UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

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Commission File Number: 1-7102

(Exact name of registrant as specified in its charter)

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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ¨     No x

INDEX OF MD&A TABLES

PART I—FINANCIAL INFORMATION

This Quarterly Report on Form 10-Q contains certain statements that are considered “forward-looking statements” within the Securities Act of 1933, as amended, and the Exchange Act of 1934, as amended. Forward-looking statements, which are based on certain assumptions and describe our future plans, strategies and expectations, are generally identified by our use of words such as “intend,” “plan,” “may,” “should,” “will,” “project,” “estimate,” “anticipate,” “believe,” “expect,” “continue,” “potential,” “opportunity” and similar expressions, whether in the negative or affirmative. All statements about future expectations or projections, including statements about loan volume, the appropriateness of the allowance for loan losses, operating income and expenses, leverage and debt-to-equity ratios, borrower financial performance, impaired loans, and sources and uses of liquidity, are forward-looking statements. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, actual results and performance may differ materially from our forward-looking statements due to several factors. Factors that could cause future results to vary from our forward-looking statements include, but are not limited to, general economic conditions, legislative changes including those that could affect our tax status, governmental monetary and fiscal policies, demand for our loan products, lending competition, changes in the quality or composition of our loan portfolio, changes in our ability to access external financing, changes in the credit ratings on our debt, valuation of collateral supporting impaired loans, charges associated with our operation or disposition of foreclosed assets, regulatory and economic conditions in the rural electric industry, non-performance of counterparties to our derivative agreements, the costs and effects of legal or governmental proceedings involving National Rural Utilities Cooperative Finance Corporation (“CFC”) or its members and the factors listed and described under “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended May 31, 2015 (“2015 Form 10-K). Except as required by law, we undertake no obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date on which the statement is made.

National Rural Utilities Cooperative Finance Corporation (“CFC”) is a member-owned cooperative association incorporated under the laws of the District of Columbia in April 1969. CFC’s principal purpose is to provide its members with financing to supplement the loan programs of the Rural Utilities Service (“RUS”) of the United States Department of Agriculture (“USDA”). CFC makes loans to its rural electric members so they can acquire, construct and operate electric distribution, generation, transmission and related facilities. CFC also provides its members with credit enhancements in the form of letters of credit and guarantees of debt obligations. As a cooperative, CFC is owned by and exclusively serves its membership, which consists of not-for-profit entities or subsidiaries or affiliates of not-for-profit entities. CFC is exempt from federal income taxes. As a member-owned cooperative, CFC’s objective is not to maximize profit, but rather to offer its members cost-based financial products and services consistent with sound financial management.

Our financial statements include the consolidated accounts of CFC, Rural Telephone Finance Cooperative (“RTFC”), National Cooperative Services Corporation (“NCSC”) and certain entities created and controlled by CFC to hold foreclosed assets. RTFC was established to provide private financing for the rural telecommunications industry. NCSC was established tomay provide financing to members of CFC, government or quasi-government entities which own electric utility systems that meet the Rural Electrification Act definition of “rural”, and the for-profit and nonprofit entities that are owned, operated or controlled by, or provide significant benefits to certain members of CFC. CFC controlled and held foreclosed assets in two entities, Caribbean Asset Holdings, LLC (“CAH”) and Denton Realty Partners, LP (“DRP”), during fiscal year 2015. DRP was dissolved during the fourth quarter of fiscal year 2015, subsequent to the sale of the remainder of its assets. CAH, which is the only entity in which we currently hold foreclosed assets, is a holding company for various U.S. Virgin Islands, British Virgin Islands and St. Maarten-based telecommunications operating entities that were transferred to CAH as a result of a loan default by a borrower and subsequent bankruptcy proceedings. These operating entities provide local, long-distance and wireless telephone, cable television and Internet services to residential and commercial customers. On September 30, 2015, CFC entered into a Purchase Agreement (the “Purchase Agreement”) with CAH, ATN VI Holdings, LLC (“Atlantic”) and Atlantic Tele-Network, Inc., the parent corporation of Atlantic, to sell all of the issued and outstanding membership interests

of CAH to Atlantic for a purchase price of $145 million, subject to certain adjustments. See “Item 1. Business—Overview” of our 2015 Form 10-K for additional information on the business activities of each of these entities. Unless stated otherwise, references to “we,” “our” or “us” relate to CFC and its consolidated entities. All references to members within this document include members, associates and affiliates of CFC and its consolidated entities.

