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Business Segments
 12 Months Ended
May 31, 2024
Segment Reporting [Abstract]  
BUSINESS SEGMENTS
NOTE 16—BUSINESS SEGMENTS

Our activities were previously conducted through three operating segments, which were based on each of the legal entities included in our consolidated financial statements: CFC, NCSC and RTFC. We reported segment information for CFC separately; however, we aggregated segment information for NCSC and RTFC into one reportable segment because neither entity met the quantitative materiality threshold for separate reporting under the accounting guidance governing segment reporting. As discussed above under “Note 1—Summary of Significant Accounting Policies,” on December 1, 2023, RTFC completed the sale of its business to NCSC. After the RTFC sale transaction, our operating segments currently consist of CFC and NCSC, which are based on each of the legal entities included in our consolidated financial statements. As we aggregated segment information for NCSC and RTFC into one reportable segment in prior periods, the RTFC sale transaction did not cause a change in the composition of our reportable segments.

Basis of Presentation

We present the results of our business segments on the basis in which management internally evaluates operating performance to establish short- and long-term performance goals, develop budgets and forecasts, identify potential trends, allocate resources and make compensation decisions.

Business Segment Reporting Methodology

The results of our business segments are intended to present the separate results for each of the legal entities included in our consolidated financial statements. As discussed in “Note 15—Variable Interest Entities,” all of NCSC’s funding is either provided by CFC or guaranteed by CFC, the terms and conditions of which are stipulated in a loan and security agreement and a guarantee agreement between CFC and NCSC. Pursuant to the guarantee agreement, CFC unconditionally guarantees full indemnification to NCSC for any credit losses. In addition, CFC manages the business operations of NCSC under a management agreement that automatically renews on an annual basis unless the agreement is terminated by either party.

We report loans and interest and fees earned on loans based on the legal entity that holds the loans. CFC borrows from various sources to fund the operations of CFC and NCSC, the cost of which is reflected in CFC’s interest expense. NCSC borrows from CFC to fund loans to its members, the cost of which is reported as interest expense by NCSC. CFC charges NCSC a management fee, which CFC reports as a component of fee and other income. NCSC reports the management fee charged by CFC as a component of non-interest expense. CFC and NCSC use derivatives, primarily interest rate swaps, to manage interest rate risk. Because we generally do not elect to apply hedge accounting to our interest rate swaps, changes in the fair value of our interest rate swaps are recorded in earnings in our consolidated total results of operations. However, management excludes the impact of derivative forward value gains and losses and includes the net periodic derivative cash settlement interest income or expense amounts as a component of interest expense in reporting our segment results of operations, which represents the only difference between the accounting and reporting for our business segment results of operations and our consolidated total results of operations.
Segment Results and Reconciliation

