We segregate our loan portfolio into segments based on the borrower member class, which consists of CFC distribution, CFC power supply, CFC statewide and associate, NCSC and RTFC. We offer both long-term and line of credit loans to our borrowers. Under our long-term loan facilities, a borrower may select a fixed interest rate or a variable interest rate at the time of each loan advance. Line of credit loans are revolving loan facilities and generally have a variable interest rate.


	November 30, 2021			May 31, 2021
(Dollars in thousands)	Amount		% of Total	Amount		% of Total
Member class:
CFC:
Distribution	$	22,558,077	78%	$	22,027,423	78%
Power supply	5,122,406		18	5,154,312		18
Statewide and associate	101,391		—	106,121		—
Total CFC	27,781,874		96	27,287,856		96
NCSC	721,299		3	706,868		3
RTFC	431,641		1	420,383		1
Total loans outstanding(1)	28,934,814		100	28,415,107		100
Deferred loan origination costs—CFC(2)	12,056		—	11,854		—
Loans to members	$	28,946,870	100%	$	28,426,961	100%

Loan type:
Long-term loans:
Fixed rate	$	26,013,141	90%	$	25,514,766	90%
Variable rate	690,177		2	658,579		2

Total long-term loans	26,703,318		92	26,173,345		92
Lines of credit	2,231,496		8	2,241,762		8
Total loans outstanding(1)	28,934,814		100	28,415,107		100
Deferred loan origination costs—CFC(2)	12,056		—	11,854		—
Loans to members	$	28,946,870	100%	$	28,426,961	100%

We may transfer whole loans and participating interests to third parties. These transfers are typically made concurrently with the closing of the loan or participation agreement at par value and meet the accounting criteria required for sale accounting. We sold CFC loans, at par for cash, totaling $4 million and $96 million during the six months ended November 30, 2021 and 2020, respectively. We recorded immaterial losses on the sale of these loans.

We report accrued interest on loans separately on our consolidated balance sheets as a component of the line item accrued interest receivable rather than as a component of loans to members. Accrued interest receivable amounts generally represent three months or less of accrued interest on loans outstanding. Because our policy is to write off past-due accrued interest receivable in a timely manner, we elected not to measure an allowance for credit losses for accrued interest receivable on loans outstanding, which totaled $94 million and $93 million as of November 30, 2021 and May 31, 2021, respectively. We also elected to exclude accrued interest receivable from the credit quality disclosures required under CECL.

Concentrations of credit may exist when a lender has large credit exposures to single borrowers, large credit exposures to borrowers in the same industry sector or engaged in similar activities or large credit exposures to borrowers in a geographic region that would cause the borrowers to be similarly impacted by economic or other conditions in the region. As a tax-exempt, member-owned finance cooperative, CFC’s principal focus is to provide funding to its rural electric utility cooperative members to assist them in acquiring, constructing and operating electric distribution systems, power supply systems and related facilities.

Because we lend primarily to our rural electric utility cooperative members, we have had a loan portfolio subject to single-industry and single-obligor concentration risks since our inception in 1969. Loans outstanding to electric utility organizations of $28,503 million and $27,995 million as of November 30, 2021 and May 31, 2021, respectively, accounted for 99% of total loans outstanding as of each respective date. The remaining loans outstanding in our portfolio were to RTFC members, affiliates and associates in the telecommunications industry.

The outstanding loan exposure for our 20 largest borrowers totaled $6,134 million and $6,182 million as of November 30, 2021 and May 31, 2021, respectively, representing 21% and 22% of total loans outstanding as of each respective date. The 20 largest borrowers consisted of 11 distribution systems and 9 power supply systems as of November 30, 2021. The 20 largest borrowers consisted of 10 distribution systems and 10 power supply systems as of May 31, 2021. The largest total outstanding exposure to a single borrower or controlled group represented less than 2% of total loans outstanding as of both November 30, 2021 and May 31, 2021.

