilities, our borrowers will typically request long-term facilities to fund construction work plans and other capital expenditures for periods of up to five years and draw down on the facility over that time. In addition, borrowers will typically request an amount in excess of their immediate estimated loan requirements to avoid the expense related to seeking additional loan funding for unexpected items. These factors contribute to our expectation that the majority of the unadvanced loan commitments will expire without being fully drawn upon and that the total unadvanced amount does not necessarily represent future cash funding requirements. Reserve for Unadvanced Loan Commitments We maintain a reserve for unadvanced loan commitments and committed lines of credit. This reserve is included as a component of other liabilities on our consolidated balance sheet and changes in the reserve is included in other non-interest expense on our consolidated statements of operations. Our estimate of the reserve for potential losses on these commitments takes into consideration various factors, including the existence of a material adverse change clause, the historical utilization of the committed lines of credit, the probability of funding, historical loss experience on unadvanced loan commitments and other inputs and management judgment consistent with the methodology used to determine our allowance for loan losses. Guarantee Liability We maintain a guarantee liability that represents our contingent and noncontingent exposure related to guarantees and standby liquidity obligations associated with our members’ debt. The guarantee liability is included in the other liabilities line item on the consolidated balance sheet, and the provision for guarantee liability is reported in non-interest expense as a separate line item on the consolidated statement of operations. The contingent portion of the guarantee liability represents management’s estimate of our exposure to losses within the guarantee portfolio. The methodology used to estimate the contingent guarantee liability is consistent with the methodology used to determine the allowance for loan losses. We record a noncontingent guarantee liability for all new or modified guarantees since January 1, 2003. Our noncontingent guarantee liability represents our obligation to stand ready to perform over the term of our guarantees and liquidity obligations that we have entered into or modified since January 1, 2003. Our noncontingent obligation is estimated based on guarantee and liquidity fees charged for guarantees issued, which represents management’s estimate of the fair value of our obligation to stand ready to perform. The fees are deferred and amortized using the straight-line method into interest income over the term of the guarantee. Nonperforming Loans We classify loans as nonperforming when any one of the following criteria is met:
A loan is considered past due if a full payment of principal and interest is not received within 30 days of its due date. Once a borrower is classified as nonperforming, we typically place the loan on nonaccrual status and reverse any accrued and unpaid interest recorded during the period in which the borrower stopped performing. We generally apply all cash received during the nonaccrual period to the reduction of principal, thereby foregoing interest income recognition. The decision to return a loan to accrual status is determined on a case-by-case basis. Fixed Assets Fixed assets are recorded at cost less accumulated depreciation. We recognize depreciation expense on a straight-line basis over the estimated useful lives of the fixed asset categories, which range from 3 to 40 years. The table below presents the components of fixed assets. CFC owns its headquarters facility in Loudoun County, Virginia, which is presented in the building and building equipment category below. We recognized depreciation expense of $7 million, $7 million and $6 million in fiscal year 2017, 2016 and 2015, respectively.
Foreclosed Assets Foreclosed assets acquired through our lending activities in satisfaction of indebtedness may be held in operating entities created and controlled by CFC and presented separately in our consolidated balance sheets under foreclosed assets, net. These assets are initially recorded at estimated fair value as of the date of acquisition. Subsequent to acquisition, foreclosed assets not classified as held for sale are evaluated for impairment and the results of operations and any impairment are reported on our consolidated statements of operations under results of operations of foreclosed assets. When foreclosed assets meet the accounting criteria to be classified as held for sale, they are recorded at the lower of cost or fair value less estimated costs to sell at the date of transfer, with the amount at the date of transfer representing the new cost basis. Subsequent changes are recognized in our consolidated statements of operations under results of operations of foreclosed assets. We also review foreclosed assets classified as held for sale each reporting period to determine whether the existing carrying amounts are fully recoverable in comparison to estimated fair values. We did not carry any foreclosed assets on our consolidated balance sheet as of May 31, 2017. Debt We report debt at cost net of unamortized issuance costs and discounts or premiums. Issuance costs, discounts and premiums are deferred and amortized into interest expense using the effective interest method or a method approximating the effective interest method over the legal maturity of each bond issue. 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. Borrowings with an original contractual maturity of greater than one year are classified as long-term debt. Derivative Instruments We are an end user of derivative financial instruments and do not engage in derivative trading. We use derivatives, primarily interest rate swaps and treasury rate locks, to manage interest rate risk. Derivatives may be privately negotiated contracts, which are often referred to as over-the-counter (“OTC”) derivatives, or they may be listed and traded on an exchange. We generally engage in OTC derivative transactions. In accordance with the accounting standards for derivatives and hedging activities, we record derivative instruments at fair value as either a derivative asset or derivative liability on our consolidated balance sheets. We report derivative asset and liability amounts on a gross basis based on individual contracts, which does not take into consideration the effects of master netting agreements or collateral netting. Derivatives in a gain position are reported as derivative assets on our consolidated balance sheets, while derivatives in a loss position are reported as derivative liabilities. Accrued interest related to derivatives is reported on our consolidated balance sheets as a component of either accrued interest 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 and derivative forward value amounts, are recognized in our consolidated statements of operations under derivative gains (losses). If we elect hedge accounting treatment for derivatives, we formally document, designate and assess the effectiveness of the hedge relationship. Changes in the fair value of derivatives designated as qualifying fair value hedges are recorded in earnings together with offsetting changes in the fair value of the hedged item and any related ineffectiveness. Changes in the fair value of derivatives designated as qualifying cash flow hedges are recorded as a component of other comprehensive income (“OCI”), to the extent that the hedge relationships are effective, and reclassified from accumulated other comprehensive income (“AOCI”) to earnings using the effective interest method over the term of the forecasted transaction. Any ineffectiveness in the hedging relationship is recognized as a component of derivative gains (losses) in our consolidated statement of operations. We generally do not designate interest rate swaps, which represent the substantial majority of our derivatives, for hedge accounting. Accordingly, changes in the fair value of interest rate swaps are reported in our consolidated statements of operations under derivative gains (losses). Net periodic cash settlements related to interest rate swaps are classified as an operating activity in our consolidated statements of cash flows. We typically designate treasury rate locks as cash flow hedges of forecasted debt issuances. Accordingly, changes in the fair value of the derivative instruments are recorded as a component of OCI and reclassified to interest expense when the forecasted transaction occurs using the effective interest method. Any ineffectiveness in the hedging relationship is recognized as a component of derivative gains (losses) in our consolidated statements of operations. At June 1, 2001, as a result of the adoption of the derivative accounting guidance that required derivatives to be reported at fair value on the balance sheet, we recorded a transition adjustment net loss in AOCI. The transition adjustment net loss is being reclassified into earnings and reported as a component of derivative gains (losses) in our consolidated statements of operations. We expect to continue to reclassify the remaining balance of the transition adjustment into earnings through 2029. We did not have any derivatives designated as accounting hedges during fiscal year 2017, 2016 or 2015. Fair Value Valuation Processes We carry certain assets and liabilities at fair value, including available-for-sale investment securities and derivatives. We use fair value measurements to record fair value adjustments for certain assets and liabilities and to determine fair value disclosures. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date (also referred to as an exit price). We have various processes and controls in place to ensure that fair value is reasonably estimated. We consider observable prices in the principal market in our valuations where possible. Fair value estimates were developed at the reporting date and may not necessarily be indicative of amounts that could ultimately be realized in a market transaction at a future date. With the exception of redeeming debt under early redemption provisions, terminating derivative instruments under early termination provisions and allowing borrowers to prepay their loans, we held and intend to hold all financial instruments to maturity excluding common stock and preferred stock investments that have no stated maturity. Fair Value Hierarchy The fair value accounting guidance provides a three-level fair value hierarchy for classifying financial instruments. This hierarchy is based on the markets in which the assets or liabilities trade and whether the inputs to the valuation techniques used to measure fair value are observable or unobservable. Fair value measurement of a financial asset or liability is assigned a level based on the lowest level of any input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are summarized below:
The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted prices in active markets or observable market parameters. When quoted prices and observable data in active markets are not fully available, management’s judgment is necessary to estimate fair value. Changes in market conditions, such as reduced liquidity in the capital markets or changes in secondary market activities, may reduce the availability and reliability of quoted prices or observable data used to determine fair value. Membership Fees Members are charged a one-time membership fee based on member class. CFC distribution system members, power supply system members and national associations of cooperatives pay a $1,000 membership fee. CFC service organization members pay a $200 membership fee and CFC associates pay a $1,000 fee. RTFC voting members pay a $1,000 membership fee and RTFC associates pay a $100 fee. NCSC members pay a $100 membership fee. Membership fees are accounted for as members’ equity. Financial Instruments with Off-Balance Sheet Risk In the normal course of business, we are a party to financial instruments with off-balance sheet risk to meet the financing needs of our member borrowers. These financial instruments include committed lines of credit, standby letters of credit and guarantees of members’ obligations. Interest Income Interest income on loans is recognized using the effective interest method. The following table presents interest income, categorized by loan and investment type, for fiscal years 2017, 2016 and 2015.
____________________________ (1) Includes loan conversion fees, which are deferred and recognized in interest income using the effective interest method. (2) Troubled debt restructuring (“TDR”) loans. (3) Consists of late payment fees and net amortization of deferred loan fees and loan origination costs. Deferred income consists primarily of deferred loan conversion fees, which totaled $68 million and $71 million as of May 31, 2017 and 2016, respectively. These fees are presented as deferred income on our consolidated balance sheets and recognized in interest income using the effective interest method. Interest Expense The following table presents interest expense, categorized by debt product type, for fiscal years 2017, 2016 and 2015.
____________________________ (1) Represents interest expense and the amortization of discounts on debt. (2) Includes underwriter’s fees, legal fees, printing costs and certain accounting fees, which are deferred and recognized in interest expense using the effective interest method. Also includes issuance costs related to dealer commercial paper, which are recognized immediately as incurred. (3) Includes fees related to funding activities, including fees paid to banks participating in our committed bank revolving line of credit agreements. Amounts are recognized as incurred or amortized on a straight-line basis over the life of the agreement. Early Extinguishment of Debt We redeem outstanding debt early from time to time to manage liquidity and interest rate risk. When we redeem outstanding debt early, we recognize a gain or loss related to the difference between the amount paid to redeem the debt and the net book value of the extinguished debt as a component of non-interest expense in the gain (loss) on early extinguishment of debt line item. Income Taxes While CFC is exempt under Section 501(c)(4) of the Internal Revenue Code, it is subject to tax on unrelated business taxable income. NCSC is a taxable cooperative that pays income tax on the full amount of its reportable taxable income and allowable deductions. RTFC is a taxable cooperative under Subchapter T of the Internal Revenue Code and is not subject to income taxes on income from patronage sources that is allocated to its borrowers, as long as the allocation is properly noticed and at least 20% of the amount allocated is retired in cash prior to filing the applicable tax return. The income tax benefit (expense) recorded in the consolidated statement of operations represents the income tax benefit (expense) at the applicable combined federal and state income tax rates resulting in a statutory tax rate. The statutory tax rate for NCSC and RTFC was 38% and 40%, respectively, for fiscal year 2017. The statutory tax rate for both NCSC and RTFC was 38% for fiscal years 2016 and 2015. Substantially all of the income tax expense recorded in our consolidated statements of operations relates to NCSC. NCSC had a deferred tax asset of $4 million and $6 million as of May 31, 2017 and 2016, respectively, primarily arising from differences in the accounting and tax treatment for derivatives. Accounting Standards Adopted in Fiscal Year 2017 Amendments to the Consolidation Analysis In February 2015, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-02, Amendments to the Consolidation Analysis, which makes several modifications to the consolidation guidance for variable interest entities (“VIEs”) and general partners’ investments in limited partnerships, as well as modifications to the evaluation of whether limited partnerships are VIEs or voting interest entities. The new guidance also amends the consolidation analysis for certain investment funds and excludes certain money market funds. We were required to adopt this guidance either retrospectively or on a modified retrospective basis at the beginning of fiscal year 2017. We adopted this guidance on a modified retrospective basis effective June 1, 2016. The adoption had no impact on our consolidated financial statements. Recently Issued But Not Yet Adopted Accounting Standards Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments In June 2016, FASB issued ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the accounting for credit losses on certain financial assets to an expected loss model from the incurred loss model currently in use. The new guidance will result in earlier recognition of credit losses based on measuring the expected credit losses over the estimated life of financial assets held at each reporting date. The expected loss model will be the basis for determining the allowance for credit losses for loans and leases, unfunded lending commitments, held-to-maturity debt securities and other debt instruments measured at amortized cost. In addition, the new guidance modifies the other-than-temporary impairment model for available-for-sale debt securities to require the recognition of credit losses through a valuation allowance, which allows for the reversal of credit impairments in future periods. The ASU will also require enhanced disclosures to help users of financial statements better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. The new standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. This update is effective for us on June 1, 2020. Upon adoption, we will be required to record a cumulative-effect adjustment to retained earnings. The impact on our consolidated financial statements from the adoption of this new guidance will depend on the composition and risk profile of our loan portfolio as of the date of adoption. We do not expect to early adopt this guidance. Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, FASB issued ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, which amends certain aspects of the recognition, measurement, presentation and disclosure of certain financial instruments, including equity investments and liabilities measured at fair value under the fair value option. The guidance also updates fair value presentation and disclosure requirements for financial instruments measured at amortized cost. The ASU requires investments in equity securities that do not result in consolidation and are not accounted for under the equity method to be measured at fair value with changes in the fair value recognized through net income, unless one of two available exceptions apply. For financial liabilities where the fair value option has been elected, the portion of the total change in fair value caused by changes in the company’s own credit risk is required to be presented separately in OCI. The classification and measurement guidance is effective for public entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This update will be effective for us on June 1, 2018. Upon adoption, we will be required to reclassify the gain (loss) related to our equity investments classified as available-for-sale from AOCI to retained earnings as a cumulative-effective adjustment and begin recording future changes in fair value in earnings. We had a gain of $12 million recorded in AOCI for our available-for-sale equity investments as of May 31, 2017. The impact on our consolidated financial statements at adoption will depend on the net unrealized gains (losses) recorded in AOCI for these equity investments as of the date of adoption. Revenue from Contracts with Customers In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers, which clarifies the principles for recognizing revenue from contracts with customers and will replace most existing revenue recognition in GAAP when it becomes effective. In July 2015, FASB approved a one year deferral of the effective date of this standard, with a revised effective date for fiscal years beginning after December 15, 2017. The new accounting guidance, which does not apply to financial instruments, will be effective for us June 1, 2018. We do not expect the new guidance to have an impact on our consolidated financial statements, as CFC’s primary business and source of revenue is from lending. |
Variable Interest Entities (Notes) |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Variable Interest Entity Disclosure |
Based on the accounting standards governing consolidations, we are required to consolidate the financial results of NCSC and RTFC because CFC is the primary beneficiary of NCSC and RTFC. CFC manages the lending activities of NCSC and RTFC. Under separate guarantee agreements, NCSC and RTFC pay CFC a fee to indemnify them against loan losses. CFC is the primary source of funding to and manages the lending activities of NCSC through a management agreement that is automatically renewable on an annual basis unless terminated by either party. NCSC funds its lending programs through loans from CFC or debt guaranteed by CFC. In connection with these guarantees, NCSC must pay a guarantee fee. CFC is the sole lender to and manages the business operations of RTFC through a management agreement that is automatically renewable on an annual basis unless terminated by either party. RTFC funds its lending programs through loans from CFC. All loans that require NCSC board approval also require CFC board approval. CFC is not a member of NCSC and does not elect directors to the NCSC board. If CFC becomes a member of NCSC, it would control the nomination process for one NCSC director. NCSC members elect directors to the NCSC board based on one vote for each member. NCSC is a service organization member of CFC. All loans that require RTFC board approval also require approval by CFC for funding under RTFC’s credit facilities with CFC. CFC is not a member of RTFC and does not elect directors to the RTFC board. RTFC is a non-voting associate of CFC. RTFC members elect directors to the RTFC board based on one vote for each member. 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. CFC had guaranteed $34 million of NCSC debt, derivative instruments and guarantees with third parties as of May 31, 2017, and CFC’s maximum potential exposure for these instruments totaled $37 million. The maturities for NCSC obligations guaranteed by CFC extend through 2031. Guarantees of NCSC debt and derivative instruments are not presented in the amount in “Note 13—Guarantees,” as the debt and derivatives are reported on the consolidated balance sheets. CFC guaranteed $2 million of RTFC guarantees with third parties as of May 31, 2017. The maturities for RTFC obligations guaranteed by CFC extend through July 2017. All CFC loans to NCSC and RTFC are secured by all assets and revenue of NCSC and RTFC. NCSC had total assets of $623 million including loans outstanding of $614 million, and RTFC had total assets of $450 million including loans outstanding to members of $354 million as of May 31, 2017. CFC had committed to provide up to $3,000 million of credit to NCSC, of which $630 million was outstanding, representing $596 million of outstanding loans and $34 million of credit enhancements as of May 31, 2017. CFC had committed to lend RTFC up to $2,500 million, of which $336 million was outstanding as of May 31, 2017. The following table presents, by component, our consolidated membership after taking into consideration systems that are members of both CFC and NCSC and eliminating memberships between CFC, NCSC and RTFC as of May 31, 2017.
Associates are eligible to borrow; however, they are not eligible to vote on matters submitted to the membership for approval. Our members and associates are located in 49 states, the District of Columbia, American Samoa and Guam. All references to members within this document include members and associates. |
Investment Securities (Notes) |
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Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVESTMENT SECURITIES |
Our investment securities consist of holdings of Farmer Mac preferred and common stock. The following tables present the amortized cost, gross unrealized gains and losses and fair value of our investment securities, all of which were classified as available for sale, as of May 31, 2017 and 2016.
We did not have any investment securities in an unrealized loss position as of May 31, 2017 or May 31, 2016. For additional information regarding the unrealized gains (losses) recorded on our available-for-sale investment securities, see “Note 11—Equity—Accumulated Other Comprehensive Income.” |
Loans and Commitments (Notes) |
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Loans and Leases Receivable Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Commitments |
Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are considered loans held for investment. The loans presented on our consolidated balance sheet are classified and accounted for as held for investment. Loans held for investment are carried at the outstanding unpaid principal balance, net of unamortized loan origination costs. We offer fixed- and variable-rate loans and line of credit loans. Borrowers may choose between a fixed interest rate or a variable interest rate for periods of one to 35 years. When a selected fixed interest rate term expires, the borrower may select another fixed-rate term or a variable rate. We consider these fixed- and variable-rate loans, which have repricing terms, as long-term loans. Collateral and security requirements for advances on loan commitments are identical to those required at the time of the initial loan approval. The following table presents the outstanding principal balance of loans to members, including deferred loan origination costs, and unadvanced loan commitments by loan type and member class, as of May 31, 2017 and 2016.
____________________________ (1) The interest rate on unadvanced loan commitments is not set until drawn; therefore, the long-term unadvanced loan commitments have been classified in this table as variable-rate unadvanced loan commitments. However, at the time of the advance, the borrower may select a fixed or a variable rate on the new loan. (2) Includes TDR loans. (3) Represents the unpaid principal balance excluding deferred loan origination costs. Unadvanced Loan Commitments Unadvanced loan commitments represent approved and executed loan contracts for which funds have not been advanced to borrowers. The following table summarizes the available balance under unadvanced loan commitments as of May 31, 2017 and the related maturities, by fiscal year and thereafter, by loan type:
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 $9,973 million and $10,757 million as of May 31, 2017 and 2016, 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 $2,602 million and $2,448 million as of May 31, 2017 and 2016, 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 following table summarizes the available balance under unconditional committed lines of credit and the related maturities, by fiscal year as of May 31, 2017.
Loan Sales We transfer, from time to time, loans to third parties under our direct loan sale program. Our transfer of loans, which are at par value, meets the applicable accounting criteria for sale accounting. Accordingly, we remove the loans from our consolidated balance sheets when control has been surrendered and recognize a gain or loss. Because the loans are sold at par, we record immaterial losses on the sale of these loans for unamortized deferred loan origination costs. We retain the servicing performance obligations on these loans and recognize related servicing fees on an accrual basis over the period for which servicing activity is provided, as we believe the servicing fee represents adequate compensation. We do not hold any continuing interest in the loans sold to date other than servicing performance obligations. We have no obligation to repurchase loans from the purchaser, except in the case of breaches of representations and warranties. We sold CFC loans with outstanding balances totaling $58 million, $99 million and $26 million at par for cash in fiscal year 2017, 2016 and 2015, respectively. We recorded immaterial losses upon the sale of these loans, attributable to the unamortized deferred loan origination costs associated with the transferred loans. Credit Quality We closely monitor loan performance trends to manage and evaluate our credit risk exposure. We seek to provide a balance between meeting the credit needs of our members while also ensuring the sound credit quality of our loan portfolio. Payment status and internal risk rating trends are key indicators, among others, of the level of credit risk within our loan portfolio. As part of our strategy in managing our credit risk exposure, we entered into a long-term standby purchase commitment agreement with Farmer Mac. 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. The aggregate unpaid principal balance of designated and Farmer Mac approved loans was $843 million and $926 million as of May 31, 2017 and 2016, respectively. Under the agreement, we are required to pay Farmer Mac a monthly fee based on the unpaid principal balance of loans covered under the purchase commitment. No loans had been put to Farmer Mac for purchase, pursuant to this agreement, as of May 31, 2017. Also, long-term loans totaling $167 million and $174 million were guaranteed by the Rural Utilities Service (“RUS”) as of May 31, 2017 and 2016, respectively. Payment Status of Loans The tables below present the payment status of loans outstanding by member class as of May 31, 2017 and 2016.
____________________________ (1) All loans 90 days or more past due are on nonaccrual status. Internal Risk Ratings of Loans We evaluate the credit quality of our loans using an internal risk rating system that employs similar criteria for all member classes. Our internal risk rating system is based on a determination of a borrower’s risk of default utilizing both quantitative and qualitative measurements. We have grouped our risk ratings into the categories of pass and criticized based on the criteria below. (i) Pass: Borrowers that are not experiencing difficulty and/or not showing a potential or well-defined credit weakness. (ii) Criticized: Includes borrowers categorized as special mention, substandard and doubtful as described below:
Borrowers included in the pass, special mention and substandard categories are generally reflected in the general portfolio of loans. Borrowers included in the doubtful category are reflected in the impaired portfolio of loans. Each risk rating is reassessed annually following the receipt of the borrower’s audited financial statements; however, interim risk rating downgrades or upgrades may take place at any time as significant events or trends occur. The following table presents our loan portfolio by risk rating category and member class based on available data as of May 31, 2017 and 2016.
Credit Concentration The service territories of our electric and telecommunications members are located throughout the United States and its territories, including 49 states, the District of Columbia, American Samoa and Guam. Loans outstanding to borrowers in any state or territory did not exceed 15% of total loans outstanding as of May 31, 2017 and 2016. CFC, RTFC and NCSC each have policies limiting the amount of credit that can be extended to individual borrowers or a controlled group of borrowers. The total exposure outstanding to any one borrower or controlled group represented approximately 2% of total loans and guarantees outstanding as of May 31, 2017 and 2016. The 20 largest borrowers included 10 distribution systems, 9 power supply systems and 1 NCSC associate member as of May 31, 2017. The 20 largest borrowers included 11 distribution systems and 9 power supply systems as of May 31, 2016. The following table shows the exposure to the 20 largest borrowers as a percentage of total credit exposure broken down by exposure type and by borrower type as of May 31, 2017 and 2016.
Allowance for Loan Losses We maintain an allowance for loan losses at a level estimated by management to provide for probable losses inherent in the loan portfolio as of each balance sheet date. The tables below summarize changes, by company, in the allowance for loan losses as of and for the years ended May 31, 2017, 2016 and 2015.
Our allowance for loan losses consists of a specific allowance for loans individually evaluated for impairment and a collective allowance for loans collectively evaluated for impairment. The tables below present, by company, the components of our allowance for loan losses and the recorded investment of the related loans as of May 31, 2017 and 2016.
___________________________ (1) Excludes unamortized deferred loan origination costs of $11 million and $10 million, as of May 31, 2017 and 2016, respectively. Reserve for Unadvanced Commitments We also maintain a reserve for unadvanced loan commitments at a level estimated by management to provide for probable losses under these commitments as of each balance sheet date. The reserve for these commitments was $0.1 million as of both May 31, 2017 and 2016. Impaired Loans The following table provides information on loans classified as individually impaired loans as of May 31, 2017 and 2016.