Table 1 provides a summary of selected financial data for the three and six months ended August 31,November 30, 2015 and 2014, and as of August 31,November 30, 2015 and May 31, 2015. In addition to financial measures determined in accordance with generally accepted accounting principles in the United States (“GAAP”), management also evaluates performance based on certain non-GAAP measures, which we refer to as “adjusted” measures. Our key non-GAAP metrics consist of adjusted times interest earned ratio (“TIER”) and adjusted debt-to-equity ratio. The most comparable GAAP measures are TIER and debt-to-equity ratio, respectively. The primary adjustments we make to calculate these non-GAAP measures consist of (i) adjusting interest expense and net interest income to include the impact of net periodic derivative cash settlements; (ii) adjusting net income, senior debt and total equity to exclude the non-cash impact of the accounting for derivative financial instruments; (iii) adjusting senior debt to exclude the amount that funds CFC member loans guaranteed by the RUS, subordinated deferrable debt and members’ subordinated certificates; and (iv) adjusting total equity to include subordinated deferrable debt and members’ subordinated certificates. See “Non-GAAP Financial Measures” for a detailed reconciliation of these adjusted measures to the most comparable GAAP measures. We believe our adjusted non-GAAP metrics, which are not a substitute for GAAP and may not be consistent with similarly titled non-GAAP measures used by other companies, provide meaningful information and are useful to investors because the financial covenants in our revolving credit agreements and debt indentures are based on these adjusted metrics.

Our primary objective as a member-owned cooperative lender is to provide cost-based financial products to our rural electric members while maintaining sound financial results required for investment-grade credit ratings on our debt instruments. Our objective is not to maximize net income; therefore, the rates we charge our member-borrowers reflect our adjusted interest expense plus a spread to cover our operating expenses, a provision for loan losses and earnings sufficient to achieve interest coverage to meet our financial objectives. Our goal is to earn an annual minimum adjusted TIER of 1.10 and to achieve and maintain an adjusted debt-to-equity ratio below 6.00-to-1.

Total loans outstanding, which consists of the unpaid principal balance and excludes deferred loan origination costs, was $22,085$22,664 million as of August 31,November 30, 2015, an increase of $625$1,204 million, or 3%6%, from May 31, 2015. The increase was primarily due to an increase in CFC distribution and power supply loans of $480$1,058 million and $163$199 million, respectively, which was attributable to members refinancing with us loans made by other lenders and member advances for capital investments. This increase was partially offset by a decrease in NCSC loans of $6$27 million and a decrease in RTFC loans of $7$21 million.

CFC had long-term fixed-rate loans totaling $206$510 million that repriced during the threesix months ended August 31,November 30, 2015. Of this total, $199$481 million repriced to a new long-term fixed rate; $6$22 million repriced to a long-term variable rate; and $1$7 million were repaid in full.

Our outstanding debt volume generally increases and decreases in response to member loan demand. As outstanding loan balances increased during the threesix months ended August 31,November 30, 2015, our debt volume also increased. Total debt outstanding was $21,801$22,276 million as of August 31,November 30, 2015, an increase of $527$1,002 million, or 2%5%, from May 31, 2015. The increase was primarily attributable to the issuancean advance of notes payable of $250 million under the Guaranteed Underwriter Program of the United States Department of Agriculture and $180 million under the note purchase agreement with the Federal Agricultural Mortgage Corporation (“Farmer Mac”). On, an advance of $250 million under the Guaranteed Underwriter Program of the USDA and the issuance of $750 million aggregate principal amount of collateral trust bonds.

In July 31, 2015, we entered intoexecuted a new three-year $300 million secured revolving note purchase agreement with Farmer Mac for $300 million.to provide us additional funding flexibility. In November 2015, we amended and restated our $1,665 million three-year and $1,645 million five-year revolving credit agreements to extend the maturity dates to November 19, 2018 and November 19, 2020, respectively, from October 28, 2017 and October 28, 2019, respectively. We provide additional information on our financing activities below under “Consolidated Balance Sheet Analysis—Debt” and “Liquidity Risk.”

We expect the amount of new long-term loan advances to exceed scheduled loan repayments over the next 12 months. We anticipate a continued increase in earnings from our core lending operations over the next 12 months based on our expectation of an increase in long-term loans outstanding.

