NOTE 2—VARIABLE INTEREST ENTITIES

NCSC and RTFC meet the definition of a VIE because they do not have sufficient equity investment at risk to finance their activities without financial support. CFC is the primary source of funding for NCSC and the sole source of funding for RTFC. Under the terms of management agreements with each company, CFC manages the business operations of NCSC and RTFC. CFC also unconditionally guarantees full indemnification for any loan losses of NCSC and RTFC pursuant to guarantee agreements with each company. CFC earns management and guarantee fees from its agreements with NCSC and RTFC.

NCSC and RTFC creditors have no recourse against CFC in the event of a default by NCSC and RTFC, unless there is a guarantee agreement under which CFC has guaranteed NCSC or RTFC debt obligations to a third party. The following table provides information on incremental consolidated assets and liabilities of VIEs included in CFC’s condensed consolidated financial statements, after intercompany eliminations, as of November 30, 2019 and May 31, 2019.



(Dollars in thousands)	November 30, 2019		May 31, 2019
Total loans outstanding	$	1,058,603	$	1,087,988
Other assets	12,805		10,963
Total assets	$	1,071,408	$	1,098,951

Long-term debt	$	—	$	6,000
Other liabilities	36,729		33,385
Total liabilities	$	36,729	$	39,385

The following table provides information on CFC’s credit commitments to NCSC and RTFC, and its potential exposure to loss as of November 30, 2019 and May 31, 2019.



(Dollars in thousands)	November 30, 2019		May 31, 2019
CFC credit commitments	$	5,500,000	$	5,500,000
Outstanding commitments:
Borrowings payable to CFC⁽¹⁾	1,037,863		1,059,629
Credit enhancements:
CFC third-party guarantees	12,591		10,091
Other credit enhancements	8,958		14,251
Total credit enhancements⁽²⁾	21,549		24,342
Total outstanding commitments	1,059,412		1,083,971
CFC available credit commitments	$	4,440,588	$	4,416,029

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⁽¹⁾ Borrowings payable to CFC are eliminated in consolidation.

⁽²⁾ Excludes interest due on these instruments.

CFC loans to NCSC and RTFC are secured by all assets and revenue of NCSC and RTFC. CFC’s maximum potential exposure, including interest due, for the credit enhancements totaled $22 million as of November 30, 2019. The maturities for obligations guaranteed by CFC extend through 2031.