PART
1.
|
FINANCIAL
INFORMATION
|
Item
1.
|
Financial
Statements.
|
November
30, 2008
|
May
31, 2008
|
|||||||
Cash
and cash equivalents
|
$
|
473,274
|
$
|
177,809
|
||||
Restricted
cash
|
9,086
|
14,460
|
||||||
Investments
in trading securities
|
11,434
|
-
|
||||||
Loans
to members
|
19,566,939
|
19,029,040
|
||||||
Less:
Allowance for loan losses
|
(648,946
|
)
|
(514,906
|
)
|
||||
Loans
to members, net
|
18,917,993
|
18,514,134
|
||||||
Accrued
interest and other receivables
|
301,788
|
258,315
|
||||||
Fixed
assets, net
|
19,109
|
21,045
|
||||||
Debt
service reserve funds
|
50,335
|
54,993
|
||||||
Bond
issuance costs, net
|
50,411
|
39,618
|
||||||
Foreclosed
assets, net
|
61,265
|
58,961
|
||||||
Derivative
assets
|
492,371
|
220,514
|
||||||
Other
assets
|
31,234
|
19,532
|
||||||
$
|
20,418,300
|
$
|
19,379,381
|
|||||
See
accompanying notes.
|
November
30, 2008
|
May
31, 2008
|
|||||||
Short-term
debt
|
$
|
5,711,175
|
$
|
6,327,453
|
||||
Accrued
interest payable
|
275,156
|
244,299
|
||||||
Long-term
debt
|
11,600,921
|
10,173,587
|
||||||
Deferred
income
|
19,612
|
21,971
|
||||||
Guarantee
liability
|
32,824
|
15,034
|
||||||
Other
liabilities
|
32,905
|
27,216
|
||||||
Derivative
liabilities
|
594,077
|
171,390
|
||||||
Subordinated
deferrable debt
|
311,440
|
311,440
|
||||||
Members'
subordinated certificates:
|
||||||||
Membership
subordinated certificates
|
649,465
|
649,465
|
||||||
Loan
and guarantee subordinated certificates
|
815,112
|
757,314
|
||||||
Total
members' subordinated certificates
|
1,464,577
|
1,406,779
|
||||||
Commitments
and contingencies
|
-
|
-
|
||||||
Minority
interest
|
11,260
|
14,247
|
||||||
Equity:
|
||||||||
Retained
equity
|
355,925
|
657,138
|
||||||
Accumulated
other comprehensive income
|
8,428
|
8,827
|
||||||
Total
equity
|
364,353
|
665,965
|
||||||
$
|
20,418,300
|
$
|
19,379,381
|
|||||
|
||||||||
See
accompanying notes.
|
Three
months ended
|
Six
months ended
|
||||||||||||||
November
30,
|
November
30,
|
||||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||||
Interest
income
|
$
|
269,042
|
$
|
263,287
|
$
|
535,560
|
$
|
531,241
|
|||||||
Interest
expense
|
(234,224
|
)
|
(240,017
|
)
|
(454,533
|
)
|
(487,342
|
)
|
|||||||
Net
interest income
|
34,818
|
23,270
|
81,027
|
43,899
|
|||||||||||
(Provision
for) recovery of loan losses
|
(126,311
|
)
|
14,301
|
(136,992
|
)
|
14,301
|
|||||||||
Net
interest (loss) income after (provision for) recovery of loan
losses
|
(91,493
|
)
|
37,571
|
(55,965
|
)
|
58,200
|
|||||||||
Non-interest
income:
|
|||||||||||||||
Rental
and other income
|
441
|
352
|
622
|
703
|
|||||||||||
Derivative
cash settlements
|
12,503
|
11,507
|
12,934
|
19,836
|
|||||||||||
Results
of operations of foreclosed assets
|
1,211
|
1,856
|
2,457
|
3,816
|
|||||||||||
Total
non-interest income
|
14,155
|
13,715
|
16,013
|
24,355
|
|||||||||||
Non-interest
(expense) income:
|
|||||||||||||||
Salaries
and employee benefits
|
(9,912
|
)
|
(8,828
|
)
|
(19,763
|
)
|
(17,651
|
)
|
|||||||
Other
general and administrative expenses
|
(5,182
|
)
|
(5,929
|
)
|
(9,924
|
)
|
(10,416
|
)
|
|||||||
(Provision
for) recovery of guarantee liability
|
(5,686
|
)
|
1,200
|
(4,981
|
)
|
3,300
|
|||||||||
Market
adjustment on foreclosed assets
|
(153
|
)
|
-
|
(153
|
)
|
-
|
|||||||||
Derivative
forward value
|
(139,383
|
)
|
(75,412
|
)
|
(150,411
|
)
|
(109,012
|
)
|
|||||||
Loss
on sale of loans
|
-
|
-
|
-
|
(518
|
)
|
||||||||||
Fair
value adjustment on investments in trading securities
|
(101
|
)
|
-
|
(101
|
)
|
-
|
|||||||||
Total
non-interest expense
|
(160,417
|
)
|
(88,969
|
)
|
(185,333
|
)
|
(134,297
|
)
|
|||||||
Loss
prior to income taxes and minority interest
|
(237,755
|
)
|
(37,683
|
)
|
(225,285
|
)
|
(51,742
|
)
|
|||||||
Income
tax benefit
|
6,400
|
2,912
|
7,160
|
4,011
|
|||||||||||
Loss
prior to minority interest
|
(231,355
|
)
|
(34,771
|
)
|
(218,125
|
)
|
(47,731
|
)
|
|||||||
Minority
interest, net of income taxes
|
1,738
|
4,545
|
2,979
|
6,123
|
|||||||||||
Net
loss
|
$
|
(229,617
|
)
|
$
|
(30,226
|
)
|
$
|
(215,146
|
)
|
$
|
(41,608
|
)
|
|||
See
accompanying notes.
|
|||||||||||||||
Patronage
Capital
|
|||||||||||||||||||||||||||||||||||||||||||||
Accumulated
|
Allocated
|
||||||||||||||||||||||||||||||||||||||||||||
Other
|
Subtotal
|
Members'
|
General
|
||||||||||||||||||||||||||||||||||||||||||
Comprehensive
|
Retained
|
Membership
|
Unallocated
|
Education
|
Capital
|
Reserve
|
|||||||||||||||||||||||||||||||||||||||
Total
|
Income
(Loss)
|
Equity
|
Fees
|
Net
Income
|
Fund
|
Reserve
|
Fund
|
Other
|
|||||||||||||||||||||||||||||||||||||
Six
months ended November 30, 2008:
|
|||||||||||||||||||||||||||||||||||||||||||||
Balance
as of May 31, 2008
|
$
|
665,965
|
$
|
8,827
|
$
|
657,138
|
$
|
993
|
$
|
44,003
|
$
|
1,484
|
$
|
187,409
|
$
|
496
|
$
|
422,753
|
|||||||||||||||||||||||||||
Patronage
capital retirement
|
(85,454
|
)
|
-
|
(85,454
|
)
|
-
|
-
|
-
|
(217
|
)
|
-
|
(85,237
|
)
|
||||||||||||||||||||||||||||||||
Loss
prior to income taxes and minority interest
|
(225,285
|
)
|
-
|
(225,285
|
)
|
-
|
(225,285
|
)
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||||||
Other
comprehensive loss
|
(399
|
)
|
(399
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||||
Income
tax benefit
|
7,160
|
-
|
7,160
|
-
|
7,160
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||||||
Minority
interest
|
2,979
|
-
|
2,979
|
-
|
2,979
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||||||
Other
|
(613
|
)
|
-
|
(613
|
)
|
-
|
-
|
(613
|
)
|
(93
|
)
|
-
|
93
|
||||||||||||||||||||||||||||||||
Balance
as of November 30, 2008
|
$
|
364,353
|
$
|
8,428
|
$
|
355,925
|
$
|
993
|
$
|
(171,143
|
)
|
$
|
871
|
$
|
187,099
|
$
|
496
|
$
|
337,609
|
||||||||||||||||||||||||||
Six
months ended November 30, 2007:
|
|||||||||||||||||||||||||||||||||||||||||||||
Balance
as of May 31, 2007
|
$
|
710,041
|
$
|
12,204
|
$
|
697,837
|
$
|
997
|
$
|
131,528
|
$
|
1,406
|
$
|
158,308
|
$
|
498
|
$
|
405,100
|
|||||||||||||||||||||||||||
Patronage
capital retirement
|
(85,494
|
)
|
-
|
(85,494
|
)
|
-
|
-
|
-
|
-
|
-
|
(85,494
|
)
|
|||||||||||||||||||||||||||||||||
Loss
prior to income taxes and minority interest
|
(51,742
|
)
|
-
|
(51,742
|
)
|
-
|
(51,742
|
)
|
-
|
-
|
-
|
-
|
|||||||||||||||||||||||||||||||||
Other
comprehensive loss
|
(331
|
)
|
(331
|
)
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||||
Income
tax benefit
|
4,011
|
-
|
4,011
|
-
|
4,011
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||||||
Minority
interest
|
6,123
|
-
|
6,123
|
-
|
6,123
|
-
|
-
|
-
|
-
|
||||||||||||||||||||||||||||||||||||
Other
|
(487
|
)
|
-
|
(487
|
)
|
(1
|
)
|
1
|
(487
|
)
|
40
|
-
|
(40
|
)
|
|||||||||||||||||||||||||||||||
Balance
as of November 30, 2007
|
$
|
582,121
|
$
|
11,873
|
$
|
570,248
|
$
|
996
|
$
|
89,921
|
$
|
919
|
$
|
158,348
|
$
|
498
|
$
|
319,566
|
|||||||||||||||||||||||||||
See
accompanying notes.
|
|||||||||||||||||||||||||||||||||||||||||||||
2008
|
2007
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
loss
|
$
|
(215,146
|
)
|
$
|
(41,608
|
)
|
|
Add
(deduct):
|
|||||||
Amortization
of deferred income
|
(3,273
|
)
|
(4,240
|
)
|
|||
Amortization
of bond issuance costs and deferred charges
|
5,102
|
11,463
|
|||||
Depreciation
|
1,176
|
1,118
|
|||||
Provision
for (recovery of) loan losses
|
136,992
|
(14,301
|
)
|
||||
Provision
for (recovery of) guarantee liability
|
4,981
|
(3,300
|
)
|
||||
Results
of operations of foreclosed assets
|
(2,457
|
)
|
(3,816
|
)
|
|||
Market
adjustment on foreclosed assets
|
153
|
-
|
|||||
Derivative
forward value
|
150,411
|
109,012
|
|||||
Fair
value adjustment on investments in trading securities
|
101
|
-
|
|||||
Loss
on sale of loans
|
-
|
518
|
|||||
Restricted
interest earned on restricted cash
|
(100
|
)
|
-
|
||||
Purchases
of trading securities
|
(71,405
|
)
|
-
|
||||
Sales
of trading securities
|
59,870
|
-
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Accrued
interest and other receivables
|
(49,542
|
)
|
(9,068
|
)
|
|||
Accrued
interest payable
|
30,856
|
98
|
|||||
Other
|
3,783
|
(5,264
|
)
|
||||
Net
cash provided by operating activities
|
51,502
|
40,612
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Advances
made on loans
|
(4,943,573
|
)
|
(3,595,700
|
)
|
|||
Principal
collected on loans
|
4,402,006
|
3,403,193
|
|||||
Net
investment in fixed assets
|
760
|
(744
|
)
|
||||
Net
proceeds from sale of loans
|
-
|
39,580
|
|||||
Change
in restricted cash
|
5,374
|
-
|
|||||
Net
cash used in investing activities
|
(535,433
|
)
|
(153,671
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Proceeds
from issuances (repayments) of short-term debt, net
|
253,271
|
(103,653
|
)
|
||||
Proceeds
from issuance of long-term debt, net
|
3,237,972
|
668,890
|
|||||
Payments
for retirement of long-term debt
|
(2,695,698
|
)
|
(346,590
|
)
|
|||
Payments
for retirement of subordinated deferrable debt
|
-
|
(175,000
|
)
|
||||
Proceeds
from issuance of members' subordinated certificates
|
71,675
|
43,189
|
|||||
Payments
for retirement of members' subordinated certificates
|
(9,345
|
)
|
(11,851
|
)
|
|||
Payments
for retirement of patronage capital
|
(78,479
|
)
|
(77,378
|
)
|
|||
|
|||||||
Net
cash provided by (used in) financing activities
|
779,396
|
(2,393
|
)
|
||||
NET
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
295,465
|
(115,452
|
)
|
||||
BEGINNING
CASH AND CASH EQUIVALENTS
|
177,809
|
304,107
|
|||||
ENDING
CASH AND CASH EQUIVALENTS
|
$
|
473,274
|
$
|
188,655
|
|||
See
accompanying notes.
|
|||||||
2008
|
2007
|
|||||||
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash
paid for interest
|
$
|
418,575
|
$
|
475,781
|
||||
Cash
paid for income taxes
|
52
|
767
|
||||||
Non-cash
financing and investing activities:
|
||||||||
Net
decrease in debt service reserve funds/debt service reserve
certificates
|
$
|
(4,658
|
)
|
$
|
-
|
|||
See
accompanying notes.