As part of our strategy in managing credit exposure to large borrowers, we entered into a long-term standby purchase commitment agreement with Farmer Mac during fiscal year 2016. Under this agreement, we may designate certain long-term loans to be covered under the commitment, subject to approval by Farmer Mac, and in the event any such loan later goes into payment default for at least 90 days, upon request by us, Farmer Mac must purchase such loan at par value. We are required to pay Farmer Mac a monthly fee based on the unpaid principal balance of loans covered under the purchase commitment. The aggregate unpaid principal balance of designated and Farmer Mac approved loans was $486 million and $512 million as of November 30, 2021 and May 31, 2021, respectively. Loan exposure to our 20 largest borrowers covered under the Farmer Mac agreement totaled $255 million and $309 million as of November 30, 2021 and May 31, 2021, respectively, which reduced our exposure to the 20 largest borrowers to 20% and 21% as of each respective date. We have had no loan defaults for loans covered under this agreement; therefore, no loans had been put to Farmer Mac for purchase pursuant to the standby purchase agreement as of November 30, 2021. Our credit exposure is also mitigated by long-term loans guaranteed by RUS. Guaranteed RUS loans totaled $135 million and $139 million as of November 30, 2021 and May 31, 2021, respectively.

Although our organizational structure and mission results in single-industry concentration, we serve a geographically diverse group of electric and telecommunications borrowers throughout the U.S. The consolidated number of borrowers with loans outstanding totaled 892 as of both November 30, 2021 and May 31, 2021 located in 49 states. Texas, which had 68 and 67 borrowers with loans outstanding as of November 30, 2021 and May 31, 2021, respectively, accounted for the largest number of borrowers with loans outstanding in any one state as of each respective date. Texas also accounted for the largest concentration of loan exposure in any one state as of each respective date. Loans outstanding to Texas-based electric utility organizations totaled $4,975 million and $4,878 million as of November 30, 2021 and May 31, 2021, respectively and accounted for approximately 17% of total loans outstanding as of each respective date. Of the loans outstanding to Texas-based electric utility organizations, $167 million and $172 million as of November 30, 2021 and May 31, 2021, respectively, were covered by the Farmer Mac standby repurchase agreement, which slightly reduces our Texas loan exposure.

Assessing the overall credit quality of our loan portfolio and measuring our credit risk is an ongoing process that involves tracking payment status, troubled debt restructurings, nonperforming loans, charge-offs, the internal risk ratings of our borrowers and other indicators of credit risk. We monitor and subject each borrower and loan facility in our loan portfolio to an individual risk assessment based on quantitative and qualitative factors. Payment status trends and internal risk ratings are indicators, among others, of the probability of borrower default and overall credit quality of our loan portfolio.

Loans are considered delinquent when contractual principal or interest amounts become past due 30 days or more following the scheduled payment due date. Loans are placed on nonaccrual status when payment of principal or interest is 90 days or more past due or management determines that the full collection of principal and interest is doubtful. The following table presents the payment status, by member class, of loans outstanding as of November 30, 2021 and May 31, 2021.


	November 30, 2021
(Dollars in thousands)	Current		30-89 Days Past Due			> 90 Days Past Due		Total Past Due		Total Loans Outstanding		Nonaccrual Loans
Member class:
CFC:
Distribution	$	22,558,077	$	—		$	—	$	—	$	22,558,077	$	—
Power supply	5,036,877		15			85,514		85,529		5,122,406		219,444
Statewide and associate	101,391		—			—		—		101,391		—
CFC total	27,696,345		15			85,514		85,529		27,781,874		219,444
NCSC	721,299		—			—		—		721,299		—
RTFC	431,641		—			—		—		431,641		—
Total loans outstanding	$	28,849,285	$	15		$	85,514	$	85,529	$	28,934,814	$	219,444