Long-term debt as of August 31, 2015, scheduled to mature over the next 12 months.months totaled $1,515 million as of November 30, 2015. We believe we have sufficient liquidity from the combination of existing cash and time deposits, member loan repayments, committed loan facilities and our ability to issue debt in the capital markets, to our members and in private placements, to meet the demand for member loan advances and satisfy our obligations to repay long-term debt maturing over the next 12 months. We had $751$583 million in cash and time deposits, up to $500 million available under committed loan facilities from the Federal Financing Bank $3,419(“FFB”), $3,309 million available under committed revolving lines of credit with a syndicate of banks, up to $300 million available under a new note purchase agreement with Farmer Mac and, subject to market conditions, up to $2,419$2,428 million available under the existing revolving note purchase agreement with Farmer Mac as of August 31,November 30, 2015. On September 28, 2015, we received a commitment from the RUS to guarantee a loan of $250 million from the Federal Financing Bank of the USDAFFB pursuant to the Guaranteed Underwriter Program. We expect to close the new committed loan facility with RUS during the third quarter of fiscal year 2016. Upon closing of the commitment, we will have an additional $250 million available under the Guaranteed Underwriter Program with a 20-year maturity repayment period during the three-year period following the date of closing. We also have the ability to issue collateral trust bonds and medium-term notes in the capital markets and medium-term notes to members.

We believe we can continue to roll over the member outstanding short-term debt of $2,294$2,523 million as of August 31,November 30, 2015, based on our expectation that our members will continue to reinvest their excess cash in our commercial paper, daily liquidity fund and select notes. We believe we can alsoexpect to continue to roll over our outstanding dealer commercial paper of $915$1,020 million as of August 31,November 30, 2015. We intend to manage our short-term wholesale funding risk by maintaining our dealer commercial paper within an approximate range between $1,000 million and $1,250 million for the foreseeable future. We expect to continue to be in compliance with the covenants under our revolving credit agreements, which will allow us to mitigate our roll-over risk as we can draw on these facilities to repay dealer or member commercial paper that cannot be rolled over due to potential adverse changes in market conditions.

Our goal is to maintain the adjusted debt-to-equity ratio at or below 6.00-to-1. However, because of the significant increase in outstanding loan balances duringover the first quarter of fiscal 2016 and the expected furtherlast 18 months, it has been necessary to increase during the remainder of the fiscal year, we anticipate additionalour borrowings to support ourfund the loan growth. As a result, our adjusted debt-to-equity ratio will likely continue to be higher than 6.00-to-1 in the near term.for an extended period of time.

As part of our strategy to manage our credit risk exposure, we entered into a long-term standby purchase commitment agreement with Farmer Mac on August 31, 2015. Under this agreement, we may designate certain loans, as approved by Farmer Mac, and in the event any such loan later goes into material default for at least 90 days, upon request by us, Farmer Mac must purchase such loan at par value. We have designated, and Farmer Mac has approved an initial tranche of loans with an aggregate outstanding principal balance of $520 million as of August 31, 2015. We expect to designate an additional trancheAs a result of principal payments, the balance of these loans in the second quartertotaled $515 million as of fiscal year 2016.November 30, 2015.

OnAs previously disclosed, on September 30, 2015, CFC entered into a Purchase Agreement (the “Purchase Agreement”) with CAH, ATN VI Holdings, LLC (“Atlantic”)Atlantic and Atlantic Tele-Network, Inc., the parent corporation of Atlantic, to sell all of the issued and outstanding membership interests of CAH to Atlantic for a purchase price of $145 million, subject to certain adjustments. We continue to expect to complete the transaction during the second half of calendar year 2016, subject to the satisfaction or waiver of various closing conditions under the Purchase Agreement, including, among other things, the receipt of required communications regulatory approvals in the United States, United States Virgin Islands, British Virgin Islands and St. Maarten, the expiration or termination of applicable waiting periods under applicable competition laws, and the absence of a material adverse effect or material adverse regulatory event. See “Consolidated Results of Operations—Results of Foreclosed Assets” below and “Note 4—Foreclosed Assets” for additional information related to CAH.