|
||||||||
For
the six months ended
November
30,
|
Year
ended
|
|||||||||
(in
thousands)
|
2008
|
2007
|
May
31, 2008
|
|||||||
Balance
at beginning of period
|
$
|
514,906
|
$
|
561,663
|
$
|
561,663
|
||||
Provision
for (recovery of) loan losses
|
136,992
|
(14,301
|
)
|
(30,262
|
)
|
|||||
Charge-offs
|
(3,118
|
)
|
(16,755
|
)
|
(16,911
|
)
|
||||
Recoveries
|
166
|
195
|
416
|
|||||||
Balance
at end of period
|
$
|
648,946
|
$
|
530,802
|
$
|
514,906
|
For
the three months ended
November
30,
|
For
the six months ended
November
30,
|
|||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Interest
on long-term fixed rate loans (1)
|
$
|
224,261
|
$
|
215,183
|
$
|
448,663
|
$
|
429,743
|
||||||||
Interest
on long-term variable rate loans (1)
|
18,469
|
22,690
|
33,649
|
47,239
|
||||||||||||
Interest
on short-term loans (1)
|
20,942
|
19,244
|
40,446
|
39,592
|
||||||||||||
Interest
on investments (2)
|
1,444
|
1,900
|
3,625
|
4,836
|
||||||||||||
Conversion
fees (3)
|
1,536
|
1,735
|
3,239
|
3,509
|
||||||||||||
Make-whole
and prepayment fees (4)
|
40
|
65
|
867
|
1,754
|
||||||||||||
Commitment
and guarantee fees (5)
|
1,767
|
1,385
|
3,636
|
2,920
|
||||||||||||
Other
fees
|
583
|
1,085
|
1,435
|
1,648
|
||||||||||||
Total
interest income
|
$
|
269,042
|
$
|
263,287
|
$
|
535,560
|
$
|
531,241
|
For
the three months ended
November
30,
|
For
the six months ended
November
30,
|
|||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Interest
expense (1):
|
||||||||||||||||
Commercial
paper and bank bid notes
|
$
|
23,638
|
$
|
33,192
|
$
|
40,076
|
$
|
71,478
|
||||||||
Medium-term
notes
|
81,055
|
83,681
|
161,513
|
166,867
|
||||||||||||
Collateral
trust bonds
|
68,035
|
63,405
|
130,955
|
128,755
|
||||||||||||
Subordinated
deferrable debt
|
4,915
|
4,916
|
9,831
|
9,831
|
||||||||||||
Subordinated
certificates
|
12,831
|
12,030
|
25,248
|
24,154
|
||||||||||||
Long-term
private debt
|
34,534
|
34,960
|
70,130
|
65,743
|
||||||||||||
Debt
issuance costs (2)
|
2,391
|
2,767
|
4,526
|
5,297
|
||||||||||||
Commitment
and guarantee fees (3)
|
5,246
|
4,605
|
10,013
|
8,675
|
||||||||||||
Loss
on early extinguishment of debt (4)
|
-
|
-
|
-
|
5,509
|
||||||||||||
Other
fees
|
1,579
|
461
|
2,241
|
1,033
|
||||||||||||
Total
interest expense
|
$
|
234,224
|
$
|
240,017
|
$
|
454,533
|
$
|
487,342
|
For
the three months ended
November
30,
|
For
the six months ended
November
30,
|
|||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
Net
loss
|
$
|
(229,617
|
)
|
$
|
(30,226
|
)
|
$
|
(215,146
|
)
|
$
|
(41,608
|
)
|
||||
Other
comprehensive income:
|
||||||||||||||||
Reclassification
adjustment for realized gain on derivatives
|
(205
|
)
|
(256
|
)
|
(399
|
)
|
(331
|
)
|
||||||||
Comprehensive
loss
|
$
|
(229,822
|
)
|
$
|
(30,482
|
)
|
$
|
(215,545
|
)
|
$
|
(41,939
|
)
|
November
30, 2008
|
May
31, 2008
|
||||||||||||||||
Unadvanced
|
Unadvanced
|
||||||||||||||||
(in
thousands)
|
Loans
Outstanding
|
Commitments
(1)
|
Loans
Outstanding
|
Commitments
(1)
|
|||||||||||||
Total
by loan type (2)
(3):
|
|||||||||||||||||
Long-term
fixed rate loans
|
$
|
15,194,040
|
$
|
-
|
$
|
15,204,614
|
$
|
-
|
|||||||||
Long-term
variable rate loans
|
2,122,837
|
6,128,736
|
1,882,095
|
5,975,541
|
|||||||||||||
Loans
guaranteed by RUS
|
246,020
|
491
|
250,169
|
491
|
|||||||||||||
Short-term
loans
|
2,000,645
|
7,629,905
|
1,690,117
|
7,597,712
|
|||||||||||||
Total
loans outstanding
|
19,563,542
|
13,759,132
|
19,026,995
|
13,573,744
|
|||||||||||||
Deferred
origination fees
|
3,397
|
-
|
2,045
|
-
|
|||||||||||||
Less:
Allowance for loan losses
|
(648,946
|
)
|
-
|
(514,906
|
)
|
-
|
|||||||||||
Net
loans outstanding
|
$
|
18,917,993
|
$
|
13,759,132
|
$
|
18,514,134
|
$
|
13,573,744
|
|||||||||
Total
by segment (2):
|
|||||||||||||||||
National
Rural:
|
|||||||||||||||||
Distribution
|
$
|
13,736,544
|
$
|
9,859,393
|
$
|
13,438,370
|
$
|
9,579,213
|
|||||||||
Power
supply
|
3,572,555
|
2,988,634
|
3,339,112
|
2,960,693
|
|||||||||||||
Statewide
and associate
|
110,032
|
163,061
|
108,925
|
158,293
|
|||||||||||||
National
Rural total
|
17,419,131
|
13,011,088
|
16,886,407
|
12,698,199
|
|||||||||||||
RTFC
|
1,697,907
|
468,428
|
1,726,514
|
562,389
|
|||||||||||||
NCSC
|
446,504
|
279,616
|
414,074
|
313,156
|
|||||||||||||
Total
loans outstanding
|
$
|
19,563,542
|
$
|
13,759,132
|
$
|
19,026,995
|
$
|
13,573,744
|
November
30, 2008
|
May
31, 2008
|
||||||||||||||||
(in
thousands)
|
Unadvanced
|
Unadvanced
|
|||||||||||||||
Non-performing
and restructured loans:
|
Loans
Outstanding
|
Commitments
(1)
|
Loans
Outstanding
|
Commitments
(1)
|
|||||||||||||
Non-performing
loans (2):
|
|||||||||||||||||
RTFC:
|
|||||||||||||||||
Long-term
fixed rate loans
|
$
|
212,984
|
$
|
-
|
$
|
219,912
|
$
|
-
|
|||||||||
Long-term
variable rate loans
|
261,142
|
-
|
261,109
|
-
|
|||||||||||||
Short-term
loans
|
18,898
|
-
|
25,843
|
-
|
|||||||||||||
Total
non-performing loans
|
$
|
493,024
|
$
|
-
|
$
|
506,864
|
$
|
-
|
|||||||||
Restructured
loans (2):
|
|||||||||||||||||
National
Rural:
|
|||||||||||||||||
Long-term
fixed rate loans
|
$
|
52,082
|
$
|
-
|
$
|
52,309
|
$
|
-
|
|||||||||
Long-term
variable rate loans
|
505,042
|
186,673
|
519,257
|
186,673
|
|||||||||||||
Short-term
loans
|
-
|
12,500
|
-
|
12,500
|
|||||||||||||
National
Rural total restructured loans
|
557,124
|
199,173
|
571,566
|
199,173
|
|||||||||||||
RTFC:
|
|||||||||||||||||
Long-term
fixed rate loans
|
5,205
|
-
|
5,545
|
-
|
|||||||||||||
Total restructured loans
|
$
|
562,329
|
$
|
199,173
|
$
|
577,111
|
$
|
199,173
|
|||||||||
(dollar
amounts in thousands)
|
November
30, 2008
|
May
31, 2008
|
||||||||||||||||||||||
Total
by loan type:
|
Secured
|
%
|
Unsecured
|
%
|
Secured
|
%
|
Unsecured
|
%
|
||||||||||||||||
Long-term
fixed rate loans
|
$
|
14,675,338
|
97
|
%
|
$
|
518,702
|
3
|
%
|
$
|
14,732,058
|
97
|
%
|
$
|
472,556
|
3
|
%
|
||||||||
Long-term
variable rate loans
|
1,949,979
|
92
|
172,858
|
8
|
1,728,803
|
92
|
153,292
|
8
|
||||||||||||||||
Loans
guaranteed by RUS
|
246,020
|
100
|
-
|
-
|
250,169
|
100
|
-
|
-
|
||||||||||||||||
Short-term
loans
|
175,735
|
9
|
1,824,910
|
91
|
165,226
|
10
|
1,524,891
|
90
|
||||||||||||||||
Total
loans
|
$
|
17,047,072
|
87
|
$
|
2,516,470
|
13
|
$
|
16,876,256
|
89
|
$
|
2,150,739
|
11
|
||||||||||||
Total
by segment:
|
||||||||||||||||||||||||
National
Rural
|
$
|
15,190,580
|
87
|
%
|
$
|
2,228,551
|
13
|
%
|
$
|
15,021,067
|
89
|
%
|
$
|
1,865,340
|
11
|
%
|
||||||||
RTFC
|
1,469,347
|
87
|
228,560
|
13
|
1,497,487
|
87
|
229,027
|
13
|
||||||||||||||||
NCSC
|
387,145
|
87
|
59,359
|
13
|
357,702
|
86
|
56,372
|
14
|
||||||||||||||||
Total
loans
|
$
|
17,047,072
|
87
|
$
|
2,516,470
|
13
|
$
|
16,876,256
|
89
|
$
|
2,150,739
|
11
|
(in
thousands)
|
November
30, 2008
|
May
31, 2008
|
|||
2007
indenture:
|
|||||
Distribution
system mortgage notes
|
$
|
3,718,474
|
$
|
917,925
|
|
Collateral
trust bonds
|
3,000,000
|
700,000
|
|||
1994
indenture:
|
|||||
Distribution
system mortgage notes
|
$
|
3,030,956
|
$
|
3,989,443
|
|
RUS
guaranteed loans qualifying as permitted investments
|
213,360
|
215,329
|
|||
Total
pledged collateral
|
$
|
3,244,316
|
$
|
4,204,772
|
|
Collateral
trust bonds
|
$
|
2,218,000
|
$
|
4,015,000
|
|
1972
indenture:
|
|||||
Cash
|
$
|
2,032
|
$
|
2,032
|
|
Collateral
trust bonds
|
1,919
|
1,927
|
|||
Farmer
Mac:
|
|||||
Distribution
system mortgage notes
|
$
|
495,391
|
$
|
1,042,564
|
|
Farmer
Mac notes payable
|
400,000
|
900,000
|
(in
thousands)
|
November
30, 2008
|
May
31, 2008
|
|
REDLG:
|
|||
Utility
System mortgage notes on deposit
|
$3,810,963
|
$3,191,292
|
|
REDLG
notes payable
|
3,000,000
|
2,500,000
|
Six
months ended November 30,
|
Year
ended
|
|||||||||||
(in
thousands)
|
2008
|
2007
|
May
31, 2008
|
|||||||||
Beginning
balance
|
$
|
58,961
|
$
|
66,329
|
$
|
66,329
|
||||||
Results
of operations
|
2,457
|
3,816
|
7,528
|
|||||||||
Net
cash provided by foreclosed assets
|
-
|
-
|
(9,056
|
)
|
||||||||
Market
value adjustment
|
(153
|
)
|
-
|
(5,840
|
)
|
|||||||
Ending
balance
|
$
|
61,265
|
$
|
70,145
|
$
|
58,961
|
(in
thousands)
|
November
30,
2008
|
May
31,
2008
|
|||||
Short-term
debt:
|
|||||||
Commercial
paper sold through dealers, net of discounts
|
$
|
1,565,255
|
$
|
1,511,953
|
|||
Commercial
paper sold directly to members, at par
|
1,310,378
|
1,275,809
|
|||||
Commercial
paper sold directly to non-members, at par
|
8,626
|
11,752
|
|||||
Total
commercial paper
|
2,884,259
|
2,799,514
|
|||||
Daily
liquidity fund sold directly to members
|
339,276
|
250,750
|
|||||
Bank
bid notes
|
180,000
|
100,000
|
|||||
Subtotal
short-term debt
|
3,403,535
|
3,150,264
|
|||||
Long-term
debt maturing within one year:
|
|||||||
Medium-term
notes sold through dealers
|
1,830,823
|
558,776
|
|||||
Medium-term
notes sold to members
|
439,305
|
288,634
|
|||||
Secured
collateral trust bonds
|
33,000
|
1,824,995
|
|||||
Secured
notes payable
|
-
|
500,000
|
|||||
Unsecured
notes payable
|
4,512
|
4,784
|
|||||
Total
long-term debt maturing within one year
|
2,307,640
|
3,177,189
|
|||||
Total
short-term debt
|
$
|
5,711,175
|
$
|
6,327,453
|
|||
(dollar
amounts in thousands)
|
November
30,
2008
(3)
|
May
31,
2008
|
Termination
Date
|
Facility
fee per
year
(1)
|
|||||||||||
Five-year
agreement
|
$
|
1,125,000
|
$
|
1,125,000
|
March
16, 2012
|
6
basis points
|
|||||||||
Five-year
agreement
|
1,025,000
|
1,025,000
|
March
22, 2011
|
6
basis points
|
|||||||||||
364-day
agreement (2)
|
1,500,000
|
1,500,000
|
March
13, 2009
|
5
basis points
|
|||||||||||
Total
|
$
|
3,650,000
|
$
|
3,650,000
|
·
|
guarantees
for members where the long-term unsecured debt of the member is rated at
least BBB+ by Standard & Poor's Corporation or Baa1 by Moody's
Investors Service; and
|
·
|
the
payment of principal and interest by the member on the guaranteed
indebtedness if covered by insurance or reinsurance provided by an insurer
having an insurance financial strength rating of AAA by Standard &
Poor's Corporation or a financial strength rating of Aaa by Moody's
Investors Service.