The following table represents the average recorded investment in individually impaired loans and the interest income recognized, by company, for fiscal years ended May 31, 2017, 2016 and 2015.
Troubled Debt Restructured (“TDR”) Loans We did not have any loans modified as TDRs during the year ended May 31, 2017. The following table provides a summary of loans modified as TDRs in prior periods, the performance status of these loans and the related unadvanced loan commitments, by member class, as of May 31, 2017 and 2016.
___________________________ (1) A borrower in this category also had a line of credit loan outstanding that was classified as performing as of May 31, 2017 and 2016. Unadvanced commitments related to this line of credit loan totaled $6 million and $4 million as of May 31, 2017 and 2016, respectively. As indicated in the table above, we did not have any TDR loans classified as nonperforming as of May 31, 2017. We had TDR loans classified as nonperforming totaling $4 million as of May 31, 2016. TDR loans classified as performing totaled $13 million and $14 million as of May 31, 2017 and 2016, respectively. These loans were on accrual status as of the respective dates. Nonperforming Loans In addition to nonperforming TDR loans, we also may have nonperforming loans that have not been modified and classified as a TDR. We did not have any loans classified as nonperforming as of May 31, 2017 and 2016. The following table shows foregone interest income for loans on nonaccrual status fiscal years ended May 31, 2017, 2016 and 2015.
Pledging of 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 our loans outstanding as collateral pledged to secure our collateral trust bonds, Clean Renewable Energy Bonds, notes payable to Farmer Mac and notes payable to the Federal Financing Bank and guaranteed by RUS under the Guaranteed Underwriter Program of the USDA (“Guaranteed Underwriter Program”) and the amount of the corresponding debt outstanding as of May 31, 2017 and 2016. See “Note 6—Short-Term Borrowings” and “Note 7—Long-Term Debt” for information on our borrowings.
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Foreclosed Assets (Notes) |
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Repossessed Assets [Abstract] | ||||
Foreclosed Assets |
Foreclosed assets consist of operating entities or other assets acquired through lending activities in satisfaction of indebtedness. We had one entity, Caribbean Asset Holdings, LLC (“CAH”), that held foreclosed assets totaling $103 million as of May 31, 2016. On July 1, 2016, the sale of CAH to ATN VI Holdings, LLC (“Buyer”) was completed. As a result, we did not carry any foreclosed assets on our consolidated balance sheet as of May 31, 2017. Our net proceeds at closing totaled $109 million, which represents the purchase price of $144 million less agreed-upon purchase price adjustments as of the closing date. In connection with the sale, RTFC provided a loan in the amount of $60 million to Buyer to finance a portion of the transaction. ATN International, Inc., the parent corporation of Buyer, has provided a guarantee on an unsecured basis of Buyer’s obligations to RTFC pursuant to the financing. CFC remains subject to potential indemnification claims, as specified in the Purchase Agreement. Upon closing, $16 million of the sale proceeds was deposited into escrow to fund potential indemnification claims for a period of 15 months following the closing. Based on indemnification claims to date, we currently expect the return of substantially all of the $16 million held in escrow. The net proceeds at closing were subject to post-closing adjustments. The Buyer provided a statement of post-closing adjustments and we agreed upon a net amount due to us for post-closing adjustments of approximately $1 million, which we received during the second quarter of fiscal year 2017. We recorded charges related to CAH of $2 million in fiscal year 2017. This amount includes the combined impact of adjustments recorded at the closing date of the sale of CAH, post-closing purchase price adjustments and certain legal costs incurred pertaining to CAH. Upon closing of the sale of CAH, we derecognized the loss of $10 million recorded in AOCI attributable to actuarial-related changes in CAH’s pension and other post-retirement benefit obligations as an offset against the sale proceeds. This derecognition had no effect on our consolidated statement of operations during the year ended May 31, 2017, as the amount was taken into consideration in the measurement of the CAH impairment loss recorded in fiscal year 2016. |
Short-Term Borrowings (Notes) |
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Short-Term Debt and Credit Arrangements |
The following table provides comparative information on our short-term borrowings and weighted-average interest rates as of May 31, 2017 and 2016.
We issue commercial paper for periods of one to 270 days. We also issue select notes for periods ranging from 30 to 270 days. Select notes are unsecured obligations that do not require backup bank lines of credit for liquidity purposes. These notes require a larger minimum investment than our commercial paper sold to members and, as a result, offer a higher interest rate than our commercial paper. We also issue daily liquidity fund notes, which are unsecured obligations that do not require backup bank lines of credit for liquidity purposes. We also issue medium-term notes, which represent unsecured obligations that may be issued through dealers in the capital markets or directly to our members. Committed Bank Revolving Line of Credit Agreements We had $3,165 million and $3,420 million of commitments under committed bank revolving line of credit agreements as of May 31, 2017 and 2016, respectively. Under our current committed bank revolving line of credit agreements, we have the ability to request up to $300 million of letters of credit, which would result in a reduction in the remaining available amount under the facilities. In September 2016, NCSC assigned a total of $50 million of its commitment to another financial institution under our committed bank revolving line of credit agreements, which consisted of $25 million under the three-year agreement and $25 million under the five-year agreement. On November 18, 2016, we amended and restated the three-year and five-year committed bank revolving line of credit agreements to extend the maturity dates to November 19, 2019 and November 19, 2021, respectively, and to terminate certain third-party bank commitments totaling $165 million under the three-year agreement and $45 million under the five year agreement. This reduction was partially offset by an increase in commitment amounts from certain existing banks of $8 million under each of the three-year and five-year agreements. We also terminated NCSC’s remaining commitment of $60 million. As a result, the total commitment amount from third-parties under the three-year facility and the five-year facility is $1,533 million and $1,632 million respectively, resulting in a combined total commitment amount under the two facilities of $3,165 million. The following table presents the total commitment, the net amount available for use and the outstanding letters of credit under our committed bank revolving line of credit agreements as of May 31, 2017 and 2016.
___________________________ (1)Reflects amounts available from unaffiliated third parties that are not consolidated with CFC. (2) 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 were in compliance with all covenants and conditions under our committed bank revolving line of credit agreements and there were no borrowings outstanding under these agreements as of May 31, 2017 and 2016. |
Long-Term Debt (Notes) |
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Long-Term Debt |
The following table displays long-term debt outstanding and the weighted-average interest rates, by debt type, as of May 31, 2017 and 2016.
The following table presents the amount of long-term debt maturing in each of the five fiscal years subsequent to May 31, 2017 and thereafter.
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. Secured Notes Payable We had outstanding secured notes payable totaling $4,985 million and $4,777 million as of May 31, 2017 and 2016, respectively, under a bond purchase agreement with Federal Financing Bank and a bond guarantee agreement with RUS issued under the Guaranteed Underwriter Program, which provides guarantees to Federal Financing Bank. We pay RUS a fee of 30 basis points per year on the total amount outstanding. 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 and Commitments” for additional information on the collateral pledged to secure notes payable under this program. On December 1, 2016, we closed on the $375 million committed (“Series L”) loan facility from Federal Financing Bank guaranteed by RUS pursuant to the Guaranteed Underwriter Program. Under the Series L facility, we are able to borrow an additional $375 million any time before October 15, 2019 with each advance amortizing quarterly and having a final maturity no longer than 20 years from the advance date. We had up to $725 million available under the GUP program as of May 31, 2017. We have two revolving note purchase agreements with Farmer Mac, which together allow us to borrow up to $4,800 million from Farmer Mac. Under the terms of the first revolving note purchase agreement with Farmer Mac dated March 24, 2011, as amended, we can borrow, subject to market conditions, up to $4,500 million at any time through January 11, 2020, and such date shall automatically extend 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. This revolving note purchase agreement allows us to 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. Each borrowing under the revolving note purchase agreement is evidenced by a pricing agreement setting forth the interest rate, maturity date and other related terms as we may negotiate with Farmer Mac at the time of each such borrowing. We may select a fixed rate or variable rate at the time of each advance with a maturity as determined in the applicable pricing agreement. Under this note purchase agreement with Farmer Mac, we had outstanding secured notes payable totaling $2,513 million and $2,303 million, as of May 31, 2017 and 2016, respectively. Under the terms of the second revolving note purchase agreement with Farmer Mac dated July 31, 2015, we can borrow up to $300 million at any time through July 31, 2018. This agreement also allows us to borrow, repay and re-borrow funds at any time through maturity, provided that the outstanding principal amount at any time does not exceed the total available under the agreement. We had no notes payable outstanding under this revolving note purchase agreement with Farmer Mac as of May 31, 2017 and 2016. 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 each of our Farmer Mac revolving note purchase agreements. See “Note 4—Loans and Commitments” for additional information on the collateral pledged to secure notes payable under these programs. We were in compliance with all covenants and conditions under our senior debt indentures as of May 31, 2017 and 2016. |
Subordinated Deferrable Debt (Notes) |
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Subordinated Debt [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subordinated Deferrable Debt |
Subordinated deferrable debt is long-term debt that is subordinated to our outstanding debt and senior to subordinated certificates held by our members. Our 4.75% and 5.25% subordinated debt due 2043 and 2046, respectively, was issued for a term of up to 30 years, pays interest semi-annually, may be called at par after ten years, converts to a variable rate after ten years, and allows us to defer the payment of interest for one or more consecutive interest periods not exceeding five consecutive years. To date, we have not exercised our right to defer interest payments. The following table presents subordinated deferrable debt outstanding and the weighted-average interest rates as of May 31, 2017 and 2016.
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Members' Subordinated Certificates (Notes) |
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Members' Subordinated Certificates |
Membership Subordinated Certificates CFC members were required to purchase membership subordinated certificates as a condition of membership. Such certificates are interest-bearing, unsecured, subordinated debt. Members may purchase the certificates over time as a percentage of the amount they borrow from CFC. Membership certificates typically have an original maturity of 100 years and pay interest at 5% semi-annually. The weighted-average maturity for all membership subordinated certificates outstanding was 59 years and 60 years as of May 31, 2017 and 2016, respectively. RTFC and NCSC members are not required to purchase membership certificates as a condition of membership. Loan and Guarantee Subordinated Certificates Members obtaining long-term loans, certain line of credit loans or guarantees may be required to purchase additional loan or guarantee subordinated certificates with each such loan or guarantee based on the borrower’s debt-to-equity ratio with CFC. These certificates are unsecured, subordinated debt and may be interest bearing or non-interest bearing. Under our current policy, most borrowers requesting standard loans are not required to buy subordinated certificates as a condition of a loan or guarantee. Borrowers meeting certain criteria, including but not limited to, high leverage ratios, or borrowers requesting large facilities, may be required to purchase loan or guarantee subordinated certificates or member capital securities (described below) as a condition of the loan. Loan subordinated certificates have the same maturity as the related long-term loan. Some certificates may amortize annually based on the outstanding loan balance. The interest rates payable on guarantee subordinated certificates purchased in conjunction with our guarantee program vary in accordance with applicable CFC policy. Guarantee subordinated certificates have the same maturity as the related guarantee. Member Capital Securities CFC offers member capital securities to its voting members. Member capital securities are interest-bearing, unsecured obligations of CFC, which are subordinate to all existing and future senior and subordinated indebtedness of CFC held by non-members of CFC, but rank proportionally to our member subordinated certificates. Series 2008 member capital maturities mature 35 years from the date of issuance, pay interest at 5% and are callable at par at our option five years from the date of issuance and anytime thereafter. Series 2013 member capital securities mature 30 years from the date of issuance, typically pay interest at 5% and are callable at par at our option 10 years from the date of issuance and anytime thereafter. These securities represent voluntary investments in CFC by the members. The following table displays members’ subordinated certificates and the weighted-average interest rates as of May 31, 2017 and 2016.
___________________________ (1) The subscribed and unissued subordinated certificates represent subordinated certificates that members are required to purchase. Upon collection of full payment of the subordinated certificate amount, the certificate will be reclassified from subscribed and unissued to outstanding. The following table presents the amount of members’ subordinated certificates maturing in each of the five fiscal years following May 31, 2017 and thereafter.
___________________________ (1)Excludes $1 million in subscribed and unissued member subordinated certificates for which a payment has been received, but no certificate has been issued. Amortizing member loan subordinated certificates totaling $290 million are amortizing annually based on the unpaid principal balance of the related loan. Amortization payments on these certificates totaled $17 million in fiscal year 2017 and represented 6% of amortizing loan subordinated certificates outstanding. |
Derivative Instruments and Hedging Activities (Notes) |
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Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Financial Instruments |
Use of Derivatives We are an end user of derivative financial instruments and do not engage in derivative trading. We use derivatives, primarily interest rate swaps and Treasury rate locks, to manage interest rate risk. Derivatives may be privately negotiated contracts, which are often referred to as over-the-counter (“OTC”) derivatives, or they may be listed and traded on an exchange. We generally engage in OTC derivative transactions. Outstanding Notional Amount and Maturities of Derivatives The notional amount provides an indication of the volume of our derivatives activity, but this amount is not recorded on our consolidated balance sheets. The notional amount is used only as the basis on which interest payments are determined and is not the amount exchanged. The following table shows the outstanding notional amounts and the weighted-average rate paid and received for our interest rate swaps, by type, as of May 31, 2017 and 2016. The substantial majority of our interest rate swaps use an index based on the London Interbank Offered Rate (“LIBOR”) for either the pay or receive leg of the swap agreement.
The following table presents the maturities for each of the next five fiscal years and thereafter based on the notional amount of our interest rate swaps as of May 31, 2017.
Impact of Derivatives on Consolidated Balance Sheets The following table displays the fair value of the derivative assets and derivative liabilities recorded on our consolidated balance sheets and the related outstanding notional amount of our interest rate swaps as of May 31, 2017 and 2016.
All of our master swap agreements include legally enforceable netting provisions that allow for offsetting of all contracts with a given counterparty in the event of default by one of the two parties. However, as indicated above, in “Note 1—Summary of Significant Accounting Policies,” we report derivative asset and liability amounts on a gross basis by individual contracts. The following table presents the gross fair value of derivative assets and liabilities reported on our consolidated balance sheets as of May 31, 2017 and 2016, and provides information on the impact of netting provisions and collateral pledged.
Impact of Derivatives on Consolidated Statements of Operations Derivative gains (losses) reported in our consolidated statements of operations consist of derivative cash settlements and derivative forward value gains (losses). Derivative cash settlements represent net contractual interest expense accruals on interest rate swaps during the period. The derivative forward value gains (losses) represent the change in fair value of our interest rate swaps during the reporting period due to changes in the estimate of future interest rates over the remaining life of our derivative contracts. The following table presents the components of the derivative gains (losses) reported in our consolidated statements of operations for our interest rate swaps for fiscal years 2017, 2016 and 2015.
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 to 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 mark-to-market 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 May 31, 2017. Both Moody’s and S&P had our ratings on stable outlook as of May 31, 2017. The following table displays the notional amounts of our derivative contracts with rating triggers as of May 31, 2017 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 assumed that the amounts for each counterparty would be netted in accordance with the provisions of the master netting agreements for each counterparty. The net payment amounts are based on the fair value of the underlying derivative instrument, excluding the credit risk valuation adjustment, plus any unpaid accrued interest amounts.
___________________________ (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. The aggregate fair value amount including the credit risk valuation adjustment, of all interest rate swaps with rating triggers that were in a net liability position was $244 million as of May 31, 2017. |
Equity (Notes) |
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Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity |
Total equity increased by $281 million during fiscal year 2017 to $1,099 million. The increase in total equity was primarily attributable to our net income of $312 million, which was partially offset by patronage capital retirements totaling $43 million. The following table presents the components of equity as of May 31, 2017 and 2016.
____________________________ (1) Represents derivative forward value gains (losses) for CFC only, as total CFC equity does not include the noncontrolling interests of the variable interest entities NCSC and RTFC, which we are required to consolidate. See “Note 15—Business Segments” for the statements of operations for CFC. District of Columbia cooperative law requires cooperatives to allocate net earnings to patrons, to a general reserve in an amount sufficient to maintain a balance of at least 50% of paid-in capital and to a cooperative educational fund, as well as permits additional allocations to board-approved reserves. District of Columbia cooperative law also requires that a cooperative’s net earnings be allocated to all patrons in proportion to their individual patronage and each patron’s allocation be distributed to the patron unless the patron agrees that the cooperative may retain its share as additional capital. Annually, the CFC Board of Directors allocates its net earnings to its patrons in the form of patronage capital, to a cooperative educational fund, to a general reserve, if necessary, and to board-approved reserves. An allocation to the general reserve is made, if necessary, to maintain the balance of the general reserve at 50% of the membership fees collected. CFC’s bylaws require the allocation to the cooperative educational fund to be at least 0.25% of its net earnings. Funds from the cooperative educational fund are disbursed annually to statewide cooperative organizations to fund the teaching of cooperative principles and for other cooperative education programs. Currently, CFC has one additional board-approved reserve, the members’ capital reserve. The CFC Board of Directors determines the amount of net earnings that is allocated to the members’ capital reserve, if any. The members’ capital reserve represents net earnings that CFC holds to increase equity retention. The net earnings held in the members’ capital reserve have not been specifically allocated to members, but may be allocated to individual members in the future as patronage capital if authorized by the CFC Board of Directors. All remaining net earnings are allocated to CFC’s members in the form of patronage capital. The amount of net earnings allocated to each member is based on the member’s patronage of CFC’s lending programs during the year. No interest is earned by members on allocated patronage capital. There is no effect on CFC’s total equity as a result of allocating net earnings to members in the form of patronage capital or to board-approved reserves. The CFC Board of Directors has voted annually to retire a portion of the patronage capital allocation. Upon retirement, patronage capital is paid out in cash to the members to whom it was allocated. CFC’s total equity is reduced by the amount of patronage capital retired to its members and by amounts disbursed from board-approved reserves. The current policy of the CFC Board of Directors is to retire 50% of the prior year’s allocated patronage capital and hold the remaining 50% for 25 years. The retirement amount and timing remains subject to annual approval by the CFC Board of Directors. In July 2016, the CFC Board of Directors authorized the allocation of the fiscal year 2016 net earnings as follows: $1 million to the Cooperative Educational Fund, $86 million to the members’ capital reserve and $84 million to members in the form of patronage capital. In July 2016, the CFC Board of Directors authorized the retirement of allocated net earnings totaling $42 million, representing 50% of the fiscal year 2016 allocation. This amount was returned to members in cash in the second quarter of fiscal year 2017. In July 2017, the CFC Board of Directors authorized the allocation of the fiscal year 2017 net earnings as follows: $1 million to the Cooperative Educational Fund, $43 million to the members’ capital reserve and $90 million to members in the form of patronage. In July 2017, the CFC Board of Directors authorized the retirement of allocated net earnings totaling $45 million, representing 50% of the fiscal year 2017 allocation. This amount will be returned to members in cash in the second quarter of fiscal year 2018. Future allocations and retirements of net earnings may be made annually as determined by the CFC Board of Directors with due regard for its financial condition. The CFC Board of Directors has the authority to change the current practice for allocating and retiring net earnings at any time, subject to applicable laws and regulations. Total equity includes noncontrolling interest, which represents 100% of NCSC and RTFC equity, as the members of NCSC and RTFC own or control 100% of the interest in their respective companies. In accordance with District of Columbia cooperative law and its bylaws and board policies, RTFC allocates its net earnings to its patrons, a cooperative educational fund and a general reserve, if necessary. RTFC’s bylaws require that it allocate at least 1% of net income to a cooperative educational fund. Funds from the cooperative educational fund are disbursed annually to fund the teaching of cooperative principles and for other cooperative education programs. An allocation to the general reserve is made, if necessary, to maintain the balance of the general reserve at 50% of the membership fees collected. The remainder is allocated to borrowers in proportion to their patronage. RTFC retires at least 20% of its annual allocation, if any, to members in cash prior to filing the applicable tax return. Any additional amounts are retired as determined by the board of directors taking into consideration RTFC’s financial condition. RTFC reported net income of less than $1 million for fiscal year 2017. Pursuant to its bylaws, RTFC allocated 1% of net income or $5 thousand to an educational fund. The remaining net income for fiscal year 2017 was not sufficient to cover the fiscal year 2016 net loss. As such, there was no allocation of patronage capital to members for fiscal year 2017. Because RTFC also reported a net loss for fiscal year 2016, there was no allocation to the educational fund or of patronage capital to members for fiscal 2016. NCSC’s bylaws require that it allocate at least 0.25% of its net earnings to a cooperative educational fund and an amount to the general reserve required to maintain the general reserve balance at 50% of membership fees collected. Funds from the cooperative educational fund are disbursed annually to fund the teaching of cooperative principles and for other cooperative education programs. The NCSC Board of Directors has the authority to determine if and when net earnings will be allocated. There is no effect on noncontrolling interest as a result of NCSC and RTFC allocating net earnings to members or board-approved reserves. There is a reduction to noncontrolling interest as a result of the cash retirement of amounts allocated to members or to disbursements from board-approved reserves. Accumulated Other Comprehensive Income The following tables summarize, by component, the activity in AOCI as of and for the years ended May 31, 2017 and 2016.
We expect to reclassify approximately $1 million of amounts in AOCI related to unrealized derivative gains into earnings over the next 12 months. |
Employee Benefits (Notes) |
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Retirement Benefits [Abstract] | ||||||||||||||||
Employee Benefits |
National Rural Electric Cooperative Association (“NRECA”) Retirement Security Plan CFC is a participant in the NRECA Retirement Security Plan (“the Plan”), a noncontributory, defined benefit multiple-employer master pension plan. The employer identification number of the Plan is 53-0116145 and the Plan number is 333. Plan information is available publicly through the annual Form 5500, including attachments. The Plan is available to all qualified CFC employees. Under the Plan, participating employees are entitled to receive annually, under a 50% joint and surviving spouse annuity, 1.70% of the average of their five highest base salaries during their last 10 years of employment, multiplied by the number of years of participation in the Plan. As a multiple-employer plan, there is no funding liability for CFC related to the Plan. CFC’s expense is limited to the annual premium to participate in the Plan. The risks of participating in CFC’s multiple-employer plan are different from single-employer plans based on the following characteristics of the Plan:
In the Plan, a certified zone status determination is not required and, therefore, not determined under the Pension Protection Act of 2006. In total, the Plan was more than 80% funded at January 1, 2017, 2016 and 2015, based on the Pension Protection Act (“PPA”) funding target and PPA actuarial value of assets on those dates. We made contributions of $4 million, $4 million and $3 million during fiscal year 2017, 2016 and 2015, respectively. In each of these years, these contributions represented less than 5% of total contributions made to the plan by all participating employers. There are no collective bargaining agreements in place that cover CFC’s employees. Our contribution rate did not include a surcharge and there were no funding improvement plans or rehabilitation plans implemented or pending and no required minimum contributions. Pension Restoration Plan The Economic Growth and Tax Relief Act of 2001 set a limit of $270,000 for calendar year 2017 on the compensation to be used in the calculation of pension benefits. To restore potential lost benefits, we adopted a Pension Restoration Plan administered by NRECA. Under the Plan, the amount that NRECA invoices CFC for the Retirement Security Plan will continue to be based on the full compensation paid to each employee. Upon the retirement of a covered employee, NRECA will calculate the retirement and security benefit to be paid with consideration of the compensation limits and will pay the maximum benefit thereunder. NRECA will also calculate the retirement and security benefit that would have been available without consideration of the compensation limits and CFC will pay the difference. NRECA will then give CFC a credit against future retirement and security contribution liabilities in the amount paid by CFC to the covered employee. The Pension Restoration Plan, which is frozen, is an unfunded, unsecured deferred compensation plan. The benefit and payout formula under the restoration component of the Retirement Security Plan is similar to that under the qualified plan component. The three participating executive officers have satisfied the provisions established to receive the benefit from this plan. Since there is no longer a risk of forfeiture of the benefit under the Pension Restoration Plan, we will make annual distributions from the plan to each of the named executive officers included in the plan. These distributions will be credited back to us by NRECA. Therefore, the distributions will have no impact on our consolidated financial statements. Executive Benefit Restoration Plan NRECA restricted additional participation in the Pension Restoration Plan in December 2014. We therefore adopted a top-hat Executive Benefit Restoration Plan, effective January 1, 2015. The Executive Benefit Restoration Plan is a nonqualified, unfunded plan maintained by CFC to provide retirement benefits to a select group of executive officers whose compensation exceeds Internal Revenue Service (“IRS”) limits for qualified defined benefit plans. There is a risk of forfeiture if participants leave the company prior to becoming fully vested in the Executive Benefit Restoration Plan. There were seven plan participants as of May 31, 2017. Upon adoption of the plan on January 1, 2015, we recorded an unfunded projected pension obligation of $1 million and a corresponding adjustment to AOCI. The actuarially determined unfunded projected benefit obligation of the plan, which is included on our consolidated balance sheet as a component of other liabilities, increased to $4 million as of May 31, 2017 from $1 million as of May 31, 2016. Of the $3 million increase in the unfunded projected benefit obligation, approximately $2 million was attributable to plan amendments for new participants in the plan and recorded in AOCI. The remaining $1 million was recognized as pension expense as a component of salaries and benefits in our consolidated statements of operations for fiscal year 2017. Defined Contribution Plan CFC offers a 401(k) defined contribution savings program, the 401(k) Pension Plan, to all employees who have completed a minimum of 1,000 hours of service in either the first 12 consecutive months or first full calendar year of employment. We contribute an amount up to 2% of an employee’s salary each year for all employees participating in the program with a minimum 2% employee contribution. We contributed $0.5 million to the plan in each of the fiscal years 2017, 2016 and 2015. |
Guarantees (Notes) |
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Guarantees |
We guarantee certain contractual obligations of our members so they may obtain various forms of financing. We use the same credit policies and monitoring procedures in providing guarantees as we do for loans and commitments. If a member system defaults on its obligation to pay debt service, then we are obligated to pay any required amounts under our guarantees. Meeting our guarantee obligations satisfies the underlying obligation of our member systems and prevents the exercise of remedies by the guarantee beneficiary based upon a payment default by a member system. In general, the member system is required to repay any amount advanced by us with interest, pursuant to the documents evidencing the member system’s reimbursement obligation. The following table summarizes total guarantees by type of guarantee and member class as of May 31, 2017 and 2016.
