Variable Interest Entities

12 Months Ended

May 31, 2026

Organization, Consolidation and Presentation of Financial Statements [Abstract]

VARIABLE INTEREST ENTITIES

NOTE 15—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 agreement with NCSC, CFC manages the business operations of NCSC. CFC also unconditionally guarantees full payment to NCSC for amounts equal to any loan losses 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. 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 the VIE included in CFC’s consolidated financial statements, after intercompany eliminations, which include NCSC’s consolidated assets and liabilities as of May 31, 2026 and 2025.

Table 15.1: Consolidated Assets and Liabilities of Variable Interest Entities

	May 31,
(Dollars in thousands)	2026		2025
Assets:
Loans outstanding	$	1,656,398	$	1,654,228
Other assets	29,290		16,111
Total assets	$	1,685,688	$	1,670,339
Liabilities:
Total liabilities	$	14,909	$	15,114

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

Table 15.2: CFC Exposure Under Credit Commitments to NCSC

	May 31,
(Dollars in thousands)	2026		2025
CFC credit commitments:
Total CFC credit commitments	$	5,000,000	$	5,000,000
Outstanding commitments:
Borrowings payable to CFC(1)	1,642,033		1,640,372
Credit enhancements:
CFC third-party guarantees	105,346		60,564
Other credit enhancements	817		1,275
Total credit enhancements(2)	106,163		61,839
Total outstanding commitments	1,748,196		1,702,211
CFC credit commitments available	$	3,251,804	$	3,297,789

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(1)Intercompany borrowings payable by NCSC to CFC as of May 31, 2026 and 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 as of May 31, 2026, 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 $106 million as of May 31, 2026. The maturities for obligations guaranteed by CFC extend through 2043.