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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
☒
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 28, 2026
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                      to                     
Commission file number 1-05721
Jefferies Financial Group Inc.
(Exact name of registrant as specified in its charter)
New York
13-2615557
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
520 Madison Avenue,
New York,
New York
10022
(Address of principal executive offices)
(Zip Code)
Registrant’s telephone number, including area code: (212) 284-2300
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Shares, par value $1 per share
JEF
New York Stock Exchange
4.850% Senior Notes Due 2027
JEF 27A
New York Stock Exchange
5.875% Senior Notes Due 2028
JEF 28
New York Stock Exchange
2.750% Senior Notes Due 2032
JEF 32A
New York Stock Exchange
6.200% Senior Notes Due 2034
JEF 34
New York Stock Exchange
5.500% Senior Notes Due 2036
JEF 36
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the
past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of
the Exchange Act.
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
☐
Smaller reporting company
☐
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒
The number of shares outstanding of each of the issuer’s classes of common stock at March 30, 2026 was 204,432,307.
Jefferies Financial Group, Inc.
Index to Quarterly Report on Form 10-Q
February 28, 2026
Page
Consolidated Statements of Financial Condition (Unaudited) .........................................................................................................
Consolidated Statements of Earnings (Unaudited) ............................................................................................................................
Consolidated Statements of Comprehensive Income (Unaudited) ..................................................................................................
Consolidated Statements of Changes in Equity (Unaudited) ............................................................................................................
Consolidated Statements of Cash Flows (Unaudited) .......................................................................................................................
Notes to Consolidated Financial Statements (Unaudited) ................................................................................................................
Item 3. Quantitative and Qualitative Disclosures About Market Risk ....................................................................................................
Item 4. Controls and Procedures ..................................................................................................................................................................
Item 1. Legal Proceedings .............................................................................................................................................................................
Item 1A. Risk Factors .....................................................................................................................................................................................
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds ..................................................................................................
Item 5. Other Information ..............................................................................................................................................................................
Item 6. Exhibits ................................................................................................................................................................................................
2
Jefferies Financial Group Inc.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements.
Consolidated Statements of Financial Condition (Unaudited)
February 28,
November 30,
$ in thousands, except share and per share amounts
2026
2025
Assets
Cash and cash equivalents ...............................................................................................................................................................
$11,963,165
$14,043,889
Cash and securities segregated and on deposit for regulatory purposes or deposited with clearing and depository
organizations .................................................................................................................................................................................
1,752,549
917,697
Financial instruments owned, at fair value (includes securities pledged of $18,129,409 and $17,419,373) .......................
28,079,458
27,722,739
Investments in and loans to related parties ...................................................................................................................................
1,560,602
1,496,125
Securities borrowed ...........................................................................................................................................................................
7,675,862
8,295,161
Securities purchased under agreements to resell ........................................................................................................................
7,784,070
8,449,107
Securities received as collateral, at fair value ................................................................................................................................
393,867
200,495
Receivables:
Brokers, dealers and clearing organizations ...............................................................................................................................
3,762,461
4,310,143
Customers ........................................................................................................................................................................................
3,984,448
3,439,921
Fees, interest and other ..................................................................................................................................................................
761,369
806,324
Premises and equipment ..................................................................................................................................................................
1,198,511
1,246,470
Goodwill ...............................................................................................................................................................................................
1,725,876
1,837,570
Assets held for sale ...........................................................................................................................................................................
269,707
—
Other assets (includes assets pledged of $646,883 and $627,259) ..........................................................................................
3,468,545
3,246,706
Total assets ........................................................................................................................................................................................
$74,380,490
$76,012,347
Liabilities and Equity
Short-term borrowings ......................................................................................................................................................................
$1,917,492
$1,767,206
Financial instruments sold, not yet purchased, at fair value .......................................................................................................
14,459,138
13,320,152
Securities loaned ................................................................................................................................................................................
2,690,387
2,540,759
Securities sold under agreements to repurchase .........................................................................................................................
10,380,281
12,156,737
Other secured financings (includes $424,023 and $425,964 at fair value) ...............................................................................
2,285,995
2,885,878
Obligation to return securities received as collateral, at fair value .............................................................................................
393,867
200,495
Payables:
Brokers, dealers and clearing organizations ...............................................................................................................................