We guarantee debt issued in connection with the construction or acquisition of pollution control, solid waste disposal, industrial development and electric distribution facilities, classified as long-term tax-exempt bonds in the table above. We unconditionally guarantee to the holders or to trustees for the benefit of holders of these bonds the full principal, interest and in most cases, premium, if any, on each bond when due. If a member system defaults in its obligation to pay debt service, then we are obligated to pay any required amounts under our guarantees. Such payment will prevent the occurrence of an event of default that would otherwise permit acceleration of the bond issue. In general, the member system is required to repay any amount advanced by us with interest, pursuant to the documents evidencing the member system’s reimbursement obligation. The maturities for the long-term tax-exempt bonds and the related guarantees extend through calendar year 2042. Amounts in the table represent the outstanding principal amount of the guaranteed bonds. Our maximum potential exposure for the $68 million of fixed-rate tax-exempt bonds was $98 million, which represented principal and interest, as of May 31, 2017. Of the amounts shown in the table above for long-term tax-exempt bonds, $400 million and $406 million as of May 31, 2017 and 2016, respectively, are adjustable or floating-rate bonds that may be converted to a fixed rate as specified in the applicable indenture for each bond offering. We are unable to determine the maximum amount of interest that we could be required to pay related to the remaining adjustable and floating-rate bonds. Many of these bonds have a call provision that allows us to call the bond in the event of a default. This would limit our exposure to future interest payments on these bonds. Generally our maximum potential exposure is secured by mortgage liens on the systems’ assets and future revenue. If a system's debt is accelerated because of a determination that the interest thereon is not tax-exempt, the system’s obligation to reimburse us for any guarantee payments will be treated as a long-term loan. The maturities for letters of credit extend through calendar year 2027. The amounts shown in the table above represent our maximum potential exposure, of which $125 million was secured, as of May 31, 2017. Letters of credit include $76 million to provide the standby liquidity for adjustable and floating-rate tax-exempt bonds issued for the benefit of our members as of both May 31, 2017 and 2016. Security provisions include a mortgage lien on substantially all of the system’s assets, future revenue and the system’s investment in our commercial paper. In addition to the letters of credit listed in the table above, under master letter of credit facilities in place as of May 31, 2017, we may be required to issue up to an additional $60 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 May 31, 2017. 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 maturities for other guarantees listed in the table run through calendar year 2025. The maximum potential exposure for these other guarantees was $115 million, all of which were unsecured, as of May 31, 2017. Guarantees under which our right of recovery from our members was not secured totaled $297 million and $308 million and represented 33% and 34% of total guarantees as of May 31, 2017 and 2016, respectively. In addition to the guarantees described above, we were also the liquidity provider for $476 million of variable-rate tax-exempt bonds as of May 31, 2017, 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 fiscal years 2017, 2016 or 2015. Guarantee Liability We recorded a guarantee liability of $15 million and $17 million as of May 31, 2017 and 2016, respectively, which represents the contingent and noncontingent exposures related to guarantees and liquidity obligations. The contingent guarantee liability was $1 million as of May 31, 2017 and 2016, based on management’s estimate of exposure to losses within the guarantee portfolio. The remaining balance of the total guarantee liability of $14 million and $16 million as of May 31, 2017 and 2016, respectively, relates to our noncontingent obligation to stand ready to perform over the term of our guarantees and liquidity obligations that we have entered into or modified since January 1, 2003. The following table details the scheduled maturities of our outstanding guarantees in each of the five fiscal years following May 31, 2017 and thereafter:
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Fair Value Measurement (Notes) |
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Fair Value Disclosures [Text Block] |
Fair Value of Financial Instruments We use fair value measurements for the initial recording of certain assets and liabilities and periodic remeasurement of certain assets and liabilities on a recurring or nonrecurring basis. The accounting guidance for fair value measurements and disclosures establishes a three-level fair value hierarchy that prioritizes the inputs into the valuation techniques used to measure fair value. The levels of the fair value hierarchy, in priority order, include Level 1, Level 2 and Level 3. We describe the valuation technique for each level in “Note 1—Summary of Significant Accounting Policies.” The following tables present the carrying value and fair value for all of our financial instruments, including those carried at amortized cost, as of May 31, 2017 and 2016. The table also displays the classification within the fair value hierarchy of the valuation technique used in estimating fair value.
Following is a description of the valuation techniques we use for fair value measurement and disclosure, the significant inputs used in those techniques (if applicable) and the classification within the fair value hierarchy. Cash and Cash Equivalents Cash and cash equivalents include cash and certificates of deposit with original maturities of less than 90 days. Cash and cash equivalents are valued at the carrying value, which approximates fair value and are classified within Level 1 of the fair value hierarchy. Restricted Cash Restricted cash consists of cash and cash equivalents for which use is contractually restricted. The carrying value of restricted cash approximates fair value and is classified within Level 1 of the fair value hierarchy. Time Deposits Time deposits with financial institutions in interest-bearing accounts have maturities of less than one year as of the reporting date and are valued at the carrying value, which approximates fair value and are classified within Level 2 of the fair value hierarchy. Investment Securities Available for Sale Our investments in equity securities consist of investments in Farmer Mac Class A common stock and Series A, Series B and Series C preferred stock. These securities are classified as available for sale and reported at fair value in our consolidated balance sheets. We determine the fair value based on quoted prices on the stock exchange where the stock is traded. That stock exchange with respect to Farmer Mac Class A common stock is an active market based on the volume of shares transacted. Fair values for these securities are classified within Level 1 of the fair value hierarchy. Deferred Compensation Investments CFC offers a nonqualified 457(b) deferred compensation plan to highly compensated employees. Such amounts deferred by employees are invested by the company. The deferred compensation investments are presented as other assets in the consolidated balance sheets in the other assets category at fair value. We calculate fair value based on the quoted price on the stock exchange where the funds are traded. That stock exchange is an active market based on the volume of shares transacted. The amounts are invested in highly liquid indices and mutual funds and are classified within Level 1 of the fair value hierarchy. Loans to Members, Net As part of receiving a loan from us, our members have additional requirements and rights that are not typical of other financial institutions, such as the ability to receive a patronage capital allocation, the general requirement to purchase subordinated certificates or member capital securities to meet their capital contribution requirements as a condition of obtaining additional credit from us, the option to select fixed rates from one year to maturity with the fixed rate resetting or repricing at the end of each selected rate term, the ability to convert from a fixed rate to another fixed rate or the variable rate at any time, and certain interest rate discounts that are specific to the borrower’s activity with us. These features make it difficult to obtain market data for similar loans. Therefore, we must use other methods to estimate the fair value. Fair values for fixed-rate loans are estimated using a discounted cash flow technique by discounting the expected future cash flows using the current rates at which we would make similar loans to new borrowers for the same remaining maturities. The maturity date used in the fair value calculation of loans with a fixed rate for a selected rate term is the next repricing date since these borrowers must reprice their loans at various times throughout the life of the loan at the current market rate. Loans with different risk characteristics, specifically nonperforming and restructured loans, are valued by using collateral valuations or by adjusting cash flows for credit risk and discounting those cash flows using the current rates at which similar loans would be made by us to borrowers for the same remaining maturities. See below for more details about how we calculate the fair value of certain impaired loans. The carrying value of our variable-rate loans adjusted for credit risk approximates fair value since variable-rate loans are eligible to be reset at least monthly. Loans to members are classified within Level 3 of the fair value hierarchy. Accrued Interest Receivable Accrued interest receivable represents accrued interest to be collected on our loans to members and derivative instruments and is valued at the carrying value, which approximates fair value. Accrued interest receivable is classified within Level 2 of the fair value hierarchy. Debt Service Reserve Funds Debt service reserve funds represent cash and/or investments on deposit with the bond trustee for tax-exempt bonds that we guarantee. Debt service reserve fund investments include actively traded tax-exempt municipal bonds and commercial paper. The carrying value approximates the fair value and the valuation technique is classified as Level 1. Short-Term Borrowings Short-term borrowings consists of commercial paper, select notes, bank bid notes, daily liquidity fund notes and medium-term notes. The fair value of short-term borrowings with maturities less than or equal to 90 days is carrying value, which is a reasonable estimate of fair value. The fair value of short-term borrowings with maturities greater than 90 days is estimated based on discounted cash flows and quoted market rates for debt with similar maturities. Short-term borrowings classified within Level 1 of the fair value hierarchy includes dealer commercial paper, bank bid notes and daily liquidity fund notes. Short-term borrowings classified within Level 2 of the fair value hierarchy consists of member commercial paper and select notes and is determined based on discounted cash flows using discount rates consistent with current market rates for similar products with similar remaining terms. Short-term borrowings classified within Level 2 also includes our medium-term notes with an original maturity equal to or less than one year. The fair value of short-term medium-term notes classified within Level 2 of the fair value hierarchy was determined based on discounted cash flows using a pricing model that incorporates available market information such as indicative benchmark yields and credit spread assumptions that are provided by third-party pricing services such as the banks that underwrite our other debt transactions. Long-Term Debt Long-term debt consists of collateral trust bonds, medium-term notes and long-term notes payable. We issue substantially all collateral trust bonds and some medium-term notes in underwritten public transactions. Collateral trust bonds and medium-term notes are classified within Level 2 of the fair value hierarchy. The fair value of long-term debt classified within Level 2 of the fair value hierarchy was determined based on discounted cash flows. There is no active secondary trading for the underwritten collateral trust bonds and medium-term notes; therefore, dealer quotes and recent market prices are both used in estimating fair value. There is essentially no secondary market for the medium-term notes issued to our members or in transactions that are not underwritten; therefore, fair value is estimated based on observable benchmark yields and spreads for similar instruments supplied by banks that underwrite our other debt transactions. The long-term notes payable are issued in private placement transactions and there is no secondary trading of such debt. Long-term notes payable are classified within Level 3 of the fair value hierarchy. The fair value was determined based on discounted cash flows using benchmark yields and spreads for similar instruments supplied by underwriter quotes for similar instruments, if available. Secondary trading quotes for our debt instruments used in the determination of fair value incorporate our credit risk. Accrued Interest Payable Accrued interest payable represents accrued interest to be paid on our debt and derivative instruments and is valued at the carrying value, which approximates fair value. Accrued interest payable is classified within Level 2 of the fair value hierarchy. Guarantees The fair value of our guarantee liability is based on the fair value of our contingent and noncontingent exposure related to our guarantees. The fair value of our contingent exposure for guarantees is based on management’s estimate of our exposure to losses within the guarantee portfolio using a discounted cash flow method. The fair value of our noncontingent exposure for guarantees issued is estimated based on the total unamortized balance of guarantee fees paid and guarantee fees to be paid discounted at our current short-term funding rate, which represents management’s estimate of the fair value of our obligation to stand ready to perform. Guarantees are classified within Level 3 of the fair value hierarchy. Subordinated Deferrable Debt Subordinated deferrable debt outstanding was issued in underwritten public transactions. There is no active secondary trading for this subordinated deferrable debt; therefore, dealer quotes and recent market prices are both used in estimating fair value based on a discounted cash flow method. Subordinated deferrable debt is classified within Level 2 of the fair value hierarchy. Members’ Subordinated Certificates Members’ subordinated certificates include (i) membership subordinated certificates issued to our members, (ii) loan and guarantee subordinated certificates issued as a condition of obtaining loan funds or guarantees and (iii) member capital securities issued as voluntary investments by our members. All members’ subordinated certificates are nontransferable other than among members with CFC’s consent and there is no ready market from which to obtain fair value quotes. These certificates are valued at par and are classified within Level 3 of the fair value hierarchy. Derivative Instruments We account for derivative instruments in the consolidated balance sheets as either an asset or liability measured at fair value. We only enter into swap agreements with counterparties that are participating in our revolving lines of credit at the time the exchange agreements are executed. All of our swap agreements are subject to master netting agreements. There is not an active secondary market for the types of interest rate swaps we use. We determine the fair value of our derivatives using models that incorporate observable market inputs, such as spot LIBOR rates, Eurodollar futures contracts and market swap rates. These inputs can vary depending on the type of derivatives and nature of the underlying rate, price or index upon which the derivative’s value is based. The impact of counterparty non-performance risk is considered when measuring the fair value of derivative assets. Internal pricing is compared against additional pricing sources, such as external valuation agents and other sources. Pricing variances among different pricing sources are analyzed and validated. The technique for determining the fair value for our interest rate swaps is classified as Level 2. Commitments The fair value of our commitments is estimated based on the carrying value, or zero. Extensions of credit under these commitments, if exercised, would result in loans priced at market rates. Recurring Fair Value Measurements 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 May 31, 2017 and 2016 and the classification of the valuation technique within the fair value hierarchy.
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 years ended May 31, 2017 and 2016. Nonrecurring Fair Value Measurements We may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis in accordance with GAAP. Any adjustments to fair value usually result from application of lower-of-cost or fair value accounting or write-downs of individual assets. Assets measured at fair value on a nonrecurring basis as of May 31, 2017 and 2016 consisted of certain impaired loans. The fair value of these assets is determined based on the use of significant unobservable inputs, which are considered Level 3 in the fair value hierarchy. We provide additional information on foreclosed assets in “Note 1—Summary of Significant Accounting Policies” and “Note 5—Foreclosed Assets.” The following table presents the carrying value and fair value of assets reported in our consolidated financial statements at fair value on a nonrecurring basis as of May 31, 2017 and 2016, and unrealized losses for the years ended May 31, 2017 and 2016.
____________________________ (1) Excludes impaired loans for which the fair value is calculated based on the estimated cash flows and impaired loans for which there is no specific allowance recorded. Significant Unobservable Level 3 Inputs Impaired Loans We utilize the fair value of estimated cash flows or the collateral underlying the loan to determine the fair value and specific allowance for impaired loans. The valuation technique used to determine fair value of the impaired loans provided by both our internal staff and third-party specialists includes market multiples (i.e., comparable companies). The significant unobservable inputs used in the determination of fair value for individually impaired loans is a multiple of earnings before interest, taxes, depreciation and amortization based on various factors (i.e., financial condition of the borrower). In estimating the fair value of the collateral, we may use third-party valuation specialists, internal estimates or a combination of both. The significant unobservable inputs for estimating the fair value of impaired collateral-dependent loans are reviewed by our Credit Risk Management group to assess the reasonableness of the assumptions used and the accuracy of the work performed. In cases where we rely on third-party inputs, we use the final unadjusted third-party valuation analysis as support for any adjustments to our consolidated financial statements and disclosures. Because of the limited amount of impaired loans as of May 31, 2017 and 2016, we do not believe that potential changes in the significant unobservable inputs used in the determination of the fair value for impaired loans will have a material impact on the fair value measurement of these assets or our results of operations. |
Segment Information (Notes) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information |
Our consolidated financial statements include the financial results of CFC, NCSC and RTFC and certain entities created and controlled by CFC to hold foreclosed assets. Separate financial statements are produced for CFC, NCSC and RTFC and are the primary reports that management reviews in evaluating performance. The separate financial statements for CFC represent the consolidation of the financial results for CFC and the entities controlled by CFC. For more detail on the requirement to consolidate the financial results of NCSC and RTFC see “Note 1—Summary of Significant Accounting Policies.” The consolidated CFC financial statements include three operating segments: CFC, NCSC and RTFC. As of May 31, 2017, the NCSC and RTFC operating segments are not required to be separately reported as the financial results of NCSC and RTFC do not meet the quantitative thresholds outlined by the accounting standards for segment reporting. As a result, we have elected to aggregate the NCSC and RTFC financial results into a combined “Other” segment. CFC is the primary source of funding to NCSC. CFC is the sole source of funding to RTFC. Pursuant to a guarantee agreement, CFC has agreed to indemnify NCSC and RTFC for loan losses. The loan loss allowance at NCSC and RTFC is offset by a guarantee receivable from CFC. The following tables display segment results for the years ended May 31, 2017, 2016 and 2015, and assets attributable to each segment as of May 31, 2017 and 2016.
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Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
General Information | The Company National Rural Utilities Cooperative Finance Corporation (“CFC”) is a member-owned cooperative association incorporated under the laws of the District of Columbia in April 1969. CFC’s principal purpose is to provide its members with financing to supplement the loan programs of the Rural Utilities Service (“RUS”) of the United States Department of Agriculture (“USDA”). CFC makes loans to its rural electric members so they can acquire, construct and operate electric distribution, generation, transmission and related facilities. CFC also provides its members with credit enhancements in the form of letters of credit and guarantees of debt obligations. As a cooperative, CFC is owned by and exclusively serves its membership, which consists of not-for-profit entities or subsidiaries or affiliates of not-for-profit entities. CFC is exempt from federal income taxes. National Cooperative Services Corporation (“NCSC”) is a taxable cooperative incorporated in 1981 in the District of Columbia as a member-owned cooperative association. NCSC’s principal purpose is to provide financing to members of CFC, entities eligible to be members of CFC and the for-profit and nonprofit entities that are owned, operated or controlled by or provide significant benefit to certain members of CFC. NCSC’s membership consists of distribution systems, power supply systems and statewide and regional associations that are members of CFC. CFC is the primary source of funding for NCSC and manages NCSC’s business operations under a management agreement that is automatically renewable on an annual basis unless terminated by either party. NCSC pays CFC a fee and, in exchange, CFC reimburses NCSC for loan losses under a guarantee agreement. As a taxable cooperative, NCSC pays income tax based on its reported taxable income and deductions. NCSC is headquartered with CFC in Dulles, Virginia. Rural Telephone Finance Cooperative (“RTFC”) is a taxable Subchapter T cooperative association originally incorporated in South Dakota in 1987 and reincorporated as a member-owned cooperative association in the District of Columbia in 2005. RTFC’s principal purpose is to provide financing for its rural telecommunications members and their affiliates. RTFC’s membership consists of a combination of not-for-profit and for-profit entities. CFC is the sole lender to and manages the business operations of RTFC through a management agreement that is automatically renewable on an annual basis unless terminated by either party. Under a guarantee agreement, RTFC pays CFC a fee and, in exchange, CFC reimburses RTFC for loan losses. As permitted under Subchapter T of the Internal Revenue Code, RTFC pays income tax based on its net income, excluding patronage-sourced earnings allocated to its patrons. RTFC is headquartered with CFC in Dulles, Virginia. |
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Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and related disclosures. The most significant estimates and assumptions involve establishing the allowance for loan losses and determining the fair value of financial instruments and other assets and liabilities. While management makes its best judgment, actual amounts or results could differ from these estimates. Certain reclassifications have been made to previously reported amounts to conform to the current-period presentation. |
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Principles of Consolidation | Principles of Consolidation Our accompanying consolidated financial statements include the accounts of CFC, RTFC, NCSC and subsidiaries created and controlled by CFC to hold foreclosed assets. All intercompany balances and transactions have been eliminated. We consolidate entities in which CFC has a controlling financial interest. We determine whether CFC has a controlling financial interest in an entity by first evaluating whether the entity is a voting interest entity or a variable interest entity (“VIE”). CFC established limited liability corporations and partnerships to hold foreclosed assets resulting from defaulted loans or bankruptcy. CFC owns and controls all of these entities and, therefore, consolidates their financial results. CFC presents the companies established to hold foreclosed assets in one line on the consolidated balance sheets and the consolidated statements of operations. Unless stated otherwise, references to “we, “our” or “us” relate to CFC and its consolidated entities. |
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Variable Interest Entities | Variable Interest Entities A VIE is an entity that has a total equity investment at risk that is not sufficient to finance its activities without additional subordinated financial support provided by another party, or where the group of equity holders does not have: (i) the ability to make decisions about the entity’s activities that most significantly impact its economic performance; (ii) the obligation to absorb the entity’s expected losses; or (iii) the right to receive the entity’s expected residual returns. NCSC and RTFC meet the definition of variable interest entities because they do not have sufficient equity investment at risk to finance their activities without additional financial support. When evaluating an entity for possible consolidation, we must determine whether or not we have a variable interest in the entity. If it is determined that we do not have a variable interest in the entity, no further analysis is required and we do not consolidate the entity. If we have a variable interest in the entity, we must evaluate whether we are the primary beneficiary based on an assessment of quantitative and qualitative factors. We are considered the primary beneficiary holder if we have a controlling financial interest in the VIE that provides (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. We consolidate the results of NCSC and RTFC with CFC because CFC is the primary beneficiary holder. |
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Cash and Cash Equivalents | Cash and Cash Equivalents Cash, certificates of deposit, due from banks and other investments with original maturities of less than 90 days are classified as cash and cash equivalents. |
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Restricted Cash | Restricted Cash Restricted cash consists of cash and cash equivalents for which the use is contractually restricted. |
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Investments | Time Deposits Time deposits are deposits that we make with financial institutions in interest-bearing accounts. These deposits have a maturity of less than one year as of the reporting date and are valued at carrying value, which approximates fair value. Investment Securities Available for Sale Our investment securities, which are classified as available for sale, consist of investments in Federal Agricultural Mortgage Corporation (“Farmer Mac”) Series A Common Stock and Farmer Mac Series A, Series B and Series C Non-Cumulative Preferred Stock. Available-for-sale securities are carried at fair value with unrealized gains and losses recorded as a component of accumulated other comprehensive income. We regularly evaluate our investment securities whose fair value has declined below the amortized cost to assess whether the decline in fair value is other than temporary. We recognize any other-than-temporary impairment amounts in earnings. |
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Loans to Members | Loans to Members Loans to members are classified as held for investment and reported at amortized cost, which is measured based on the outstanding principal balance net of unamortized deferred loan origination costs. Deferred loan origination costs are amortized using the straight-line method, which approximates the effective interest method, over the life of the loan as a reduction to interest income. |
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Allowance for Credit Losses | Allowance for Loan Losses We maintain an allowance for loan losses at a level estimated by management to provide for probable losses inherent in the loan portfolio. The allowance for loan losses is reported separately on the consolidated balance sheet, and the provision for loan losses is reported as a separate line item on the consolidated statement of operations. We review the estimates and assumptions used in the calculations of the allowance for loan losses on a quarterly basis. The estimate of the allowance for loan losses is based on a review of the composition of the loan portfolio, past loss experience, specific problem loans, current economic conditions, available market data and/or projection of future cash flows and other pertinent factors that in management’s judgment may contribute to incurred losses. The allowance is based on estimates and, accordingly, actual losses may differ from the allowance amount. The methodology used to calculate the allowance for loan losses is summarized below. The allowance for loan losses is calculated by dividing the portfolio into two categories of loans:
Collective Allowance The collective, or general, loan portfolio consists of loans not specifically identified in the impaired category. We disaggregate the loans in the general portfolio by company: CFC, RTFC and NCSC. We further disaggregate the CFC loan portfolio by member class: distribution, power supply and statewide and associates. We use the following factors to determine the allowance for loan losses for the general portfolio category:
Management also evaluates certain qualitative factors, such as current economic and other conditions and trends that may affect the collectibility of our loan portfolio but are not yet reflected in our model-generated allowance for loan losses and applies judgment to assess the impact of these factors on the allowance. Specific Allowance A loan is considered to be impaired when we do not expect to collect all principal and interest payments as scheduled by the original loan terms, other than an insignificant delay or an insignificant shortfall in amount. Factors considered in determining impairment may include, but are not limited to:
We generally measure impairment for individually impaired loans based on the difference between the recorded investment of the loan and the present value of the expected future cash flows discounted at the loan’s effective interest rate. If the loan is collateral dependent, we measure impairment based upon the fair value of the underlying collateral, which we determine based on the current fair value of the collateral less estimated selling costs. Loans are considered to be collateral dependent if repayment of the loan is expected to be provided solely by the underlying collateral and there are no other available and reliable sources of repayment. In calculating the impairment on a loan, the estimates of the expected future cash flows or collateral value are the key estimates made by management. Changes in the estimated future cash flows or collateral value affect the amount of the calculated impairment. The change in cash flows required to make the change in the calculated impairment material will be different for each borrower and depend on the period covered, the effective interest rate at the time the loan became impaired and the amount of the loan outstanding. Estimates are not used to determine our investment in the receivables or the discount rate since, in all cases, the investment is equal to the loan balance outstanding at the reporting date, and the discount rate is equal to the effective interest rate on the loan at the time the loan became impaired. We recognize interest income on impaired loans on a case-by-case basis. An impaired loan to a borrower that is nonperforming will typically be placed on nonaccrual status and we will reverse all accrued and unpaid interest. We generally apply all cash received during the nonaccrual period to the reduction of principal, thereby foregoing interest income recognition. Interest income may be recognized on an accrual basis for restructured impaired loans where the borrower is performing and is expected to continue to perform based on agreed-upon terms. All of our restructured loans are troubled debt restructurings. All loans are written off in the period that it becomes evident that collectability is highly unlikely; however, our efforts to recover all charged-off amounts may continue. The determination to write off all or a portion of a loan balance is made based on various factors on a case-by-case basis including, but not limited to, cash flow analysis and the fair value of collateral securing the borrower’s loans. Unadvanced Loan Commitments Unadvanced commitments represent amounts for which we have approved and executed loan contracts, but the funds have not been advanced. The majority of the unadvanced commitments reported represent amounts that are subject to material adverse change clauses at the time of the loan advance. Prior to making an advance on these facilities, 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 loan terms and conditions. The remaining unadvanced commitments relate to line of credit loans that are not subject to a material adverse change clause at the time of each loan advance. As such, we would be required to advance amounts on these committed facilities as long as the borrower is in compliance with the terms and conditions of the loan commitment. Unadvanced loan commitments related to line of credit loans are typically for periods not to exceed five years and are generally revolving facilities used for working capital and backup liquidity purposes. Historically, we have experienced a very low utilization rate on line of credit loan facilities, whether or not there is a material adverse change clause. Since we generally do not charge a fee on the unadvanced portion of the majority of our loan facilities, our borrowers will typically request long-term facilities to fund construction work plans and other capital expenditures for periods of up to five years and draw down on the facility over that time. In addition, borrowers will typically request an amount in excess of their immediate estimated loan requirements to avoid the expense related to seeking additional loan funding for unexpected items. These factors contribute to our expectation that the majority of the unadvanced loan commitments will expire without being fully drawn upon and that the total unadvanced amount does not necessarily represent future cash funding requirements. Reserve for Unadvanced Loan Commitments We maintain a reserve for unadvanced loan commitments and committed lines of credit. This reserve is included as a component of other liabilities on our consolidated balance sheet and changes in the reserve is included in other non-interest expense on our consolidated statements of operations. Our estimate of the reserve for potential losses on these commitments takes into consideration various factors, including the existence of a material adverse change clause, the historical utilization of the committed lines of credit, the probability of funding, historical loss experience on unadvanced loan commitments and other inputs and management judgment consistent with the methodology used to determine our allowance for loan losses. |
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Guarantee Liability | Guarantee Liability We maintain a guarantee liability that represents our contingent and noncontingent exposure related to guarantees and standby liquidity obligations associated with our members’ debt. The guarantee liability is included in the other liabilities line item on the consolidated balance sheet, and the provision for guarantee liability is reported in non-interest expense as a separate line item on the consolidated statement of operations. The contingent portion of the guarantee liability represents management’s estimate of our exposure to losses within the guarantee portfolio. The methodology used to estimate the contingent guarantee liability is consistent with the methodology used to determine the allowance for loan losses. We record a noncontingent guarantee liability for all new or modified guarantees since January 1, 2003. Our noncontingent guarantee liability represents our obligation to stand ready to perform over the term of our guarantees and liquidity obligations that we have entered into or modified since January 1, 2003. Our noncontingent obligation is estimated based on guarantee and liquidity fees charged for guarantees issued, which represents management’s estimate of the fair value of our obligation to stand ready to perform. The fees are deferred and amortized using the straight-line method into interest income over the term of the guarantee. |
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Non-performing Loans | Nonperforming Loans We classify loans as nonperforming when any one of the following criteria is met:
A loan is considered past due if a full payment of principal and interest is not received within 30 days of its due date. Once a borrower is classified as nonperforming, we typically place the loan on nonaccrual status and reverse any accrued and unpaid interest recorded during the period in which the borrower stopped performing. We generally apply all cash received during the nonaccrual period to the reduction of principal, thereby foregoing interest income recognition. The decision to return a loan to accrual status is determined on a case-by-case basis. |
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Fixed Assets | Fixed Assets Fixed assets are recorded at cost less accumulated depreciation. We recognize depreciation expense on a straight-line basis over the estimated useful lives of the fixed asset categories, which range from 3 to 40 years. The table below presents the components of fixed assets. CFC owns its headquarters facility in Loudoun County, Virginia, which is presented in the building and building equipment category below. We recognized depreciation expense of $7 million, $7 million and $6 million in fiscal year 2017, 2016 and 2015, respectively.