|
Actual
|
||||||||||
Requirement
|
November
30, 2008
|
May
31, 2008
|
||||||||
Minimum
average adjusted TIER over the six most recent fiscal
quarters
|
1.025
|
1.05
|
1.16
|
|||||||
Minimum
adjusted TIER at prior fiscal year end (1)
|
1.05
|
1.15
|
1.15
|
|||||||
Maximum
ratio of senior debt to total equity
|
10.00
|
8.11
|
7.33
|
|||||||
(in
thousands)
|
November
30,
2008
|
May
31,
2008
|
|||||||
Unsecured
long-term debt:
|
|||||||||
Medium-term
notes sold through dealers
|
$
|
2,834,652
|
$
|
4,231,982
|
|||||
Medium-term
notes sold to members
|
140,054
|
104,105
|
|||||||
Subtotal
|
2,974,706
|
4,336,087
|
|||||||
Unamortized
discount
|
(3,465
|
)
|
(5,483
|
)
|
|||||
Total
unsecured medium-term notes
|
2,971,241
|
4,330,604
|
|||||||
Unsecured
notes payable
|
3,058,362
|
2,558,362
|
|||||||
Unamortized
discount
|
(1,811
|
)
|
(1,959
|
)
|
|||||
Total
unsecured notes payable
|
3,056,551
|
2,556,403
|
|||||||
Total
unsecured long-term debt
|
6,027,792
|
6,887,007
|
|||||||
Secured
long-term debt:
|
|||||||||
Collateral
trust bonds
|
5,186,919
|
2,891,927
|
|||||||
Unamortized
discount
|
(13,790
|
)
|
(5,347
|
)
|
|||||
Total
secured collateral trust bonds
|
5,173,129
|
2,886,580
|
|||||||
Secured
notes payable
|
400,000
|
400,000
|
|||||||
Total
secured long-term debt
|
5,573,129
|
3,286,580
|
|||||||
Total
long-term debt
|
$
|
11,600,921
|
$
|
10,173,587
|
(in
thousands)
|
November
30, 2008
|
May
31, 2008
|
|||||||
6.75% due 2043
(1)
|
$
|
125,000
|
$
|
125,000
|
|||||
6.10%
due 2044 (2)
|
88,201
|
88,201
|
|||||||
5.95%
due 2045 (3)
|
98,239
|
98,239
|
|||||||
Total
|
$
|
311,440
|
$
|
311,440
|
Notional
Amounts Outstanding
|
||||
(in
thousands)
|
November
30, 2008
|
May
31, 2008
|
||
Pay
fixed and receive variable
|
$
|
7,186,544
|
$
|
7,659,973
|
Pay
variable and receive fixed
|
5,906,440
|
5,256,440
|
||
Total
interest rate swaps
|
$
|
13,092,984
|
$
|
12,916,413
|
Three
months ended
|
Six
months ended
|
|||||||||||||||||||
November
30,
|
November
30,
|
|||||||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||||||
Statement
of operations
|
||||||||||||||||||||
Agreements
that do not qualify for hedge accounting
|
||||||||||||||||||||
Derivative
cash settlements
|
$
|
12,503
|
$
|
11,507
|
$
|
12,934
|
$
|
19,836
|
||||||||||||
Derivative
forward value
|
(139,383
|
)
|
(75,412
|
)
|
(150,411
|
)
|
(109,012
|
)
|
||||||||||||
Total
loss on interest rate exchange agreements
|
$
|
(126,880
|
)
|
$
|
(63,905
|
)
|
$
|
(137,477
|
)
|
$
|
(89,176
|
)
|
||||||||
Comprehensive
income
|
||||||||||||||||||||
Amortization
of transition adjustment
|
$
|
(205
|
)
|
$
|
(256
|
)
|
$
|
(399
|
)
|
$
|
(331
|
)
|
||||||||
Total
comprehensive loss
|
$
|
(205
|
)
|
$
|
(256
|
)
|
$
|
(399
|
)
|
$
|
(331
|
)
|
||||||||
(in
thousands)
|
Notional
|
Required
Company
|
Amount
Company
|
Net
|
|||||||||
Rating
Level:
|
Amount
|
Payment
|
Would
Collect
|
Total
|
|||||||||
Fall
to Baa1/BBB+ and below
|
$
|
8,008
|
$
|
(127,638
|
)
|
$
|
38,500
|
$
|
(89,138
|
)
|
|||
(in
thousands)
|
November
30,
2008
|
May
31,
2008
|
|||||||
Membership
fees
|
$
|
993
|
$
|
993
|
|||||
Education
fund
|
871
|
1,484
|
|||||||
Members'
capital reserve
|
187,099
|
187,409
|
|||||||
Allocated
net income
|
338,105
|
423,249
|
|||||||
Unallocated
net loss (1)
|
(83,365
|
)
|
(53
|
)
|
|||||
Total
members' equity
|
443,703
|
613,082
|
|||||||
Prior
years' cumulative derivative forward
|
|||||||||
value
and foreign currency adjustments
|
44,056
|
131,551
|
|||||||
Year-to-date
derivative forward value loss (2)
|
(131,834
|
)
|
(87,495
|
)
|
|||||
Total
retained equity
|
355,925
|
657,138
|
|||||||
Accumulated
other comprehensive income
|
8,428
|
8,827
|
|||||||
Total
equity
|
$
|
364,353
|
$
|
665,965
|
For
the six months ended
November
30,
|
Year
ended
May
31,
|
|||||||||
(dollar
amounts in thousands)
|
2008
|
2007
|
2008
|
|||||||
Beginning
balance
|
$
|
15,034
|
$
|
18,929
|
$
|
18,929
|
||||
Net
change in non-contingent liability
|
12,809
|
(948
|
)
|
(791
|
)
|
|||||
Provision
(recovery) of contingent guarantee losses
|
4,981
|
(3,300
|
)
|
(3,104
|
)
|
|||||
Ending
balance
|
$
|
32,824
|
$
|
14,681
|
$
|
15,034
|
||||
Liability
as a percentage of total guarantees
|
2.65
|
%
|
1.35
|
%
|
1.45
|
%
|
(in
thousands)
|
November
30, 2008
|
May
31, 2008
|
||||
Total
by type:
|
||||||
Long-term
tax-exempt bonds (1)
|
$
|
640,255
|
$
|
498,495
|
||
Indemnifications
of tax benefit transfers (2)
|
89,048
|
94,821
|
||||
Letters
of credit (3)
|
409,637
|
343,424
|
||||
Other
guarantees (4)
|
100,213
|
100,400
|
||||
Total
|
$
|
1,239,153
|
$
|
1,037,140
|
||
Total
by segment:
|
||||||
National
Rural:
|
||||||
Distribution
|
$
|
225,186
|
$
|
184,459
|
||
Power
supply
|
928,041
|
786,455
|
||||
Statewide
and associate
|
20,488
|
22,785
|
||||
National
Rural total
|
1,173,715
|
993,699
|
||||
RTFC
|
500
|
260
|
||||
NCSC
|
64,938
|
43,181
|
||||
Total
|
$
|
1,239,153
|
$
|
1,037,140
|
·
|
Level
1 – Quoted prices for identical instruments in active
markets.
|
·
|
Level
2 – Quoted prices for similar instruments in active markets; quoted prices
for identical or similar instruments in markets that are not active; and
model-derived valuations whose inputs are observable or whose significant
value drivers are observable.
|
·
|
Level
3 – Instruments whose significant value drivers are
unobservable.
|
(in
thousands)
|
Level
1
|
Level
2
|
Level
3
|
||||
Derivative
assets
|
$
|
-
|
$
|
492,371
|
$
|
-
|
|
Derivative
liabilities
|
-
|
594,077
|
-
|
||||
Investments
in trading securities
|
-
|
-
|
11,434
|
Level
3
Investments
in Trading Securities
|
|||||||
(in
thousands)
|
For
the three months ended November 30, 2008
|
For
the six months ended November 30, 2008
|
|||||
Beginning
balance
|
$
|
-
|
$
|
-
|
|||
Losses
included in earnings
|
(101
|
)
|
(101
|
)
|
|||
Purchases,
sales, issuances, and settlements, net
|
11,535
|
11,535
|
|||||
Ending
balance
|
$
|
11,434
|
$$
|
11,434
|
(in
thousands)
|
Level
3
Fair
Value
|
Total
losses for the
three
months ended
November
30, 2008
|
Total
losses for the
six
months ended
November
30, 2008
|
||||
Foreclosed
assets, net
|
$
|
61,265
|
$
|
153
|
$
|
153
|
|
Non-performing
loans, net of specific reserves
|
152,183
|
113,810
|
117,683
|
(in
thousands)
|
November
30,
2008
|
May
31,
2008
|
November
30,
2007
|
||||
Non-performing
loans
|
$
|
493,024
|
$
|
506,864
|
$
|
503,198
|
|
Restructured
loans
|
562,329
|
577,111
|
590,768
|
||||
Total
|
$
|
1,055,353
|
$
|
1,083,975
|
$
|
1,093,966
|
Three
months ended
|
Six
months ended
|
||||||||||||||||
November
30,
|
November
30,
|
||||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Non-performing
loans
|
$
|
7,417
|
$
|
8,513
|
$
|
14,851
|
$
|
17,727
|
|||||||||
Restructured
loans
|
6,893
|
8,970
|
13,597
|
18,311
|
|||||||||||||
Total
|
$
|
14,310
|
$
|
17,483
|
$
|
28,448
|
$
|
36,038
|
|||||||||
·
|
court
rulings,
|
·
|
changes
to collateral values, and
|
·
|
changes
to expected future cash flows both as to timing and
amount.
