| Loans | NOTE 4—LOANS We segregate our loan portfolio into portfolio 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. Loans to Members Loans to members consists of total loans outstanding, which reflects the unpaid principal balance, net of charge-offs and recoveries, of loans and deferred loan origination costs. The following table presents loans to members and unadvanced loan commitments, by member class and by loan type, as of February 28, 2021 and May 31, 2020. Table 4.1: Loans to Members by Member Class and Loan Type February 28, 2021 May 31, 2020 (Dollars in thousands) Loans Unadvanced Commitments (1) Loans Unadvanced Commitments (1) Member class: CFC: Distribution $ 21,878,524 $ 9,182,179 $ 20,769,653 $ 8,992,457 Power supply 5,187,586 3,737,294 4,731,506 3,409,227 Statewide and associate 96,717 165,905 106,498 153,626 Total CFC 27,162,827 13,085,378 25,607,657 12,555,310 NCSC 721,894 556,887 697,862 551,674 RTFC 430,950 282,332 385,335 281,642 Total loans outstanding (2) 28,315,671 13,924,597 26,690,854 13,388,626 Deferred loan origination costs 11,810 — 11,526 — Loans to members $ 28,327,481 $ 13,924,597 $ 26,702,380 $ 13,388,626 Loan type: Long-term loans: Fixed rate $ 25,443,254 $ — $ 24,472,003 $ — Variable rate 625,699 5,491,495 655,704 5,458,676 Total long-term loans 26,068,953 5,491,495 25,127,707 5,458,676 Lines of credit 2,246,718 8,433,102 1,563,147 7,929,950 Total loans outstanding (2) 28,315,671 13,924,597 26,690,854 13,388,626 Deferred loan origination costs 11,810 — 11,526 — Loans to members $ 28,327,481 $ 13,924,597 $ 26,702,380 $ 13,388,626 ____________________________ (1) The interest rate on unadvanced loan commitments is not set until an advance is made; therefore, all unadvanced long-term loan commitments are reported as variable rate. However, the borrower may select either a fixed or a variable rate when an advance is drawn under a loan commitment. (2) Represents the unpaid principal balance, net of charge-offs and recoveries, of loans as of the end of each period. Unadvanced Loan Commitments Unadvanced loan commitments represent approved and executed loan contracts for which funds have not been advanced to borrowers. The following table displays, by loan type, the available balance under unadvanced loan commitments as of February 28, 2021, and the related maturities in each fiscal year during the five-year period ended May 31, 2025, and thereafter. Table 4.2: Unadvanced Loan Commitments Available Notional Maturities of Unadvanced Loan Commitments (Dollars in thousands) 2021 2022 2023 2024 2025 Thereafter Line of credit loans $ 8,433,102 $ 71,079 $ 4,352,328 $ 1,482,817 $ 1,120,063 $ 1,054,376 $ 352,439 Long-term loans 5,491,495 65,531 978,673 806,491 1,646,073 888,679 1,106,048 Total $ 13,924,597 $ 136,610 $ 5,331,001 $ 2,289,308 $ 2,766,136 $ 1,943,055 $ 1,458,487 Unadvanced line of credit commitments accounted for 61% of total unadvanced loan commitments as of February 28, 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. Our unadvanced long-term loan commitments have a five-year draw period under which a borrower may draw funds prior to the expiration of the commitment. We expect that the majority of the long-term unadvanced loan commitments of $5,491 million will be advanced prior to the expiration of the commitment. Because we historically have experienced a very low utilization rate on line of credit loan facilities, which account for the majority of our total unadvanced loan commitments, we believe the unadvanced loan commitment total of $13,925 million as of February 28, 2021 is not necessarily representative of our future funding requirements. Unadvanced Loan Commitments—Conditional 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 to taled $10,878 million and $10,532 million as of February 28, 2021 and May 31, 2020, 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—Unconditional Unadvanced loan commitments not subject to material adverse change clauses at the time of each advance consisted of unadvanced committed lines of credit t otaling $3,047 million and $2,857 million as of February 28, 2021 and May 31, 2020, 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 tab le below displays the amount available for advance under unconditional committed lines of credit as