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Foreclosed Assets | Foreclosed Assets Foreclosed assets acquired through our lending activities in satisfaction of indebtedness may be held in operating entities created and controlled by CFC and presented separately in our consolidated balance sheets under foreclosed assets, net. These assets are initially recorded at estimated fair value as of the date of acquisition. Subsequent to acquisition, foreclosed assets not classified as held for sale are evaluated for impairment and the results of operations and any impairment are reported on our consolidated statements of operations under results of operations of foreclosed assets. When foreclosed assets meet the accounting criteria to be classified as held for sale, they are recorded at the lower of cost or fair value less estimated costs to sell at the date of transfer, with the amount at the date of transfer representing the new cost basis. Subsequent changes are recognized in our consolidated statements of operations under results of operations of foreclosed assets. We also review foreclosed assets classified as held for sale each reporting period to determine whether the existing carrying amounts are fully recoverable in comparison to estimated fair values. We did not carry any foreclosed assets on our consolidated balance sheet as of May 31, 2017. |
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Debt | Debt We report debt at cost net of unamortized issuance costs and discounts or premiums. Issuance costs, discounts and premiums are deferred and amortized into interest expense using the effective interest method or a method approximating the effective interest method over the legal maturity of each bond issue. 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. Borrowings with an original contractual maturity of greater than one year are classified as long-term debt. |
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Derivative Financial Instruments | Derivative Instruments We are an end user of derivative financial instruments and do not engage in derivative trading. We use derivatives, primarily interest rate swaps and treasury rate locks, to manage interest rate risk. Derivatives may be privately negotiated contracts, which are often referred to as over-the-counter (“OTC”) derivatives, or they may be listed and traded on an exchange. We generally engage in OTC derivative transactions. In accordance with the accounting standards for derivatives and hedging activities, we record derivative instruments at fair value as either a derivative asset or derivative liability on our consolidated balance sheets. We report derivative asset and liability amounts on a gross basis based on individual contracts, which does not take into consideration the effects of master netting agreements or collateral netting. Derivatives in a gain position are reported as derivative assets on our consolidated balance sheets, while derivatives in a loss position are reported as derivative liabilities. Accrued interest related to derivatives is reported on our consolidated balance sheets as a component of either accrued interest 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 and derivative forward value amounts, are recognized in our consolidated statements of operations under derivative gains (losses). If we elect hedge accounting treatment for derivatives, we formally document, designate and assess the effectiveness of the hedge relationship. Changes in the fair value of derivatives designated as qualifying fair value hedges are recorded in earnings together with offsetting changes in the fair value of the hedged item and any related ineffectiveness. Changes in the fair value of derivatives designated as qualifying cash flow hedges are recorded as a component of other comprehensive income (“OCI”), to the extent that the hedge relationships are effective, and reclassified from accumulated other comprehensive income (“AOCI”) to earnings using the effective interest method over the term of the forecasted transaction. Any ineffectiveness in the hedging relationship is recognized as a component of derivative gains (losses) in our consolidated statement of operations. We generally do not designate interest rate swaps, which represent the substantial majority of our derivatives, for hedge accounting. Accordingly, changes in the fair value of interest rate swaps are reported in our consolidated statements of operations under derivative gains (losses). Net periodic cash settlements related to interest rate swaps are classified as an operating activity in our consolidated statements of cash flows. We typically designate treasury rate locks as cash flow hedges of forecasted debt issuances. Accordingly, changes in the fair value of the derivative instruments are recorded as a component of OCI and reclassified to interest expense when the forecasted transaction occurs using the effective interest method. Any ineffectiveness in the hedging relationship is recognized as a component of derivative gains (losses) in our consolidated statements of operations. At June 1, 2001, as a result of the adoption of the derivative accounting guidance that required derivatives to be reported at fair value on the balance sheet, we recorded a transition adjustment net loss in AOCI. The transition adjustment net loss is being reclassified into earnings and reported as a component of derivative gains (losses) in our consolidated statements of operations. We expect to continue to reclassify the remaining balance of the transition adjustment into earnings through 2029. We did not have any derivatives designated as accounting hedges during fiscal year 2017, 2016 or 2015. |
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Fair Value of Financial Instruments | Fair Value Valuation Processes We carry certain assets and liabilities at fair value, including available-for-sale investment securities and derivatives. We use fair value measurements to record fair value adjustments for certain assets and liabilities and to determine fair value disclosures. Fair value is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date (also referred to as an exit price). We have various processes and controls in place to ensure that fair value is reasonably estimated. We consider observable prices in the principal market in our valuations where possible. Fair value estimates were developed at the reporting date and may not necessarily be indicative of amounts that could ultimately be realized in a market transaction at a future date. With the exception of redeeming debt under early redemption provisions, terminating derivative instruments under early termination provisions and allowing borrowers to prepay their loans, we held and intend to hold all financial instruments to maturity excluding common stock and preferred stock investments that have no stated maturity. Fair Value Hierarchy The fair value accounting guidance provides a three-level fair value hierarchy for classifying financial instruments. This hierarchy is based on the markets in which the assets or liabilities trade and whether the inputs to the valuation techniques used to measure fair value are observable or unobservable. Fair value measurement of a financial asset or liability is assigned a level based on the lowest level of any input that is significant to the fair value measurement in its entirety. The three levels of the fair value hierarchy are summarized below:
The degree of management judgment involved in determining the fair value of a financial instrument is dependent upon the availability of quoted prices in active markets or observable market parameters. When quoted prices and observable data in active markets are not fully available, management’s judgment is necessary to estimate fair value. Changes in market conditions, such as reduced liquidity in the capital markets or changes in secondary market activities, may reduce the availability and reliability of quoted prices or observable data used to determine fair value. |
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Membership Fees | Membership Fees Members are charged a one-time membership fee based on member class. CFC distribution system members, power supply system members and national associations of cooperatives pay a $1,000 membership fee. CFC service organization members pay a $200 membership fee and CFC associates pay a $1,000 fee. RTFC voting members pay a $1,000 membership fee and RTFC associates pay a $100 fee. NCSC members pay a $100 membership fee. Membership fees are accounted for as members’ equity. |
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Financial Instruments with Off-Balance Sheet Risk | Financial Instruments with Off-Balance Sheet Risk In the normal course of business, we are a party to financial instruments with off-balance sheet risk to meet the financing needs of our member borrowers. These financial instruments include committed lines of credit, standby letters of credit and guarantees of members’ obligations. |
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Interest Income | Interest Income Interest income on loans is recognized using the effective interest method. The following table presents interest income, categorized by loan and investment type, for fiscal years 2017, 2016 and 2015.
____________________________ (1) Includes loan conversion fees, which are deferred and recognized in interest income using the effective interest method. (2) Troubled debt restructuring (“TDR”) loans. (3) Consists of late payment fees and net amortization of deferred loan fees and loan origination costs. Deferred income consists primarily of deferred loan conversion fees, which totaled $68 million and $71 million as of May 31, 2017 and 2016, respectively. These fees are presented as deferred income on our consolidated balance sheets and recognized in interest income using the effective interest method. |
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Interest Expense | Interest Expense The following table presents interest expense, categorized by debt product type, for fiscal years 2017, 2016 and 2015.
____________________________ (1) Represents interest expense and the amortization of discounts on debt. (2) Includes underwriter’s fees, legal fees, printing costs and certain accounting fees, which are deferred and recognized in interest expense using the effective interest method. Also includes issuance costs related to dealer commercial paper, which are recognized immediately as incurred. (3) Includes fees related to funding activities, including fees paid to banks participating in our committed bank revolving line of credit agreements. Amounts are recognized as incurred or amortized on a straight-line basis over the life of the agreement. |
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Early Extinguishment of Debt | Early Extinguishment of Debt We redeem outstanding debt early from time to time to manage liquidity and interest rate risk. When we redeem outstanding debt early, we recognize a gain or loss related to the difference between the amount paid to redeem the debt and the net book value of the extinguished debt as a component of non-interest expense in the gain (loss) on early extinguishment of debt line item. |
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Income Taxes | Income Taxes While CFC is exempt under Section 501(c)(4) of the Internal Revenue Code, it is subject to tax on unrelated business taxable income. NCSC is a taxable cooperative that pays income tax on the full amount of its reportable taxable income and allowable deductions. RTFC is a taxable cooperative under Subchapter T of the Internal Revenue Code and is not subject to income taxes on income from patronage sources that is allocated to its borrowers, as long as the allocation is properly noticed and at least 20% of the amount allocated is retired in cash prior to filing the applicable tax return. The income tax benefit (expense) recorded in the consolidated statement of operations represents the income tax benefit (expense) at the applicable combined federal and state income tax rates resulting in a statutory tax rate. The statutory tax rate for NCSC and RTFC was 38% and 40%, respectively, for fiscal year 2017. The statutory tax rate for both NCSC and RTFC was 38% for fiscal years 2016 and 2015. Substantially all of the income tax expense recorded in our consolidated statements of operations relates to NCSC. NCSC had a deferred tax asset of $4 million and $6 million as of May 31, 2017 and 2016, respectively, primarily arising from differences in the accounting and tax treatment for derivatives. |
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New Accounting Pronouncements | Accounting Standards Adopted in Fiscal Year 2017 Amendments to the Consolidation Analysis In February 2015, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) 2015-02, Amendments to the Consolidation Analysis, which makes several modifications to the consolidation guidance for variable interest entities (“VIEs”) and general partners’ investments in limited partnerships, as well as modifications to the evaluation of whether limited partnerships are VIEs or voting interest entities. The new guidance also amends the consolidation analysis for certain investment funds and excludes certain money market funds. We were required to adopt this guidance either retrospectively or on a modified retrospective basis at the beginning of fiscal year 2017. We adopted this guidance on a modified retrospective basis effective June 1, 2016. The adoption had no impact on our consolidated financial statements. Recently Issued But Not Yet Adopted Accounting Standards Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments In June 2016, FASB issued ASU 2016-13, Financial Instruments—Credit Losses: Measurement of Credit Losses on Financial Instruments, which changes the accounting for credit losses on certain financial assets to an expected loss model from the incurred loss model currently in use. The new guidance will result in earlier recognition of credit losses based on measuring the expected credit losses over the estimated life of financial assets held at each reporting date. The expected loss model will be the basis for determining the allowance for credit losses for loans and leases, unfunded lending commitments, held-to-maturity debt securities and other debt instruments measured at amortized cost. In addition, the new guidance modifies the other-than-temporary impairment model for available-for-sale debt securities to require the recognition of credit losses through a valuation allowance, which allows for the reversal of credit impairments in future periods. The ASU will also require enhanced disclosures to help users of financial statements better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. The new standard is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. This update is effective for us on June 1, 2020. Upon adoption, we will be required to record a cumulative-effect adjustment to retained earnings. The impact on our consolidated financial statements from the adoption of this new guidance will depend on the composition and risk profile of our loan portfolio as of the date of adoption. We do not expect to early adopt this guidance. Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities In January 2016, FASB issued ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities, which amends certain aspects of the recognition, measurement, presentation and disclosure of certain financial instruments, including equity investments and liabilities measured at fair value under the fair value option. The guidance also updates fair value presentation and disclosure requirements for financial instruments measured at amortized cost. The ASU requires investments in equity securities that do not result in consolidation and are not accounted for under the equity method to be measured at fair value with changes in the fair value recognized through net income, unless one of two available exceptions apply. For financial liabilities where the fair value option has been elected, the portion of the total change in fair value caused by changes in the company’s own credit risk is required to be presented separately in OCI. The classification and measurement guidance is effective for public entities in fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. This update will be effective for us on June 1, 2018. Upon adoption, we will be required to reclassify the gain (loss) related to our equity investments classified as available-for-sale from AOCI to retained earnings as a cumulative-effective adjustment and begin recording future changes in fair value in earnings. We had a gain of $12 million recorded in AOCI for our available-for-sale equity investments as of May 31, 2017. The impact on our consolidated financial statements at adoption will depend on the net unrealized gains (losses) recorded in AOCI for these equity investments as of the date of adoption. Revenue from Contracts with Customers In May 2014, FASB issued ASU 2014-09, Revenue from Contracts with Customers, which clarifies the principles for recognizing revenue from contracts with customers and will replace most existing revenue recognition in GAAP when it becomes effective. In July 2015, FASB approved a one year deferral of the effective date of this standard, with a revised effective date for fiscal years beginning after December 15, 2017. The new accounting guidance, which does not apply to financial instruments, will be effective for us June 1, 2018. We do not expect the new guidance to have an impact on our consolidated financial statements, as CFC’s primary business and source of revenue is from lending. |
Summary of Significant Accounting Policies (Tables) |
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Schedule of fixed assets |
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Schedule of components of interest income | Interest income on loans is recognized using the effective interest method. The following table presents interest income, categorized by loan and investment type, for fiscal years 2017, 2016 and 2015.
____________________________ (1) Includes loan conversion fees, which are deferred and recognized in interest income using the effective interest method. (2) Troubled debt restructuring (“TDR”) loans. (3) Consists of late payment fees and net amortization of deferred loan fees and loan origination costs. |
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Schedule of components of interest expense | The following table presents interest expense, categorized by debt product type, for fiscal years 2017, 2016 and 2015.
____________________________ (1) Represents interest expense and the amortization of discounts on debt. (2) Includes underwriter’s fees, legal fees, printing costs and certain accounting fees, which are deferred and recognized in interest expense using the effective interest method. Also includes issuance costs related to dealer commercial paper, which are recognized immediately as incurred. (3) Includes fees related to funding activities, including fees paid to banks participating in our committed bank revolving line of credit agreements. Amounts are recognized as incurred or amortized on a straight-line basis over the life of the agreement. |
Variable Interest Entities (Tables) |
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Schedule of Variable Interest Entities [Table Text Block] | The following table presents, by component, our consolidated membership after taking into consideration systems that are members of both CFC and NCSC and eliminating memberships between CFC, NCSC and RTFC as of May 31, 2017.
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Investment Securities (Tables) |
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Schedule of investments in equity securities | as of May 31, 2017 and 2016.
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Loans and Commitments (Tables) |
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May 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans and Leases Receivable Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of loans outstanding to members and unadvanced commitments by loan type and by member class | The following table presents the outstanding principal balance of loans to members, including deferred loan origination costs, and unadvanced loan commitments by loan type and member class, as of May 31, 2017 and 2016.
____________________________ (1) The interest rate on unadvanced loan commitments is not set until drawn; therefore, the long-term unadvanced loan commitments have been classified in this table as variable-rate unadvanced loan commitments. However, at the time of the advance, the borrower may select a fixed or a variable rate on the new loan. (2) Includes TDR loans. (3) Represents the unpaid principal balance excluding deferred loan origination costs. |
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Schedule of Available Balance and Maturities of Lines of Credit [Table Text Block] | The following table summarizes the available balance under unadvanced loan commitments as of May 31, 2017 and the related maturities, by fiscal year and thereafter, by loan type:
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Summary of available balance under committed lines of credit and the related maturities by fiscal year | The following table summarizes the available balance under unconditional committed lines of credit and the related maturities, by fiscal year as of May 31, 2017.
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Schedule of analysis of the age of the recorded investment in loans outstanding by member class | The tables below present the payment status of loans outstanding by member class as of May 31, 2017 and 2016.
____________________________ (1) All loans 90 days or more past due are on nonaccrual status. |
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Schedule of loan portfolio by risk rating category and member class based on available data | The following table presents our loan portfolio by risk rating category and member class based on available data as of May 31, 2017 and 2016.
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Schedule of exposure to the 10 largest borrowers as a percentage of total credit exposure broken down by exposure type and by borrower type | The following table shows the exposure to the 20 largest borrowers as a percentage of total credit exposure broken down by exposure type and by borrower type as of May 31, 2017 and 2016.
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Summary of the activity in the loan loss allowance reflecting disaggregation by company of the allowance for loan losses held at CFC based on borrower type | The tables below summarize changes, by company, in the allowance for loan losses as of and for the years ended May 31, 2017, 2016 and 2015.
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Schedule of loan loss allowance and the recorded investment in outstanding loans by impairment methodology and by company | The tables below present, by company, the components of our allowance for loan losses and the recorded investment of the related loans as of May 31, 2017 and 2016.
___________________________ (1) Excludes unamortized deferred loan origination costs of $11 million and $10 million, as of May 31, 2017 and 2016 |
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Summary of recorded investment in individually-impaired loans and the related specific valuation allowance by member class | The following table provides information on loans classified as individually impaired loans as of May 31, 2017 and 2016.
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Schedule of average recorded investment in impaired loans and the interest income recognized by member class | The following table represents the average recorded investment in individually impaired loans and the interest income recognized, by company, for fiscal years ended May 31, 2017, 2016 and 2015.
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Schedule of nonperforming and restructured loans | The following table provides a summary of loans modified as TDRs in prior periods, the performance status of these loans and the related unadvanced loan commitments, by member class, as of May 31, 2017 and 2016.
___________________________ (1) A borrower in this category also had a line of credit loan outstanding that was classified as performing as of May 31, 2017 and 2016. Unadvanced commitments related to this line of credit loan totaled $6 million and $4 million as of May 31, 2017 and 2016, respectively. |
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Summary of foregone interest income as a result of holding loans on non-accrual status | The following table shows foregone interest income for loans on nonaccrual status fiscal years ended May 31, 2017, 2016 and 2015.
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Summary of loans outstanding as collateral pledged to secure the entity's collateral trust bonds, Clean Renewable Energy Bonds and notes payable to the Federal Agricultural Mortgage Corporation and the amount of the corresponding debt outstanding | The following table summarizes our loans outstanding as collateral pledged to secure our collateral trust bonds, Clean Renewable Energy Bonds, notes payable to Farmer Mac and notes payable to the Federal Financing Bank and guaranteed by RUS under the Guaranteed Underwriter Program of the USDA (“Guaranteed Underwriter Program”) and the amount of the corresponding debt outstanding as of May 31, 2017 and 2016. See “Note 6—Short-Term Borrowings” and “Note 7—Long-Term Debt” for information on our borrowings.
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Short-Term Borrowings (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of short-term debt outstanding and the weighted-average effective interest rates | The following table provides comparative information on our short-term borrowings and weighted-average interest rates as of May 31, 2017 and 2016.
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Schedule of total available and outstanding letters of credit under the revolving credit agreements | The following table presents the total commitment, the net amount available for use and the outstanding letters of credit under our committed bank revolving line of credit agreements as of May 31, 2017 and 2016.
___________________________ |
Long-Term Debt (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Instruments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of long-term debt outstanding and the weighted-average effective interest rates | The following table displays long-term debt outstanding and the weighted-average interest rates, by debt type, as of May 31, 2017 and 2016.
