Variable Interest Entities

9 Months Ended

Feb. 28, 2026

Organization, Consolidation and Presentation of Financial Statements [Abstract]

VARIABLE INTEREST ENTITIES

NOTE 13—VARIABLE INTEREST ENTITIES

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

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 Class C member of CFC.

NCSC creditors have no recourse against CFC in the event of a default by NCSC, unless there is a guarantee agreement under which CFC has guaranteed NCSC debt obligations to a third party. The following table provides information on incremental consolidated assets and liabilities of VIE included in CFC’s consolidated financial statements, after intercompany eliminations, which include NCSC’s consolidated assets and liabilities as of February 28, 2026 and May 31, 2025.

Table 13.1: Consolidated Assets and Liabilities of Variable Interest Entities

(Dollars in thousands)	February 28, 2026		May 31, 2025
Assets:
Loans outstanding	$	1,782,379	$	1,654,228
Other assets	26,064		16,111
Total assets	$	1,808,443	$	1,670,339
Liabilities:
Total liabilities	$	15,683	$	15,114

The following table provides information on CFC’s credit commitments and potential exposure to loss under these commitments to NCSC as of February 28, 2026 and May 31, 2025.

Table 13.2: CFC Exposure Under Credit Commitments to NCSC

	February 28, 2026		May 31, 2025
(Dollars in thousands)
CFC credit commitments:
Total CFC credit commitments	$	5,000,000	$	5,000,000
Outstanding commitments:
Borrowings payable to CFC(1)	1,767,923		1,640,372
Credit enhancements:
CFC third-party guarantees	107,345		60,564
Other credit enhancements	1,402		1,275
Total credit enhancements(2)	108,747		61,839
Total outstanding commitments	1,876,670		1,702,211
CFC credit commitments available	$	3,123,330	$	3,297,789

____________________________

(1)Intercompany borrowings payable by NCSC to CFC as of February 28, 2026 and May 31, 2025 are eliminated in consolidation.

(2)Excludes interest due on these instruments.

Under a loan and security agreement with CFC, NCSC has access to a $2,000 million revolving line of credit and a $3,000 million revolving term loan from CFC which will mature in 2067. CFC loans to NCSC are secured by all assets and revenue of NCSC. CFC’s maximum potential exposure, including interest due, for the credit enhancements totaled $109 million as of February 28, 2026. The maturities for obligations guaranteed by CFC extend through 2043.