Percentage of total loans	99.70%		—		%	0.30%		0.30%		100.00%		0.76%


	May 31, 2021
(Dollars in thousands)	Current		30-89 Days Past Due			> 90 Days Past Due		Total Past Due		Total Loans Outstanding		Nonaccrual Loans
Member class:
CFC:
Distribution	$	22,027,423	$	—		$	—	$	—	$	22,027,423	$	—
Power supply	5,069,316		3,400			81,596		84,996		5,154,312		228,312
Statewide and associate	106,121		—			—		—		106,121		—
CFC total	27,202,860		3,400			81,596		84,996		27,287,856		228,312
NCSC	706,868		—			—		—		706,868		—
RTFC	420,383		—			—		—		420,383		9,185
Total loans outstanding	$	28,330,111	$	3,400		$	81,596	$	84,996	$	28,415,107	$	237,497

Percentage of total loans	99.70%		0.01		%	0.29%		0.30%		100.00%		0.84%

We had one delinquent loan totaling $86 million and $85 million as of November 30, 2021 and May 31, 2021, respectively, to Brazos Electric Power Cooperative, Inc. (“Brazos”), a CFC Texas-based power supply borrower, which we classified as nonperforming and placed on nonaccrual status in the third quarter of fiscal year 2021. Brazos filed bankruptcy in March 2021 and is therefore not permitted to make scheduled loan payments without the approval of the bankruptcy court.


	November 30, 2021				May 31, 2021
(Dollars in thousands)	Number of Borrowers	Outstanding Amount (1)		% of Total Loans Outstanding	Number of Borrowers	Outstanding Amount (1)		% of Total Loans Outstanding
TDR loans:


Member class:
CFC—Distribution	1	$	5,092	0.02%	1	$	5,379	0.02%

RTFC	1	4,342		0.01	1	4,592		0.02
Total TDR loans	2	$	9,434	0.03%	2	$	9,971	0.04%

Performance status of TDR loans:
Performing TDR loans	2	$	9,434	0.03%	2	$	9,971	0.04%
Total TDR loans	2	$	9,434	0.03%	2	$	9,971	0.04%

There were no unadvanced commitments related to these loans as of November 30, 2021 and May 31, 2021. These loans, which have been performing in accordance with the terms of their respective restructured loan agreement for an extended period of time, were classified as performing and on accrual status as of November 30, 2021 or May 31, 2021. We did not have any TDR loans classified as nonperforming as of November 30, 2021 or May 31, 2021.

We had loans to two borrowers totaling $219 million classified as nonperforming as of November 30, 2021. In comparison we had loans to four borrowers totaling $237 million classified as nonperforming as of May 31, 2021. Nonperforming loans represented 0.76% and 0.84% of total loans outstanding as of November 30, 2021 and May 31, 2021, respectively. Loans outstanding to Brazos accounted for $86 million and $85 million of our total nonperforming loans as of November 30, 2021 and May 31, 2021, respectively. Brazos is not permitted to make scheduled loan payments without approval of the bankruptcy court. As a result, we have not received payments from Brazos since March 2021, and its loans outstanding were delinquent as of each respective date. Prior to Brazos’ bankruptcy filing in March 2021, we had not experienced any defaults or charge-offs in our electric utility and telecommunications loan portfolios since fiscal years 2013 and 2017, respectively. The reduction in nonperforming loans of $18 million during the six months ended November 30, 2021 was due in part to our receipt during the current quarter of full payment of all amounts due on nonperforming loans to two RTFC borrowers totaling $9 million. In addition, we have continued to receive payments on the remaining outstanding nonperforming loan to a CFC electric power supply borrower, including a payment of $9 million during the six months ended November 30, 2021, which reduced the balance of this loan to $134 million as of November 30, 2021, from $143 million as of May 31, 2021.

As part of our management of credit risk, we maintain a credit risk rating framework under which we employ a consistent process for assessing the credit quality of our loan portfolio. We evaluate each borrower and loan facility in our loan portfolio and assign internal borrower and loan facility risk ratings based on consideration of a number of quantitative and qualitative factors. We categorize loans in our portfolio based on our internally assigned borrower risk ratings, which are intended to assess the general creditworthiness of the borrower and probability of default. Our borrower risk ratings align with the U.S. federal banking regulatory agencies credit risk definitions of pass and criticized categories, with the criticized category further segmented among special mention, substandard and doubtful. Pass ratings reflect relatively low probability of default, while criticized ratings have a higher probability of default.