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Schedule of amount of long-term debt maturities | The following table presents the amount of long-term debt maturing in each of the five fiscal years subsequent to May 31, 2017 and thereafter.
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Subordinated Deferrable Debt (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Subordinated Debt [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Subordinated Borrowing | The following table presents subordinated deferrable debt outstanding and the weighted-average interest rates as of May 31, 2017 and 2016.
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Members' Subordinated Certificates (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Members' subordinated certificates | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Subordinated Borrowing | The following table presents subordinated deferrable debt outstanding and the weighted-average interest rates as of May 31, 2017 and 2016.
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Schedule of amount of members' subordinated certificates maturing in each of the five fiscal years | The following table presents the amount of long-term debt maturing in each of the five fiscal years subsequent to May 31, 2017 and thereafter.
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Subordinated certificates | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Members' subordinated certificates | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Subordinated Borrowing | The following table displays members’ subordinated certificates and the weighted-average interest rates as of May 31, 2017 and 2016.
___________________________ (1) The subscribed and unissued subordinated certificates represent subordinated certificates that members are required to purchase. Upon collection of full payment of the subordinated certificate amount, the certificate will be reclassified from subscribed and unissued to outstanding. |
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Schedule of amount of members' subordinated certificates maturing in each of the five fiscal years | The following table presents the amount of members’ subordinated certificates maturing in each of the five fiscal years following May 31, 2017 and thereafter.
___________________________ (1)Excludes $1 million in subscribed and unissued member subordinated certificates for which a payment has been received, but no certificate has been issued. Amortizing member loan subordinated certificates totaling $290 million are amortizing annually based on the unpaid principal balance of the related loan. Amortization payments on these certificates totaled $17 million in fiscal year 2017 and represented 6% of amortizing loan subordinated certificates outstanding. |
Derivative Instruments and Hedging Activities (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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May 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of notional amounts outstanding and the weighted average interest rate paid and received for the entity's interest rate swaps | The following table shows the outstanding notional amounts and the weighted-average rate paid and received for our interest rate swaps, by type, as of May 31, 2017 and 2016. The substantial majority of our interest rate swaps use an index based on the London Interbank Offered Rate (“LIBOR”) for either the pay or receive leg of the swap agreement.
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Schedule of Derivative Instruments Maturity | The following table presents the maturities for each of the next five fiscal years and thereafter based on the notional amount of our interest rate swaps as of May 31, 2017.
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Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table displays the fair value of the derivative assets and derivative liabilities recorded on our consolidated balance sheets and the related outstanding notional amount of our interest rate swaps as of May 31, 2017 and 2016.
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Offsetting Assets | The following table presents the gross fair value of derivative assets and liabilities reported on our consolidated balance sheets as of May 31, 2017 and 2016, and provides information on the impact of netting provisions and collateral pledged.
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Offsetting Liabilities | The following table presents the gross fair value of derivative assets and liabilities reported on our consolidated balance sheets as of May 31, 2017 and 2016, and provides information on the impact of netting provisions and collateral pledged.
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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 our interest rate swaps for fiscal years 2017, 2016 and 2015.
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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 May 31, 2017 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 assumed that the amounts for each counterparty would be netted in accordance with the provisions of the master netting agreements for each counterparty. The net payment amounts are based on the fair value of the underlying derivative instrument, excluding the credit risk valuation adjustment, plus any unpaid accrued interest amounts.
___________________________ (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) |
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May 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of equity | The following table presents the components of equity as of May 31, 2017 and 2016.
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Summary of activity in accumulated other comprehensive income account by component | The following tables summarize, by component, the activity in AOCI as of and for the years ended May 31, 2017 and 2016.
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Guarantees (Tables) |
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May 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Guarantees [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of total guarantees by type of guarantee and member class | The following table summarizes total guarantees by type of guarantee and member class as of May 31, 2017 and 2016.
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Schedule of maturities of outstanding guarantees | The following table details the scheduled maturities of our outstanding guarantees in each of the five fiscal years following May 31, 2017 and thereafter:
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Fair Value Measurement (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of carrying and fair values for entity's financial instruments | The following tables present the carrying value and fair value for all of our financial instruments, including those carried at amortized cost, as of May 31, 2017 and 2016. The table also displays the classification within the fair value hierarchy of the valuation technique used in estimating fair value.
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Schedule of Fair Value, Assets and Liabilities Measured on 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 May 31, 2017 and 2016 and the classification of the valuation technique within the fair value hierarchy.
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Fair Value Measurements, Nonrecurring | The following table presents the carrying value and fair value of assets reported in our consolidated financial statements at fair value on a nonrecurring basis as of May 31, 2017 and 2016, and unrealized losses for the years ended May 31, 2017 and 2016.
____________________________ (1) Excludes impaired loans for which the fair value is calculated based on the estimated cash flows and impaired loans for which there is no specific allowance recorded |
Segment Information (Tables) |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment presentation for the consolidated statements of operations and consolidated balance sheets | The following tables display segment results for the years ended May 31, 2017, 2016 and 2015, and assets attributable to each segment as of May 31, 2017 and 2016.
|
Summary of Significant Accounting Policies Fixed Assets (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
---|---|---|
Fixed Assets | ||
Fixed assets, gross | $ 97,591 | $ 93,007 |
Less: accumulated depreciation | (41,274) | (35,592) |
Net depreciable fixed assets | 56,317 | 57,415 |
Fixed assets, net | 122,260 | 112,563 |
Building and building equipment | ||
Fixed Assets | ||
Fixed assets, gross | 50,236 | 50,156 |
Furniture and fixtures | ||
Fixed Assets | ||
Fixed assets, gross | 5,852 | 5,455 |
Computer software and hardware | ||
Fixed Assets | ||
Fixed assets, gross | 40,469 | 36,378 |
Other | ||
Fixed Assets | ||
Fixed assets, gross | 1,034 | 1,018 |
Land | ||
Fixed Assets | ||
Fixed assets, gross | 37,847 | 37,847 |
Construction-in-progress and software | ||
Fixed Assets | ||
Fixed assets, gross | $ 28,096 | $ 17,301 |
Summary of Significant Accounting Policies Interest Income (Details) - USD ($) $ in Thousands |
12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
||||||||
Components of interest income | ||||||||||
Interest income | $ (1,036,634) | $ (1,012,636) | $ (952,976) | |||||||
Long-term fixed-rate loans | ||||||||||
Components of interest income | ||||||||||
Interest income | [1] | (980,173) | (959,701) | (898,181) | ||||||
Long-term variable-rate loans | ||||||||||
Components of interest income | ||||||||||
Interest income | (19,902) | (19,858) | (20,184) | |||||||
Line of credit loans | ||||||||||
Components of interest income | ||||||||||
Interest income | (25,389) | (24,864) | (26,411) | |||||||
Restructured loans | ||||||||||
Components of interest income | ||||||||||
Interest income | [2] | (905) | (512) | (15) | ||||||
Non-performing loans | ||||||||||
Components of interest income | ||||||||||
Interest income | 0 | (142) | 0 | |||||||
Investments | ||||||||||
Components of interest income | ||||||||||
Interest income | (11,347) | (8,647) | (7,933) | |||||||
Fee income | ||||||||||
Components of interest income | ||||||||||
Interest income | [3] | $ (1,082) | $ (1,088) | $ (252) | ||||||
|
Summary of Significant Accounting Policies Interest Expense (Details) - USD ($) $ in Thousands |
12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
||||||||
Interest expense on debt: | ||||||||||
Total interest expense | [1],[2],[3] | $ 741,738 | $ 681,850 | $ 635,684 | ||||||
Short-term borrowings | ||||||||||
Interest expense on debt: | ||||||||||
Interest expense on debt | [1],[2],[3] | 26,684 | 14,728 | 14,374 | ||||||
Medium-term notes | ||||||||||
Interest expense on debt: | ||||||||||
Interest expense on debt | [1],[2],[3] | 99,022 | 86,270 | 71,739 | ||||||
Collateral trust bonds | ||||||||||
Interest expense on debt: | ||||||||||
Interest expense on debt | [1],[2],[3] | 340,854 | 333,338 | 315,106 | ||||||
Long-term notes payable | ||||||||||
Interest expense on debt: | ||||||||||
Interest expense on debt | [1],[2],[3] | 177,929 | 165,820 | 151,763 | ||||||
Subordinated deferrable debt | ||||||||||
Interest expense on debt: | ||||||||||
Interest expense on debt | [1],[2],[3] | 37,657 | 21,245 | 19,143 | ||||||
Subordinated certificates | ||||||||||
Interest expense on debt: | ||||||||||
Interest expense on debt | [1],[2],[3] | $ 59,592 | $ 60,449 | $ 63,559 | ||||||
|
Summary of Significant Accounting Policies Additional Information (Details) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2017
USD ($)
line_item
category
$ / shares
|
May 31, 2016
USD ($)
|
May 31, 2015
USD ($)
|
|
Summary of Significant Accounting Policies [Line Items] | |||
Number of lines holding foreclosed assets on the balance sheet | line_item | 1 | ||
Number of categories of loans | category | 2 | ||
Depreciation and amortization | $ | $ 7,173 | $ 7,327 | $ 6,497 |
Deferred conversion fees | $ | 68,000 | 71,000 | |
Accumulated other comprehensive income | $ | $ 13,175 | 1,058 | $ 4,080 |
Maximum | |||
Summary of Significant Accounting Policies [Line Items] | |||
Estimated useful lives | 40 years | ||
Minimum | |||
Summary of Significant Accounting Policies [Line Items] | |||
Estimated useful lives | 3 years | ||
NCSC | |||
Summary of Significant Accounting Policies [Line Items] | |||
Deferred Tax Assets, Net | $ | $ 4,000 | $ 6,000 | |
RTFC | |||
Summary of Significant Accounting Policies [Line Items] | |||
Effective percentage of tax rate | 40.00% | 38.00% | 38.00% |
RTFC | Minimum | |||
Summary of Significant Accounting Policies [Line Items] | |||
Percentage of income from patronage sources allocated to borrowers to be retired in cash prior to filing the applicable tax return | 20.00% | ||
NCSC | |||
Summary of Significant Accounting Policies [Line Items] | |||
Membership fees (in dollars per share) | $ 100 | ||
Effective percentage of tax rate | 38.00% | 38.00% | 38.00% |
Distribution system members | CFC | |||
Summary of Significant Accounting Policies [Line Items] | |||
Membership fees (in dollars per share) | $ 1,000 | ||
Service organization members | CFC | |||
Summary of Significant Accounting Policies [Line Items] | |||
Membership fees (in dollars per share) | 200 | ||
Associates | CFC | |||
Summary of Significant Accounting Policies [Line Items] | |||
Membership fees (in dollars per share) | 1,000 | ||
Associates | RTFC | |||
Summary of Significant Accounting Policies [Line Items] | |||
Membership fees (in dollars per share) | 100 | ||
Voting members | RTFC | |||
Summary of Significant Accounting Policies [Line Items] | |||
Membership fees (in dollars per share) | $ 1,000 | ||
Unadvanced commitments not subject to material adverse change clauses | |||
Summary of Significant Accounting Policies [Line Items] | |||
Loans and Leases Receivable Unadvanced Commitments Period Maximum | 5 years | ||
Unadvanced commitments | |||
Summary of Significant Accounting Policies [Line Items] | |||
Loans and Leases Receivable Unadvanced Commitments Period Maximum | 5 years |
Variable Interest Entities Consolidated membership (Details) |
May 31, 2017
associate
distribution_system
telecommunication_member
member
power_supply_system
|
---|---|
Variable Interest Entity [Line Items] | |
Number of Members in Consolidated Membership | member | 1,461 |
Number of Associates in Consolidated Membership | 219 |
Number Of Members and Associates In Consolidated Membership | 1,680 |
Distribution | Consolidated variable interest entities | |
Variable Interest Entity [Line Items] | |
Number of Members in Consolidated Membership | distribution_system | 839 |
Power supply | Consolidated variable interest entities | |
Variable Interest Entity [Line Items] | |
Number of Members in Consolidated Membership | power_supply_system | 70 |
Telecommunications | Consolidated variable interest entities | |
Variable Interest Entity [Line Items] | |
Number of Members in Consolidated Membership | telecommunication_member | 488 |
Statewide and regional associations | Consolidated variable interest entities | |
Variable Interest Entity [Line Items] | |
Number of Members in Consolidated Membership | 63 |
National association of cooperatives | Consolidated variable interest entities | |
Variable Interest Entity [Line Items] | |
Number of Members in Consolidated Membership | 1 |
Variable Interest Entities Additional Information (Details) $ in Thousands |
May 31, 2017
USD ($)
state
director
vote
|
May 31, 2016
USD ($)
|
---|---|---|
Variable Interest Entity [Line Items] | ||
Loans to members, net | $ 24,329,668 | $ 23,129,438 |
Number of states where members and associates are located | state | 49 | |
RTFC | Consolidated variable interest entities | ||
Variable Interest Entity [Line Items] | ||
Number of votes by each member for election of directors | vote | 1 | |
Guarantee amount | $ 2,000 | |
Total assets including loans outstanding to members | 450,000 | |
Loans to members, net | 354,000 | |
Maximum amount committed to extend loan | 2,500,000 | |
Commitment outstanding | $ 336,000 | |
NCSC | Consolidated variable interest entities | ||
Variable Interest Entity [Line Items] | ||
Number of directors for whom nomination process is controlled | director | 1 | |
Number of votes by each member for election of directors | vote | 1 | |
Guarantee amount | $ 34,000 | |
Maximum potential exposure | 37,000 | |
Total assets including loans outstanding to members | 623,000 | |
Loans to members, net | 614,000 | |
Maximum amount committed to extend loan | 3,000,000 | |
Commitment outstanding | 630,000 | |
Loans outstanding | $ 596,000 |
Investment Securities Investment Securities (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
---|---|---|
Investments | ||
Amortized Cost | $ 80,538 | $ 80,538 |
Gross Unrealized Gains | 12,016 | 7,402 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 92,554 | 87,940 |
Preferred Stock | Farmer Mac—Series A Non-Cumulative Preferred Stock | ||
Investments | ||
Amortized Cost | 30,000 | 30,000 |
Gross Unrealized Gains | 1,585 | 780 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 31,585 | 30,780 |
Preferred Stock | Farmer Mac—Series B Non-Cumulative Preferred Stock | ||
Investments | ||
Amortized Cost | 25,000 | 25,000 |
Gross Unrealized Gains | 1,940 | 2,600 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 26,940 | 27,600 |
Preferred Stock | Farmer Mac—Series C Non-Cumulative Preferred Stock | ||
Investments | ||
Amortized Cost | 25,000 | 25,000 |
Gross Unrealized Gains | 4,150 | 1,650 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | 29,150 | 26,650 |
Common Stock | Farmer Mac—Class A Common Stock | ||
Investments | ||
Amortized Cost | 538 | 538 |
Gross Unrealized Gains | 4,341 | 2,372 |
Gross Unrealized Losses | 0 | 0 |
Fair Value | $ 4,879 | $ 2,910 |
Investment Securities Additional Information (Details) - USD ($) |
May 31, 2017 |
May 31, 2016 |
---|---|---|
Investments, Debt and Equity Securities [Abstract] | ||
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value | $ 0 | $ 0 |
Loans and Commitments Loans - Outstanding Principal Balance and Unadvanced Commitments (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
|||||||
---|---|---|---|---|---|---|---|---|---|
Loans outstanding | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1],[2] | $ 24,356,330 | $ 23,152,517 | ||||||
Deferred origination costs | [1] | 10,714 | 10,179 | ||||||
Loans to members | [1] | 24,367,044 | 23,162,696 | ||||||
Unadvanced commitments | |||||||||
Loans outstanding | |||||||||
Available Balance | [1],[2],[3] | 12,574,974 | 13,205,010 | ||||||
CFC | |||||||||
Loans outstanding | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1],[2] | 23,387,987 | 22,129,873 | ||||||
CFC | Unadvanced commitments | |||||||||
Loans outstanding | |||||||||
Available Balance | [1],[2],[3] | 11,715,665 | 12,314,732 | ||||||
CFC | Distribution | |||||||||
Loans outstanding | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 18,825,366 | 17,674,335 | ||||||
CFC | Distribution | Unadvanced commitments | |||||||||
Loans outstanding | |||||||||
Available Balance | [1],[3] | 8,295,146 | 8,967,730 | ||||||
CFC | Power supply | |||||||||
Loans outstanding | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 4,504,791 | 4,401,185 | ||||||
CFC | Power supply | Unadvanced commitments | |||||||||
Loans outstanding | |||||||||
Available Balance | [1],[3] | 3,276,113 | 3,191,873 | ||||||
CFC | Statewide and associate | |||||||||
Loans outstanding | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 57,830 | 54,353 | ||||||
CFC | Statewide and associate | Unadvanced commitments | |||||||||
Loans outstanding | |||||||||
Available Balance | [1],[3] | 144,406 | 155,129 | ||||||
NCSC | |||||||||
Loans outstanding | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 613,924 | 680,802 | ||||||
NCSC | Unadvanced commitments | |||||||||
Loans outstanding | |||||||||
Available Balance | [1],[3] | 584,944 | 643,621 | ||||||
RTFC | |||||||||
Loans outstanding | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 354,419 | 341,842 | ||||||
RTFC | Unadvanced commitments | |||||||||
Loans outstanding | |||||||||
Available Balance | [1],[3] | 274,365 | 246,657 | ||||||
Long-term fixed-rate loans | |||||||||
Loans outstanding | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 22,136,690 | 21,390,576 | ||||||
Long-term variable-rate loans | |||||||||
Loans outstanding | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 847,419 | 757,500 | ||||||
Long-term variable-rate loans | Unadvanced commitments | |||||||||
Loans outstanding | |||||||||
Available Balance | [1],[3] | 4,802,319 | 4,508,562 | ||||||
Long-term loans | |||||||||
Loans outstanding | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 22,984,109 | 22,148,076 | ||||||
Long-term loans | Unadvanced commitments | |||||||||
Loans outstanding | |||||||||
Available Balance | [1],[3] | 4,802,319 | 4,508,562 | ||||||
Line of credit loans | |||||||||
Loans outstanding | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 1,372,221 | 1,004,441 | ||||||
Line of credit loans | Unadvanced commitments | |||||||||
Loans outstanding | |||||||||
Available Balance | [1],[3] | $ 7,772,655 | $ 8,696,448 | ||||||
|
Loans and Commitments Unadvanced Commitments - Available Balance and Maturity (Details) - Unadvanced commitments - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
|||||||
---|---|---|---|---|---|---|---|---|---|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Available Balance | [1],[2],[3] | $ 12,574,974 | $ 13,205,010 | ||||||
2018 | 5,073,968 | ||||||||
2019 | 1,877,392 | ||||||||
2020 | 1,510,218 | ||||||||
2021 | 1,501,569 | ||||||||
2022 | 2,576,542 | ||||||||
Thereafter | 35,285 | ||||||||
Line of credit loans | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Available Balance | [1],[3] | 7,772,655 | 8,696,448 | ||||||
2018 | 4,489,826 | ||||||||
2019 | 871,557 | ||||||||
2020 | 791,825 | ||||||||
2021 | 750,419 | ||||||||
2022 | 859,028 | ||||||||
Thereafter | 10,000 | ||||||||
Long-term loans | |||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||||||||
Available Balance | [1],[3] | 4,802,319 | $ 4,508,562 | ||||||
2018 | 584,142 | ||||||||
2019 | 1,005,835 | ||||||||
2020 | 718,393 | ||||||||
2021 | 751,150 | ||||||||
2022 | 1,717,514 | ||||||||
Thereafter | $ 25,285 | ||||||||
|
Loans and Commitments Committed Lines of Credit - Available Balance and Maturity (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
||||||
---|---|---|---|---|---|---|---|---|
Unadvanced commitments | ||||||||
Unadvanced Loan Commitments | ||||||||
2018 | $ 5,073,968 | |||||||
2019 | 1,877,392 | |||||||
2020 | 1,510,218 | |||||||
2021 | 1,501,569 | |||||||
2022 | 2,576,542 | |||||||
Available Balance | [1],[2],[3] | 12,574,974 | $ 13,205,010 | |||||
Unadvanced commitments not subject to material adverse change clauses | ||||||||
Unadvanced Loan Commitments | ||||||||
2018 | 300,106 | |||||||
2019 | 567,270 | |||||||
2020 | 548,408 | |||||||
2021 | 486,900 | |||||||
2022 | 699,578 | |||||||
Available Balance | $ 2,602,262 | $ 2,448,000 | ||||||
|
Loans and Commitments Loans - Payment Status (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
||||||||
---|---|---|---|---|---|---|---|---|---|---|
Payment Status of Loans | ||||||||||
Current | $ 24,356,330 | $ 23,149,011 | ||||||||
Past Due | 0 | 3,506 | ||||||||
Loans and Leases Receivable, Net of Deferred Income | [1],[2] | 24,356,330 | 23,152,517 | |||||||
Non-accrual loans | $ 0 | $ 3,506 | ||||||||
As a % of total loans | ||||||||||
Current | 100.00% | 99.98% | ||||||||
30-89 days past due | 0.00% | 0.00% | ||||||||
90 days or more past due | [3] | 0.00% | 0.02% | |||||||
Total past due | 0.00% | 0.02% | ||||||||
Total financing receivables | 100.00% | 100.00% | ||||||||
Non-accrual loans | 0.00% | 0.02% | ||||||||
CFC | ||||||||||
Payment Status of Loans | ||||||||||
Current | $ 23,387,987 | $ 22,129,873 | ||||||||
Past Due | 0 | 0 | ||||||||
Loans and Leases Receivable, Net of Deferred Income | [1],[2] | 23,387,987 | 22,129,873 | |||||||
