NOTE 5—ALLOWANCE FOR LOAN LOSSES

We maintain an allowance for loan losses that represents management’s estimate of probable losses inherent in our loan portfolio as of each balance sheet date. Our allowance for loan losses consists of a collective allowance for loans in our portfolio that are not individually impaired and a specific allowance for loans identified as individually impaired. The allowance for loan losses is reported separately on the consolidated balance sheet, and the provision for loan losses is separately reported on our condensed consolidated statements of operations.

The following tables summarize changes, by company, in the allowance for loan losses as of and for the three and six months ended November 30, 2019 and 2018.



	Three Months Ended November 30, 2019
(Dollars in thousands)	CFC		NCSC			RTFC		Total
Balance as of August 31, 2019	$	12,962	$	2,077		$	2,526	$	17,565
Provision (benefit) for loan losses	114		(1,267		)	108		(1,045		)
Balance as of November 30, 2019	$	13,076	$	810		$	2,634	$	16,520



	Three Months Ended November 30, 2018
(Dollars in thousands)	CFC			NCSC			RTFC			Total
Balance as of August 31, 2018	$	12,508		$	2,012		$	4,172		$	18,692
Benefit for loan losses	(334		)	(43		)	(1,411		)	(1,788		)
Balance as of November 30, 2018	$	12,174		$	1,969		$	2,761		$	16,904



	Six Months Ended November 30, 2019
(Dollars in thousands)	CFC			NCSC			RTFC		Total
Balance as of May 31, 2019	$	13,120		$	2,007		$	2,408	$	17,535
Provision (benefit) for loan losses	(44		)	(1,197		)	226		(1,015		)
Balance as of November 30, 2019	$	13,076		$	810		$	2,634	$	16,520



	Six Months Ended November 30, 2018
(Dollars in thousands)	CFC			NCSC			RTFC			Total
Balance as of May 31, 2018	$	12,300		$	2,082		$	4,419		$	18,801
Benefit for loan losses	(126		)	(113		)	(1,658		)	(1,897		)
Balance as of November 30, 2018	$	12,174		$	1,969		$	2,761		$	16,904

The following tables present, by company, the components of our allowance for loan losses and the recorded investment of the related loans as of November 30, 2019 and May 31, 2019.



	November 30, 2019
(Dollars in thousands)	CFC			NCSC			RTFC			Total
Ending balance of the allowance:
Collective allowance	$	13,076		$	810		$	1,678		$	15,564
Specific allowance	—			—			956			956
Total ending balance of the allowance	$	13,076		$	810		$	2,634		$	16,520

Recorded investment in loans:
Collectively evaluated loans	$	25,362,521		$	702,279		$	350,982		$	26,415,782
Individually evaluated loans	5,755			—			5,342			11,097
Total recorded investment in loans	$	25,368,276		$	702,279		$	356,324		$	26,426,879

Total recorded investment in loans, net⁽¹⁾	$	25,355,200		$	701,469		$	353,690		$	26,410,359

Allowance coverage ratio:
Allowance as a percentage of total recorded investment in loans	0.05		%	0.12		%	0.74		%	0.06		%



	May 31, 2019
(Dollars in thousands)	CFC			NCSC			RTFC			Total
Ending balance of the allowance:
Collective allowance	$	13,120		$	2,007		$	1,387		$	16,514
Specific allowance	—			—			1,021			1,021
Total ending balance of the allowance	$	13,120		$	2,007		$	2,408		$	17,535

Recorded investment in loans:
Collectively evaluated loans	$	24,811,415		$	742,888		$	339,508		$	25,893,811
Individually evaluated loans	6,261			—			5,592			11,853
Total recorded investment in loans	$	24,817,676		$	742,888		$	345,100		$	25,905,664

Total recorded investment in loans, net⁽¹⁾	$	24,804,556		$	740,881		$	342,692		$	25,888,129

Allowance coverage ratio:
Allowance as a percentage of total recorded investment in loans	0.05		%	0.27		%	0.70		%	0.07		%

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⁽¹⁾Excludes unamortized deferred loan origination costs of $11 million as of both November 30, 2019 and May 31, 2019.

As noted above in “Note 4—Loans,” we did not have any loans classified as nonperforming as of either November 30, 2019 or May 31, 2019.

In addition to the allowance for loan losses, 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, which was less than $1 million as of both November 30, 2019 and May 31, 2019.