5,646,053
6,955,100
Customers ........................................................................................................................................................................................
5,350,833
5,216,714
Lease liabilities ...................................................................................................................................................................................
573,096
594,097
Liabilities held for sale ......................................................................................................................................................................
257,888
—
Accrued expenses and other liabilities ...........................................................................................................................................
2,533,907
3,836,709
Long-term debt (includes $3,686,758 and $3,734,843 at fair value) ..........................................................................................
17,229,419
15,895,891
Total liabilities ....................................................................................................................................................................................
63,718,356
65,369,738
Mezzanine Equity
Redeemable noncontrolling interests .............................................................................................................................................
406
406
Equity
Series B preferred shares, par value of $1 per share, authorized 70,000 shares; 55,125 shares issued and outstanding
55
55
Common shares, par value $1 per share, authorized 565,000,000 shares; 204,422,673 and 206,296,167 shares issued
and outstanding, after deducting 116,695,397 and 114,821,903 shares held in treasury ..................................................
204,423
206,296
Non-voting common shares, par value $1 per share, authorized 35,000,000, shares; no shares issued and
outstanding ....................................................................................................................................................................................
—
—
Additional paid-in capital ..................................................................................................................................................................
2,075,065
2,177,954
Accumulated other comprehensive loss ........................................................................................................................................
(315,023)
(384,434)
Retained earnings ..............................................................................................................................................................................
8,646,325
8,574,825
Total Jefferies Financial Group Inc. shareholders' equity ..........................................................................................................
10,610,845
10,574,696
Noncontrolling interests ...................................................................................................................................................................
50,883
67,507
Total equity .........................................................................................................................................................................................
10,661,728
10,642,203
Total liabilities and equity ................................................................................................................................................................
$74,380,490
$76,012,347
See accompanying notes to consolidated financial statements.
February 2026 Form 10-Q
3
Consolidated Statements of Earnings (Unaudited)
Three Months Ended February 28,
$ in thousands, except per share amounts
2026
2025
Revenues
Investment banking ....................................................................................................................................................................
$1,018,284
$729,510
Principal transactions ................................................................................................................................................................
487,498
407,230
Commissions and other fees ....................................................................................................................................................
367,604
288,300
Asset management fees and revenues ...................................................................................................................................
67,362
85,408
Interest .........................................................................................................................................................................................
813,119
845,171
Other .............................................................................................................................................................................................
117,398
117,245
Total revenues ............................................................................................................................................................................
2,871,265
2,472,864
Interest expense ..........................................................................................................................................................................
854,135
879,845
Net revenues ...............................................................................................................................................................................
2,017,130
1,593,019
Non-interest expenses
Compensation and benefits ......................................................................................................................................................
1,085,890
841,127
Brokerage and clearing fees .....................................................................................................................................................
133,132
109,436
Underwriting costs ......................................................................................................................................................................
31,383
17,846
Technology and communications ............................................................................................................................................
159,858
139,475
Occupancy and equipment rental .............................................................................................................................................
33,860
30,199
Business development ...............................................................................................................................................................
75,422
72,291
Professional services .................................................................................................................................................................
76,944
72,466
Depreciation and amortization .................................................................................................................................................
56,865
30,988
Cost of sales ................................................................................................................................................................................
29,920
41,568
Other expenses ...........................................................................................................................................................................
121,640
86,558
Total non-interest expenses ....................................................................................................................................................
1,804,914
1,441,954
Earnings before income taxes ..................................................................................................................................................
212,216
151,065
Income tax expense ...................................................................................................................................................................
52,870
14,216
Net earnings ................................................................................................................................................................................
159,346
136,849
Net losses attributable to noncontrolling interests ...............................................................................................................
(15,858)
(6,983)
Preferred stock dividends ..........................................................................................................................................................
19,504
16,039
Net earnings attributable to common shareholders ............................................................................................................
$155,700
$127,793
Earnings per common share
Basic .............................................................................................................................................................................................
$0.72
$0.60
Diluted ...........................................................................................................................................................................................
0.70
0.57
Weighted-average common shares outstanding
Basic .............................................................................................................................................................................................
215,707
214,536
Diluted ...........................................................................................................................................................................................
223,270
222,448
See accompanying notes to consolidated financial statements.