of February 28, 2021, and the maturities in each fiscal year during the five-year period ended May 31, 2025, and thereafter. Table 4.3: Unconditional Committed Lines of Credit—Available Balance Available Notional Maturities of Unconditional Committed Lines of Credit (Dollars in thousands) 2021 2022 2023 2024 2025 Thereafter Committed lines of credit $ 3,047,263 $ 370 $ 150,480 $ 1,156,586 $ 658,698 $ 916,682 $ 164,447 Loan Sales We transfer, from time to time, whole loans and participating interests to third parties. We sold CFC loans, at par for cash, totaling $126 million and $87 million during the nine months ended February 28, 2021 and February 29, 2020, respectively. We recorded immaterial losses on the sale of these loans attributable to the unamortized deferred loan origination costs associated with the transferred loans. Pledged Loans We are required to pledge eligible mortgage notes in an amount at least equal to the outstanding balance of our secured debt. The following table summarizes loans outstanding pledged as collateral to secure our collateral trust bonds, notes payable under the United States Department of Agriculture (“USDA”) Guaranteed Underwriter Program (“Guaranteed Underwriter Program”), notes payable under the revolving note purchase agreement with Farmer Mac and Clean Renewable Energy Bonds, and the corresponding debt outstanding as of February 28, 2021 and May 31, 2020. See “Note 6—Short-Term Borrowings” and “Note 7—Long-Term Debt” for information on our borrowings. Table 4.4: Pledged Loans (Dollars in thousands) February 28, 2021 May 31, 2020 Collateral trust bonds: 2007 indenture: Distribution system mortgage notes pledged $ 8,549,575 $ 8,244,202 RUS-guaranteed loans qualifying as permitted investments 123,381 128,361 Total pledged collateral $ 8,672,956 $ 8,372,563 Collateral trust bonds outstanding 7,422,711 7,422,711 1994 indenture: Distribution system mortgage notes pledged $ 37,478 $ 39,785 Collateral trust bonds outstanding 30,000 35,000 Guaranteed Underwriter Program: Distribution and power supply system mortgage notes pledged $ 7,259,421 $ 7,535,931 Notes payable outstanding 6,029,890 6,261,312 Farmer Mac: Distribution and power supply system mortgage notes pledged $ 3,156,344 $ 3,687,418 Notes payable outstanding 2,675,979 3,059,637 Clean Renewable Energy Bonds Series 2009A: Distribution and power supply system mortgage notes pledged $ 5,807 $ 7,269 Cash — 395 Total pledged collateral $ 5,807 $ 7,664 Notes payable outstanding 4,412 6,068 Credit Concentration Concentrations may exist when there are amounts loaned to borrowers engaged in similar activities or in geographic areas that would cause them to be similarly impacted by economic or other conditions or when there are large exposures to single borrowers. 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 $27,885 million and $26,306 million as of February 28, 2021 and May 31, 2020, 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. Geographic Concentration Although our organizational structure and mission results in single-industry concentration, we serve a geographically diverse group of electric and telecommunications borrowers throughout the United States. The number of borrowers with outstanding loans totaled 891 and 889 as of February 28, 2021 and May 31, 2020, respectively, located in 49 states. Texas accounted for the largest number of borrowers in any one state as of each respective date. In addition, loans to Texas-based borrowers accounted for approximately 17% and 16% of total loans outstanding as of February 28, 2021 and May 31, 2020, respectively, representing the largest concentration of loans outstanding to borrowers in any one state. Loans to Texas-based electric utility organizations covered by the Farmer Mac standby repurchase agreement totaled $174 million and $181 million as of February 28, 2021 and May 31, 2020, respectively, reducing our Texas-based exposure to 16% and 15% of total loans outstanding as of each respective date. Single-Obligor Concentration The outstanding loan exposure for our 20 largest borrowers totaled $6,213 million and $5,877 million as of February 28, 2021 and May 31, 2020, respectively, representing 22% of total loans outstanding as of each respective date. The 20 largest borrowers consisted of 11 distribution systems and nine power supply systems as of both February 28, 2021 and May 31, 2020. The largest total outstanding exposure to a single borrower or controlled group represen ted less than 2% of total loans outstanding as of both February 28, 2021 and May 31, 2020. 