v3.26.3
Variable Interest Entities
 3 Months Ended
Aug. 31, 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 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 August 31, 2026 and May 31, 2026.

Table 13.1: Consolidated Assets and Liabilities of Variable Interest Entities

(Dollars in thousands)August 31, 2026May 31, 2026
Assets:
Loans outstanding$1,697,618 $1,656,398 
Other assets23,285 29,290 
Total assets$1,720,903 $1,685,688 
Liabilities:
Total liabilities
$13,638 $14,909 

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

Table 13.2: CFC Exposure Under Credit Commitments to NCSC
August 31, 2026May 31, 2026
(Dollars in thousands)
CFC credit commitments:
Total CFC credit commitments$5,000,000 $5,000,000 
Outstanding commitments:
Borrowings payable to CFC(1)
1,683,908 1,642,033 
Credit enhancements:
CFC third-party guarantees94,784 105,346 
Other credit enhancements515 817 
Total credit enhancements(2)
95,299 106,163 
Total outstanding commitments1,779,207 1,748,196 
CFC credit commitments available
$3,220,793 $3,251,804 
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(1)Intercompany borrowings payable by NCSC to CFC as of August 31, 2026 and May 31, 2026 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 August 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 $95 million as of August 31, 2026. The maturities for obligations guaranteed by CFC extend through 2043.