Table 4.5 displays total loans outstanding, by borrower risk rating category and by member class, as of November 30, 2021 and May 31, 2021. The borrower risk rating categories presented below correspond to the borrower risk rating categories used in calculating our collective allowance for credit losses. If a parent company provides a guarantee of full repayment of loans of a subsidiary borrower, we include the loans outstanding in the borrower risk-rating category of the guarantor parent company rather than the risk rating category of the subsidiary borrower for purposes of calculating the collective allowance.

We present term loans outstanding as of November 30, 2021, by fiscal year of origination for each year during the five-year annual reporting period beginning in fiscal year 2018, and in the aggregate for periods prior to fiscal year 2018. The origination period represents the date CFC advances funds to a borrower, rather than the execution date of a loan facility for a borrower. Revolving loans are presented separately due to the nature of revolving loans. The substantial majority of loans in our portfolio represent fixed-rate advances under secured long-term facilities with terms up to 35 years, and as indicated in Table 4.5 below, term loan advances made to borrowers prior to fiscal year 2018 totaled $17,122 million, representing 59% of our total loans outstanding of $28,935 million as of November 30, 2021. The average remaining maturity of our long-term loans, which accounted for 92% of total loans outstanding as of November 30, 2021, was 18 years.

As discussed above, as a member-owned finance cooperative, CFC’s principal focus is to provide funding to its rural electric utility cooperative members to assist them in acquiring, constructing and operating electric distribution systems, power supply systems and related facilities. As such, since our inception in 1969 we have had an extended repeat lending and repayment history with substantially all of member borrowers through our various loan programs. Our secured long-term loan commitment facilities typically provide a five-year draw period under which a borrower may draw funds prior to the expiration of the commitment. Because our electric utility cooperative borrowers must make substantial annual capital investments to maintain operations and ensure delivery of the essential service provided by electric utilities, they require a continuous inflow of funds to finance infrastructure upgrades and new asset purchases. Due to the funding needs of electric utility cooperatives, a CFC borrower generally has multiple loans outstanding under advances drawn in different years.

While the number of borrowers with loans outstanding was 892 borrowers as of November 30, 2021, the number of loans outstanding was 16,512 as of November 30, 2021, resulting in an average of 19 loans outstanding per borrower. Our borrowers, however, are subject to cross-default under the terms of our loan agreements. Therefore, if a borrower defaults on one loan, the borrower is considered in default on all outstanding loans. Due to these factors, we historically have not observed a correlation between the year of origination of our loans and default risk. Instead, default risk on our loans has typically been more closely correlated to the risk rating of our borrowers.


	November 30, 2021
	Term Loans by Fiscal Year of Origination
(Dollars in thousands)	YTD Q2 2022		2021		2020		2019		2018		Prior		Revolving Loans		Total		May 31, 2021
Pass
CFC:
Distribution	$	1,003,440	$	1,736,046	$	1,909,008	$	1,211,086	$	1,474,402	$	13,747,440	$	1,225,521	$	22,306,943	$	21,808,099
Power supply	244,193		541,766		194,019		338,813		248,520		2,665,332		270,648		4,503,291		4,517,408
Statewide and associate	1,465		2,372		20,327		3,486		—		21,957		36,238		85,845		90,261
CFC total	1,249,098		2,280,184		2,123,354		1,553,385		1,722,922		16,434,729		1,532,407		26,896,079		26,415,768
NCSC	—		40,349		236,919		4,225		43,346		249,631		146,829		721,299		706,868
RTFC	25,237		93,813		47,565		11,097		24,799		190,022		34,766		427,299		406,606
Total pass	$	1,274,335	$	2,414,346	$	2,407,838	$	1,568,707	$	1,791,067	$	16,874,382	$	1,714,002	$	28,044,677	$	27,529,242