We have identified certain accounting policies as critical because they involve significant judgments and assumptions about highly complex and inherently uncertain matters, and the use of reasonably different estimates and assumptions could have a material impact on our results of operations or financial condition. Our most critical accounting policies and estimates involve the determination of the allowance for loan losses and fair value. We evaluate our critical accounting estimates and judgments required by our policies on an ongoing basis and update them as necessary based on changing conditions. There were no material changes in the assumptions used in our critical accounting policies and estimates during the current quarter. Management has discussed significant judgments and assumptions in applying our critical accounting policies with the Audit Committee of our Board of Directors. We provide information on the methodologies and key assumptions used in our critical accounting policies and estimates under “MD&A—Critical Accounting Policies and Estimates” in our 2015 Form 10-K. See “Item 1A. Risk Factors” for a discussion of the risks associated with management’s judgments and estimates in applying our accounting policies and methods in our 2015 Form 10-K.

The section below provides a comparative discussion of our condensed consolidated results of operations between the three months ended August 31,November 30, 2015 and 2014 and between the threesix months ended August 31,November 30, 2015 and 2014. Following this section, we provide a comparative analysis of our condensed consolidated balance sheets as of August 31,November 30, 2015 and May 31, 2015. You should read these sections together with our “Executive Summary—Outlook for the Next 12 Months” where we discuss trends and other factors that we expect will affect our future results of operations.

Net interest income represents the difference between the interest income and applicable fees earned on our interest-earning assets, which include loans and investment securities, and the interest expense on our interest-bearing liabilities. Our net interest yield represents the difference between the yield on our interest-earning assets and the cost of our interest-bearing liabilities plus the impact from non-interest bearing funding. We expect net interest income and our net interest yield to fluctuate based on changes in interest rates and changes in the amount and composition of our interest-earning assets and interest-bearing liabilities. We do not fund each individual loan with specific debt. Rather, we attempt to minimize costs and maximize efficiency by funding large aggregated amounts of loans.

Table 2 presents our average balance sheets for the three and six months ended August 31,November 30, 2015 and 2014, and for each major category of our interest-earning assets and interest-bearing liabilities, the interest income earned or interest expense incurred, and the average yield or cost. Table 2 also presents non-GAAP adjusted interest expense, adjusted net interest income and adjusted net interest yield, which reflect the inclusion of net periodic derivative cash settlements in interest expense. We provide reconciliations of our non-GAAP adjusted measures to the most comparable GAAP measures under “Non-GAAP Financial Measures.”

Net interest income of $80$89 million for the current quarter decreased slightlyincreased by $12 million, or 16% from the same prior year quarter, driven by a decreasean increase in average interest-earning assets of 8% and an increase in net interest yield of 5% (78% (11 basis points) to 1.44%1.56%.

Net interest income of $170 million for the six months ended November 30, 2015, increased by $12 million, or 8%, which was largely offsetfrom the same prior-year period, driven by an increase in average interest-earning assets of 5%6% and an increase in net interest yield of 1% (2 basis points) to 1.50%.

Adjusted net interest income of $60$67 million for the current quarter also decreased slightlyincreased by $11 million, or 21%, from the same priorprior- year quarter, driven by a decreasethe increase in average interest-earning assets of 8% and an increase in adjusted net interest yield of 13% (13 basis points) to 1.17%.

Adjusted net interest income of $127 million for the six months ended November 30, 2015 increased by $11 million, or 10%, from the same prior-year period, driven by the increase in average interest-earning assets of 6% and an increase in the adjusted net interest yield of 5% (64% (4 basis points) to 1.07%, offset by the 5% increase in average interest-earning assets.1.12%.

Our adjusted net interest income and adjusted net interest yield include the impact of net periodic derivative cash settlements during the period. We recorded net periodic derivative cash settlement expense of $20$23 million and $22 million for the three months ended August 31,November 30, 2015 and 2014.2014, respectively, and $43 million and $42 million for the six months ended November 30, 2015 and 2014, respectively. See “Non-GAAP Financial Measures” for additional information on our adjusted measures.

Our provision for loan losses in each period is primarily driven by the level of allowance that we determine is necessary for probable incurred loan losses inherent in our loan portfolio as of each balance sheet date.