|
(in
thousands)
|
National
Rural
|
RTFC
|
NCSC
|
Consolidated
|
||||||||||||
Statement
of operations:
|
||||||||||||||||
Interest
income
|
$
|
481,386
|
$
|
38,888
|
$
|
15,286
|
$
|
535,560
|
||||||||
Interest
expense
|
(406,936
|
)
|
(36,454
|
)
|
(11,143
|
)
|
(454,533
|
)
|
||||||||
Net
interest income
|
74,450
|
2,434
|
4,143
|
81,027
|
||||||||||||
(Provision
for) recovery of loan losses
|
(137,031
|
)
|
-
|
39
|
(136,992
|
)
|
||||||||||
Net
interest (loss) income after (provision for) recovery of loan
losses
|
(62,581
|
)
|
2,434
|
4,182
|
(55,965
|
)
|
||||||||||
Non-interest
income:
|
||||||||||||||||
Rental
and other income
|
332
|
-
|
290
|
622
|
||||||||||||
Derivative
cash settlements
|
15,332
|
-
|
(2,398
|
)
|
12,934
|
|||||||||||
Results
of operations from foreclosed assets
|
2,457
|
-
|
-
|
2,457
|
||||||||||||
Total
non-interest income
|
18,121
|
-
|
(2,108
|
)
|
16,013
|
|||||||||||
Non-interest
expense:
|
||||||||||||||||
General
and administrative expenses
|
(24,812
|
)
|
(2,698
|
)
|
(2,177
|
)
|
(29,687
|
)
|
||||||||
Provision
for guarantee liability
|
(4,981
|
)
|
-
|
-
|
(4,981
|
)
|
||||||||||
Derivative
forward value
|
(131,834
|
)
|
-
|
(18,577
|
)
|
(150,411
|
)
|
|||||||||
Market
adjustment on foreclosed assets
|
(153
|
)
|
-
|
-
|
(153
|
)
|
||||||||||
Fair
value adjustment on investments in trading securities
|
(101
|
)
|
-
|
-
|
(101
|
)
|
||||||||||
Total
non-interest expense
|
(161,881
|
)
|
(2,698
|
)
|
(20,754
|
)
|
(185,333
|
)
|
||||||||
Loss
prior to income taxes and minority
interest
|
(206,341
|
)
|
(264
|
)
|
(18,680
|
)
|
(225,285
|
)
|
||||||||
Income
tax benefit
|
-
|
69
|
7,091
|
7,160
|
||||||||||||
Loss
per segment reporting
|
$
|
(206,341
|
)
|
$
|
(195
|
)
|
$
|
(11,589
|
)
|
$
|
(218,125
|
)
|
||||
Reconciliation
of net loss:
|
||||||||||||||||
Net
loss per segment reporting
|
$
|
(218,125
|
)
|
|||||||||||||
Minority
interest, net of income taxes
|
2,979
|
|||||||||||||||
Net
loss per consolidated statement of operations
|
$
|
(215,146
|
)
|
|||||||||||||
Assets:
|
||||||||||||||||
Total
loans outstanding
|
$
|
17,419,131
|
$
|
1,697,907
|
$
|
446,504
|
$
|
19,563,542
|
||||||||
Deferred
origination fees
|
3,397
|
-
|
-
|
3,397
|
||||||||||||
Less: Allowance
for loan losses
|
(648,755
|
)
|
-
|
(191
|
)
|
(648,946
|
)
|
|||||||||
Loans
to members, net
|
16,773,773
|
1,697,907
|
446,313
|
18,917,993
|
||||||||||||
Other
assets
|
1,267,704
|
183,022
|
49,581
|
1,500,307
|
||||||||||||
Total
assets
|
$
|
18,041,477
|
$
|
1,880,929
|
$
|
495,894
|
$
|
20,418,300
|
(in
thousands)
|
National
Rural
|
RTFC
|
NCSC
|
Consolidated
|
|||||||||||
Statement
of operations:
|
|||||||||||||||
Interest
income
|
$
|
465,790
|
$
|
47,366
|
$
|
18,085
|
$
|
531,241
|
|||||||
Interest
expense
|
(427,164
|
)
|
(44,551
|
)
|
(15,627
|
)
|
(487,342
|
)
|
|||||||
Net
interest income
|
38,626
|
2,815
|
2,458
|
43,899
|
|||||||||||
Recovery
of loan losses
|
14,301
|
-
|
-
|
14,301
|
|||||||||||
Net
interest income after recovery of loan losses
|
52,927
|
2,815
|
2,458
|
58,200
|
|||||||||||
Non-interest
income:
|
|||||||||||||||
Rental
and other income
|
389
|
-
|
314
|
703
|
|||||||||||
Derivative
cash settlements
|
19,679
|
-
|
157
|
19,836
|
|||||||||||
Results
of operations of foreclosed assets
|
3,816
|
-
|
-
|
3,816
|
|||||||||||
Total
non-interest income
|
23,884
|
-
|
471
|
24,355
|
|||||||||||
Non-interest
expense:
|
|||||||||||||||
General
and administrative expenses
|
(23,854
|
)
|
(2,379
|
)
|
(1,834
|
)
|
(28,067
|
)
|
|||||||
Recovery
of guarantee liability
|
3,300
|
-
|
-
|
3,300
|
|||||||||||
Derivative
forward value
|
(97,347
|
)
|
-
|
(11,665
|
)
|
(109,012
|
)
|
||||||||
Loss
on sale of loans
|
(518
|
)
|
-
|
-
|
(518
|
)
|
|||||||||
Total
non-interest expense
|
(118,419
|
)
|
(2,379
|
)
|
(13,499
|
)
|
(134,297
|
)
|
|||||||
(Loss)
income prior to income taxes and minority
|
|||||||||||||||
interest
|
(41,608
|
)
|
436
|
(10,570
|
)
|
(51,742
|
)
|
||||||||
Income
taxes
|
-
|
(1
|
)
|
4,012
|
4,011
|
||||||||||
Net
(loss) income per segment reporting
|
$
|
(41,608
|
)
|
$
|
435
|
$
|
(6,558
|
)
|
$
|
(47,731
|
)
|
||||
Reconciliation
of net loss:
|
|||||||||||||||
Net
loss per segment reporting
|
$
|
(47,731
|
)
|
||||||||||||
Minority
interest, net of income taxes
|
6,123
|
||||||||||||||
Net
loss per consolidated statement of operations
|
$
|
(41,608
|
)
|
||||||||||||
Assets:
|
|||||||||||||||
Total
loans
|
$
|
16,002,716
|
$
|
1,791,504
|
$
|
463,683
|
$
|
18,257,903
|
|||||||
Deferred
origination fees
|
4,020
|
-
|
-
|
4,020
|
|||||||||||
Less: Allowance
for loan losses
|
(530,313
|
)
|
-
|
(489
|
)
|
(530,802
|
)
|
||||||||
Loans
to members, net
|
15,476,423
|
1,791,504
|
463,194
|
17,731,121
|
|||||||||||
Other
assets
|
626,539
|
194,850
|
54,385
|
875,774
|
|||||||||||
Total
assets
|
$
|
16,102,962
|
$
|
1,986,354
|
$
|
517,579
|
$
|
18,606,895
|
(in
thousands)
|
National
Rural
|
RTFC
|
NCSC
|
Consolidated
|
||||||||||||
Statement
of operations:
|
||||||||||||||||
Interest
income
|
$
|
241,966
|
$
|
19,316
|
$
|
7,760
|
$
|
269,042
|
||||||||
Interest
expense
|
(209,930
|
)
|
(18,208
|
)
|
(6,086
|
)
|
(234,224
|
)
|
||||||||
Net
interest income
|
32,036
|
1,108
|
1,674
|
34,818
|
||||||||||||
(Provision
for) recovery of loan losses
|
(126,350
|
)
|
-
|
39
|
(126,311
|
)
|
||||||||||
Net
interest (loss) income after (provision for) recovery of loan
losses
|
(94,314
|
)
|
1,108
|
1,713
|
(91,493
|
)
|
||||||||||
Non-interest
income:
|
||||||||||||||||
Rental
and other income
|
291
|
-
|
150
|
441
|
||||||||||||
Derivative
cash settlements
|
13,707
|
-
|
(1,204
|
)
|
12,503
|
|||||||||||
Results
of operations of foreclosed assets
|
1,211
|
-
|
-
|
1,211
|
||||||||||||
Total
non-interest income
|
15,209
|
-
|
(1,054
|
)
|
14,155
|
|||||||||||
Non-interest
expense:
|
||||||||||||||||
General
and administrative expenses
|
(12,671
|
)
|
(1,373
|
)
|
(1,050
|
)
|
(15,094
|
)
|
||||||||
Provision
for guarantee liability
|
(5,686
|
)
|
-
|
-
|
(5,686
|
)
|
||||||||||
Derivative
forward value
|
(123,096
|
)
|
-
|
(16,287
|
)
|
(139,383
|
)
|
|||||||||
Market
adjustment on foreclosed assets
|
(153
|
)
|
-
|
-
|
(153
|
)
|
||||||||||
Fair
value adjustment on investments in
trading securities
|
(101
|
)
|
-
|
-
|
(101
|
)
|
||||||||||
Total
non-interest expense
|
(141,707
|
)
|
(1,373
|
)
|
(17,337
|
)
|
(160,417
|
)
|
||||||||
Loss
prior to income taxes and minority
interest
|
(220,812
|
)
|
(265
|
)
|
(16,678
|
)
|
(237,755
|
)
|
||||||||
Income
taxes
|
-
|
69
|
6,331
|
6,400
|
||||||||||||
Net
loss per segment reporting
|
$
|
(220,812
|
)
|
$
|
(196
|
)
|
$
|
(10,347
|
)
|
$
|
(231,355
|
)
|
||||
Reconciliation
of net loss:
|
||||||||||||||||
Net
loss per segment reporting
|
$
|
(231,355
|
)
|
|||||||||||||
Minority
interest
|
1,738
|
|||||||||||||||
Net
loss per consolidated statement of operations
|
$
|
(229,617
|
)
|
(in
thousands)
|
National
Rural
|
RTFC
|
NCSC
|
Consolidated
|
|||||||||||
Statement
of operations:
|
|||||||||||||||
Interest
income
|
$
|
230,984
|
$
|
23,337
|
$
|
8,966
|
$
|
263,287
|
|||||||
Interest
expense
|
(210,403
|
)
|
(21,921
|
)
|
(7,693
|
)
|
(240,017
|
)
|
|||||||
Net
interest income
|
20,581
|
1,416
|
1,273
|
23,270
|
|||||||||||
Recovery
of loan losses
|
14,301
|
-
|
-
|
14,301
|
|||||||||||
Net
interest income after recovery of loan losses
|
34,882
|
1,416
|
1,273
|
37,571
|
|||||||||||
Non-interest
income:
|
|||||||||||||||
Rental
and other income
|
200
|
-
|
152
|
352
|
|||||||||||
Derivative
cash settlements
|
11,514
|
-
|
(7
|
)
|
11,507
|
||||||||||
Results
of operations of foreclosed assets
|
1,856
|
-
|
-
|
1,856
|
|||||||||||
Total
non-interest income
|
13,570
|
-
|
145
|
13,715
|
|||||||||||
Non-interest
(expense) income:
|
|||||||||||||||
General
and administrative expenses
|
(12,593
|
)
|
(1,200
|
)
|
(964
|
)
|
(14,757
|
)
|
|||||||
Recovery
of guarantee losses
|
1,200
|
-
|
-
|
1,200
|
|||||||||||
Derivative
forward value
|
(67,285
|
)
|
-
|
(8,127
|
)
|
(75,412
|
)
|
||||||||
Total
non-interest (expense) income
|
(78,678
|
)
|
(1,200
|
)
|
(9,091
|
)
|
(88,969
|
)
|
|||||||
(Loss)
income prior to income taxes and minority
interest
|
(30,226
|
)
|
216
|
(7,673
|
)
|
(37,683
|
)
|
||||||||
Income
taxes
|
-
|
-
|
2,912
|
2,912
|
|||||||||||
Net
(loss) income per segment reporting
|
$
|
(30,226
|
)
|
$
|
216
|
$
|
(4,761
|
)
|
$
|
(34,771
|
)
|
||||
Reconciliation
of net loss:
|
|||||||||||||||
Net
loss per segment reporting
|
$
|
(34,771
|
)
|
||||||||||||
Minority
interest
|
4,545
|
||||||||||||||
Net
loss per consolidated statement of operations
|
$
|
(30,226
|
)
|
For
the six months ended November 30,
|
Increase/
|
||||||||||||||||
(dollar
amounts in thousands)
|
2008
|
2007
|
(Decrease)
|
||||||||||||||
Interest
income
|
$
|
535,560
|
$
|
531,241
|
$
|
4,319
|
|||||||||||
Interest
expense
|
(454,533
|
)
|
(487,342
|
)
|
32,809
|
||||||||||||
Net
interest income
|
81,027
|
43,899
|
37,128
|
||||||||||||||
(Provision
for) recovery of loan losses
|
(136,992
|
)
|
14,301
|
(151,293
|
)
|
||||||||||||
Net
interest (loss) income after (provision for) recovery of loan
losses
|
(55,965
|
)
|
58,200
|
(114,165
|
)
|
||||||||||||
Non-interest
income:
|
|||||||||||||||||
Rental
and other income
|
622
|
703
|
(81
|
)
|
|||||||||||||
Derivative
cash settlements
|
12,934
|
19,836
|
(6,902
|
)
|
|||||||||||||
Results
of operations from foreclosed assets
|
2,457
|
3,816
|
(1,359
|
)
|
|||||||||||||
Total
non-interest income
|
16,013
|
24,355
|