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 $520 million and $569 million as of February 28, 2021 and May 31, 2020, respectively . Loan exposure to our 20 largest borrowers covered under the Farmer Mac agreement totaled $271 million and $314 million as of February 28, 2021 and May 31, 2020, respectively. We have had no loan defaults for loans covered under this agreement; therefore, no loans had been put to Farme r Mac for purchase pursuant to the standby purchase agreement as of February 28, 2021. Our credit exposure is also mitigated by long-term loans guaranteed by the Rural Utilities Service (“RUS”) of the USDA. Guaranteed RUS loans totaled $141 million and $147 million as of February 28, 2021 and May 31, 2020, respectively. Credit Quality Indicators 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. Payment Status of Loans 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 February 28, 2021 and May 31, 2020. Table 4.5: Payment Status of Loans Outstanding February 28, 2021 (Dollars in thousands) Current 30-89 Days Past Due 90 Days or More Total Total Loans Outstanding Nonaccrual Loans CFC: Distribution $ 21,878,524 $ — $ — $ — $ 21,878,524 $ — Power supply 5,187,586 — — — 5,187,586 230,073 Statewide and associate 96,717 — — — 96,717 — CFC total 27,162,827 — — — 27,162,827 230,073 NCSC 721,894 — — — 721,894 — RTFC 430,950 — — — 430,950 9,619 Total loans outstanding $ 28,315,671 $ — $ — $ — $ 28,315,671 $ 239,692 Percentage of total loans 100.00 % — % — % — % 100.00 % 0.85 % May 31, 2020 (Dollars in thousands) Current 30-89 Days Past Due 90 Days or More Past Due (1) Total Total Loans Outstanding Nonaccrual Loans CFC: Distribution $ 20,769,653 $ — $ — $ — $ 20,769,653 $ — Power supply 4,731,506 — — — 4,731,506 167,708 Statewide and associate 106,498 — — — 106,498 — CFC total 25,607,657 — — — 25,607,657 167,708 NCSC 697,862 — — — 697,862 — RTFC 385,335 — — — 385,335 — Total loans outstanding $ 26,690,854 $ — $ — $ — $ 26,690,854 $ 167,708 Percentage of total loans 100.00 % — % — % — % 100.00 % 0.63 % While we had no delinquent loans as of February 28, 2021 or May 31, 2020, loans outstanding on nonaccrual status increased $72 million to $240 million as of February 28, 2021. No interest income was recognized on nonaccrual loans during the nine months ended February 28, 2021 and February 29, 2020. See “Nonperforming Loans” below for additional information. Troubled Debt Restructurings We did not have any loan modifications that were required to be accounted for as a TDR during the nine months ended February 28, 2021, nor have we had any TDR loan modifications since fiscal year 2016. The following table presents the outstanding balance of modified loans accounted for as TDRs in prior periods and the performance status, by member class, of these loans as of February 28, 2021 and May 31, 2020. Table 4.6: Trouble Debt Restructurings February 28, 2021 May 31, 2020 (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: CFC—Distribution 1 $ 5,379 0.02 % 1 $ 5,755 0.02 % RTFC 1 4,717 0.02 1 5,092 0.02 Total TDR loans 2 $ 10,096 0.04 % 2 $ 10,847 0.04 % Performance status of TDR loans: Performing TDR loans 2 $ 10,096 0.04 % 2 $ 10,847 0.04 % Total TDR loans 2 $ 10,096 0.04 % 2 $ 10,847 0.04 % ____________________________ (1) Represents the unpaid principal balance net of charge-offs and recoveries as of the end of each period. The outstanding TDR loans for CFC and RTFC each relate to the modification of a loan for one borrower that, at the time of the modification, was experiencing financial difficulty. There were no unadvanced commitments related to these loans as of February 28, 2021 and May 31, 2020. We did not have any TDR loans classified as nonperforming as of February 28, 2021 or May 31, 2020. Nonperforming Loans In addition to TDR loans that may be classified as nonperforming, we also may have nonperforming loans that have not been modified as a TDR. The following table presents the outstanding balance of nonperforming loans, by