The following tables display segment results of operations for the years ended May 31, 2024, 2023 and 2022, assets attributable to each segment as of May 31, 2024 and 2023 and a reconciliation of total segment amounts to our consolidated total amounts.
Table 16.1: Business Segment Information
 Year Ended May 31, 2024
(Dollars in thousands)CFC
NCSC
Segments Total
Reclasses and Adjustments(1)
Intersegment Eliminations(2)
Consolidated
Results of operations:    
Interest income$1,584,071 $82,104 $1,666,175 $— $(72,824)$1,593,351 
Interest expense(1,339,003)(72,909)(1,411,912)— 72,824 (1,339,088)
Derivative cash settlements interest income
127,017 149 127,166 (127,166)— — 
Interest expense(1,211,986)(72,760)(1,284,746)(127,166)72,824 (1,339,088)
Net interest income372,085 9,344 381,429 (127,166)— 254,263 
Benefit (provision) for credit losses
5,516 (2,330)3,186 — 2,330 5,516 
Net interest income after benefit (provision) for credit losses
377,601 7,014 384,615 (127,166)2,330 259,779 
Non-interest income:
Fee and other income27,857 7,448 35,305 — (12,513)22,792 
Derivative gains:
Derivative cash settlements interest income— — — 127,166 — 127,166 
Derivative forward value gains— — — 264,871 — 264,871 
Derivative gains— — — 392,037 — 392,037 
Investment securities gains
10,772 — 10,772 — — 10,772 
Total non-interest income38,629 7,448 46,077 392,037 (12,513)425,601 
Non-interest expense:
General and administrative expenses(123,336)(11,286)(134,622)— 8,251 (126,371)
Losses on early extinguishment of debt(1,025)— (1,025)— — (1,025)
Other non-interest expense(2,112)(1,984)(4,096)— 1,932 (2,164)
Total non-interest expense(126,473)(13,270)(139,743)— 10,183 (129,560)
Income before income taxes
289,757 1,192 290,949 264,871 — 555,820 
Income tax provision— (1,504)(1,504)— — (1,504)
Net income (loss)$289,757 $(312)$289,445 $264,871 $— $554,316 
May 31, 2024
CFC
NCSC
Segments Total
Reclasses and Adjustments(1)
Intersegment Eliminations(2)
Consolidated Total
Assets:
Total loans outstanding$34,516,488 $1,544,477 $36,060,965 $— $(1,532,781)$34,528,184 
Deferred loan origination costs14,101 — 14,101 — — 14,101 
Loans to members34,530,589 1,544,477 36,075,066 — (1,532,781)34,542,285 
Less: Allowance for credit losses(48,726)(6,000)(54,726)— 6,000 (48,726)
Loans to members, net34,481,863 1,538,477 36,020,340 — (1,526,781)34,493,559 
Other assets1,671,555 28,389 1,699,944 — (15,689)1,684,255 
Total assets$36,153,418 $1,566,866 $37,720,284 $— $(1,542,470)$36,177,814 
 Year Ended May 31, 2023
(Dollars in thousands)CFC
NCSC
Segments Total
Reclasses and Adjustments(1)
Intersegment Eliminations(2)
Consolidated Total
Results of operations:    
Interest income$1,343,215 $61,716 $1,404,931 $— $(53,202)$1,351,729 
Interest expense(1,036,499)(53,211)(1,089,710)— 53,202 (1,036,508)
Derivative cash settlements interest income (expense)
34,021 (444)33,577 (33,577)— — 
Interest expense(1,002,478)(53,655)(1,056,133)(33,577)53,202 (1,036,508)
Net interest income340,737 8,061 348,798 (33,577)— 315,221 
Provision for credit losses
(603)(935)(1,538)— 935 (603)
Net interest income after provision for credit losses
340,134 7,126 347,260 (33,577)935 314,618 
Non-interest income:
Fee and other income24,880 3,922 28,802 — (10,668)18,134 
Derivative gains:
Derivative cash settlements interest income
— — — 33,577 — 33,577 
Derivative forward value gains— — — 252,267 — 252,267 
Derivative gains— — — 285,844 — 285,844 
Investment securities losses(4,974)— (4,974)— — (4,974)
Total non-interest income19,906 3,922 23,828 285,844 (10,668)299,004 
Non-interest expense:
General and administrative expenses(107,209)(10,522)(117,731)— 8,100 (109,631)
Losses on early extinguishment of debt(117)— (117)— — (117)
Other non-interest expense(1,484)(1,636)(3,120)— 1,633 (1,487)
Total non-interest expense(108,810)(12,158)(120,968)— 9,733 (111,235)
Income (loss) before income taxes251,230 (1,110)250,120 252,267 — 502,387 
Income tax provision— (800)(800)— — (800)
Net income (loss)$251,230 $(1,910)$249,320 $252,267 $— $501,587 
May 31, 2023
CFC
NCSC
Segments Total
Reclasses and Adjustments(1)
Intersegment Eliminations(2)
Consolidated Total
Assets:    
Total loans outstanding$32,503,574 $1,444,662 $33,948,236 $— $(1,428,887)$32,519,349 
Deferred loan origination costs12,737 — 12,737 — — 12,737 
Loans to members32,516,311 1,444,662 33,960,973 — (1,428,887)32,532,086 
Less: Allowance for credit losses(53,094)(3,670)(56,764)— 3,670 (53,094)
Loans to members, net32,463,217 1,440,992 33,904,209 — (1,425,217)32,478,992 
Other assets1,520,456 77,628 1,598,084 — (65,016)1,533,068 
Total assets$33,983,673 $1,518,620 $35,502,293 $— $(1,490,233)$34,012,060 
 Year Ended May 31, 2022
(Dollars in thousands)CFC
NCSC
Segments Total
Reclasses and Adjustments(1)
Intersegment Eliminations(2)
Consolidated Total
Results of operations:    
Interest income$1,133,173 $43,295 $1,176,468 $— $(35,225)$1,141,243 
Interest expense(705,534)(35,225)(740,759)— 35,225 (705,534)
Derivative cash settlements interest expense(99,768)(1,617)(101,385)101,385 — — 
Interest expense(805,302)(36,842)(842,144)101,385 35,225 (705,534)
Net interest income327,871 6,453 334,324 101,385 — 435,709 
Benefit for credit losses
17,972 3,334 21,306 — (3,334)17,972 
Net interest income after benefit for credit losses
345,843 9,787 355,630 101,385 (3,334)453,681 
Non-interest income:
Fee and other income22,426 70 22,496 — (5,303)17,193 
Derivative gains:
Derivative cash settlements interest expense— — — (101,385)— (101,385)
Derivative forward value gains— — — 557,867 — 557,867 
Derivative gains— — — 456,482 — 456,482 
Investment securities losses
(30,179)— (30,179)— — (30,179)
Total non-interest income (expense)
(7,753)70 (7,683)456,482 (5,303)443,496 
Non-interest expense:
General and administrative expenses(93,465)(8,102)(101,567)— 6,381 (95,186)
Losses on early extinguishment of debt(754)— (754)— — (754)
Other non-interest expense(1,552)(2,256)(3,808)— 2,256 (1,552)
Total non-interest expense(95,771)(10,358)(106,129)— 8,637 (97,492)
Income (loss) before income taxes242,319 (501)241,818 557,867 — 799,685 
Income tax provision— (1,148)(1,148)— — (1,148)
Net income (loss)$242,319 $(1,649)$240,670 $557,867 $— $798,537 
____________________________
(1)Consists of (i) the reclassification of net periodic derivative settlement interest income (expense) amounts, which we report as a component of interest expense for business segment reporting purposes but is included in derivatives gains (losses) in our consolidated total results and (ii) derivative forward value gains and losses, which we exclude from our business segment results but is included in derivatives gains (losses) in our consolidated total results.
(2)Consists of intercompany borrowings payable by NCSC to CFC and the interest related to those borrowings, management fees paid by NCSC to CFC and other intercompany amounts, all of which are eliminated in consolidation.