(8,342
|
)
|
|||||||||||||
Non-interest
(expense) income:
|
|||||||||||||||||
Salaries
and employee benefits
|
(19,763
|
)
|
(17,651
|
)
|
(2,112
|
)
|
|||||||||||
Other
general and administrative expenses
|
(9,924
|
)
|
(10,416
|
)
|
492
|
||||||||||||
(Provision
for) recovery of guarantee liability
|
(4,981
|
)
|
3,300
|
(8,281
|
)
|
||||||||||||
Market
adjustment on foreclosed assets
|
(153
|
)
|
-
|
(153
|
)
|
||||||||||||
Derivative
forward value
|
(150,411
|
)
|
(109,012
|
)
|
(41,399
|
)
|
|||||||||||
Loss
on sale of loans
|
-
|
(518
|
)
|
518
|
|||||||||||||
Fair
value adjustment on investments in trading securities
|
(101
|
)
|
-
|
(101
|
)
|
||||||||||||
Total
non-interest expense
|
(185,333
|
)
|
(134,297
|
)
|
(51,036
|
)
|
|||||||||||
Loss
prior to income taxes and minority interest
|
(225,285
|
)
|
(51,742
|
)
|
(173,543
|
)
|
|||||||||||
Income
tax benefit
|
7,160
|
4,011
|
3,149
|
||||||||||||||
Minority
interest, net of income taxes
|
2,979
|
6,123
|
(3,144
|
)
|
|||||||||||||
Net
loss
|
$
|
(215,146
|
)
|
$
|
(41,608
|
)
|
$
|
(173,538
|
)
|
||||||||
TIER
(1)
|
-
|
-
|
|||||||||||||||
Adjusted
TIER (1) (2)
|
-
|
1.13
|
For
the six months ended November 30,
|
Increase/
|
||||||||||||
2008
|
2007
|
(Decrease)
|
|||||||||||
Interest
income
|
5.53
|
%
|
5.85
|
%
|
(0.32
|
)%
|
|||||||
Interest
expense
|
(4.69
|
)
|
(5.37
|
)
|
0.68
|
||||||||
Net
interest income
|
0.84
|
0.48
|
0.36
|
||||||||||
(Provision
for) recovery of loan losses
|
(1.42
|
)
|
0.16
|
(1.58
|
)
|
||||||||
Net
interest (loss) income after (provision for) recovery of loan
losses
|
(0.58
|
)
|
0.64
|
(1.22
|
)
|
||||||||
Non-interest
income:
|
|||||||||||||
Rental
and other income
|
0.01
|
0.01
|
-
|
||||||||||
Derivative
cash settlements
|
0.13
|
0.22
|
(0.09
|
)
|
|||||||||
Results
of operations of foreclosed assets
|
0.03
|
0.05
|
(0.02
|
)
|
|||||||||
Total
non-interest income
|
0.17
|
0.28
|
(0.11
|
)
|
|||||||||
Non-interest
(expense) income:
|
|||||||||||||
Salaries
and employee benefits
|
(0.20
|
)
|
(0.20
|
)
|
-
|
||||||||
Other
general and administrative expenses
|
(0.11
|
)
|
(0.11
|
)
|
-
|
||||||||
(Provision
for) recovery of guarantee liability
|
(0.05
|
)
|
0.03
|
(0.08
|
)
|
||||||||
Derivative
forward value
|
(1.55
|
)
|
(1.20
|
)
|
(0.35
|
)
|
|||||||
Loss
on sale of loans
|
-
|
(0.01
|
)
|
0.01
|
|||||||||
Total
non-interest expense
|
(1.91
|
)
|
(1.49
|
)
|
(0.42
|
)
|
|||||||
Loss
prior to income taxes and minority interest
|
(2.32
|
)
|
(0.57
|
)
|
(1.75
|
)
|
|||||||
Income
tax benefit
|
0.07
|
0.04
|
0.03
|
||||||||||
Minority
interest, net of income taxes
|
0.03
|
0.07
|
(0.04
|
)
|
|||||||||
Net
loss
|
(2.22
|
)%
|
(0.46
|
)%
|
(1.76
|
)%
|
|||||||
Adjusted
net interest income (1)
|
0.97
|
%
|
0.70
|
%
|
0.27
|
%
|
|||||||
Adjusted
(loss) income prior to income taxes and minority interest (2)
|
(0.77
|
)%
|
0.63
|
%
|
(1.40
|
)%
|
For
the six months ended November 30,
|
||||||||||||||||||||||||||||||||
2008
|
2007
|
Change
due to
|
||||||||||||||||||||||||||||||
Average
Loan
Balance
|
Income/
(Cost)
|
Rate
|
Average
Loan
Balance
|
Income/
(Cost)
|
Rate
|
Volume
(1)
|
Rate
(2)
|
Total
|
||||||||||||||||||||||||
Interest
income:
|
||||||||||||||||||||||||||||||||
National
Rural:
|
$
|
17,200
|
$
|
481
|
5.58
|
%
|
$
|
15,818
|
$
|
466
|
5.87
|
%
|
$
|
40
|
$
|
(25
|
)
|
$
|
15
|
|||||||||||||
RTFC
|
1,708
|
39
|
4.54
|
1,831
|
47
|
5.16
|
(3
|
)
|
(5
|
)
|
(8
|
)
|
||||||||||||||||||||
NCSC
|
425
|
15
|
7.18
|
462
|
18
|
7.80
|
(2
|
)
|
(1
|
)
|
(3
|
)
|
||||||||||||||||||||
Total
|
$
|
19,333
|
$
|
535
|
5.53
|
$
|
18,111
|
$
|
531
|
5.85
|
$
|
35
|
$
|
(31
|
)
|
$
|
4
|
|||||||||||||||
Interest
expense:
|
||||||||||||||||||||||||||||||||
National
Rural:
|
$
|
17,200
|
$
|
(407
|
)
|
(4.72
|
)%
|
$
|
15,818
|
$
|
(427
|
)
|
(5.39
|
)%
|
$
|
(37
|
)
|
$
|
57
|
$
|
20
|
|||||||||||
RTFC
|
1,708
|
(36
|
)
|
(4.26
|
)
|
1,831
|
(44
|
)
|
(4.85
|
)
|
3
|
5
|
8
|
|||||||||||||||||||
NCSC
|
425
|
(11
|
)
|
(5.24
|
)
|
462
|
(16
|
)
|
(6.74
|
)
|
2
|
3
|
5
|
|||||||||||||||||||
Total
|
$
|
19,333
|
$
|
(454
|
)
|
(4.69
|
)
|
$
|
18,111
|
$
|
(487
|
)
|
(5.37
|
)
|
$
|
(32
|
)
|
$
|
65
|
$
|
33
|
|||||||||||
Net
interest income:
|
||||||||||||||||||||||||||||||||
National
Rural:
|
$
|
17,200
|
$
|
74
|
0.86
|
%
|
$
|
15,818
|
$
|
39
|
0.48
|
%
|
$
|
3
|
$
|
32
|
$
|
35
|
||||||||||||||
RTFC
|
1,708
|
3
|
0.28
|
1,831
|
3
|
0.31
|
-
|
-
|
-
|
|||||||||||||||||||||||
NCSC
|
425
|
4
|
1.94
|
462
|
2
|
1.06
|
-
|
2
|
2
|
|||||||||||||||||||||||
Total
|
$
|
19,333
|
$
|
81
|
0.84
|
$
|
18,111
|
$
|
44
|
0.48
|
$
|
3
|
$
|
34
|
$
|
37
|
||||||||||||||||
Derivative
cash settlements (3):
|
||||||||||||||||||||||||||||||||
National
Rural
|
$
|
13,179
|
$
|
15
|
0.23
|
%
|
$
|
12,786
|
$
|
20
|
0.31
|
%
|
$
|
-
|
$
|
(5
|
)
|
$
|
(5
|
)
|
||||||||||||
NCSC
|
195
|
(2
|
)
|
(2.45
|
)
|
208
|
-
|
-
|
-
|
(2
|
)
|
(2
|
)
|
|||||||||||||||||||
Total
|
$
|
13,374
|
$
|
13
|
0.19
|
$
|
12,994
|
$
|
20
|
0.31
|
$
|
-
|
$
|
(7
|
)
|
$
|
(7
|
)
|
||||||||||||||
Adjusted
interest expense (4):
|
||||||||||||||||||||||||||||||||
Total
|
$
|
19,333
|
$
|
(441
|
)
|
(4.56
|
)
|
$
|
18,111
|
$
|
(467
|
)
|
(5.15
|
)%
|
$
|
(32
|
)
|
$
|
58
|
$
|
26
|
|||||||||||
For
the six months ended November 30,
|
|||||||||||||||
2008
|
2007
|
||||||||||||||
(Dollar
amounts in thousands)
|
Amount
|
Rate
|
Amount
|
Rate
|
Increase/
(Decrease)
|
||||||||||
Interest
on long-term fixed rate loans (1)
|
$
|
448,663
|
$
|
429,743
|
$
|
18,920
|
|||||||||
Interest
on long-term variable rate loans (1)
|
33,649
|
47,239
|
(13,590
|
)
|
|||||||||||
Interest
on short-term loans (1)
|
40,446
|
39,592
|
854
|
||||||||||||
Total
interest income on loans
|
522,758
|
5.39
|
%
|
516,574
|
5.69
|
%
|
6,184
|
||||||||
Interest
on investments (2)
|
3,625
|
0.04
|
4,836
|
0.06
|
(1,211
|
)
|
|||||||||
Conversion
fees (3)
|
3,239
|
0.03
|
3,509
|
0.03
|
(270
|
)
|
|||||||||
Make-whole
and prepayment fees (4)
|
867
|
0.01
|
1,754
|
0.02
|
(887
|
)
|
|||||||||
Commitment
and guarantee fees (5)
|
3,636
|
0.04
|
2,920
|
0.03
|
716
|
||||||||||
Other
fees
|
1,435
|
0.02
|
1,648
|
0.02
|
(213
|
)
|
|||||||||
Total interest
income
|
$
|
535,560
|
5.53
|
%
|
$
|
531,241
|
5.85
|
%
|
$
|
4,319
|
For
the six months ended November 30,
|
||||||||||||||||
2008
|
2007
|
|||||||||||||||
(Dollar
amounts in thousands)
|
Amount
|
Rate
|
Amount
|
Rate
|
Increase/
(Decrease)
|
|||||||||||
Interest
expense (1):
|
||||||||||||||||
Commercial
paper and bank bid notes
|
$
|
40,076
|
$
|
71,478
|
$
|
(31,402
|
)
|
|||||||||
Medium-term
notes
|
161,513
|
166,867
|
(5,354
|
)
|
||||||||||||
Collateral
trust bonds
|
130,955
|
128,755
|
2,200
|
|||||||||||||
Subordinated
deferrable debt
|
9,831
|
9,831
|
-
|
|||||||||||||
Subordinated
certificates
|
25,248
|
24,154
|
1,094
|
|||||||||||||
Long-term
private debt
|
70,130
|
65,743
|
4,387
|
|||||||||||||
Total
interest expense on debt
|
437,753
|
4.52
|
%
|
466,828
|
5.14
|
%
|
(29,075
|
)
|
||||||||
Debt
issuance costs (2)
|
4,526
|
0.05
|
5,297
|
0.06
|
(771
|
)
|
||||||||||
Commitment
and guarantee fees (3)
|
10,013
|
0.10
|
8,675
|
0.09
|
1,338
|
|||||||||||
Loss
on extinguishment of debt (4)
|
-
|
-
|
5,509
|
0.07
|
(5,509
|
)
|
||||||||||
Other
fees
|
2,241
|
0.02
|
1,033
|
0.01
|
1,208
|
|||||||||||
Total
interest expense
|
$
|
454,533
|
4.69
|
%
|
$
|
487,342
|
5.37
|
%
|
$
|
(32,809
|
)
|
For
the three months ended
November
30,
|
Increase/
|
|||||||||||
(Dollar
amounts in thousands)
|
2008
|
2007
|
(Decrease)
|
|||||||||
Interest
income
|
$
|
269,042
|
$
|
263,287
|
$
|
5,755
|
||||||
Interest
expense
|
(234,224
|
)
|
(240,017
|
)
|
5,793
|
|||||||
Net
interest income
|
34,818
|
23,270
|
11,548
|
|||||||||
(Provision
for) recovery of loan losses
|
(126,311
|
)
|
14,301
|
(140,612
|
)
|
|||||||
Net
interest (loss) income after (provision for) recovery of loan
losses
|
(91,493
|
)
|
37,571
|
(129,064
|
)
|
|||||||
Non-interest
income:
|
||||||||||||
Rental
and other income
|
441
|
352
|
89
|
|||||||||
Derivative
cash settlements
|
12,503
|
11,507
|
996
|
|||||||||
Results
of operations of foreclosed assets
|
1,211
|
1,856
|
(645
|
)
|
||||||||
Total
non-interest income
|
14,155
|
13,715
|
440
|
|||||||||
Non-interest
(expense) income:
|
||||||||||||
Salaries
and employee benefits
|
(9,912
|
)
|
(8,828
|
)
|
(1,084
|
)
|
||||||
Other
general and administrative expenses
|
(5,182
|
)
|
(5,929
|
)
|
747
|
|||||||
(Provision
for) recovery of guarantee liability
|
(5,686
|
)
|
1,200
|
(6,886
|
)
|
|||||||
Derivative
forward value
|
(139,383
|
)
|
(75,412
|
)
|
(63,971
|
)
|
||||||
Market
adjustment on foreclosed assets
|
(153
|
)
|
-
|
(153
|
)
|
|||||||
Fair
value adjustment on investments in trading securities
|
(101
|
)
|
-
|
(101
|
)
|
|||||||
Total
non-interest expense
|
(160,417
|
)
|
(88,969
|
)
|
(71,448
|
)
|
||||||
Loss
prior to income taxes and minority interest
|
(237,755
|
)
|
(37,683
|
)
|
(200,072
|
)
|
||||||
Income
tax benefit
|
6,400
|
2,912
|
3,488
|
|||||||||
Minority
interest, net of income taxes
|
1,738
|
4,545
|
(2,807
|
)
|
||||||||
Net
loss
|
$
|
(229,617
|
)
|
$
|
(30,226
|
)
|
$
|
(199,391
|
)
|
|||
TIER
(1)
|
-
|
-
|
||||||||||
Adjusted
TIER (1) (2)
|
-
|
1.18
|
For
the three months ended
November
30,
|
Increase/
|
|||||||||||||
2008
|
2007
|
(Decrease)
|
||||||||||||
Interest
income
|
5.54
|
%
|
5.83
|
%
|
(0.29
|
)
|
||||||||
Interest
expense
|
(4.82
|
)
|
(5.32
|
)
|
0.50
|
|||||||||
Net
interest income
|
0.72
|
0.51
|
0.21
|
|||||||||||