member class, as of February 28, 2021 and May 31, 2020. Table 4.7: Nonperforming Loans February 28, 2021 May 31, 2020 (Dollars in thousands) Number of Borrowers Outstanding Amount (1) % of Total Loans Outstanding Number of Borrowers Outstanding Amount (1) % of Total Loans Outstanding Nonperforming loans: CFC—Power supply (2) 2 $ 230,073 0.81 % 1 $ 167,708 0.63 % RTFC 2 9,619 0.04 — — — Total nonperforming loans 4 $ 239,692 0.85 % 1 $ 167,708 0.63 % ____________________________ (1) Represents the unpaid principal balance net of charge-offs and recoveries as of the end of each period. (2) In addition, we had $3 million letters of credit outstanding to Brazos as of February 28, 2021. Nonperforming loans increased $72 million to $240 million, or 0.85%, of total loans outstanding as of February 28, 2021, from $168 million, or 0.63%, of total loans outstanding as of May 31, 2020, primarily due to our classification of the loans outstanding of $82 million to Brazos Electric Power Cooperative, Inc. (“Brazos”), a CFC Texas-based power supply borrower, as nonperforming as a result of its bankruptcy filing as described below. In mid-February 2021, Texas and several neighboring states experienced a series of severe winter storms and record-low temperatures as a result of the polar vortex. The freezing conditions affected power demand, supply and market prices in Texas, triggering unprecedented increases in electrical power load demand in combination with significant reductions in power supply across Texas, including a loss of almost half of the electric generation within the Electric Reliability Council of Texas (“ERCOT”) service area. ERCOT raised wholesale electric power prices per megawatt hour to the maximum allowable amount of $9,000, to spur greater power generation by providing a financial incentive for power generators in the state to remain online. According to ERCOT data, pre-storm wholesale power prices were less than $50 per megawatt hour. ERCOT also initiated controlled rolling power outages, which impacted millions of residential and commercial customers, to protect and maintain the stability of the Texas electric grid. The surge in wholesale electricity prices had a direct financial impact primarily on certain electric power supply utilities, including a significant adverse financial impact on two CFC Texas-based electric power supply borrowers that had insufficient generation supply during the February 2021 polar vortex and were forced, at the height of the surge in power prices, to purchase power at elevated prices to meet the electric demand of their member distribution system customers. On March 1, 2021, we were informed that Brazos filed for Chapter 11 bankruptcy protection. We had exposure to Brazos totaling $85 million as of February 28, 2021, consisting of unsecured loans outstanding of $82 million and letters of credit of $3 million, pursuant to a $500 million syndicated revolving credit agreement administered by Bank of America. As a result of draws on the letters of credit in March 2021, subsequent to Brazos’ bankruptcy filing, we currently have unsecured loans outstanding to Brazos of $85 million. We downgraded Brazos’ borrower risk rating from a rating within the pass category to doubtful, classified its loans outstanding of $82 million as of February 28, 2021 as nonperforming, placed the loans on nonaccrual status, and reversed unpaid interest amounts previously accrued and recognized in interest income. In addition to Brazos, we classified loans outstanding to two affiliated RTFC telecommunications borrowers totaling $10 million as nonperforming as of February 28, 2021. Under the terms of the syndicated Bank of America revolving credit agreement, in the event of bankruptcy by Brazos, each lending participant is permitted to hold any deposited or investment funds from Brazos, up to the amount of the participant’s exposure to Brazos pursuant to the agreement, for set off against such exposure to Brazos. The total so held by all participants is required to be shared among the participants in accordance with the pro rata share of each participant in the agreement. As of the bankruptcy filing date, funds on deposit from or invested by Brazos with participating lenders of the agreement, available for set off against