Non-accrual loans | 0 | 0 | ||||||||
CFC | Distribution | ||||||||||
Payment Status of Loans | ||||||||||
Current | 18,825,366 | 17,674,335 | ||||||||
Past Due | 0 | 0 | ||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 18,825,366 | 17,674,335 | |||||||
Non-accrual loans | 0 | 0 | ||||||||
CFC | Power supply | ||||||||||
Payment Status of Loans | ||||||||||
Current | 4,504,791 | 4,401,185 | ||||||||
Past Due | 0 | 0 | ||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 4,504,791 | 4,401,185 | |||||||
Non-accrual loans | 0 | 0 | ||||||||
CFC | Statewide and associate | ||||||||||
Payment Status of Loans | ||||||||||
Current | 57,830 | 54,353 | ||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 57,830 | 54,353 | |||||||
NCSC | ||||||||||
Payment Status of Loans | ||||||||||
Current | 613,924 | 680,802 | ||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 613,924 | 680,802 | |||||||
Non-accrual loans | 0 | 0 | ||||||||
RTFC | ||||||||||
Payment Status of Loans | ||||||||||
Current | 354,419 | 338,336 | ||||||||
Past Due | 0 | 3,506 | ||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 354,419 | 341,842 | |||||||
Non-accrual loans | 0 | 3,506 | ||||||||
30-89 Days Past Due | ||||||||||
Payment Status of Loans | ||||||||||
Past Due | 0 | 0 | ||||||||
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 | RTFC | ||||||||||
Payment Status of Loans | ||||||||||
Past Due | 0 | 0 | ||||||||
90 Days or More Past Due | ||||||||||
Payment Status of Loans | ||||||||||
Past Due | [3] | 0 | 3,506 | |||||||
90 Days or More Past Due | CFC | ||||||||||
Payment Status of Loans | ||||||||||
Past Due | 0 | [3] | 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 | ||||||||
90 Days or More Past Due | RTFC | ||||||||||
Payment Status of Loans | ||||||||||
Past Due | [3] | $ 0 | $ 3,506 | |||||||
|
Loans and Commitments Loans - Internal Risk Rating (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
|||||
---|---|---|---|---|---|---|---|
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | [1],[2] | $ 24,356,330 | $ 23,152,517 | ||||
CFC | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | [1],[2] | 23,387,987 | 22,129,873 | ||||
CFC | Distribution | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 18,825,366 | 17,674,335 | ||||
CFC | Power supply | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 4,504,791 | 4,401,185 | ||||
CFC | Statewide and associate | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 57,830 | 54,353 | ||||
NCSC | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 613,924 | 680,802 | ||||
RTFC | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 354,419 | 341,842 | ||||
Pass | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | 24,236,791 | 23,104,932 | |||||
Pass | CFC | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | 23,277,255 | 22,096,213 | |||||
Pass | CFC | Distribution | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | 18,715,810 | 17,640,928 | |||||
Pass | CFC | Power supply | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | 4,504,791 | 4,401,185 | |||||
Pass | CFC | Statewide and associate | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | 56,654 | 54,100 | |||||
Pass | NCSC | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | 612,592 | 678,552 | |||||
Pass | RTFC | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | 346,944 | 330,167 | |||||
Criticized | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | 119,539 | 47,585 | |||||
Criticized | CFC | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | 110,732 | 33,660 | |||||
Criticized | CFC | Distribution | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | 109,556 | 33,407 | |||||
Criticized | CFC | Power supply | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | 0 | 0 | |||||
Criticized | CFC | Statewide and associate | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | 1,176 | 253 | |||||
Criticized | NCSC | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | 1,332 | 2,250 | |||||
Criticized | RTFC | |||||||
Credit Quality | |||||||
Loans and Leases Receivable, Net of Deferred Income | $ 7,475 | $ 11,675 | |||||
|
Loans and Commitments Loans - Credit Concentration (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
||||||
Credit concentration | |||||||
Loans and Leases Receivable, Net of Deferred Income | [1],[2] | $ (24,356,330) | $ (23,152,517) | ||||
CFC | |||||||
Credit concentration | |||||||
Loans and Leases Receivable, Net of Deferred Income | [1],[2] | (23,387,987) | (22,129,873) | ||||
NCSC | |||||||
Credit concentration | |||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | $ (613,924) | $ (680,802) | ||||
Loans | |||||||
Credit concentration | |||||||
Percentage of concentration | (23.00%) | (23.00%) | |||||
Guarantees | |||||||
Credit concentration | |||||||
Percentage of concentration | (1.00%) | (2.00%) | |||||
Loans Guaranteed by Farmer Mac | |||||||
Credit concentration | |||||||
Percentage of concentration | (1.00%) | (2.00%) | |||||
Loans and Leases Receivable, Net of Deferred Income | $ (351,699) | $ (402,244) | |||||
Credit concentration | |||||||
Credit concentration | |||||||
Loans and Leases Receivable, Net of Deferred Income | (5,749,885) | (5,638,217) | |||||
Credit concentration | CFC | |||||||
Credit concentration | |||||||
Loans and Leases Receivable, Net of Deferred Income | (5,899,709) | (5,991,674) | |||||
Credit concentration | NCSC | |||||||
Credit concentration | |||||||
Loans and Leases Receivable, Net of Deferred Income | (204,795) | (12,000) | |||||
Credit concentration | Guarantees | |||||||
Credit concentration | |||||||
Loans and Leases Receivable, Net of Deferred Income | $ (354,619) | $ (365,457) | |||||
Loans outstanding | CFC | |||||||
Credit concentration | |||||||
Percentage of concentration | (23.00%) | (25.00%) | |||||
Loans outstanding | NCSC | |||||||
Credit concentration | |||||||
Percentage of concentration | (1.00%) | (0.00%) | |||||
Total exposure to 20 largest borrowers | |||||||
Credit concentration | |||||||
Percentage of concentration | (24.00%) | (25.00%) | |||||
Total exposure to 20 largest borrowers | Credit concentration | |||||||
Credit concentration | |||||||
Loans and Leases Receivable, Net of Deferred Income | $ (6,104,504) | $ (6,003,674) | |||||
Net exposure to 20 largest borrowers | |||||||
Credit concentration | |||||||
Percentage of concentration | (23.00%) | (23.00%) | |||||
Net exposure to 20 largest borrowers | Credit concentration | |||||||
Credit concentration | |||||||
Loans and Leases Receivable, Net of Deferred Income | $ (5,752,805) | $ (5,601,430) | |||||
|
Loans and Commitments Allowance for Loan Losses Rollforward (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Balance at the beginning of the period | $ 33,258 | $ 33,690 | $ 56,429 |
(Recovery of) provision for loan losses | 5,978 | 646 | (21,954) |
Charge-offs of allowance for loan losses applied against loan balances | (2,119) | (999) | |
Recoveries of loans previously charged-off | 259 | 214 | 214 |
Balance at the end of the period | 37,376 | 33,258 | 33,690 |
CFC | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Balance at the beginning of the period | 24,559 | 23,716 | 45,600 |
(Recovery of) provision for loan losses | 4,781 | 629 | 22,098 |
Charge-offs of allowance for loan losses applied against loan balances | 0 | ||
Recoveries of loans previously charged-off | 159 | 214 | 214 |
Balance at the end of the period | 29,499 | 24,559 | 23,716 |
NCSC | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Balance at the beginning of the period | 3,134 | 5,441 | 6,547 |
(Recovery of) provision for loan losses | 224 | 2,307 | (1,106) |
Balance at the end of the period | 2,910 | 3,134 | 5,441 |
RTFC | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Balance at the beginning of the period | 5,565 | 4,533 | 4,282 |
(Recovery of) provision for loan losses | 1,421 | 1,032 | 1,250 |
Charge-offs of allowance for loan losses applied against loan balances | (2,119) | (999) | |
Recoveries of loans previously charged-off | 100 | 0 | |
Balance at the end of the period | $ 4,967 | $ 5,565 | $ 4,533 |
Loans and Commitments Allowance for Loan Losses Components and Related Loan Investments (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
May 31, 2014 |
|||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Ending balance of the allowance: | |||||||||||
Collectively evaluated | $ 35,736 | $ 30,158 | |||||||||
Individually evaluated | 1,640 | 3,100 | |||||||||
Total ending balance of the allowance | 37,376 | 33,258 | $ 33,690 | $ 56,429 | |||||||
Recorded investment in loans: | |||||||||||
Collectively evaluated | 24,343,157 | 23,135,203 | |||||||||
Individually evaluated | 13,173 | 17,314 | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1],[2] | 24,356,330 | 23,152,517 | ||||||||
Loans and Leases Receivable, Net Amount | [3] | 24,318,954 | 23,119,259 | ||||||||
Deferred origination costs | [1] | 10,714 | 10,179 | ||||||||
CFC | |||||||||||
Ending balance of the allowance: | |||||||||||
Collectively evaluated | 29,499 | 24,559 | |||||||||
Individually evaluated | 0 | ||||||||||
Total ending balance of the allowance | 29,499 | 24,559 | 23,716 | 45,600 | |||||||
Recorded investment in loans: | |||||||||||
Collectively evaluated | 23,381,406 | 22,123,157 | |||||||||
Individually evaluated | 6,581 | 6,716 | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1],[2] | 23,387,987 | 22,129,873 | ||||||||
Loans and Leases Receivable, Net Amount | [3] | 23,358,488 | 22,105,314 | ||||||||
NCSC | |||||||||||
Ending balance of the allowance: | |||||||||||
Collectively evaluated | 2,910 | 3,134 | |||||||||
Individually evaluated | 0 | 0 | |||||||||
Total ending balance of the allowance | 2,910 | 3,134 | 5,441 | 6,547 | |||||||
Recorded investment in loans: | |||||||||||
Collectively evaluated | 613,924 | 680,802 | |||||||||
Individually evaluated | 0 | 0 | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 613,924 | 680,802 | ||||||||
Loans and Leases Receivable, Net Amount | [3] | 611,014 | 677,668 | ||||||||
RTFC | |||||||||||
Ending balance of the allowance: | |||||||||||
Collectively evaluated | 3,327 | 2,465 | |||||||||
Individually evaluated | 1,640 | 3,100 | |||||||||
Total ending balance of the allowance | 4,967 | 5,565 | $ 4,533 | $ 4,282 | |||||||
Recorded investment in loans: | |||||||||||
Collectively evaluated | 347,827 | 331,244 | |||||||||
Individually evaluated | 6,592 | 10,598 | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 354,419 | 341,842 | ||||||||
Loans and Leases Receivable, Net Amount | [3] | $ 349,452 | $ 336,277 | ||||||||
|
Loans and Commitments Impaired Loans - Recorded Investment and Allowance (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
---|---|---|
Recorded investment in individually-impaired loans and the related specific valuation allowance | ||
Total impaired loans | $ 13,173 | $ 17,314 |
Related allowance | 1,640 | 3,100 |
CFC | Distribution | ||
Impaired Loans | ||
Impaired Financing Receivable, with No Related Allowance, Recorded Investment | 6,581 | 6,716 |
RTFC | ||
Recorded investment in individually-impaired loans and the related specific valuation allowance | ||
Impaired Financing Receivable, with Related Allowance, Recorded Investment | 6,592 | 10,598 |
Related allowance | $ 1,640 | $ 3,100 |
Loans and Commitments Impaired Loans - Average Recorded Investment and Interest Income Recognized (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
|
Impaired Loans | |||
Total impaired loans | $ 14,349 | $ 16,665 | $ 9,075 |
Interest impaired loans | 905 | 654 | 15 |
CFC | Distribution | |||
Impaired Loans | |||
Total impaired loans | 6,613 | 6,842 | 7,312 |
Interest impaired loans | 562 | 390 | 0 |
NCSC | |||
Impaired Loans | |||
Total impaired loans | 0 | 0 | 325 |
Interest impaired loans | 0 | 0 | 15 |
RTFC | |||
Impaired Loans | |||
Total impaired loans | 7,736 | 9,823 | 1,438 |
Interest impaired loans | $ 343 | $ 264 | $ 0 |
Loans and Commitments Troubled Debt Restructured Loans (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
|||||||
---|---|---|---|---|---|---|---|---|---|
Financing Receivable, Modifications [Line Items] | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1],[2] | $ 24,356,330 | $ 23,152,517 | ||||||
Loans and Leases Receivable Commercial, Net of Deferred Income, Percentage | 100.00% | 100.00% | |||||||
Nonperforming TDR loans | |||||||||
Financing Receivable, Modifications [Line Items] | |||||||||
Loans and Leases Receivable Commercial, Net of Deferred Income, Percentage | 0.01% | ||||||||
Performing TDR Loans | |||||||||
Financing Receivable, Modifications [Line Items] | |||||||||
Financing Receivable, Modifications, Recorded Investment | $ 13,173 | $ 13,808 | |||||||
Performing TDR Loans As Percentage of Total Loans | 0.05% | 0.06% | |||||||
TDR Financing Receivable | |||||||||
Financing Receivable, Modifications [Line Items] | |||||||||
Loans and Leases Receivable, Net of Deferred Income | $ 13,173 | $ 17,314 | |||||||
Loans and Leases Receivable Commercial, Net of Deferred Income, Percentage | 0.05% | 0.07% | |||||||
CFC | |||||||||
Financing Receivable, Modifications [Line Items] | |||||||||
Loans and Leases Receivable, Net of Deferred Income | [1],[2] | $ 23,387,987 | $ 22,129,873 | ||||||
CFC | Performing TDR Loans | |||||||||
Financing Receivable, Modifications [Line Items] | |||||||||
Financing Receivable, Modifications, Recorded Investment | [3] | 6,581 | 6,716 | ||||||
Available Balance | 6,000 | 4,000 | |||||||
RTFC | |||||||||
Financing Receivable, Modifications [Line Items] | |||||||||
Loans outstanding | 6,592 | 10,598 | |||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 354,419 | 341,842 | ||||||
RTFC | Nonperforming TDR loans | |||||||||
Financing Receivable, Modifications [Line Items] | |||||||||
Loans outstanding | 0 | 3,506 | |||||||
RTFC | Performing TDR Loans | |||||||||
Financing Receivable, Modifications [Line Items] | |||||||||
Financing Receivable, Modifications, Recorded Investment | $ 6,592 | $ 7,092 | |||||||
|
Loans and Commitments Loans - Foregone Interest Income (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
|
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans | $ 31 | $ 275 | $ 655 |
Restructured loans | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans | 0 | 166 | 532 |
Non-performing loans | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans | 0 | 0 | $ 123 |
Nonperforming TDR loans | |||
Accounts, Notes, Loans and Financing Receivable [Line Items] | |||
Loans and Leases Receivable, Impaired, Interest Lost on Nonaccrual Loans | $ 31 | $ 109 |
Loans and Commitments Loans Outstanding Pledged as Collateral (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
---|---|---|
Pledging of Loans and Loans on Deposit | ||
Cash | $ 21,806 | $ 4,628 |
Collateral trust bonds 2007 indenture | ||
Pledging of Loans and Loans on Deposit | ||
Loans outstanding and pledged as collateral | 8,886,945 | 7,398,660 |
Debt outstanding | 7,697,711 | 6,747,711 |
Collateral trust bonds 1994 indenture | ||
Pledging of Loans and Loans on Deposit | ||
Debt outstanding | 225,000 | 800,000 |
Secured notes payable | Federal Agricultural Mortgage Corporation | ||
Pledging of Loans and Loans on Deposit | ||
Debt outstanding | 2,513,389 | 2,303,122 |
Clean Renewable Energy Bonds Series 2009A | ||
Pledging of Loans and Loans on Deposit | ||
Debt outstanding | 13,214 | 14,871 |
Cash | 481 | 0 |
Total pledged collateral | 15,424 | 17,081 |
Guaranteed Underwriter Program Notes Payable | ||
Pledging of Loans and Loans on Deposit | ||
Debt outstanding | 4,985,748 | 4,777,404 |
Mortgage notes | Distribution system mortgage notes | Collateral trust bonds 2007 indenture | ||
Pledging of Loans and Loans on Deposit | ||
Loans outstanding and pledged as collateral | 8,740,572 | 7,246,973 |
Mortgage notes | Distribution system mortgage notes | Collateral trust bonds 1994 indenture | ||
Pledging of Loans and Loans on Deposit | ||
Loans outstanding and pledged as collateral | 263,007 | 968,030 |
Mortgage notes | Distribution and power supply system mortgage notes | Federal Agricultural Mortgage Corporation | ||
Pledging of Loans and Loans on Deposit | ||
Loans outstanding and pledged as collateral | 2,942,456 | 2,683,806 |
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 | 14,943 | 17,081 |
RUS guaranteed loans qualifying as permitted investments | Collateral trust bonds 2007 indenture | ||
Pledging of Loans and Loans on Deposit | ||
Loans outstanding and pledged as collateral | 146,373 | 151,687 |
Mortgage Receivables 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 | $ 5,833,515 | $ 5,248,935 |
Loans and Commitments Additional Information (Details) |
12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
May 31, 2017
USD ($)
associate
state
distribution_system
power_supply_system
borrower
|
May 31, 2016
USD ($)
distribution_system
power_supply_system
|
May 31, 2015
USD ($)
|
||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Valuation Allowances and Reserves, Balance | $ 100,000 | $ 100,000 | ||||||
Loans Receivable Cost of Loans Sold | 58,000,000 | 99,000,000 | $ 26,000,000 | |||||
Loans and Leases Receivable, Net of Deferred Income | [1],[2] | $ 24,356,330,000 | 23,152,517,000 | |||||
Number of States in which Electric and Telecommunications Members are Located | state | 49 | |||||||
Minimum | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Term of Loans | 1 year | |||||||
Maximum | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Term of Loans | 35 years | |||||||
Credit concentration | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Loans and Leases Receivable, Net of Deferred Income | $ 5,749,885,000 | $ 5,638,217,000 | ||||||
Loans outstanding | Geographic Concentration Risk | Maximum | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Percentage of concentration | 15.00% | 15.00% | ||||||
Loans outstanding | Credit concentration | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Concentration Risk Number of Borrowers | borrower | 20 | |||||||
Loans outstanding | Credit concentration | Maximum | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Percentage of concentration | 2.00% | |||||||
Loans outstanding | Credit concentration | Distribution | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Concentration Risk Number of Borrowers | distribution_system | 10 | 11 | ||||||
Loans outstanding | Credit concentration | Power supply | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Concentration Risk Number of Borrowers | power_supply_system | 9 | 9 | ||||||
Loans outstanding | Credit concentration | Associates | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Concentration Risk Number of Borrowers | associate | 1 | |||||||
Loans Guaranteed by Farmer Mac | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Loans and Leases Receivable, Net of Deferred Income | $ 843,000,000 | $ 926,000,000 | ||||||
RUS guaranteed loans qualifying as permitted investments | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Loans and Leases Receivable, Net of Deferred Income | 167,000,000 | 174,000,000 | ||||||
Commitments to Extend Credit Subject to Material Adverse Change Clause [Member] | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Available Balance | 9,973,000,000 | 10,757,000,000 | ||||||
Unadvanced commitments not subject to material adverse change clauses | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Available Balance | 2,602,262,000 | 2,448,000,000 | ||||||
RTFC | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | 354,419,000 | 341,842,000 | |||||
Impaired Financing Receivable, with Related Allowance, Recorded Investment | 6,592,000 | 10,598,000 | ||||||
RTFC | Nonperforming TDR loans | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Impaired Financing Receivable, with Related Allowance, Recorded Investment | 0 | 3,506,000 | ||||||
RTFC | Non-performing loans | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Impaired Financing Receivable, with Related Allowance, Recorded Investment | $ 0 | $ 0 | ||||||
|
Foreclosed Assets Additional Information (Details) - USD ($) $ in Thousands |
2 Months Ended | 12 Months Ended | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Aug. 29, 2016 |
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
Feb. 28, 2017 |
Jul. 01, 2016 |
||||||
Investment Holdings, Other than Securities [Line Items] | |||||||||||
Foreclosed assets, net | $ 0 | $ 102,967 | |||||||||
Proceeds from Divestiture of Businesses | $ 109,000 | ||||||||||
Disposal Group, Including Discontinued Operation, Consideration | $ 144,000 | ||||||||||
Loans and Leases Receivable, Net of Deferred Income | [1],[2] | 24,356,330 | 23,152,517 | ||||||||
Escrow Deposit | 16,000 | ||||||||||
Other Receivables | 45,469 | 51,478 | |||||||||
Results of operations of foreclosed assets | 1,749 | 6,899 | $ 120,148 | ||||||||
Other Comprehensive Income Loss Reclassification Adjustment From AOCI Foreclosed Asset | 9,823 | ||||||||||
Foreclosed Assets | |||||||||||
Investment Holdings, Other than Securities [Line Items] | |||||||||||
Other Receivables | $ 1,000 | ||||||||||
RTFC | |||||||||||
Investment Holdings, Other than Securities [Line Items] | |||||||||||
Loans and Leases Receivable, Net of Deferred Income | [1] | $ 354,419 | $ 341,842 | ||||||||
ATN VI Holdings LLC | RTFC | |||||||||||
Investment Holdings, Other than Securities [Line Items] | |||||||||||
Loans and Leases Receivable, Net of Deferred Income | $ 60,000 | ||||||||||
|
Short-Term Borrowings Short-Term Debt Outstanding and Weighted-Average Interest Rates (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
---|---|---|
Short-term Debt [Line Items] | ||
Short-term Debt | $ 3,342,900 | $ 2,938,848 |
Short-term Debt, Weighted Average Interest Rate, at Point in Time | 0.99% | 0.51% |
Commercial paper sold through dealers, net of discounts | ||
Short-term Debt [Line Items] | ||
Short-term Debt | $ 999,691 | $ 659,935 |
Short-term Debt, Weighted Average Interest Rate, at Point in Time | 0.93% | 0.43% |
Commercial paper sold directly to members, at par | ||
Short-term Debt [Line Items] | ||
Short-term Debt | $ 928,158 | $ 848,007 |
Short-term Debt, Weighted Average Interest Rate, at Point in Time | 0.95% | 0.45% |
Select notes | ||
Short-term Debt [Line Items] | ||
Short-term Debt | $ 696,889 | $ 701,849 |
Short-term Debt, Weighted Average Interest Rate, at Point in Time | 1.12% | 0.62% |
Daily liquidity fund notes | ||
Short-term Debt [Line Items] | ||
Short-term Debt | $ 527,990 | $ 525,959 |
Short-term Debt, Weighted Average Interest Rate, at Point in Time | 0.80% | 0.34% |
Medium-term notes sold to members | ||
Short-term Debt [Line Items] | ||
Short-term Debt | $ 190,172 | $ 203,098 |
Short-term Debt, Weighted Average Interest Rate, at Point in Time | 1.50% | 1.05% |
Short-Term Borrowings Commitments under Revolving Credit Agreements (Details) - USD ($) $ in Millions |
12 Months Ended | |||||||
---|---|---|---|---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
|||||||
Three Year Agreement | ||||||||
Short-term Debt [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,533 | |||||||
Five Year Agreement | ||||||||
Short-term Debt [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 1,632 | |||||||
Revolving credit agreements | ||||||||
Short-term Debt [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 3,165 | $ 3,310 | ||||||
Letters of Credit Outstanding, Amount | 1 | 1 | ||||||
Line of Credit Facility, Remaining Borrowing Capacity | [1] | $ 3,164 | 3,309 | |||||
Revolving credit agreements | Three Year Nonconsenting Agreement | ||||||||
Short-term Debt [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 25 | |||||||
Line of Credit Facility, Remaining Borrowing Capacity | [1] | $ 25 | ||||||
Debt Instrument, Maturity Date | Oct. 28, 2017 | |||||||
Line of Credit Facility, Commitment Fee Percentage | [2] | 0.075% | 0.075% | |||||
Revolving credit agreements | Three Year Consenting Agreement | ||||||||
Short-term Debt [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,640 | |||||||