(Provision
for) recovery of loan losses
|
(2.60
|
)
|
0.31
|
(2.91
|
)
|
|||||||||
Net
interest (loss) income after (provision for) recovery of loan
losses
|
(1.88
|
)
|
0.82
|
(2.70
|
)
|
|||||||||
Non-interest
income:
|
||||||||||||||
Rental
and other income
|
0.01
|
0.02
|
(0.01
|
)
|
||||||||||
Derivative
cash settlements
|
0.26
|
0.27
|
(0.01
|
)
|
||||||||||
Results
of operations of foreclosed assets
|
0.02
|
0.04
|
(0.02
|
)
|
||||||||||
Total
non-interest income
|
0.29
|
0.33
|
(0.04
|
)
|
||||||||||
Non-interest
(expense) income:
|
||||||||||||||
Salaries
and employee benefits
|
(0.20
|
)
|
(0.20
|
)
|
-
|
|||||||||
Other
general and administrative expenses
|
(0.11
|
)
|
(0.13
|
)
|
0.02
|
|||||||||
(Provision
for) recovery of guarantee liability
|
(0.12
|
)
|
0.02
|
(0.14
|
)
|
|||||||||
Derivative
forward value
|
(2.87
|
)
|
(1.69
|
)
|
(1.18
|
)
|
||||||||
Total
non-interest expense
|
(3.30
|
)
|
(2.00
|
)
|
(1.30
|
)
|
||||||||
Loss
prior to income taxes and minority interest
|
(4.89
|
)
|
(0.85
|
)
|
(4.04
|
)
|
||||||||
Income
tax benefit
|
0.13
|
0.07
|
0.06
|
|||||||||||
Minority
interest, net of income taxes
|
0.04
|
0.11
|
(0.07
|
)
|
||||||||||
Net
loss
|
(4.72
|
)%
|
(0.67
|
)%
|
(4.05
|
)
|
||||||||
Adjusted
net interest income (1)
|
0.98
|
%
|
0.78
|
%
|
0.20
|
|||||||||
Adjusted
(loss) income prior to income taxes and minority interest (2)
|
(2.02
|
)%
|
0.84
|
%
|
(2.86
|
)
|
For
the three months ended November 30,
|
|||||||||||||||||||||||||
2008
|
2007
|
Change
due to
|
|||||||||||||||||||||||
Average
Loan
Balance
|
Income
/ (Cost)
|
Rate
|
Average
Loan Balance
|
Income
/ (Cost)
|
Rate
|
Volume
(1)
|
Rate
(2)
|
Total
|
|||||||||||||||||
Interest
income:
|
|||||||||||||||||||||||||
National
Rural
|
$
|
17,357
|
$
|
242
|
5.59
|
%
|
$
|
15,816
|
$
|
231
|
5.86
|
%
|
$
|
22
|
$
|
(11
|
)
|
$
|
11
|
||||||
RTFC
|
1,705
|
19
|
4.54
|
1,806
|
23
|
5.18
|
(1
|
)
|
(3
|
)
|
(4
|
)
|
|||||||||||||
NCSC
|
434
|
8
|
7.17
|
463
|
9
|
7.77
|
(1
|
)
|
-
|
(1
|
)
|
||||||||||||||
Total
|
$
|
19,496
|
$
|
269
|
5.54
|
$
|
18,085
|
$
|
263
|
5.83
|
$
|
20
|
$
|
(14
|
)
|
$
|
6
|
||||||||
Interest
expense:
|
|||||||||||||||||||||||||
National
Rural
|
$
|
17,357
|
$
|
(210
|
)
|
(4.85
|
)%
|
$
|
15,816
|
$
|
(210
|
)
|
(5.34
|
)%
|
$
|
(20
|
)
|
$
|
20
|
$
|
-
|
||||
RTFC
|
1,705
|
(18
|
)
|
(4.28
|
)
|
1,806
|
(22
|
)
|
(4.87
|
)
|
1
|
3
|
4
|
||||||||||||
NCSC
|
434
|
(6
|
)
|
(5.62
|
)
|
463
|
(8
|
)
|
(6.67
|
)
|
1
|
1
|
2
|
||||||||||||
Total
|
$
|
19,496
|
$
|
(234
|
)
|
(4.82
|
)
|
$
|
18,085
|
$
|
(240
|
)
|
(5.32
|
)
|
$
|
(18
|
)
|
$
|
24
|
$
|
6
|
||||
Net
interest income:
|
|||||||||||||||||||||||||
National
Rural
|
$
|
17,357
|
$
|
32
|
0.74
|
%
|
$
|
15,816
|
$
|
21
|
0.52
|
%
|
$
|
2
|
$
|
9
|
$
|
11
|
|||||||
RTFC
|
1,705
|
1
|
0.26
|
1,806
|
1
|
0.31
|
-
|
-
|
-
|
||||||||||||||||
NCSC
|
434
|
2
|
1.55
|
463
|
1
|
1.10
|
-
|
1
|
1
|
||||||||||||||||
Total
|
$
|
19,496
|
$
|
35
|
0.72
|
$
|
18,085
|
$
|
23
|
0.51
|
$
|
2
|
$
|
10
|
$
|
12
|
|||||||||
Derivative
cash settlements (3):
|
|||||||||||||||||||||||||
National
Rural
|
$
|
12,872
|
$
|
14
|
0.43
|
%
|
$
|
13,152
|
$
|
12
|
0.35
|
%
|
$
|
-
|
$
|
2
|
$
|
2
|
|||||||
NCSC
|
195
|
(1
|
)
|
(2.48
|
)
|
205
|
-
|
-
|
-
|
(1
|
)
|
(1
|
)
|
||||||||||||
Total
|
$
|
13,067
|
$
|
13
|
0.38
|
$
|
13,357
|
$
|
12
|
0.35
|
$
|
-
|
$
|
1
|
$
|
1
|
|||||||||
Adjusted
interest expense (4):
|
|||||||||||||||||||||||||
Total
|
$
|
19,496
|
$
|
(221
|
)
|
(4.56
|
)%
|
$
|
18,085
|
$
|
(228
|
)
|
(5.05
|
)%
|
$
|
(18
|
)
|
$
|
25
|
$
|
7
|
For
the three months ended November 30,
|
||||||||||||||||||
2008
|
2007
|
Increase/
|
||||||||||||||||
(Dollar
amounts in thousands)
|
Amount
|
Rate
|
Amount
|
Rate
|
(Decrease)
|
|||||||||||||
Interest
on long-term fixed rate loans (1)
|
$
|
224,261
|
$
|
215,183
|
$
|
9,078
|
||||||||||||
Interest
on long-term variable rate loans (1)
|
18,469
|
22,690
|
(4,221
|
)
|
||||||||||||||
Interest
on short-term loans (1)
|
20,942
|
19,244
|
1,698
|
|||||||||||||||
Total
interest income on loans
|
263,672
|
5.43
|
%
|
257,117
|
5.71
|
%
|
6,555
|
|||||||||||
Interest
on investments (2)
|
1,444
|
0.03
|
1,900
|
0.04
|
(456
|
)
|
||||||||||||
Conversion
fees (3)
|
1,536
|
0.03
|
1,735
|
0.04
|
(199
|
)
|
||||||||||||
Make-whole
and prepayment fees (4)
|
40
|
-
|
65
|
-
|
(25
|
)
|
||||||||||||
Commitment
and guarantee fees (5)
|
1,767
|
0.04
|
1,385
|
0.02
|
382
|
|||||||||||||
Other
fees
|
583
|
0.01
|
1,085
|
0.02
|
(502
|
)
|
||||||||||||
Total interest
income
|
$
|
269,042
|
5.54
|
%
|
$
|
263,287
|
5.83
|
%
|
$
|
5,755
|
For
the three months ended November 30,
|
||||||||||||||||||
2008
|
2007
|
|||||||||||||||||
(Dollar
amounts in thousands)
|
Amount
|
Rate
|
Amount
|
Rate
|
Increase/
(Decrease)
|
|||||||||||||
Interest
expense (1):
|
||||||||||||||||||
Commercial
paper and bid notes
|
$
|
23,638
|
$
|
33,192
|
$
|
(9,554
|
)
|
|||||||||||
Medium-term
notes
|
81,055
|
83,681
|
(2,626
|
)
|
||||||||||||||
Collateral
trust bonds
|
68,035
|
63,405
|
4,630
|
|||||||||||||||
Subordinated
deferrable debt
|
4,915
|
4,916
|
(1
|
)
|
||||||||||||||
Subordinated
certificates
|
12,831
|
12,030
|
801
|
|||||||||||||||
Long-term
private debt
|
34,534
|
34,960
|
(426
|
)
|
||||||||||||||
Total
interest expense on debt
|
225,008
|
4.63
|
%
|
232,184
|
5.14
|
%
|
(7,176
|
)
|
||||||||||
Debt
issuance costs (2)
|
2,391
|
0.05
|
2,767
|
0.07
|
(376
|
)
|
||||||||||||
Commitment
and guarantee fees (3)
|
5,246
|
0.11
|
4,605
|
0.11
|
641
|
|||||||||||||
Other
fees
|
1,579
|
0.03
|
461
|
-
|
1,118
|
|||||||||||||
Total
interest expense
|
$
|
234,224
|
4.82
|
%
|
$
|
240,017
|
5.32
|
%
|
$
|
(5,793
|
)
|
Three
months ended
November
30,
|
Six
months ended
November
30,
|
||||||||||||
(Dollar
amounts in thousands)
|
2008
|
2007
|
2008
|
2007
|
|||||||||
Loss
prior to cumulative effect of
|
|||||||||||||
change
in accounting principle
|
$
|
(229,617
|
)
|
$
|
(30,226
|
)
|
$
|
(215,146
|
)
|
$
|
(41,608
|
)
|
|
Add:
fixed charges
|
234,224
|
240,017
|
454,533
|
487,342
|
|||||||||
Earnings
available for fixed charges
|
$
|
4,607
|
$
|
209,791
|
$
|
239,387
|
$
|
445,734
|
|||||
Total
fixed charges:
|
|||||||||||||
Interest
on all debt (including amortization of
|
|||||||||||||
discount
and issuance costs)
|
$
|
234,224
|
$
|
240,017
|
$
|
454,533
|
$
|
487,342
|
|||||
Ratio
of earnings to fixed charges (1)
|
-
|
-
|
-
|
-
|
Increase/
|
||||||||||||||||||||||
(dollar
amounts in thousands)
|
November
30, 2008
|
May
31, 2008
|
(Decrease)
|
|||||||||||||||||||
Loans
by type:
|
||||||||||||||||||||||
Long-term
loans (1):
|
||||||||||||||||||||||
Long-term
fixed rate loans
|
$
|
15,406,183
|
79
|
%
|
$
|
15,418,662
|
81
|
%
|
$
|
(12,479
|
)
|
|||||||||||
Long-term
variable rate loans
|
2,156,714
|
11
|
1,918,216
|
10
|
238,498
|
|||||||||||||||||
Total
long-term loans
|
17,562,897
|
90
|
17,336,878
|
91
|
226,019
|
|||||||||||||||||
Short-term
loans (2)
|
2,000,645
|
10
|
1,690,117
|
9
|
310,528
|
|||||||||||||||||
Total
loans
|
$
|
19,563,542
|
100
|
%
|
$
|
19,026,995
|
100
|
%
|
$
|
536,547
|
Increase/
|
||||||||||||||||||||||||
(dollar
amounts in thousands)
|
November
30, 2008
|
May
31, 2008
|
(Decrease)
|
|||||||||||||||||||||
Loans
by segment:
|
||||||||||||||||||||||||
National
Rural:
|
||||||||||||||||||||||||
Distribution
|
$
|
13,736,544
|
70
|
%
|
$
|
13,438,370
|
71
|
%
|
$
|
298,174
|
||||||||||||||
Power
supply
|
3,572,555
|
18
|
3,339,112
|
17
|
233,443
|
|||||||||||||||||||
Statewide
and associate
|
110,032
|
1
|
108,925
|
1
|
1,107
|
|||||||||||||||||||
National
Rural total
|
17,419,131
|
89
|
16,886,407
|
89
|
532,724
|
|||||||||||||||||||
RTFC
|
1,697,907
|
9
|
1,726,514
|
9
|
(28,607
|
)
|
||||||||||||||||||
NCSC
|
446,504
|
2
|
414,074
|
2
|
32,430
|
|||||||||||||||||||
Total
|
$
|
19,563,542
|
100
|
%
|
$
|
19,026,995
|
100
|
%
|
$
|
536,547
|
(dollar
amounts in thousands)
|
November
30, 2008
|
May
31, 2008
|
Increase/
(Decrease)
|
||||||||||||||||
National
Rural:
|
|||||||||||||||||||
Distribution
|
$
|
13,961,730
|
67
|
%
|
$
|
13,622,829
|
68
|
%
|
$
|
338,901
|
|||||||||
Power
supply
|
4,500,596
|
22
|
4,125,567
|
20
|
375,029
|
||||||||||||||
Statewide
and associate
|
130,520
|
1
|
131,710
|
1
|
(1,190
|
)
|
|||||||||||||
National
Rural total
|
18,592,846
|
90
|
17,880,106
|
89
|
712,740
|
||||||||||||||
RTFC
|
1,698,407
|
8
|
1,726,774
|
9
|
(28,367
|
)
|
|||||||||||||
NCSC
|
511,442
|
2
|
457,255
|
2
|
54,187
|
||||||||||||||
Total
|
$
|
20,802,695
|
100
|
%
|
$
|
20,064,135
|
100
|
%
|
$
|
738,560
|
(dollar
amounts in thousands)
|
November
30, 2008
|
May
31, 2008
|
Increase/
(Decrease)
|
|||||||||||||
Rural
local exchange carriers
|
$
|
1,493,987
|
88
|
%
|
$
|
1,518,197
|
88
|
%
|
$
|
(24,210
|
)
|
|||||
Cable
television providers
|
152,934
|
9
|
153,539
|
9
|
(605
|
)
|
||||||||||
Fiber
optic network providers
|
11,167
|
1
|
16,884
|
1
|
(5,717
|
)
|
||||||||||
Competitive
local exchange carriers
|
36,312
|
2
|
29,871
|
2
|
6,441
|
|||||||||||
Wireless
providers
|
4,007
|
-
|
4,579
|
-
|
(572
|
)
|
||||||||||
Other
|
-
|
-
|
3,704
|
-
|
(3,704
|
)
|
||||||||||
Total
|
$
|
1,698,407
|
100
|
%
|
$
|
1,726,774
|
100
|
%
|
$
|
(28,367
|
)
|
·
|
loans
outstanding, excluding loans guaranteed by
RUS,
|
·
|
the
Company's guarantees of the borrower's
obligations,
|
·
|
unadvanced
loan commitments,
|
·
|
borrower
guarantees to the Company of another borrower's debt,
and
|
·
|
other
indebtedness of any kind unless guaranteed by the U.S.