We recorded a provision for loan losses of $5$1 million for the three months ended August 31,November 30, 2015 and 2014. We recorded a provision for loan losses of $6 million for the six months ended November 30, 2015, compared with a benefitnegative provision of $6 million for the six months ended November 30, 2014. The growth in our loan lossesportfolio was the primary driver of $7the provision expense of $6 million for the six months ended November 30, 2015. In comparison, outstanding loans remained

relatively flat during the same prior year period. The shift in the provision was attributable to the increase in loan balancesperiod, and a slight deterioration in the overall credit risk profile of our loan portfolio. Specifically, certain loanswe experienced negative migration through our internal risk rating process. As a result, our allowance for loan losses increased to $38 million as of August 31, 2015, from $34 million as of May 31, 2015. The benefit for loan losses recorded in the prior year period was due to modest improvement in the credit quality and overall credit risk profile of our loan portfolio, and relatively flat loan balances. which together resulted in the negative provision of $6 million for the six months ended November 30, 2014.

We provide additional information on our allowance for loan losses under “Credit Risk—Allowance for Loan Losses” and “Note 3—Loans and Commitments” of this Report. For information on our allowance methodology, see “MD&A—Critical Accounting Policies and Estimates” and “Note 1—Summary ” in our 2015 Form 10-K.

Non-interest income consists of fee and other income, gains and losses on derivatives not accounted for in hedge accounting relationships and results of operations of foreclosed assets.

We recorded losses from non-interest income of $9$92 million and $48$94 million for the three months ended August 31,November 30, 2015 and 2014, respectively. We recorded losses from non-interest income of $101 million and $142 million for the six months ended November 30, 2015 and 2014, respectively. The decreasevariances in losses of $39 million wasnon-interest income for three and six months ended November 30, 2015, from the same prior year periods were primarily attributable to a reductionchanges in net derivative losses recognized in our consolidated statements of $38operations and an impairment charge of $27 million duringrelated to CAH recorded in the three months ended August 31, 2015.November 30, 2014.

Derivative Gains (Losses)

Our derivative instruments are an integral part of our interest rate risk management strategy. Our principal purpose in using derivatives is to manage our aggregate interest rate risk profile within prescribed risk parameters. The derivative instruments we use primarily include interest rate swaps, which we typically hold to maturity. The primary factors affecting the fair value of our derivatives and derivative gains (losses) recorded in our results of operations include changes in interest rates, yield curves and implied interest rate volatility and the composition and balance of instrument types in our derivative portfolio. We generally do not designate interest rate swaps, which represent the substantial majority of our derivatives, for hedge accounting. Accordingly, changes in the fair value of interest rate swaps are reported in our consolidated statements of operations under derivative gains (losses). We did not have any derivatives designated as accounting hedges as of August 31,November 30, 2015 or May 31, 2015.

We recorded derivative losses of $12$101 million and $50$75 million for the three months ended August 31,November 30, 2015 and 2014, respectively, and derivative losses $113 million and $124 million for the six months ended November 30, 2015 and 2014, respectively. Table 4 presents the components of net derivative gains (losses) recorded in our condensed consolidated results of operations for the three and six months ended August 31,November 30, 2015 and 2014. The derivative gains (losses) relate to interest rate swap agreements. Derivative cash settlements represent net contractual interest expense accruals on interest rate swaps during the period. The derivative forward value represents the change in fair value of our interest rate swaps during the reporting period due to changes in expected future interest rates over the remaining life of our derivative contracts.

We currently use two types of interest rate swap agreements: (i) we pay a fixed rate and receive a variable rate (“pay-fixed swaps”) and (ii) we pay a variable rate and receive a fixed rate (“receive-fixed swaps”). Pay-fixed swaps generally decrease in value as interest rates decline and increase in value as interest rates rise. In contrast, receive-fixed swaps generally increase in value as interest rates decline and decrease in value as interest rates rise. The composition of our pay-fixed and receive-fixed swaps varies across the swap yield curve. As a result, the overall fair value gains and losses of our derivatives

also are sensitive to flattening and steepening of the swap yield curve. See “Note 12—Fair Value of Financial Instruments” for information on how we estimate the fair value of our derivative instruments.

Table 5 displays the average notional amount outstanding, by swap agreement type, and the weighted-average interest rate paid and received for derivative cash settlements during the three and six months ended August 31,November 30, 2015 and 2014. As indicated in Table 5, our derivative portfolio currently consists of a higher proportion of pay-fixed swaps than receive-fixed swaps, which is subject to change based on changes in market conditions and actions taken to manage our interest rate risk.