4
Jefferies Financial Group Inc.
Consolidated Statements of Comprehensive Income (Unaudited)
Three Months Ended February 28,
$ in thousands
2026
2025
Net earnings .............................................................................................................................................................................
$159,346
$136,849
Other comprehensive income (loss), net of tax:
Currency translation adjustments and other (1) ................................................................................................................
9,179
(15,322)
Changes in fair value related to instrument-specific credit risk (2) ................................................................................
59,648
30,256
Unrealized gains on available-for-sale-securities .............................................................................................................
584
125
Total other comprehensive income (loss), net of tax (3) .................................................................................................
69,411
15,059
Comprehensive income ..........................................................................................................................................................
228,757
151,908
Net losses attributable to noncontrolling interests ............................................................................................................
(15,858)
(6,983)
Preferred stock dividends ......................................................................................................................................................
19,504
16,039
Comprehensive income attributable to common shareholders ......................................................................................
$225,111
$142,852
(1)Includes income tax expense of $4.5 million for the three months ended February 28, 2026 and income tax benefit of $4.5 million for the three
months ended February 28, 2025.
(2)Includes income tax expense of $19.0 million and $10.6 million for the three months ended February 28, 2026 and 2025, respectively.
(3)Includes unrealized losses of $0.2 million for the three months ended February 28, 2025, related to currency translation adjustments attributable to
noncontrolling interests.
See accompanying notes to consolidated financial statements.
February 2026 Form 10-Q
5
Consolidated Statements of Changes in Equity (Unaudited)
Three Months Ended February 28,
$ in thousands, except par value and per share amounts
2026
2025
Preferred shares $1 par value
Balance, beginning of period ....................................................................................................................................................
$55
$55
Balance, end of period ..............................................................................................................................................................
$55
$55
Common shares $1 par value
Balance, beginning of period ....................................................................................................................................................
$206,296
$205,504
Purchase of common shares for treasury ..........................................................................................................................
(2,996)
(696)
Other .........................................................................................................................................................................................
1,123
1,442
Balance, end of period ..............................................................................................................................................................
$204,423
$206,250
Additional paid-in capital
Balance, beginning of period ....................................................................................................................................................
$2,177,954
$2,104,199
Share-based compensation expense ..................................................................................................................................
50,672
35,637
Purchase of common shares for treasury ..........................................................................................................................
(171,307)
(55,622)
Dividend equivalents ..............................................................................................................................................................
10,908
8,597
Change in equity interest related to consolidated subsidiaries .......................................................................................
4,606
853
Other .........................................................................................................................................................................................
2,232
474
Balance, end of period ..............................................................................................................................................................
$2,075,065
$2,094,138
Accumulated other comprehensive loss, net of tax
Balance, beginning of period ....................................................................................................................................................
$(384,434)
$(423,131)
Other comprehensive income, net of taxes ........................................................................................................................
69,411
15,059
Balance, end of period ..............................................................................................................................................................
$(315,023)
$(408,072)
Retained earnings
Balance, beginning of period ....................................................................................................................................................
$8,574,825
$8,270,145
Net earnings attributable to Jefferies Financial Group Inc. ..............................................................................................
175,204
143,832
Dividends - common shares ($0.40 and $0.40 per share) ................................................................................................
(92,674)
(91,095)
Dividends - preferred shares .................................................................................................................................................
(11,025)
(11,025)
Other .........................................................................................................................................................................................
(5)
—
Balance, end of period ..............................................................................................................................................................
$8,646,325
$8,311,857
Total Jefferies Financial Group Inc. shareholders' equity .................................................................................................
$10,610,845
$10,204,228
Noncontrolling interests
Balance, beginning of period ....................................................................................................................................................
$67,507
$68,215
Net losses attributable to noncontrolling interests ...........................................................................................................
(15,858)
(6,983)
Contributions ...........................................................................................................................................................................
119
104
Distributions ............................................................................................................................................................................
(1,518)
(2,795)
Other .........................................................................................................................................................................................
633
5,670
Balance, end of period ..............................................................................................................................................................
$50,883
$64,211
Total equity .................................................................................................................................................................................
$10,661,728
$10,268,439
See accompanying notes to consolidated financial statements.
6
Jefferies Financial Group Inc.