Special mention
CFC:
Distribution	$	—	$	4,945	$	—	$	5,150	$	941	$	12,693	$	227,405	$	251,134	$	219,324
Power supply	—		—		—		—		—		29,000		—		29,000		29,611
Statewide and associate	—		—		—		5,000		3,946		6,600		—		15,546		15,860
CFC total	—		4,945		—		10,150		4,887		48,293		227,405		295,680		264,795
RTFC	—		—		—		—		—		4,342		—		4,342		4,592
Total special mention	$	—	$	4,945	$	—	$	10,150	$	4,887	$	52,635	$	227,405	$	300,022	$	269,387

Substandard
CFC:

Power supply	$	—	$	23,200	$	—	$	81,869	$	—	$	61,042	$	204,560	$	370,671	$	378,981


Total substandard	$	—	$	23,200	$	—	$	81,869	$	—	$	61,042	$	204,560	$	370,671	$	378,981

Doubtful
CFC:
Power supply	$	—	$	—	$	—	$	—	$	—	$	133,915	$	85,529	$	219,444	$	228,312
CFC total	—		—		—		—		—		133,915		85,529		219,444		228,312
RTFC	—		—		—		—		—		—		—		—		9,185
Total doubtful	$	—	$	—	$	—	$	—	$	—	$	133,915	$	85,529	$	219,444	$	237,497
Total criticized loans	$	—	$	28,145	$	—	$	92,019	$	4,887	$	247,592	$	517,494	$	890,137	$	885,865
Total loans outstanding	$	1,274,335	$	2,442,491	$	2,407,838	$	1,660,726	$	1,795,954	$	17,121,974	$	2,231,496	$	28,934,814	$	28,415,107

Criticized loans totaled $890 million and $886 million as of November 30, 2021 and May 31, 2021, respectively, and represented approximately 3% of total loans outstanding as of each respective date. Criticized loans include loans outstanding to Brazos of $86 million and $85 million as of November 30, 2021 and May 31, 2021, respectively, which were classified as doubtful as of each respective date, and loans outstanding to Rayburn Country Electric Cooperative, Inc. (“Rayburn”) of $371 million and $379 million as of November 30, 2021 and May 31, 2021, respectively. Each of the borrowers with loans outstanding in the criticized category, with the exception of Brazos, was current with regard to all principal and interest amounts due as of November 30, 2021 and May 31, 2021. Brazos is not permitted to make scheduled loan payments without approval of the bankruptcy court.

One CFC electric distribution borrower with loans outstanding of $251 million and $219 million as of November 30, 2021 and May 31, 2021, respectively, accounted for the substantial majority of loans in the special mention loan category amount of $300 million and $269 million as of each respective date. This borrower experienced an adverse financial impact from restoration costs incurred to repair damage caused by two successive hurricanes. We expect that the borrower will receive grant funds from the Federal Emergency Management Agency and the state where it is located for reimbursement of the hurricane damage-related restoration costs.

Loans outstanding classified as doubtful totaled $219 million and $237 million as of November 30, 2021 and May 31, 2021, respectively, consisting of loans outstanding to Brazos of $86 million and $85 million as of each respective date and loans outstanding to a CFC electric power supply borrower of $134 million and $143 million as of each respective date. These loans were also classified as nonperforming, as discussed above under “Nonperforming Loans.”

In June 2021, Texas enacted securitization legislation that offers a financing program for qualifying electric cooperatives exposed to elevated power costs during the February 2021 polar vortex. Brazos and Rayburn both qualify for the Texas-enacted financing program. Rayburn has initiated the securitization financing process to raise funds for eligible costs incurred during the February 2021 polar vortex, as specified in the legislation, and has stated that it intends to use the proceeds to pay down its related outstanding obligation to the Electric Reliability Council of Texas. There are many factors, which we are unable to predict, that may impact the completion and outcome of the securitization transaction and the ultimate collectibility of Rayburn’s loans outstanding. Rayburn, however, was current on all of its debt obligations to us as of the date of this Report.