Government.
|
|
|
November
30, 2008
|
|
|
May
31, 2008
|
Increase/
|
||||||
(dollar
amounts in thousands)
|
Amount
|
%
of Total
|
Amount
|
%
of Total
|
(Decrease)
|
|||||||
Total
by type:
|
||||||||||||
Loans
|
$
|
3,393,606
|
$
|
3,395,865
|
$
|
(2,259
|
)
|
|||||
Guarantees
|
367,750
|
164,740
|
203,010
|
|||||||||
Total
credit exposure to ten largest borrowers
|
$
|
3,761,356
|
18%
|
$
|
3,560,605
|
18%
|
$
|
200,751
|
||||
Total
by segment:
|
||||||||||||
National
Rural
|
$
|
3,243,794
|
$
|
3,043,905
|
$
|
199,889
|
||||||
RTFC
|
485,362
|
491,700
|
(6,338
|
)
|
||||||||
NCSC
|
32,200
|
25,000
|
7,200
|
|||||||||
Total
credit exposure to ten largest borrowers
|
$
|
3,761,356
|
18%
|
$
|
3,560,605
|
18%
|
$
|
200,751
|
|
|
November
30, 2008
|
|
|
May
31, 2008
|
Increase/
|
||||||
(dollar
amounts in thousands)
|
Amount
|
%
of Total
|
Amount
|
%
of Total
|
(Decrease)
|
|||||||
Total
by type:
|
||||||||||||
Loans
|
$
|
2,516,470
|
$
|
2,150,739
|
$
|
365,731
|
||||||
Guarantees
|
283,836
|
235,816
|
48,020
|
|||||||||
Total
unsecured credit exposure
|
$
|
2,800,306
|
13%
|
$
|
2,386,555
|
11%
|
$
|
413,751
|
||||
Total
by segment:
|
||||||||||||
National
Rural
|
$
|
2,511,667
|
$
|
2,100,676
|
$
|
410,991
|
||||||
RTFC
|
229,060
|
229,287
|
(227
|
)
|
||||||||
NCSC
|
59,579
|
56,592
|
2,987
|
|||||||||
Total
unsecured credit exposure
|
$
|
2,800,306
|
13%
|
$
|
2,386,555
|
11%
|
$
|
413,751
|
·
|
principal
or interest payments on any loan to the borrower are past due 90 days or
more,
|
·
|
as
a result of court proceedings, repayment on the original terms is not
anticipated, or
|
·
|
for
some other reason, management does not expect the timely repayment of
principal and interest.
|
·
|
interest
rates,
|
·
|
court
rulings,
|
·
|
changes
in collateral values,
|
·
|
changes
in economic conditions in the area in which the cooperative operates,
and
|
·
|
changes
to the industry in which the cooperative
operates.
|
(dollar
amounts in thousands)
|
November
30, 2008
|
May
31, 2008
|
||||||
Non-performing
loans
|
$
|
493,024
|
$
|
506,864
|
||||
Percent
of loans outstanding
|
2.52
|
%
|
2.67
|
%
|
||||
Percent
of loans and guarantees outstanding
|
2.37
|
2.52
|
||||||
Restructured
loans
|
$
|
562,329
|
$
|
577,111
|
||||
Percent
of loans outstanding
|
2.87
|
%
|
3.03
|
%
|
||||
Percent
of loans and guarantees outstanding
|
2.70
|
2.88
|
||||||
Total
non-performing and restructured loans
|
$
|
1,055,353
|
$
|
1,083,975
|
||||
Percent
of loans outstanding
|
5.39
|
%
|
5.70
|
%
|
||||
Percent
of loans and guarantees outstanding
|
5.07
|
5.40
|
For
the six months ended and as of
|
For
the year ended
and
as of
|
|||||||||||
(dollar
amounts in thousands)
|
November
30, 2008
|
November
30, 2007
|
May
31,
2008
|
|||||||||
Beginning
balance
|
$
|
514,906
|
$
|
561,663
|
$
|
561,663
|
||||||
Provision
for (recovery of) loan losses
|
136,992
|
(14,301
|
)
|
(30,262
|
)
|
|||||||
Net
charge-offs
|
(2,952
|
)
|
(16,560
|
)
|
(16,495
|
)
|
||||||
Ending
balance
|
$
|
648,946
|
$
|
530,802
|
$
|
514,906
|
||||||
`
|
||||||||||||
Loan
loss allowance by segment:
|
||||||||||||
National
Rural
|
$
|
648,755
|
$
|
530,313
|
$
|
514,626
|
||||||
NCSC
|
191
|
489
|
280
|
|||||||||
Total
|
$
|
648,946
|
$
|
530,802
|
$
|
514,906
|
||||||
As
a percentage of total loans outstanding
|
3.32
|
%
|
2.91
|
%
|
2.71
|
%
|
||||||
As
a percentage of total non-performing loans outstanding
|
131.63
|
105.57
|
101.59
|
|||||||||
As
a percentage of total restructured loans outstanding
|
115.40
|
89.85
|
89.22
|
(dollar
amounts in thousands)
|
November
30,
2008
|
May
31,
2008
|
Increase/
(Decrease)
|
||||||||||
Short-term
debt:
|
|||||||||||||
Commercial
paper (1)
|
$
|
3,223,535
|
$
|
3,050,264
|
$
|
173,271
|
|||||||
Bank
bid notes
|
180,000
|
100,000
|
80,000
|
||||||||||
Long-term
debt with remaining maturities less than one year
|
2,307,640
|
3,177,189
|
(869,549
|
)
|
|||||||||
Total
short-term debt
|
5,711,175
|
6,327,453
|
(616,278
|
)
|
|||||||||
Long-term
debt:
|
|||||||||||||
Collateral
trust bonds
|
5,173,129
|
2,886,580
|
2,286,549
|
||||||||||
Notes
payable
|
3,456,551
|
2,956,403
|
500,148
|
||||||||||
Medium-term
notes
|
2,971,241
|
4,330,604
|
(1,359,363
|
)
|
|||||||||
Total
long-term debt
|
11,600,921
|
10,173,587
|
1,427,334
|
||||||||||
Subordinated
deferrable debt
|
311,440
|
311,440
|
-
|
||||||||||
Members'
subordinated certificates:
|
|||||||||||||
Membership
certificates
|
649,465
|
649,465
|
-
|
||||||||||
Loan
certificates
|
683,000
|
654,047
|
28,953
|
||||||||||
Guarantee
certificates
|
132,112
|
103,267
|
28,845
|
||||||||||
Total
members' subordinated certificates
|
1,464,577
|
1,406,779
|
57,798
|
||||||||||
Total
debt outstanding
|
$
|
19,088,113
|
$
|
18,219,259
|
$
|
868,854
|
|||||||
Percentage
of fixed rate debt (2)
|
83
|
%
|
82
|
%
|
|||||||||
Percentage
of variable rate debt (3)
|
17
|
18
|
|||||||||||
Percentage
of long-term debt
|
70
|
65
|
|||||||||||
Percentage
of short-term debt
|
30
|
35
|
(in
thousands)
|
November
30,
2008
|
May
31,
2008
|
Increase/
(Decrease)
|
||||||||||
Membership
fees
|
$
|
993
|
$
|
993
|
$
|
-
|
|||||||
Education
fund
|
871
|
1,484
|
(613
|
)
|
|||||||||
Members'
capital reserve
|
187,099
|
187,409
|
(310
|
)
|
|||||||||
Allocated
net income
|
338,105
|
423,249
|
(85,144
|
)
|
|||||||||
Unallocated
net loss (1)
|
(83,365
|
)
|
(53
|
)
|
(83,312
|
)
|
|||||||
Total
members' equity
|
443,703
|
613,082
|
(169,379
|
)
|
|||||||||
Prior
years’ cumulative derivative forward
|
|||||||||||||
value
and foreign currency adjustments
|
44,056
|
131,551
|
(87,495
|
)
|
|||||||||
Year-to-date
derivative forward value loss (2)
|
(131,834
|
)
|
(87,495
|
)
|
(44,339
|
)
|
|||||||
Total
retained equity
|
355,925
|
657,138
|
(301,213
|
)
|
|||||||||
Accumulated
other comprehensive income
|
8,428
|
8,827
|
(399
|
)
|
|||||||||
Total
equity
|
$
|
364,353
|
$
|
665,965
|
$
|
(301,612
|
)
|
(in
millions)
|
More
than 5
|
||||||||||||||||||||||||||||
Instrument
|
2009
|
2010
|
2011
|
2012
|
2013
|
Years
|
Total
|
||||||||||||||||||||||
Long-term
debt due in less than one year
|
$
|
503
|
$
|
1,805
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
2,308
|
|||||||||||||||
Long-term
debt
|
-
|
372
|
1,025
|
2,064
|
441
|
7,699
|
11,601
|
||||||||||||||||||||||
Subordinated
deferrable debt
|
-
|
-
|
-
|
-
|
-
|
311
|
311
|
||||||||||||||||||||||
Members'
subordinated certificates
(1)
|
7
|
39
|
19
|
26
|
18
|
1,102
|
1,211
|
||||||||||||||||||||||
Operating
leases (2)
|
2
|
4
|
1
|
-
|
-
|
-
|
7
|
||||||||||||||||||||||
Contractual
interest on long-term debt (3)
|
407
|
731
|
661
|
621
|
534
|
4,975
|
7,929
|
||||||||||||||||||||||
Total
contractual obligations
|
$
|
919
|
$
|
2,951
|
$
|
1,706
|
$
|
2,711
|
$
|
993
|
$
|
14,087
|
$
|
23,367
|
November
30,
|
May
31,
|
Increase/
|
||||||||||
(in
thousands)
|
2008
|
2008
|
(Decrease)
|
|||||||||
Total
by type:
|
||||||||||||
Long-term
tax-exempt bonds
|
$
|
640,255
|
$
|
498,495
|
$
|
141,760
|
||||||
Indemnifications
of tax benefit transfers
|
89,048
|
94,821
|
(5,773
|
)
|
||||||||
Letters
of credit
|
409,637
|
343,424
|
66,213
|
|||||||||
Other
guarantees
|
100,213
|
100,400
|
(187
|
)
|
||||||||
Total
|
$
|
1,239,153
|
$
|
1,037,140
|
$
|
202,013
|
||||||
Total
by segment:
|
||||||||||||
National
Rural
|
$
|
1,173,715
|
$
|
993,699
|
$
|
180,016
|
||||||
RTFC
|
500
|
260
|
240
|
|||||||||
NCSC
|
64,938
|
43,181
|
21,757
|
|||||||||
Total
|
$
|
1,239,153
|
$
|
1,037,140
|
$
|
202,013
|
(in
thousands)
|
Principal
Amortization and Maturities
|
|||||||||||||||
Outstanding
|
Remaining
|
|||||||||||||||
Balance
|
2009
|
2010
|
2011
|
2012
|
2013
|
Years
|
||||||||||
Guarantees
(1)
|
$1,239,153
|
$65,204
|
$289,153
|
$173,260
|
$61,717
|
$108,385
|
$541,434
|
Moody's
Investors
|
Standard
& Poor's
|
|||||||||||
Service
|
Corporation
|
Fitch
Ratings
|
||||||||||
Direct:
|
||||||||||||
Senior
secured debt
|
A1
|
A+
|
A+
|
|||||||||
Senior
unsecured debt
|
A2
|
A
|
A
|
|||||||||
Subordinated
deferrable debt
|
A3
|
BBB+
|
A-
|
|||||||||
Commercial
paper
|
P-1
|
A-1
|
F1
|
|||||||||
Guarantees:
|
||||||||||||
Pooled
bonds
|
A1
|
A
|
A
|
|||||||||
Other
bonds
|
A2
|
A
|
A
|
|||||||||
Short-term
|
P-1
|
A-1
|
F1
|
(dollar
amounts in thousands)
|
November
30, 2008 (3)
|
May
31, 2008
|
Termination
Date
|
Facility
fee per
year
(1)
|
||||||||
Five-year
agreement
|
$
|
1,125,000
|
$
|
1,125,000
|
March
16, 2012
|
6
basis points
|
||||||
Five-year
agreement
|
1,025,000
|
1,025,000
|
March
22, 2011
|
6
basis points
|
||||||||
364-day
agreement (2)
|
1,500,000
|
1,500,000
|
March
13, 2009
|
5
basis points
|
||||||||
Total
|
$
|
3,650,000
|
$
|
3,650,000
|
·
|
guarantees
for members where the long-term unsecured debt of the member is rated at
least BBB+ by Standard & Poor's Corporation or Baa1 by Moody's
Investors Service; and
|
·
|
the
payment of principal and interest by the member on the guaranteed
indebtedness if covered by insurance or reinsurance provided by an insurer
having an insurance financial strength rating of AAA by Standard &
Poor's Corporation or a financial strength rating of Aaa by Moody's
Investors Service.