Line of Credit Facility, Remaining Borrowing Capacity | [1] | $ 1,640 | ||||||
Debt Instrument, Maturity Date | Nov. 19, 2018 | |||||||
Line of Credit Facility, Commitment Fee Percentage | [2] | 0.075% | 0.075% | |||||
Revolving credit agreements | Three Year Agreement | ||||||||
Short-term Debt [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,533 | $ 1,665 | ||||||
Line of Credit Facility, Remaining Borrowing Capacity | [1] | $ 1,533 | 1,665 | |||||
Debt Instrument, Maturity Date | Nov. 19, 2019 | |||||||
Revolving credit agreements | Five Year Consenting Agreement | ||||||||
Short-term Debt [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | 1,600 | |||||||
Letters of Credit Outstanding, Amount | 1 | |||||||
Line of Credit Facility, Remaining Borrowing Capacity | [1] | $ 1,599 | ||||||
Debt Instrument, Maturity Date | Nov. 19, 2020 | |||||||
Line of Credit Facility, Commitment Fee Percentage | [2] | 0.10% | 0.10% | |||||
Revolving credit agreements | Five Year Nonconsenting Agreement | ||||||||
Short-term Debt [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 45 | |||||||
Line of Credit Facility, Remaining Borrowing Capacity | [1] | $ 45 | ||||||
Debt Instrument, Maturity Date | Oct. 28, 2019 | |||||||
Line of Credit Facility, Commitment Fee Percentage | [2] | 0.10% | 0.10% | |||||
Revolving credit agreements | Five Year Agreement | ||||||||
Short-term Debt [Line Items] | ||||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,632 | $ 1,645 | ||||||
Letters of Credit Outstanding, Amount | 1 | 1 | ||||||
Line of Credit Facility, Remaining Borrowing Capacity | $ 1,631 | [1] | $ 1,644 | |||||
Debt Instrument, Maturity Date | Nov. 19, 2021 | |||||||
|
Short-Term Borrowings Additional Information (Details) - USD ($) |
12 Months Ended | ||
---|---|---|---|
May 31, 2017 |
Sep. 30, 2016 |
May 31, 2016 |
|
Short-term Debt [Line Items] | |||
Short-term Debt | $ 3,342,900,000 | $ 2,938,848,000 | |
Select notes | |||
Short-term Debt [Line Items] | |||
Short-term Debt | 696,889,000 | 701,849,000 | |
Three Year Agreement | |||
Short-term Debt [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | 1,533,000,000 | ||
Line Of Credit Facility Terminated | 165,000,000 | ||
Line of Credit Facility, Increase (Decrease), Net | 8,000,000 | ||
Five Year Agreement | |||
Short-term Debt [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | 1,632,000,000 | ||
Line Of Credit Facility Terminated | $ 45,000,000 | ||
Minimum | Commercial paper | |||
Short-term Debt [Line Items] | |||
Term of debt | 1 day | ||
Minimum | Select notes | |||
Short-term Debt [Line Items] | |||
Term of debt | 30 days | ||
Maximum | Commercial paper | |||
Short-term Debt [Line Items] | |||
Term of debt | 270 days | ||
Maximum | Select notes | |||
Short-term Debt [Line Items] | |||
Term of debt | 270 days | ||
Revolving credit agreements | |||
Short-term Debt [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | $ 3,165,000,000 | 3,310,000,000 | |
Letter of Credit Maximum Amount Available | 300,000,000 | ||
Short-term Debt | 0 | 0 | |
Revolving credit agreements | Three Year Agreement | |||
Short-term Debt [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | 1,533,000,000 | 1,665,000,000 | |
Revolving credit agreements | Five Year Agreement | |||
Short-term Debt [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | 1,632,000,000 | 1,645,000,000 | |
CFC | Revolving credit agreements | |||
Short-term Debt [Line Items] | |||
Line of Credit Facility, Maximum Borrowing Capacity | 3,165,000,000 | $ 3,420,000,000 | |
NCSC | |||
Short-term Debt [Line Items] | |||
Line Of Credit Facility Assigned To Third Party | $ 50,000,000 | ||
Line Of Credit Facility Terminated | $ 60,000,000 | ||
NCSC | Three Year Agreement | |||
Short-term Debt [Line Items] | |||
Line Of Credit Facility Assigned To Third Party | 25,000,000 | ||
NCSC | Five Year Agreement | |||
Short-term Debt [Line Items] | |||
Line Of Credit Facility Assigned To Third Party | $ 25,000,000 |
Long-Term Debt Long-Term Debt Outstanding and Weighted-Average Interest Rates (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
May 31, 2017 |
May 31, 2016 |
|
Debt Instrument [Line Items] | ||
Long-term Debt | $ 17,955,594 | $ 17,473,603 |
Weighted-Average Interest Rate | 3.29% | 3.28% |
Medium-term notes sold through dealers | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 2,386,956 | $ 2,668,276 |
Weighted-Average Interest Rate | 3.48% | 3.02% |
Medium-term notes sold to members | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 422,779 | $ 450,960 |
Weighted-Average Interest Rate | 2.18% | 1.93% |
Unsecured medium-term notes | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 2,809,735 | $ 3,119,236 |
Unamortized discount | (382) | (537) |
Unamortized Debt Issuance Expense | (21,903) | (19,370) |
Long-term Debt | $ 2,787,450 | $ 3,099,329 |
Weighted-Average Interest Rate | 3.29% | 2.86% |
Unsecured notes payable: | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 22,799 | $ 27,092 |
Unamortized discount | (379) | (496) |
Unamortized Debt Issuance Expense | $ (94) | $ (123) |
Weighted-Average Interest Rate | 3.98% | 4.02% |
Unsecured notes payable | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 22,326 | $ 26,473 |
Weighted-Average Interest Rate | 3.98% | 4.02% |
Unsecured long-term debt | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 2,809,776 | $ 3,125,802 |
Weighted-Average Interest Rate | 3.29% | 2.87% |
Collateral trust bonds | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 7,922,711 | $ 7,547,711 |
Unamortized discount | (258,329) | (265,837) |
Unamortized Debt Issuance Expense | (30,334) | (28,778) |
Long-term Debt | $ 7,634,048 | $ 7,253,096 |
Weighted-Average Interest Rate | 4.08% | 4.28% |
Guaranteed Underwriter Program Notes Payable | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 4,985,748 | $ 4,777,404 |
Unamortized Debt Issuance Expense | (264) | (293) |
Long-term Debt | $ 4,985,484 | $ 4,777,111 |
Weighted-Average Interest Rate | 2.83% | 2.98% |
Farmer Mac notes payable | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 2,513,389 | $ 2,303,123 |
Weighted-Average Interest Rate | 1.71% | 1.15% |
Other secured notes payable | ||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 13,214 | $ 14,871 |
Unamortized Debt Issuance Expense | (317) | (400) |
Long-term Debt | $ 12,897 | $ 14,471 |
Weighted-Average Interest Rate | 2.81% | 2.86% |
Debt Instrument, Maturity Date | Dec. 31, 2024 | Dec. 31, 2024 |
Secured notes payable | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 7,511,770 | $ 7,094,705 |
Weighted-Average Interest Rate | 2.45% | 2.39% |
Secured long-term debt | ||
Debt Instrument [Line Items] | ||
Long-term Debt | $ 15,145,818 | $ 14,347,801 |
Weighted-Average Interest Rate | 3.29% | 3.36% |
Minimum | Medium-term notes sold through dealers | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Maturity Date | Dec. 31, 2018 | Dec. 31, 2016 |
Minimum | Medium-term notes sold to members | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Maturity Date | Dec. 31, 2017 | Dec. 31, 2016 |
Minimum | Unsecured notes payable: | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Maturity Date | Dec. 31, 2022 | Dec. 31, 2022 |
Minimum | Collateral trust bonds | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Maturity Date | Dec. 31, 2018 | Dec. 31, 2017 |
Minimum | Guaranteed Underwriter Program Notes Payable | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Maturity Date | Dec. 31, 2025 | Dec. 31, 2025 |
Minimum | Farmer Mac notes payable | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Maturity Date | Dec. 31, 2018 | Dec. 31, 2018 |
Maximum | Medium-term notes sold through dealers | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Maturity Date | Dec. 31, 2032 | Dec. 31, 2032 |
Maximum | Medium-term notes sold to members | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Maturity Date | Dec. 31, 2037 | Dec. 31, 2037 |
Maximum | Unsecured notes payable: | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Maturity Date | Dec. 31, 2023 | Dec. 31, 2023 |
Maximum | Collateral trust bonds | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Maturity Date | Dec. 31, 2032 | Dec. 31, 2032 |
Maximum | Guaranteed Underwriter Program Notes Payable | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Maturity Date | Dec. 31, 2037 | Dec. 31, 2036 |
Maximum | Farmer Mac notes payable | ||
Debt Instrument [Line Items] | ||
Debt Instrument, Maturity Date | Dec. 31, 2047 | Dec. 31, 2045 |
Long-Term Debt Long-Term Debt Maturities (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
---|---|---|
Amount Maturing | ||
Long-term Debt | $ 17,955,594 | $ 17,473,603 |
Long-Term Debt | ||
Amount Maturing | ||
2018 | 1,258,058 | |
2019 | 2,603,992 | |
2020 | 1,367,922 | |
2021 | 1,270,604 | |
2022 | 1,559,515 | |
Thereafter | 9,895,503 | |
Long-term Debt | $ 17,955,594 | |
Weighted-Average Interest Rate | ||
2018 (as a percent) | 3.80% | |
2019 (as a percent) | 5.40% | |
2020 (as a percent) | 2.04% | |
2021 (as a percent) | 2.28% | |
2022 (as a percent) | 2.37% | |
Thereafter (as a percent) | 3.12% | |
Total (as a percent) | 3.29% |
Long-Term Debt Additional Information (Details) - USD ($) |
12 Months Ended | |||
---|---|---|---|---|
May 31, 2017 |
Dec. 01, 2016 |
May 31, 2016 |
Jul. 31, 2015 |
|
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 17,955,594,000 | $ 17,473,603,000 | ||
Secured notes payable | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 7,511,770,000 | 7,094,705,000 | ||
Debt Instrument Fee Percentage | 0.30% | |||
Guaranteed Underwriter Program Notes Payable | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 4,985,484,000 | 4,777,111,000 | ||
Debt Instrument Maximum Borrowing Capacity | $ 375,000,000 | |||
Term of debt | 20 years | |||
Debt Instrument, Unused Borrowing Capacity, Amount | $ 725,000,000 | |||
Federal Agricultural Mortgage Corporation | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument Maximum Borrowing Capacity | 4,800,000,000 | |||
Federal Agricultural Mortgage Corporation | First revolving note purchase agreement with FMAC | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | 2,513,000,000 | 2,303,000,000 | ||
Debt Instrument Maximum Borrowing Capacity | 4,500,000,000 | |||
Federal Agricultural Mortgage Corporation | Second revolving note purchase agreement with FMAC | ||||
Debt Instrument [Line Items] | ||||
Long-term Debt | $ 0 | $ 0 | ||
Debt Instrument Maximum Borrowing Capacity | $ 300,000,000 |
Subordinated Deferrable Debt Additional Information (Details) |
12 Months Ended | |
---|---|---|
May 31, 2017 |
May 31, 2016 |
|
Subordinated Deferrable Debt | ||
Interest rate (as a percent) | 4.98333% | 4.98% |
Period after which debt can be called at par | 10 years | |
Debt Instrument, Period after which Debt can be Converted | 10 years | |
Maximum | ||
Subordinated Deferrable Debt | ||
Consecutive period for which interest payment can be deferred | 5 years | |
4.75 percent due 2043 | ||
Subordinated Deferrable Debt | ||
Interest rate (as a percent) | 4.75% | 4.75% |
5.25 Percent Due 2046 | ||
Subordinated Deferrable Debt | ||
Interest rate (as a percent) | 5.25% | 5.25% |
Subordinated Debt | Maximum | ||
Subordinated Deferrable Debt | ||
Term of debt | 30 years |
Subordinated Deferrable Debt Subordinated Deferrable Debt Outstanding and Weighted-Average Interest Rates (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
May 31, 2017 |
May 31, 2016 |
|
Debt Instrument [Line Items] | ||
Subordinated Debt | $ 742,274 | $ 742,212 |
Interest rate (as a percent) | 4.98333% | 4.98% |
4.75 percent due 2043 | ||
Debt Instrument [Line Items] | ||
Subordinated Debt | $ 400,000 | $ 400,000 |
Interest rate (as a percent) | 4.75% | 4.75% |
5.25 Percent Due 2046 | ||
Debt Instrument [Line Items] | ||
Subordinated Debt | $ 350,000 | $ 350,000 |
Interest rate (as a percent) | 5.25% | 5.25% |
Subordinated Debt | ||
Debt Instrument [Line Items] | ||
Unamortized Debt Issuance Expense | $ (7,726) | $ (7,788) |
Members' Subordinated Certificates Outstanding and Weighted-Average Interest Rates (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
||||
Subordinated Deferrable Debt | |||||
Subordinated deferrable debt | $ 742,274 | $ 742,212 | |||
Interest rate (as a percent) | 4.98333% | 4.98% | |||
Subordinated certificates | |||||
Subordinated Deferrable Debt | |||||
Subordinated deferrable debt | $ 1,419,025 | $ 1,443,810 | |||
Weighted-Average Interest Rate (as a percent) | 4.18% | 4.14% | |||
Membership subordinated certificates | |||||
Subordinated Deferrable Debt | |||||
Subordinated deferrable debt | $ 630,098 | $ 630,063 | |||
Weighted-Average Interest Rate (as a percent) | 4.94% | 4.94% | |||
Interest rate (as a percent) | 5.00% | ||||
Certificates maturing 2020 through 2095 | |||||
Subordinated Deferrable Debt | |||||
Subordinated deferrable debt | $ 629,011 | $ 629,114 | |||
Subscribed and unissued membership subordinated certificates | |||||
Subordinated Deferrable Debt | |||||
Subordinated deferrable debt | [1] | 1,087 | 949 | ||
Loan and guarantee subordinated certificates | |||||
Subordinated Deferrable Debt | |||||
Subordinated deferrable debt | $ 567,830 | $ 593,701 | |||
Weighted-Average Interest Rate (as a percent) | 3.02% | 2.99% | |||
3% certificates maturing through 2040 | |||||
Subordinated Deferrable Debt | |||||
Subordinated deferrable debt | $ 110,164 | $ 110,164 | |||
Interest rate (as a percent) | 3.00% | 3.00% | |||
3% to 10% certificates maturing through 2045 | |||||
Subordinated Deferrable Debt | |||||
Subordinated deferrable debt | $ 268,592 | $ 279,823 | |||
Non-interest bearing certificates maturing through 2047 | |||||
Subordinated Deferrable Debt | |||||
Subordinated deferrable debt | 189,013 | 203,463 | |||
Subscribed and unissued loan and guarantee subordinated certificates | |||||
Subordinated Deferrable Debt | |||||
Subordinated deferrable debt | [1] | 61 | 251 | ||
Member capital securities | |||||
Subordinated Deferrable Debt | |||||
Subordinated deferrable debt | $ 221,097 | $ 220,046 | |||
Weighted-Average Interest Rate (as a percent) | 5.00% | 5.00% | |||
Interest rate (as a percent) | 5.00% | ||||
Minimum | 3% to 10% certificates maturing through 2045 | |||||
Subordinated Deferrable Debt | |||||
Interest rate (as a percent) | 2.00% | 2.00% | |||
Maximum | 3% to 10% certificates maturing through 2045 | |||||
Subordinated Deferrable Debt | |||||
Interest rate (as a percent) | 10.00% | 10.00% | |||
|
Members' Subordinated Certificates Maturities (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
||||
Amount Maturing | |||||
Total long-term debt | $ 742,274 | $ 742,212 | |||
Members' Certificates, exclusive of certificates amortized annually | |||||
Amount Maturing | |||||
2018 | [1] | 10,379 | |||
2019 | [1] | 13,592 | |||
2020 | [1] | 16,383 | |||
2021 | [1] | 54,713 | |||
2022 | [1] | 16,216 | |||
Thereafter | [1] | 1,306,617 | |||
Total long-term debt | [1] | $ 1,417,900 | |||
Weighted-Average Interest Rate | |||||
2018 (as a percent) | 2.26% | ||||
2019 (as a percent) | 2.98% | ||||
2020 (as a percent) | 2.98% | ||||
2021 (as a percent) | 3.85% | ||||
2022 (as a percent) | 3.08% | ||||
Thereafter (as a percent) | 4.25% | ||||
Total (as a percent) | 4.18% | ||||
Loan subordinated certificates, amortized annually | |||||
Amount Maturing | |||||
Total long-term debt | $ 290,000 | ||||
Other information | |||||
Payments not received on certificates subscribed and unissued | 1,000 | ||||
Average amortization of debt | $ 17,000 | ||||
Amortization as a percentage of amortizing loan subordinated debt outstanding | 6.00% | ||||
|
Members' Subordinated Certificates Additional Information (Details) |
12 Months Ended | |
---|---|---|
May 31, 2017 |
May 31, 2016 |
|
Members' subordinated certificates | ||
Interest rate (as a percent) | 4.98333% | 4.98% |
Membership subordinated certificates | ||
Members' subordinated certificates | ||
Maturity period | 100 years | |
Interest rate (as a percent) | 5.00% | |
Series 2008 Member Capital Securities | ||
Members' subordinated certificates | ||
Maturity period | 35 years | |
Member capital security, call option term | 5 years | |
Member capital securities | ||
Members' subordinated certificates | ||
Maturity period | 30 years | |
Interest rate (as a percent) | 5.00% | |
Series 2013 Member Capital Securities | ||
Members' subordinated certificates | ||
Member capital security, call option term | 10 years | |
Weighted Average | Membership subordinated certificates | ||
Members' subordinated certificates | ||
Maturity period | 59 years | 60 years |
Derivative Instruments and Hedging Activities Derivatives Notional Amounts and Weighted-Average Rate (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
May 31, 2017 |
May 31, 2016 |
|
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 10,791,396 | $ 10,200,471 |
Pay Fixed Receive Variable Swaps | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 6,807,013 | $ 6,661,471 |
Derivative Weighted Average Interest Rate Paid Percentage | 2.85% | 2.95% |
Derivative Weighted Average Interest Rate Received Percentage | 1.16% | 0.63% |
Pay Variable Receive Fixed Swaps | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 3,699,000 | $ 3,499,000 |
Derivative Weighted Average Interest Rate Paid Percentage | 1.72% | 1.02% |
Derivative Weighted Average Interest Rate Received Percentage | 2.64% | 2.82% |
Interest rate swaps | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 10,506,013 | $ 10,160,471 |
Derivative Weighted Average Interest Rate Paid Percentage | 2.46% | 2.29% |
Derivative Weighted Average Interest Rate Received Percentage | 1.68% | 1.39% |
Forward Contracts | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 285,383 | $ 40,000 |
Derivative Instruments and Hedging Activities Derivatives Notional Amount Maturities (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
---|---|---|
Derivative [Line Items] | ||
Derivative, Notional Amount | $ 10,791,396 | $ 10,200,471 |
Interest rate swaps | ||
Derivative [Line Items] | ||
Derivative, Notional Amount | 10,506,013 | $ 10,160,471 |
Derivative Notional Amount Maturing in one year | 647,080 | |
Derivative Notional Amount Maturing in two years | 511,117 | |
Derivative Notional Amount Maturing in three years | 1,329,870 | |
Derivative Notional Amount Maturing in four years | 483,062 | |
Derivative Notional Amount Maturing in five years | 522,072 | |
Derivative Notional Amount Maturing in more than five years | $ 7,298,195 |
Derivative Instruments and Hedging Activities Derivatives - Balance Sheet Impact (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
---|---|---|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative assets | $ 49,481 | $ 80,095 |
Derivative Asset, Notional Amount | 3,754,120 | 2,879,567 |
Derivative liabilities | 385,337 | 594,820 |
Derivative Liability, Notional Amount | 7,037,276 | 7,320,904 |
Derivative Assets (Liabilities), at Fair Value, Net | (335,856) | (514,725) |
Derivative, Notional Amount | $ 10,791,396 | $ 10,200,471 |
Derivative Instruments and Hedging Activities Derivatives Offsetting (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
---|---|---|
Derivative [Line Items] | ||
Derivative assets | $ 49,481 | $ 80,095 |
Derivative liabilities | 385,337 | 594,820 |
Interest rate swaps | ||
Derivative [Line Items] | ||
Derivative Asset, Fair Value, Gross Liability | 0 | 0 |
Derivative Asset, Fair Value, Amount Not Offset Against Collateral | 49,481 | 80,095 |
Derivative, Collateral, Obligation to Return Securities | 49,481 | 80,095 |
Derivative, Collateral, Obligation to Return Cash | 0 | 0 |
Derivative Asset, Fair Value, Amount Offset Against Collateral | 0 | 0 |
Derivative Liability, Fair Value, Gross Asset | 0 | 0 |
Derivative Liability, Fair Value, Amount Not Offset Against Collateral | 385,337 | 594,820 |
Derivative, Collateral, Right to Reclaim Securities | 49,481 | 80,095 |
Derivative, Collateral, Right to Reclaim Cash | 0 | 0 |
Derivative Liability, Fair Value, Amount Offset Against Collateral | $ 335,856 | $ 514,725 |
Derivative Instruments and Hedging Activities Derivatives - Income Statement Impact (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
|
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Gain (Loss) on Sale of Derivatives | $ (84,478) | $ (88,758) | $ (82,906) |
Unrealized Gain (Loss) on Derivatives | 179,381 | (221,083) | (114,093) |
Derivative gains (losses) | $ 94,903 | $ (309,841) | $ (196,999) |
Derivative Instruments and Hedging Activities Derivatives - Rating Triggers (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
|||||
---|---|---|---|---|---|---|---|
Derivative [Line Items] | |||||||
Derivative, Notional Amount | $ 10,791,396 | $ 10,200,471 | |||||
Interest rate swaps | |||||||
Derivative [Line Items] | |||||||
Derivative, Notional Amount | 10,506,013 | $ 10,160,471 | |||||
Counterparty Group | Interest rate swaps | |||||||
Derivative [Line Items] | |||||||
Derivative, Notional Amount | 7,795,725 | ||||||
Assets Needed for Immediate Settlement, Aggregate Fair Value | 245,962 | ||||||
Assets Received for Immediate Settlement Aggregate Fair Value | 0 | ||||||
Net Asset Needed for Immediate Settlement Aggregate Fair Value | (245,962) | ||||||
Counterparty Group | Moodys A3 Rating Standard Poors A Minus Rating | Interest rate swaps | Minimum | |||||||
Derivative [Line Items] | |||||||
Derivative, Notional Amount | [1] | 59,165 | |||||
Assets Needed for Immediate Settlement, Aggregate Fair Value | 13,713 | ||||||
Assets Received for Immediate Settlement Aggregate Fair Value | [1] | 0 | |||||
Net Asset Needed for Immediate Settlement Aggregate Fair Value | [1] | (13,713) | |||||
Counterparty Group | Moodys Baa 1 Rating Standard Poor's BBB Plus Rating | Interest rate swaps | Minimum | |||||||
Derivative [Line Items] | |||||||
Derivative, Notional Amount | 7,008,763 | ||||||
Assets Needed for Immediate Settlement, Aggregate Fair Value | 208,022 | ||||||
Assets Received for Immediate Settlement Aggregate Fair Value | 0 | ||||||
Net Asset Needed for Immediate Settlement Aggregate Fair Value | (208,022) | ||||||
Counterparty Group | Moody's Baa 2 Rating Standard Poor's BBB Rating | Interest rate swaps | Minimum | |||||||
Derivative [Line Items] | |||||||
Derivative, Notional Amount | [2] | 459,106 | |||||
Assets Needed for Immediate Settlement, Aggregate Fair Value | [2] | 646 | |||||
Assets Received for Immediate Settlement Aggregate Fair Value | [2] | 0 | |||||
Net Asset Needed for Immediate Settlement Aggregate Fair Value | [2] | (646) | |||||
Counterparty Group | Moodys Baa 3 Rating Standard Poor's BBB- Plus Rating | Interest rate swaps | Minimum | |||||||
Derivative [Line Items] | |||||||
Derivative, Notional Amount | 268,691 | ||||||
Assets Needed for Immediate Settlement, Aggregate Fair Value | 23,581 | ||||||
Net Asset Needed for Immediate Settlement Aggregate Fair Value | $ (23,581) | ||||||
|
Derivative Instruments and Hedging Activities Additional Information (Details) $ in Millions |
May 31, 2017
USD ($)
|
---|---|
Interest rate swaps | |
Derivative [Line Items] | |
Derivative, Net Liability Position, Aggregate Fair Value | $ 244 |
Equity Equity Components (Details) - USD ($) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
May 31, 2014 |
|
Components of equity | ||||
Prior years cumulative derivative forward value and foreign currency adjustments | $ (507,904) | $ (287,077) | ||
Unrealized Gain (Loss) on Derivatives | 179,381 | (221,083) | $ (114,093) | |
Total Cumulative Derivative Forward Value and Foreign Currency Adjustments | (332,525) | (507,904) | ||
Retained equity | 1,056,778 | 790,234 | ||
Accumulated other comprehensive income | 13,175 | 1,058 | 4,080 | |
Total CFC equity | 1,069,953 | 791,292 | ||
Noncontrolling interests | 28,852 | 26,086 | ||
Total equity | 1,098,805 | 817,378 | 911,786 | $ 970,374 |
Membership fees | ||||
Components of equity | ||||
Total members' equity | 971 | 974 | ||
Education fund | ||||
Components of equity | ||||
Total members' equity | 1,929 | 1,798 | ||
Retained Earnings, Appropriated Membership Fees and Education Fund [Member] | ||||