(Dollars in thousands)	November 30, 2021		May 31, 2021
Member class:
CFC:
Distribution	$	9,659,640	$	9,387,070
Power supply	3,904,003		3,970,698
Statewide and associate	180,152		161,340
Total CFC	13,743,795		13,519,108
NCSC	596,904		551,125
RTFC	337,652		286,806
Total unadvanced commitments	$	14,678,351	$	14,357,039



Loan type:(1)
Long-term loans:
Fixed rate	$	—	$	—
Variable rate	5,663,645		5,771,813

Total long-term loans	5,663,645		5,771,813
Lines of credit	9,014,706		8,585,226
Total unadvanced commitments	$	14,678,351	$	14,357,039

Table 4.7: Unadvanced Loan Commitments


	Available Balance		Notional Maturities of Unadvanced Loan Commitments
(Dollars in thousands)			2022		2023		2024		2025		2026		Thereafter
Line of credit loans	$	9,014,706	$	705,293	$	4,351,138	$	1,184,200	$	1,516,986	$	449,196	$	807,893
Long-term loans	5,663,645		268,120		843,783		1,600,903		854,606		1,083,856		1,012,377
Total	$	14,678,351	$	973,413	$	5,194,921	$	2,785,103	$	2,371,592	$	1,533,052	$	1,820,270

Unadvanced line of credit commitments accounted for 61% of total unadvanced loan commitments as of November 30, 2021, while unadvanced long-term loan commitments accounted for 39% of total unadvanced loan commitments. Unadvanced line of credit commitments are typically revolving facilities for periods not to exceed five years. Unadvanced line of credit commitments generally serve as supplemental back-up liquidity to our borrowers. Historically, borrowers have not drawn the full commitment amount for line of credit facilities, and we have experienced a very low utilization rate on line of credit loan facilities regardless of whether or not we are obligated to fund the facility where a material adverse change exists.

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 $11,447 million and $11,312 million as of November 30, 2021 and May 31, 2021, 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 not subject to material adverse change clauses at the time of each advance consisted of unadvanced committed lines of credit totaling $3,231 million and $3,045 million as of November 30, 2021 and May 31, 2021, 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 as of November 30, 2021, and the related maturity amounts in each fiscal year during the five-year period ending May 31, 2026, and thereafter.

We are required to pledge eligible mortgage notes in an amount at least equal to the outstanding balance of our secured debt. Table 4.9 displays the borrowing amount under each of our secured borrowing agreements and the corresponding loans outstanding pledged as collateral as of November 30, 2021 and May 31, 2021. See “Note 6—Short-Term Borrowings” and “Note 7—Long-Term Debt” for information on our secured borrowings and other borrowings.


(Dollars in thousands)	November 30, 2021		May 31, 2021
Collateral trust bonds:
2007 indenture:
Collateral trust bonds outstanding	$	7,022,711	$	7,422,711
Pledged collateral:
Distribution system mortgage notes pledged	8,160,235		8,400,293
RUS-guaranteed loans qualifying as permitted investments pledged	135,181		121,679
Total pledged collateral	8,295,416		8,521,972

1994 indenture:
Collateral trust bonds outstanding	$	25,000	$	30,000
Pledged collateral:
Distribution system mortgage notes pledged	32,241		34,924

Guaranteed Underwriter Program:
Notes payable outstanding	$	6,290,600	$	6,269,303
Pledged collateral:
Distribution and power supply system mortgage notes pledged	7,032,830		7,150,240

Farmer Mac:
Notes payable outstanding	$	3,121,485	$	2,977,909
Pledged collateral:
Distribution and power supply system mortgage notes pledged	3,531,936		3,440,307

Clean Renewable Energy Bonds Series 2009A:
Notes payable outstanding	$	4,412	$	4,412
Pledged collateral:
Distribution and power supply system mortgage notes pledged	4,520		5,316
Cash	1,179		394
Total pledged collateral	5,699		5,710