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended February 28,
$ in thousands
2026
2025
Cash flows from operating activities:
Net earnings ...................................................................................................................................................................
$159,346
$136,849
Adjustments to reconcile net earnings to net cash used in operating activities:
Depreciation and amortization .................................................................................................................................
41,335
32,995
Impairment of assets ................................................................................................................................................
65,413
—
Share-based compensation ......................................................................................................................................
50,672
35,637
Net bad debt expense ...............................................................................................................................................
14,427
7,493
Income on investments in and loans to related parties .......................................................................................
(24,474)
(7,052)
Distributions received on investments in related parties .....................................................................................
21,173
16,142
Other adjustments .....................................................................................................................................................
118,761
(44,419)
Net change in assets and liabilities:
Receivables:
Brokers, dealers and clearing organizations .......................................................................................................
547,515
(877,505)
Customers ................................................................................................................................................................
(544,527)
32,699
Fees, interest and other ..........................................................................................................................................
7,851
(47,567)
Securities borrowed ...................................................................................................................................................
619,155
(1,198,188)
Financial instruments owned ...................................................................................................................................
(357,809)
(2,271,617)
Securities purchased under agreements to resell ................................................................................................
664,567
(1,976,348)
Other assets ................................................................................................................................................................
(305,830)
(236,583)
Payables:
Brokers, dealers and clearing organizations .......................................................................................................
(1,308,863)
546,020
Customers ................................................................................................................................................................
134,119
48,413
Securities loaned ........................................................................................................................................................
149,785
(30,136)
Financial instruments sold, not yet purchased ......................................................................................................
1,139,710
3,027,469
Securities sold under agreements to repurchase .................................................................................................
(1,776,125)
1,359,656
Lease liabilities ...........................................................................................................................................................
(17,783)
(21,429)
Accrued expenses and other liabilities ...................................................................................................................
(1,135,709)
(1,197,694)
Net cash used in operating activities ........................................................................................................................
(1,737,291)
(2,665,165)
Cash flows from investing activities:
Contributions to investments in and loans to related parties .............................................................................
(64,830)
(21,949)
Capital distributions from investments and repayments of loans from related parties .................................
426
13,752
Net payments on premises and equipment ...........................................................................................................
(64,861)
(49,578)
Net cash used in investing activities ........................................................................................................................
(129,265)
(57,775)
Cash flows from financing activities:
Proceeds from short-term borrowings ...................................................................................................................
$2,081,271
$3,253,704
Payments on short-term borrowings ......................................................................................................................
(1,916,779)
(2,662,000)
Proceeds from issuance of long-term debt, net of issuance costs ....................................................................
2,570,746
1,536,928
Repayment of long-term debt ..................................................................................................................................
(1,239,142)
(188,890)
Purchase of common shares for treasury..............................................................................................................
(174,303)
(56,318)
Dividends paid to common and preferred shareholders ......................................................................................
(92,791)
(92,735)
Net proceeds from (payments on) other secured financings .............................................................................
(600,057)
98,941
Net change in bank overdrafts .................................................................................................................................
(8,400)
137,305
Proceeds from contributions of noncontrolling interests ....................................................................................
119
104
Payments on distributions to noncontrolling interests ........................................................................................
(1,518)
(2,795)
Other ............................................................................................................................................................................
7,956
1,916
Net cash provided by financing activities ................................................................................................................
627,102
2,026,160
Effect of exchange rate changes on cash, cash equivalents, and restricted cash ...........................................
(152)
(8,062)
Change in cash, cash equivalents, and restricted cash reclassified from (to) assets held for sale .................
(6,266)
—
Net decrease in cash, cash equivalents, and restricted cash ................................................................................
(1,239,606)
(704,842)
Cash, cash equivalents, and restricted cash at beginning of period .....................................................................
14,961,586
13,165,612
Cash, cash equivalents, and restricted cash at end of period ..............................................................................
$13,715,714
$12,460,770
February 2026 Form 10-Q
7
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended February 28,
$ in thousands
2026
2025
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest .........................................................................................................................................................................
$831,330
$845,673
Income taxes, net .......................................................................................................................................................
37,848
9,089
Noncash investing activities:
During the three months ended February 28, 2025, we donated land with a fair market value of $5.7 million.