Components of equity | ||||
Total members' equity | 2,900 | 2,772 | ||
Total equity | 2,900 | 2,772 | 2,743 | 2,751 |
Members' capital reserve | ||||
Components of equity | ||||
Total members' equity | 761,701 | 713,853 | ||
Total equity | 630,305 | 587,219 | 501,731 | 485,447 |
Allocated net income | ||||
Components of equity | ||||
Total members' equity | 630,305 | 587,219 | ||
Total equity | 761,701 | 713,853 | 668,980 | 630,340 |
Unallocated net income (loss) | ||||
Components of equity | ||||
Total members' equity | (5,603) | (5,706) | ||
Unallocated net income (loss) | ||||
Components of equity | ||||
Total equity | (338,128) | (513,610) | $ (293,212) | $ (178,650) |
CFC | ||||
Components of equity | ||||
Unrealized Gain (Loss) on Derivatives | $ (175,379) | $ 220,827 |
Equity Accumulated Other Comprehensive Income Rollforward (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
|
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | $ 1,058 | $ 4,080 | |
Change in fair value | 4,614 | 3,468 | $ 4,295 |
Other Comprehensive Income (Loss), Unrealized Gains (Losses) | (1,535) | (5,781) | |
Unrealized losses on foreclosed assets | 0 | (5,575) | (1,938) |
Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, after Tax | 175 | ||
Other Comprehensive Income Loss Reclassification Adjustment From AOCI Foreclosed Asset | 9,823 | ||
Realized gains reclassified into earnings | (785) | (884) | |
Other comprehensive income | 12,117 | (3,022) | |
Ending balance | 13,175 | 1,058 | 4,080 |
Unrealized Gains (Losses) AFS Securities | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | 7,402 | 3,934 | |
Change in fair value | 4,614 | 3,468 | |
Other comprehensive income | 4,614 | 3,468 | |
Ending balance | 12,016 | 7,402 | 3,934 |
Unrealized Gains Derivatives | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | 4,487 | 5,371 | |
Realized gains reclassified into earnings | (785) | (884) | |
Other comprehensive income | (785) | (884) | |
Ending balance | 3,702 | 4,487 | 5,371 |
Unrealized Losses Foreclosed Assets | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | (9,823) | (4,248) | |
Unrealized losses on foreclosed assets | (5,575) | ||
Other Comprehensive Income Loss Reclassification Adjustment From AOCI Foreclosed Asset | 9,823 | ||
Other comprehensive income | 9,823 | (5,575) | |
Ending balance | 0 | (9,823) | (4,248) |
Accumulated Defined Benefit Plans Adjustment, Net Transition Asset (Obligation) | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | (1,008) | (977) | |
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, after Tax | (1,535) | (206) | |
Other Comprehensive (Income) Loss, Defined Benefit Plan, Reclassification Adjustment from AOCI, after Tax | 175 | ||
Other comprehensive income | (1,535) | (31) | |
Ending balance | $ (2,543) | $ (1,008) | $ (977) |
Equity Additional Information (Details) $ in Thousands |
12 Months Ended | |||
---|---|---|---|---|
May 31, 2017
USD ($)
reserve
|
May 31, 2016
USD ($)
|
May 31, 2015
USD ($)
|
May 31, 2014
USD ($)
|
|
Equity | ||||
Stockholders' Equity, Period Increase (Decrease) | $ 281,000 | |||
Total equity | 1,098,805 | $ 817,378 | $ 911,786 | $ 970,374 |
Net income (loss) | 312,099 | (51,516) | (18,927) | |
Retirement/allocation of net earnings authorized | $ (42,490) | (39,384) | (40,141) | |
Minimum percentage of paid-in-capital required to be maintained under District of Columbia cooperative law | 50.00% | |||
Accumulated other comprehensive income expected to be reclassified into earnings over the next 12 months | $ 1,000 | |||
Patronage capital allocated | ||||
Equity | ||||
Total equity | 761,701 | 713,853 | 668,980 | 630,340 |
Net income (loss) | 90,441 | 84,257 | 78,420 | |
Retirement/allocation of net earnings authorized | (42,593) | (39,384) | (39,779) | |
Members' capital reserve | ||||
Equity | ||||
Total equity | 630,305 | 587,219 | 501,731 | $ 485,447 |
Net income (loss) | $ 43,086 | 85,917 | $ 16,283 | |
CFC | ||||
Equity | ||||
General reserve required to be maintained as a percentage of membership fees collected | 50.00% | |||
Number of additional board-approved reserves | reserve | 1 | |||
CFC | Cooperative educational fund | ||||
Equity | ||||
Allocation of net earnings | $ 1,000 | 1,000 | ||
CFC | Cooperative educational fund | Minimum | ||||
Equity | ||||
Minimum percentage of net earnings to be allocated to cooperative education fund as per bylaws of the entity | 0.25% | |||
CFC | Patronage capital allocated | ||||
Equity | ||||
Retirement/allocation of net earnings authorized | $ (45,000) | (42,000) | ||
Percentage of prior year's allocated patronage capital required to be retired | 50.00% | |||
Percentage of prior year's allocated patronage capital required to be held | 50.00% | |||
Period for which prior year's allocated patronage capital is required to be held | 25 years | |||
Allocation of net earnings | $ 90,000 | 84,000 | ||
Members' Capital | $ 86,000 | |||
Retirement of allocated net earnings, percentage | 50.00% | 50.00% | ||
CFC | Members' capital reserve | ||||
Equity | ||||
Allocation of net earnings | $ 43,000 | |||
RTFC | ||||
Equity | ||||
Minimum percentage of paid-in-capital required to be maintained under District of Columbia cooperative law | 50.00% | |||
Allocation of net earnings | $ 0 | $ 0 | ||
Percentage of ownership by parent | 100.00% | |||
Percentage of ownership by minority owners | 100.00% | |||
RTFC | Minimum | ||||
Equity | ||||
Percentage of retirement of allocated net earnings in cash | 20.00% | |||
RTFC | Cooperative educational fund | ||||
Equity | ||||
Allocation of net earnings | $ 1,000 | $ 0 | ||
RTFC | Cooperative educational fund | Minimum | ||||
Equity | ||||
Minimum percentage of net earnings to be allocated to cooperative education fund as per bylaws of the entity | 1.00% | |||
RTFC | Members' capital reserve | ||||
Equity | ||||
Minimum percentage of net earnings to be allocated to cooperative education fund as per bylaws of the entity | 1.00% | |||
Allocation of net earnings | $ 0 | |||
NCSC | ||||
Equity | ||||
Minimum percentage of paid-in-capital required to be maintained under District of Columbia cooperative law | 50.00% | |||
NCSC | Cooperative educational fund | Minimum | ||||
Equity | ||||
Minimum percentage of net earnings to be allocated to cooperative education fund as per bylaws of the entity | 0.25% |
Employee Benefits Additional Information (Details) |
12 Months Ended | |||||
---|---|---|---|---|---|---|
May 31, 2017
USD ($)
salary
|
May 31, 2016
USD ($)
|
May 31, 2015
USD ($)
|
Jan. 01, 2017 |
Jan. 01, 2016 |
Jan. 01, 2015
USD ($)
|
|
Defined benefit multiemployer master pension plan | ||||||
Percentage of joint and surviving spouse annuity | 50.00% | |||||
Annuity factor (as a percent) | 1.70% | |||||
Number of highest base salaries | salary | 5 | |||||
Number of years of employment considered in selection of highest base salaries | 10 years | |||||
Liability, Defined Benefit Pension Plan | $ 4,000,000 | $ 1,000,000 | $ 1,000,000 | |||
Contributions made by CFC | 4,000,000 | 4,000,000 | $ 3,000,000 | |||
Limit on the compensation to be used in the calculation of pension benefits | 270,000 | |||||
Other Comprehensive (Income) Loss, Defined Benefit Plan, after Reclassification Adjustment, before Tax | 2,000,000 | |||||
Increase (Decrease) in Obligation, Pension Benefits | 3,000,000 | |||||
Postemployment Benefits, Period Expense | $ 1,000,000 | |||||
401(k) defined contribution savings program | ||||||
Number of consecutive months considered for eligible period of service | 12 months | |||||
Maximum matching contributions by CFC as a percentage of employee's salary | 2.00% | |||||
Minimum employee contribution (as a percent) | 2.00% | |||||
Contributions made by CFC | $ 500,000 | 500,000 | 500,000 | |||
Accumulated other comprehensive income | $ 13,175,000 | $ 1,058,000 | $ 4,080,000 | |||
Minimum | ||||||
Defined benefit multiemployer master pension plan | ||||||
Funded status, more than 80% (as a percent) | 80.00% | 80.00% | 80.00% | |||
401(k) defined contribution savings program | ||||||
Period of service in either the first 12 consecutive months or first full calendar year of employment for eligibility of pension plan | 1000 hours | |||||
Maximum | ||||||
Defined benefit multiemployer master pension plan | ||||||
Contributions made by CFC as a percentage of total contributions by all participating employers | 5.00% | 5.00% | 5.00% | |||
Multiemployer Plans, Pension | ||||||
Defined benefit multiemployer master pension plan | ||||||
Liability, Defined Benefit Pension Plan | $ 0 | |||||
Pension Restoration Plan | ||||||
Defined benefit multiemployer master pension plan | ||||||
Defined Contribution Plan, Number of Employees | 3 | |||||
Executive Benefit Restoration Plan | ||||||
Defined benefit multiemployer master pension plan | ||||||
Defined Contribution Plan, Number of Employees | 7 | |||||
Accumulated Defined Benefit Plans Adjustment, Net Transition Asset (Obligation) | ||||||
401(k) defined contribution savings program | ||||||
Accumulated other comprehensive income | $ (2,543,000) | $ (1,008,000) | $ (977,000) | $ 1,000,000 |
Guarantees Guarantees Outstanding (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
---|---|---|
Guarantor Obligations [Line Items] | ||
Guarantor Obligations, Current Carrying Value | $ 889,617 | $ 909,208 |
Long-term tax-exempt bonds | ||
Guarantor Obligations [Line Items] | ||
Guarantor Obligations, Current Carrying Value | 468,145 | 475,965 |
Letters of credit | ||
Guarantor Obligations [Line Items] | ||
Guarantor Obligations, Current Carrying Value | 307,321 | 319,596 |
Other guarantees | ||
Guarantor Obligations [Line Items] | ||
Guarantor Obligations, Current Carrying Value | 114,151 | 113,647 |
CFC | ||
Guarantor Obligations [Line Items] | ||
Guarantor Obligations, Current Carrying Value | 874,920 | 892,289 |
CFC | Distribution | ||
Guarantor Obligations [Line Items] | ||
Guarantor Obligations, Current Carrying Value | 126,188 | 127,890 |
CFC | Power supply | ||
Guarantor Obligations [Line Items] | ||
Guarantor Obligations, Current Carrying Value | 743,678 | 759,345 |
CFC | Statewide and associate | ||
Guarantor Obligations [Line Items] | ||
Guarantor Obligations, Current Carrying Value | 5,054 | 5,054 |
NCSC | ||
Guarantor Obligations [Line Items] | ||
Guarantor Obligations, Current Carrying Value | 1,574 | 1,574 |
RTFC | ||
Guarantor Obligations [Line Items] | ||
Guarantor Obligations, Current Carrying Value | $ 13,123 | $ 15,345 |
Guarantees Guarantees Maturities (Details) - Guarantee Obligations $ in Thousands |
May 31, 2017
USD ($)
|
---|---|
Guarantor Obligations [Line Items] | |
2018 | $ 367,648 |
2019 | 26,890 |
2020 | 58,251 |
2021 | 109,243 |
2022 | 38,253 |
Thereafter | 289,332 |
Contractual Obligation | $ 889,617 |
Guarantees Additional Information (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
May 31, 2017 |
May 31, 2016 |
|
Guarantor Obligations [Line Items] | ||
Guarantor Obligations, Current Carrying Value | $ 889,617 | $ 909,208 |
Guarantee Obligations Unsecured | $ 297,000 | $ 308,000 |
Guarantee Obligations Unsecured Commitment as Percentage of Total Commitment | 33.00% | 34.00% |
Guarantee Liability Recorded | $ 15,000 | $ 17,000 |
Guaranty Liabilities Contingent | 1,000 | 1,000 |
Guaranty Liabilities | 14,000 | 16,000 |
Long-term variable-rate loans | ||
Guarantor Obligations [Line Items] | ||
Guarantee Obligations Liquidity Provided to Member Carrying Value | 476,000 | |
Other guarantees | ||
Guarantor Obligations [Line Items] | ||
Guarantor Obligations, Current Carrying Value | 114,151 | 113,647 |
Guarantor Obligations, Maximum Exposure, Undiscounted | 115,000 | |
Financial Standby Letter of Credit | Adjustable and Floating Rate Tax Exempt Bonds | ||
Guarantor Obligations [Line Items] | ||
Guarantor Obligations, Current Carrying Value | 76,000 | |
Performance Guarantee | Master Letter of Credit | ||
Guarantor Obligations [Line Items] | ||
Letter of Credit Facility Maximum Additional Amount Potentially Required to be Issued | 60,000 | |
Performance Guarantee | Letter of Credit Secured | ||
Guarantor Obligations [Line Items] | ||
Guarantee Obligations Secured | 125,000 | |
Financial guarantees | Long-term fixed-rate loans | ||
Guarantor Obligations [Line Items] | ||
Guarantor Obligations, Current Carrying Value | 68,000 | |
Guarantor Obligations, Maximum Exposure, Undiscounted | 98,000 | |
Financial guarantees | Long-term variable-rate loans | ||
Guarantor Obligations [Line Items] | ||
Guarantor Obligations, Current Carrying Value | $ 400,000 | $ 406,000 |
Fair Value Measurement Fair Value of Financial Instruments (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
May 31, 2014 |
---|---|---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and cash equivalents | $ 166,615 | $ 204,540 | $ 248,836 | $ 338,715 |
Cash and Cash Equivalents, Fair Value Disclosure | 166,615 | 204,540 | ||
Restricted cash | 21,806 | 4,628 | ||
Time deposits | 226,000 | 340,000 | ||
Time Deposits, At Fair Value | 226,000 | 340,000 | ||
Investment securities available for sale, at fair value | 92,554 | 87,940 | ||
Investments, Fair Value Disclosure | 92,554 | 87,940 | ||
Deferred Compensation Plan Assets | 4,693 | 4,326 | ||
Loans to members, net | 24,329,668 | 23,129,438 | ||
Loans Receivable, Fair Value Disclosure | 24,182,724 | 23,297,924 | ||
Accrued interest receivable | 111,493 | 113,272 | ||
Debt service reserve restricted funds | 17,151 | 17,151 | ||
Derivative assets | 49,481 | 80,095 | ||
Short-term Debt | 3,342,900 | 2,938,848 | ||
Short-term Debt, Fair Value | 3,342,990 | 2,938,716 | ||
Long-term Debt | 17,955,594 | 17,473,603 | ||
Long-term Debt, Fair Value | 18,744,331 | 18,577,261 | ||
Accrued interest payable | 137,476 | 132,996 | ||
Guaranty Liabilities Contingent and Noncontingent | 15,241 | 17,109 | ||
Guarantees, Fair Value Disclosure | 16,204 | 19,019 | ||
Derivative liabilities | 385,337 | 594,820 | ||
Subordinated deferrable debt | 742,274 | 742,212 | ||
Subordinated Debt Obligations, Fair Value Disclosure | 788,079 | 751,395 | ||
Members Subordinated Certificates, Total | 1,419,025 | 1,443,810 | ||
Members Subordinated Certificates, At Fair Value | 1,419,048 | 1,443,834 | ||
Level 1 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Cash and Cash Equivalents, Fair Value Disclosure | 166,615 | 204,540 | ||
Restricted cash | 21,806 | 4,628 | ||
Investments, Fair Value Disclosure | 92,554 | 87,940 | ||
Deferred Compensation Plan Assets | 4,693 | 4,326 | ||
Debt service reserve restricted funds | 17,151 | 17,151 | ||
Short-term Debt, Fair Value | 1,527,990 | 1,185,959 | ||
Accrued interest payable | 0 | |||
Level 2 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Time Deposits, At Fair Value | 226,000 | 340,000 | ||
Accrued interest receivable | 111,493 | 113,272 | ||
Derivative assets | 49,481 | 80,095 | ||
Short-term Debt, Fair Value | 1,815,000 | 1,752,757 | ||
Long-term Debt, Fair Value | 11,215,290 | 11,327,004 | ||
Accrued interest payable | 137,476 | 132,996 | ||
Derivative liabilities | 385,337 | 594,820 | ||
Subordinated Debt Obligations, Fair Value Disclosure | 788,079 | 751,395 | ||
Level 3 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Loans Receivable, Fair Value Disclosure | 24,182,724 | 23,297,924 | ||
Long-term Debt, Fair Value | 7,529,041 | 7,250,257 | ||
Guarantees, Fair Value Disclosure | 16,204 | 19,019 | ||
Members Subordinated Certificates, At Fair Value | $ 1,419,048 | $ 1,443,834 |
Fair Value Measurement Recurring Fair Value Measurements (Details) - USD ($) $ in Thousands |
May 31, 2017 |
May 31, 2016 |
---|---|---|
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investment securities available for sale, at fair value | $ 92,554 | $ 87,940 |
Investments, Fair Value Disclosure | 92,554 | 87,940 |
Deferred Compensation Plan Assets | 4,693 | 4,326 |
Derivative assets | 49,481 | 80,095 |
Derivative liabilities | 385,337 | 594,820 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, Fair Value Disclosure | 92,554 | 87,940 |
Deferred Compensation Plan Assets | 4,693 | 4,326 |
Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 49,481 | 80,095 |
Derivative liabilities | 385,337 | 594,820 |
Recurring basis | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, Fair Value Disclosure | 92,554 | 87,940 |
Deferred Compensation Plan Assets | 4,693 | 4,326 |
Derivative assets | 49,481 | 80,095 |
Derivative liabilities | 385,337 | 594,820 |
Recurring basis | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investment securities available for sale, at fair value | 92,554 | 87,940 |
Deferred Compensation Plan Assets | 4,326 | |
Recurring basis | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Derivative assets | 49,481 | 80,095 |
Derivative liabilities | $ 385,337 | $ 594,820 |
Fair Value Measurement Nonrecurring Fair Value (Details) - Non-recurring basis - Level 3 - USD ($) $ in Thousands |
12 Months Ended | ||||
---|---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |||||
Non-performing loans, net of specific reserves | [1] | $ 0 | $ 7,498 | ||
Fair Value Measurement with Unobservable Inputs Reconciliation Asset Impaired Financing Receivable Nonperforming Status Gain (Loss) Included in Earnings | [1] | $ 0 | $ (4,273) | ||
|
Segment Information Segment Results and Total Assets (Details) - USD ($) $ in Thousands |
12 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 31, 2017 |
May 31, 2016 |
May 31, 2015 |
May 31, 2014 |
||||||||||||
Statement of operations: | |||||||||||||||
Interest income | $ 1,036,634 | $ 1,012,636 | $ 952,976 | ||||||||||||
Interest expense | [1],[2],[3] | (741,738) | (681,850) | (635,684) | |||||||||||
Net interest income | 294,896 | 330,786 | 317,292 | ||||||||||||
Provision (benefit) for loan losses | (5,978) | 646 | 21,954 | ||||||||||||
Net interest income after provision for loan losses | 288,918 | 331,432 | 339,246 | ||||||||||||
Non-interest income: | |||||||||||||||
Fee and other income | 19,713 | 21,785 | 36,783 | ||||||||||||
Gain (Loss) on Sale of Derivatives | (84,478) | (88,758) | (82,906) | ||||||||||||
Unrealized Gain (Loss) on Derivatives | 179,381 | (221,083) | (114,093) | ||||||||||||
Derivative gains (losses) | 94,903 | (309,841) | (196,999) | ||||||||||||
Results of operations of foreclosed assets | (1,749) | (6,899) | (120,148) | ||||||||||||
Total non-interest income | 112,867 | (294,955) | (280,364) | ||||||||||||
Non-interest expense: | |||||||||||||||
General and administrative expenses | (86,226) | (86,343) | (76,530) | ||||||||||||
Gains (losses) on early extinguishment of debt | 192 | (333) | (703) | ||||||||||||
Other non-interest expense | (1,948) | (1,260) | (167) | ||||||||||||
Total non-interest expense | (87,982) | (87,936) | (77,400) | ||||||||||||
Income (loss) prior to income taxes | 313,803 | (51,459) | (18,518) | ||||||||||||
Income tax expense | (1,704) | (57) | (409) | ||||||||||||
Net income (loss) | 312,099 | (51,516) | (18,927) | ||||||||||||
Assets: | |||||||||||||||
Loans and Leases Receivable, Net of Deferred Income | [4],[5] | 24,356,330 | 23,152,517 | ||||||||||||
Deferred origination costs | [4] | 10,714 | 10,179 | ||||||||||||
Less: Allowance for loan losses | (37,376) | (33,258) | (33,690) | $ (56,429) | |||||||||||
Loans to members, net | 24,329,668 | 23,129,438 | |||||||||||||
Other assets | 876,024 | 1,140,762 | |||||||||||||
Total assets | 25,205,692 | 24,270,200 | |||||||||||||
CFC | |||||||||||||||
Statement of operations: | |||||||||||||||
Interest income | 1,026,302 | 1,001,241 | 940,541 | ||||||||||||
Interest expense | (740,695) | (680,661) | (634,287) | ||||||||||||
Net interest income | 285,607 | 320,580 | 306,254 | ||||||||||||
Provision (benefit) for loan losses | (5,978) | (646) | (21,954) | ||||||||||||
Net interest income after provision for loan losses | 279,629 | 321,226 | 328,208 | ||||||||||||
Non-interest income: | |||||||||||||||
Fee and other income | 18,858 | 21,164 | 36,215 | ||||||||||||
Gain (Loss) on Sale of Derivatives | (81,489) | (85,316) | (78,624) | ||||||||||||
Unrealized Gain (Loss) on Derivatives | 175,379 | (220,827) | (114,665) | ||||||||||||
Derivative gains (losses) | 93,890 | (306,143) | (193,289) | ||||||||||||
Results of operations of foreclosed assets | 1,749 | 6,899 | (120,148) | ||||||||||||
Total non-interest income | 110,999 | (291,878) | (277,222) | ||||||||||||
Non-interest expense: | |||||||||||||||
General and administrative expenses | (78,965) | (77,407) | (69,129) | ||||||||||||
Gains (losses) on early extinguishment of debt | 192 | (333) | (703) | ||||||||||||
Other non-interest expense | (1,949) | (1,261) | (186) | ||||||||||||
Total non-interest expense | (80,722) | (79,001) | (70,018) | ||||||||||||
Income (loss) prior to income taxes | 309,906 | (49,653) | (19,032) | ||||||||||||
Net income (loss) | 309,906 | (49,653) | (19,032) | ||||||||||||
Assets: | |||||||||||||||
Loans and Leases Receivable, Net of Deferred Income | 24,319,673 | 23,112,714 | |||||||||||||
Deferred origination costs | 10,714 | 10,179 | |||||||||||||
Less: Allowance for loan losses | (37,376) | (33,258) | |||||||||||||
Loans to members, net | 24,293,011 | 23,089,635 | |||||||||||||
Other assets | 865,867 | 1,129,138 | |||||||||||||
Total assets | 25,158,878 | 24,218,773 | |||||||||||||
Other | |||||||||||||||
Statement of operations: | |||||||||||||||
Interest income | 43,502 | 45,798 | 46,666 | ||||||||||||
Interest expense | (34,250) | (35,665) | (35,628) | ||||||||||||
Net interest income | 9,252 | 10,133 | 11,038 | ||||||||||||
Net interest income after provision for loan losses | 9,252 | 10,133 | 11,038 | ||||||||||||
Non-interest income: | |||||||||||||||
Fee and other income | 3,528 | 4,350 | 3,447 | ||||||||||||
Gain (Loss) on Sale of Derivatives | (2,989) | (3,442) | (4,282) | ||||||||||||
Unrealized Gain (Loss) on Derivatives | (4,002) | (256) | 572 | ||||||||||||
Derivative gains (losses) | 1,013 | (3,698) | (3,710) | ||||||||||||
Total non-interest income | 4,541 | 652 | (263) | ||||||||||||
Non-interest expense: | |||||||||||||||
General and administrative expenses | (7,261) | (8,936) | (8,370) | ||||||||||||
Other non-interest expense | (2,635) | (3,655) | (1,891) | ||||||||||||
Total non-interest expense | (9,896) | (12,591) | (10,261) | ||||||||||||
Income (loss) prior to income taxes | 3,897 | (1,806) | 514 | ||||||||||||
Income tax expense | (1,704) | (57) | (409) | ||||||||||||
Net income (loss) | 2,193 | (1,863) | 105 | ||||||||||||
Assets: | |||||||||||||||
Loans and Leases Receivable, Net of Deferred Income | 968,343 | 1,022,644 | |||||||||||||
Loans to members, net | 968,343 | 1,022,644 | |||||||||||||
Other assets | 104,643 | 111,789 | |||||||||||||
Total assets | 1,072,986 | 1,134,433 | |||||||||||||
Elimination | |||||||||||||||
Statement of operations: | |||||||||||||||
Interest income | (33,170) | (34,403) | (34,231) | ||||||||||||
Interest expense | 33,207 | 34,476 | 34,231 | ||||||||||||
Net interest income | 37 | 73 | 0 | ||||||||||||
Net interest income after provision for loan losses | 37 | 73 | 0 | ||||||||||||
Non-interest income: | |||||||||||||||
Fee and other income | (2,673) | (3,729) | (2,879) | ||||||||||||
Derivative gains (losses) | 0 | 0 | 0 | ||||||||||||
Results of operations of foreclosed assets | 0 | ||||||||||||||
Total non-interest income | (2,673) | (3,729) | (2,879) | ||||||||||||
Non-interest expense: | |||||||||||||||
General and administrative expenses | 0 | 0 | 969 | ||||||||||||
Other non-interest expense | 2,636 | 3,656 | 1,910 | ||||||||||||
Total non-interest expense | 2,636 | 3,656 | $ 2,879 | ||||||||||||
Assets: | |||||||||||||||
Loans and Leases Receivable, Net of Deferred Income | (931,686) | (982,841) | |||||||||||||
Loans to members, net | (931,686) | (982,841) | |||||||||||||
Other assets | (94,486) | (100,165) | |||||||||||||
Total assets | $ (1,026,172) | $ (1,083,006) | |||||||||||||
|
Segment Information Additional Information (Details) |
12 Months Ended |
---|---|
May 31, 2017
operating_segment
| |
Segment Reporting [Abstract] | |
Number of Operating Segments | 3 |
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