The derivative losses of $12$101 million recognized duringand $113 million recorded in the three and six months ended August 31,November 30, 2015, reflected the combined impact of net derivative forward value gains of $8 million, which was offset by a net loss related to the periodic cash settlements as we were a net payer on our interest-rate swaps based on the terms of the instruments. The net derivative forward value gains of $8 million were primarily attributable to a net increasedecrease in the fair value of our pay-fixed swaps during the period due to a steepeningflattening of the swap yield curve resulting from a gradual increasedecline in interest rates across the medium and longer end of the yield curve.

Of the totalThe net derivative losses of $50$75 million and $124 million recorded for the three and six months ended August 31,November 30, 2014, $30 million related to derivative forward value losses and the remainder related to the net periodic contractual interest settlements. The derivative forward value lossesrespectively, were primarily attributable to a flattening of the swap yield curve during the period, with rates onas the shorter endoverall level of the yield curve increasing andinterest rates on the longer end of the yield curve declining. Due todeclined. This decline resulted in a net decrease in the overallfair value of our pay-fixed swaps and a net increase in the fair value of our receive-fixed swaps. Because of the composition of our derivative portfolio, we experienced an overallthe decline in the fair value of both our pay-fixed andswaps more than offset the increase in the fair value of our receive-fixed swaps during the quarter.swaps.

See “Note 8—Derivative Financial Instruments” for additional information on our derivative instruments.

Results of Operations of Foreclosed Assets

The financial operating results of entities controlled by CFC that hold foreclosed assets are reported in our consolidated statements of operations under results of operations of foreclosed assets. We previously had two entities, CAH and DRP, that held foreclosed assets. We dissolved DRP during the fourth quarter of fiscal 2015, following the sale of DRP’s remaining assets.

We recorded lossesa gain from the results of operations of foreclosed assets of $2 million for the three months ended August 31,November 30, 2015, compared with lossesa loss of $3$29 million for the same prior year period.three months ended November 30, 2014. We recorded a gain from the results of foreclosed assets of less than $1 million for the six months ended November 30, 2015, compared with a loss of $32 million for the six months ended November 30, 2014. The lossesgains recorded during the three and six months ended August 31,November 30, 2015 were primarily attributable to valuationpurchase price adjustments related to CAH, while the losses recorded

during the same prior year period relatedperiods were primarily attributable to CAH’s resultsa CAH impairment charge of operations.$27 million recorded in the second quarter of fiscal year 2015.

As discussed above under “Introduction” and “Executive Summary,” on September 30, 2015, CFC entered into a Purchase Agreement with CAH, Atlantic and Atlantic Tele-Network, Inc., the parent corporation of Atlantic, to sell all of the issued and outstanding membership interests of CAH to Atlantic for a purchase price of $145 million, subject to certain adjustments. The amount recorded on our condensed consolidated balance sheet for CAH of $114$117 million as of August 31,November 30, 2015 reflects the expected net proceeds, including estimatedagreed-upon purchase price adjustments to the selling price and estimated selling costs, from the completion of the CAH sales transaction.

We expect to complete the transaction during the second half of calendar year 2016, subject to the satisfaction or waiver of various closing conditions under the Purchase Agreement, including, among other things, the receipt of required communications regulatory approvals in the United States, United States Virgin Islands, British Virgin Islands and St. Maarten, the expiration or termination of applicable waiting periods under applicable competition laws, and the absence of a material adverse effect or material adverse regulatory event.

Non-interest expense consists of salaries and employee benefit expense, general and administrative expenses, provision for guarantee liability, losses on early extinguishment of debt and other miscellaneous expenses.

We recorded non-interest expense of $23$20 million and $18 million for the three months ended August 31,November 30, 2015 anand 2014, respectively, and non-interest expense of $43 million and $37 million for the six months ended November 30, 2015 and 2014, respectively. The increase of $5 million, or, 25% fromfor the current year periods over the same prior year periodprior-year periods was primarily dueattributable to an increase in other generalsalaries and administrative expensesemployee benefit expense, costs related to system infrastructure enhancements and higher legal fees.

Net income (loss) attributable to noncontrolling interests represents 100% of the results of operations of RTFC and NCSC, as the members of RTFC and NCSC own or control 100% of the interest in their respective companies.