|
Actual
|
||||||||
Requirement
|
November
30, 2008
|
May
31, 2008
|
||||||
Minimum
average adjusted TIER over the six most recent fiscal
quarters
|
1.025
|
1.05
|
1.16
|
|||||
Minimum
adjusted TIER at prior fiscal year end (1)
|
1.05
|
1.15
|
1.15
|
|||||
Maximum
ratio of senior debt to total equity
|
10.00
|
8.11
|
7.33
|
November
30, 2008
|
May
31, 2008
|
Increase/
|
|||||||||||||||||||
(dollar
amounts in thousands)
|
Amount
|
%
of Total (1)
|
Amount
|
%
of Total (1)
|
(Decrease)
|
||||||||||||||||
Commercial
paper (2)
|
$
|
1,649,654
|
51
|
%
|
$
|
1,526,559
|
50
|
%
|
$
|
123,095
|
|||||||||||
Medium-term
notes
|
579,359
|
11
|
392,739
|
8
|
186,620
|
||||||||||||||||
Members'
subordinated certificates
|
1,464,577
|
100
|
1,406,779
|
100
|
57,798
|
||||||||||||||||
Members'
equity (3)
|
443,703
|
100
|
613,082
|
100
|
(169,379
|
)
|
|||||||||||||||
Total
|
$
|
4,137,293
|
$
|
3,939,159
|
$
|
198,134
|
|||||||||||||||
Percentage
of total assets
|
20.3
|
%
|
20.3
|
%
|
|||||||||||||||||
Percentage
of total assets less derivative assets (3)
|
20.8
|
%
|
20.6
|
%
|
|||||||||||||||||
Amount
|
|||||
(in
thousands)
|
Maturing
(1)
|
||||
2009
|
$
|
510,281
|
|||
2010
|
2,215,388
|
||||
2011
|
1,044,802
|
||||
2012
|
2,089,871
|
||||
2013
|
458,700
|
||||
Thereafter
|
9,112,426
|
||||
Total
|
$
|
15,431,468
|
INTEREST
RATE GAP ANALYSIS
|
(Fixed
Rate Assets/Liabilities)
|
At
November 30, 2008
|
May
31,
|
June
1,
|
June
1,
|
June
1,
|
June
1,
|
|||||||||||||||||||||||||||||||||||||
2009
|
2009
to
|
2011
to
|
2013
to
|
2018
to
|
Beyond
|
||||||||||||||||||||||||||||||||||||
or
|
May
31,
|
May
31,
|
May
31,
|
May
31,
|
June
1,
|
||||||||||||||||||||||||||||||||||||
(Dollar
amounts in millions)
|
prior
|
2011
|
2013
|
2018
|
2028
|
2028
|
Total
|
||||||||||||||||||||||||||||||||||
Assets
amortization and repricing
|
$
|
1,511
|
$
|
3,528
|
$
|
2,915
|
$
|
3,467
|
$
|
2,711
|
$
|
1,066
|
$
|
15,198
|
|||||||||||||||||||||||||||
Liabilities
and members' equity:
|
|||||||||||||||||||||||||||||||||||||||||
Long-term
debt
|
$
|
1,044
|
$
|
3,155
|
$
|
3,346
|
$
|
3,600
|
$
|
1,759
|
$
|
796
|
$
|
13,700
|
|||||||||||||||||||||||||||
Subordinated
certificates
|
12
|
53
|
79
|
64
|
816
|
240
|
1,264
|
||||||||||||||||||||||||||||||||||
Members'
equity (1)
|
-
|
25
|
32
|
127
|
109
|
137
|
430
|
||||||||||||||||||||||||||||||||||
Total
liabilities and members' equity
|
$
|
1,056
|
$
|
3,233
|
$
|
3,457
|
$
|
3,791
|
$
|
2,684
|
$
|
1,173
|
$
|
15,394
|
|||||||||||||||||||||||||||
Gap (2)
|
$
|
455
|
$
|
295
|
$
|
(542
|
)
|
$
|
(324
|
)
|
$
|
27
|
$
|
(107
|
)
|
$
|
(196
|
)
|
|||||||||||||||||||||||
Cumulative
gap
|
455
|
750
|
208
|
(116
|
)
|
(89
|
)
|
(196
|
)
|
||||||||||||||||||||||||||||||||
Cumulative
gap as a % of total assets
|
2.23
|
%
|
3.67
|
%
|
1.02
|
%
|
(0.57
|
)%
|
(0.44
|
)%
|
(0.96
|
)%
|
|||||||||||||||||||||||||||||
Cumulative
gap as a % of adjusted total assets (3)
|
2.28
|
3.76
|
1.04
|
(0.58
|
)
|
(0.45
|
)
|
(0.98
|
)
|
(in
thousands)
|
Notional
|
Required
Company
|
Amount
Company
|
Net
|
|||||||||
Rating
Level:
|
Amount
|
Payment
|
Would
Collect
|
Total
|
|||||||||
Fall
to Baa1/BBB+ and below
|
$
|
8,008
|
$
|
(127,638
|
)
|
$
|
38,500
|
$
|
(89,138
|
)
|
|||
Three
months ended
|
Six
months ended
|
|||||||||||||||||||||||||||
November
30,
|
November
30,
|
|||||||||||||||||||||||||||
(in
thousands)
|
2008
|
2007
|
2008
|
2007
|
||||||||||||||||||||||||
Interest
expense
|
$
|
(234,224
|
)
|
$
|
(240,017
|
)
|
$
|
(454,533
|
)
|
$
|
(487,342
|
)
|
||||||||||||||||
Derivative
cash settlements
|
12,503
|
11,507
|
12,934
|
19,836
|
||||||||||||||||||||||||
Adjusted
interest expense
|
$
|
(221,721
|
)
|
$
|
(228,510
|
)
|
$
|
(441,599
|
)
|
$
|
(467,506
|
)
|
||||||||||||||||
Net
interest income
|
$
|
34,818
|
$
|
23,270
|
$
|
81,027
|
$
|
43,899
|
||||||||||||||||||||
Derivative
cash settlements
|
12,503
|
11,507
|
12,934
|
19,836
|
||||||||||||||||||||||||
Adjusted
net interest income
|
$
|
47,321
|
$
|
34,777
|
$
|
93,961
|
$
|
63,735
|
||||||||||||||||||||
Loss
prior to income taxes and minority interest
|
$
|
(237,755
|
)
|
$
|
(37,683
|
)
|
$
|
(225,285
|
)
|
$
|
(51,742
|
)
|
||||||||||||||||
Derivative
forward value
|
139,383
|
75,412
|
150,411
|
109,012
|
||||||||||||||||||||||||
Adjusted
(loss) income prior to income taxes and minority interest
|
$
|
(98,372
|
)
|
$
|
37,729
|
$
|
(74,874
|
)
|
$
|
57,270
|
||||||||||||||||||
Net
loss
|
$
|
(229,617
|
)
|
$
|
(30,226
|
)
|
$
|
(215,146
|
)
|
$
|
(41,608
|
)
|
||||||||||||||||
Minority
interest net loss
|
(1,738
|
)
|
(4,545
|
)
|
(2,979
|
)
|
(6,123
|
)
|
||||||||||||||||||||
Derivative
forward value
|
139,383
|
75,412
|
150,411
|
109,012
|
||||||||||||||||||||||||
Adjusted
net (loss) income
|
$
|
(91,972
|
)
|
$
|
40,641
|
$
|
(67,714
|
)
|
$
|
61,281
|
||||||||||||||||||
Interest
expense + net income prior to cumulative
|
|||
TIER
=
|
effect
of change in accounting principle
|
||
Interest
expense
|
Adjusted
TIER =
|
Adjusted
interest expense + adjusted net income
|
||
Adjusted
interest expense
|
Three
months ended
|
Six
months ended
|
|||||||||||||||
November
30,
|
November
30,
|
|||||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
TIER
(1)
|
-
|
-
|
-
|
-
|
||||||||||||
Adjusted
TIER (1)
|
-
|
1.18
|
-
|
1.13
|
(in
thousands)
|
November
30, 2008
|
May
31, 2008
|
|||||||
Liabilities
|
$
|
20,042,687
|
$
|
18,699,169
|
|||||
Less:
|
|||||||||
Derivative
liabilities
|
(594,077
|
)
|
(171,390
|
)
|
|||||
Debt
used to fund loans guaranteed by RUS
|
(246,020
|
)
|
(250,169
|
)
|
|||||
Subordinated
deferrable debt
|
(311,440
|
)
|
(311,440
|
)
|
|||||
Subordinated
certificates
|
(1,464,577
|
)
|
(1,406,779
|
)
|
|||||
Adjusted
liabilities
|
$
|
17,426,573
|
$
|
16,559,391
|
|||||
Total
equity
|
$
|
364,353
|
$
|
665,965
|
|||||
Less:
|
|||||||||
Prior
year cumulative derivative forward value and
|
|||||||||
foreign
currency adjustments
|
(44,056
|
)
|
(131,551
|
)
|
|||||
Year-to-date
derivative forward value loss (1)
|
131,834
|
87,495
|
|||||||
Accumulated
other comprehensive income
|
(8,428
|
)
|
(8,827
|
)
|
|||||
Subtotal
members' equity
|
443,703
|
613,082
|
|||||||
Plus:
|
|||||||||
Subordinated
certificates
|
1,464,577
|
1,406,779
|
|||||||
Subordinated
deferrable debt
|
311,440
|
311,440
|
|||||||
Minority
interest
|
11,260
|
14,247
|
|||||||
Adjusted
equity
|
$
|
2,230,980
|
$
|
2,345,548
|
|||||
Guarantees
|
$
|
1,239,153
|
$
|
1,037,140
|
The
leverage and debt to equity ratios using GAAP financial measures are
calculated as follows:
|
Leverage
ratio =
|
Liabilities
+ guarantees outstanding
|
||
Total
equity
|
|||
Debt
to equity ratio =
|
Liabilities
|
||
Total
equity
|
The
adjusted leverage and debt to equity ratios are calculated as
follows:
|
Adjusted
leverage ratio =
|
Adjusted
liabilities + guarantees outstanding
|
|||
Adjusted
equity
|
Adjusted
debt to equity ratio =
|
Adjusted
liabilities
|
|||
Adjusted
equity
|
The
following table provides the calculated ratio for leverage and debt to
equity, as well as the adjusted ratio calculations. The
adjusted leverage ratio and the adjusted debt to equity ratio are the same
calculation except for the addition of guarantees to adjusted liabilities
in the adjusted leverage ratio.
|
November
30, 2008
|
May
31, 2008
|
|||||||
Leverage
ratio
|
58.41
|
29.64
|
||||||
Adjusted
leverage ratio
|
8.37
|
7.50
|
||||||
Debt
to equity ratio
|
55.01
|
28.08
|
||||||
Adjusted
debt to equity ratio
|
7.81
|
7.06
|
PART
II.
|
OTHER
INFORMATION
|
Item
1A.
|
Risk
Factors
|
Item
6.
|
Exhibits
|
4.34
|
–
|
Amendment
No. 1 dated as of December 9, 2008 to the Revolving Credit Agreement dated
as of March 14, 2008 for $1,500,000,000 expiring on March 13,
2009.
|
4.35
|
–
|
Amendment
No. 2 dated as of December 9, 2008 to the Revolving Credit Agreement dated
as of March 16, 2007 for $1,125,000,000 expiring on March 16,
2012.
|
4.36
|
–
|
Amendment
No. 4 dated as of December 9, 2008 to the Revolving Credit Agreement dated
as of March 22, 2006 for $1,000,000,000 expiring on March 22,
2011.
|
4.37
|
-
|
Note
Purchase Agreement dated as of December 15, 2008 for $500,000,000 between
the Registrant and Federal Agricultural Mortgage
Corporation.
|
4.38
|
-
|
Pledge
Agreement dated as of December 15, 2008, between the Registrant, Federal
Agricultural Mortgage Corporation and U.S. Bank Trust National
Association.
|
4.39
|
-
|
Amendment
No. 2 dated as of December 19, 2008 to the Revolving Credit Agreement
dated as of March 14, 2008 for $1,500,000,000 expiring on March 13,
2009.
|
4.40
|
-
|
Amendment
No. 3 dated as of December 19, 2008 to the Revolving Credit Agreement
dated as of March 16, 2007 for $1,125,000,000 expiring on March 16,
2012.
|
4.41
|
-
|
Amendment
No. 5 dated as of December 19, 2008 to the Revolving Credit Agreement
dated as of March 22, 2006 for $1,000,000,000 expiring on March 22,
2011.
|
10.14
|
–
|
Fourth
Amendment to Agreement of Purchase and Sale between National Rural and DTC
Partners, LLC dated as of December 3, 2008.
|
31.1
|
–
|
Certification
of the Chief Executive Officer required by Section 302 of the
Sarbanes-Oxley Act of 2002.
|
31.2
|
–
|
Certification
of the Chief Financial Officer required by Section 302 of the
Sarbanes-Oxley Act of 2002.
|
32.1
|
–
|
Certification
of the Chief Executive Officer required by Section 906 of the
Sarbanes-Oxley Act of 2002.
|
32.2
|
–
|
Certification
of the Chief Financial Officer required by Section 906 of the
Sarbanes-Oxley Act of 2002.
|