Brazos’s obligations, totaled $117 million. Based on our exposure of $85 million under the $500 million syndicated Bank of America agreement, our pro rata share set-off right is 17%, or approximately $20 million. The set-off rights have been agreed to and confirmed by Brazos and the bankruptcy court, subject only to challenge by parties other than Brazos until May 16, 2021, and subject to extension beyond this date by order of the court. In order to allow Brazos to access such deposited or invested funds, the lenders have been granted adequate protection liens and super-priority claims in an amount equal to the diminution of value of the amount available for set off. One loan to another CFC power supply borrower, with an outstanding balance of $148 million and $168 million as of February 28, 2021 and May 31, 2020, respectively, accounted for the substantial majority of nonperforming loans as of February 28, 2021, and the entire amount of nonperforming loans as of May 31, 2020. Under the terms of this loan, which matures in December 2026, the amount the borrower is required to pay in 2024 and 2025 may vary, as the payments are contingent on the borrower’s financial performance in those years. Based on our review and assessment of the borrower’s most recent forecast and underlying assumptions provided to us in May 2020, we no longer believed that the future expected cash payments from the borrower through the maturity of the loan in December 2026 would be sufficient to repay the outstanding loan balance. We therefore classified this loan as nonperforming, placed the loan on nonaccrual status and established an asset-specific allowance for credit losses as of May 31, 2020 . We received payments from the borrower on this loan during the current year-to-date period, reducing the outstanding balance to $148 million as of February 28, 2021. While the borrower is not in default and was current with respect to required payments on the loan as of February 28, 2021, we have continued to report the loan as nonperforming. Net Charge-Offs We had no loan charge-offs during the nine months ended February 28, 2021, nor during the same prior year-to-date period. Prior to Brazos’ bankruptcy filing, we had not experienced any defaults or charge-offs in our electric utility and telecommunications loan portfolios since fiscal year 2013 and 2017, respectively. In addition, we had no delinquent loans as of either February 28, 2021 or May 31, 2020. However, as a result of its bankruptcy filing, we expect that Brazos will be unable to make future scheduled loan payments without approval of the bankruptcy court. Borrower Risk Ratings 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. Each risk rating is reassessed annually following the receipt of the borrower’s audited financial statements; however, interim risk-rating adjustments may occur as a result of updated information affecting a borrower’s ability to fulfill its obligations or other significant developments and trends. We categorize loans in our portfolio based on our internally assigned borrower risk ratings, which are intended to assess the general credit worthiness 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. Following is a description of the borrower risk rating categories. • Pass : Borrowers that are not experiencing difficulty and/or not showing a potential or well-defined credit weakness. • Special Mention : Borrowers that may be characterized by a potential credit weakness or deteriorating financial condition that is not sufficiently serious to warrant a classification of substandard or doubtful. • Substandard : Borrowers that display a well-defined credit weakness that may jeopardize the full collection of principal and interest. • Doubtful : Borrowers that have a well-defined credit weakness or weaknesses that make full collection of principal and interest, on the basis of currently known facts, conditions and collateral values, highly questionable and improbable. We use our internal risk ratings to measure the credit risk of each borrower and loan facility, identify or confirm problem or potential problem loans in a timely manner, differentiate risk within each of our portfolio segments, assess the overall credit quality of our loan portfolio and manage overall risk levels. Our internally assigned borrower risk ratings, which we map to equivalent credit ratings by external credit rating agencies, serve as the primary credit quality indicator for our loan portfolio. Because our internal borrower risk ratings provide important information on the probability of default, they are a key input in estimating our allowance for credit losses. The following table displays total loans outstanding, by borrower risk rating category and borrower member type, as of February 28, 2021 and May 31, 2020. The borrower risk rating categories of loans outstanding presented below correspond to the borrower risk rating categories used in calculating the 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. In connection with our adoption of CECL, we present term loans outstanding as of February 28, 2021, by fiscal year of origination for each year during the five-year annual reporting period beginning in fiscal year 2017, and in the aggregate for periods prior to fiscal year 2017. 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 the table below, $16,088 million, or 57%, of total loans outstanding of $28,316 million as of February 28, 2021 represent term-loan advances made to borrowers prior to fiscal year 2017. Our long-term loans, which represent 92% of total loans outstanding, have an average remaining maturity of 18 years as of February 28, 2021. As discussed above, 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. 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 891 borrowers as of February 28, 2021, the number of loans outstanding was 16,593 as of February 28, 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. Table 4.8: Loans Outstanding by Borrower Risk Ratings and Origination Year February 28, 2021 Term Loans by Fiscal Year of Origination (Dollars in thousands) YTD Q3 2021 2020 2019 2018 2017 Prior Revolving Loans Total May 31, 2020 Pass CFC: Distribution $ 1,362,961 $ 1,948,601 $ 1,243,580 $ 1,508,703 $ 1,532,026 $ 12,754,846 $ 1,231,123 $ 21,581,840 $ 20,643,737 Power supply 537,504 204,251 352,543 252,833 253,714 2,518,555 379,097 4,498,497 4,516,595 Statewide and associate 999 22,871 3,784 — 605 24,559 27,910 80,728 90,274 CFC total 1,901,464 2,175,723 1,599,907 1,761,536 1,786,345 15,297,960 1,638,130 26,161,065 25,250,606 NCSC 16,120 243,819 4,454 58,337 14,701 257,556 126,907 721,894 697,862 RTFC 81,286 70,550 12,649 28,618 65,335 134,995 23,181 416,614 371,507 Total pass $ 1,998,870 $ 2,490,092 $ 1,617,010 $ 1,848,491 $ 1,866,381 $ 15,690,511 $ 1,788,218 $ 27,299,573 $ 26,319,975 Special mention CFC: Distribution $ 5,070 $ — $ 5,220 $ 954 $ 4,644 $ 110,302 $ 170,494 $ 296,684 $ 7,743 Power supply 23,600 — 87,822 2,339 8,193 132,502 204,560 459,016 — Statewide and associate — — 5,000 4,000 5,815 1,174 — 15,989 16,224 CFC total 28,670 — 98,042 7,293 18,652 243,978 375,054 771,689 23,967 RTFC — — — — — — — — 8,736 Total special mention $ 28,670 $ — $ 98,042 $ 7,293 $ 18,652 $ 243,978 $ 375,054 $ 771,689 $ 32,703 Substandard CFC: Distribution $ — $ — $ — $ — $ — $ — $ — $ — $ 118,173 Power supply — — — — — — — — 47,203 CFC total — — — — — — — — 165,376 RTFC — — — — — 4,717 — 4,717 5,092 Total substandard $ — $ — $ — $ — $ — $ 4,717 $ — $ 4,717 $ 170,468 Doubtful CFC: Power supply $ — $ — $ — $ — $ — $ 148,477 $ 81,596 $ 230,073 $ 167,708 CFC total — — — — — 148,477 81,596 230,073 167,708 RTFC — — 1,473 3,078 3,218 — 1,850 9,619 — Total doubtful $ — $ — $ 1,473 $ 3,078 $ 3,218 $ 148,477 $ 83,446 $ 239,692 $ 167,708 Total criticized loans $ 28,670 $ — $ 99,515 $ 10,371 $ 21,870 $ 397,172 $ 458,500 $ 1,016,098 $ 370,879 Total loans outstanding $ 2,027,540 $ 2,490,092 $ 1,716,525 $ 1,858,862 $ 1,888,251 $ 16,087,683 $ 2,246,718 $ 28,315,671 $ 26,690,854 Criticized loans increased $645 million to $1,016 million as of February 28, 2021, from $371 million as of May 31, 2020, representing approximately 4% and 1% of total loans outstanding as of each respective date. The increase was attributable to increases in loans outstanding in the special mention and doubtful categories, partially offset by a decrease in loans outstanding in the substandard category. Each of the borrowers with loans outstanding in the criticized category was current with regard to all principal and interest amounts due as of |