Cash, cash equivalents and restricted cash by category in our Consolidated Statements of Financial Condition:
February 28,
November 30,
$ in thousands
2026
2025
Cash and cash equivalents ...........................................................................................................................................
$11,963,165
$14,043,889
Cash on deposit for regulatory purposes with clearing and depository organizations .......................................
1,752,549
917,697
Total cash, cash equivalents and restricted cash ....................................................................................................
$13,715,714
$14,961,586
See accompanying notes to consolidated financial statements.
8
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Index
Page
Note 1. Organization and Basis of Presentation ......................................................................................................................................................................
Note 2. Summary of Significant Accounting Policies .............................................................................................................................................................
Note 3. Accounting Developments ............................................................................................................................................................................................
Note 4. Assets and Liabilities Held for Sale ..............................................................................................................................................................................
Note 5. Fair Value Disclosures ....................................................................................................................................................................................................
Note 6. Derivative Financial Instruments ..................................................................................................................................................................................
Note 7. Collateralized Transactions ...........................................................................................................................................................................................
Note 8. Securitization Activities .................................................................................................................................................................................................
Note 9. Variable Interest Entities ................................................................................................................................................................................................
Note 10. Investments ...................................................................................................................................................................................................................
Note 11. Credit Losses on Financial Assets Measured at Amortized Cost .........................................................................................................................
Note 12. Goodwill and Intangible Assets ..................................................................................................................................................................................
Note 13. Revenues from Contracts with Customers ...............................................................................................................................................................
Note 14. Compensation Plans ....................................................................................................................................................................................................
Note 15. Borrowings .....................................................................................................................................................................................................................
Note 16. Total Equity ....................................................................................................................................................................................................................
Note 17. Income Taxes ................................................................................................................................................................................................................
Note 18. Commitments, Contingencies and Guarantees .......................................................................................................................................................
Note 19. Regulatory Requirements ............................................................................................................................................................................................
Note 20. Segment Reporting .......................................................................................................................................................................................................
Note 21. Related Party Transactions .........................................................................................................................................................................................
February 2026 Form 10-Q
9
Notes to Consolidated Financial Statements
(Unaudited)
Note 1. Organization and Basis of Presentation
Organization
Jefferies Financial Group Inc. is a U.S.-headquartered global
investment banking and capital markets firm. The accompanying
consolidated financial statements represent the accounts of
Jefferies Financial Group Inc. and subsidiaries (together, the
“Company,” “we” or “us”). We, collectively with our consolidated
subsidiaries and through our affiliates, deliver a broad range of
financial services across investment banking, capital markets
and asset management.
We operate in two reportable business segments: (1) Investment
Banking and Capital Markets and (2) Asset Management. The
Investment Banking and Capital Markets reportable business
segment includes our capital markets activities and our
investment banking business, which provides underwriting and
financial advisory services to our clients. We operate in the
Americas; Europe and the Middle East; and Asia-Pacific.
Investment Banking and Capital Markets also includes our
corporate lending joint venture (“Jefferies Finance LLC” or
“Jefferies Finance”), our commercial real estate joint venture
(“Berkadia Commercial Holding LLC” or “Berkadia”). The Asset
Management reportable business segment provides alternative
investment management services to investors globally and
generates investment income from capital invested in and
managed by us or our affiliated asset managers, and includes
certain remaining businesses and assets of our legacy merchant
banking portfolio.
Basis of Presentation
The accompanying consolidated financial statements have been
prepared in accordance with U.S. generally accepted accounting
principles (“U.S. GAAP”) and should be read in conjunction with
our consolidated financial statements and notes thereto included
in our Annual Report on Form 10-K for the year ended November
30, 2025. Certain footnote disclosures included in our Annual
Report on Form 10-K for the year ended November 30, 2025 have
been condensed or omitted from the consolidated financial
statements as they are not required for interim reporting under
U.S. GAAP. The consolidated financial statements reflect all
adjustments of a normal, recurring nature that are, in the opinion
of management, necessary for the fair presentation of the results
for the interim period. The results presented in our consolidated
financial statements for interim periods are not necessarily
indicative of the results for the entire year.
We have made a number of estimates and assumptions relating
to the reporting of assets and liabilities, the disclosure of
contingent assets and liabilities and the reported amounts of
revenues and expenses during the reporting period to prepare
these consolidated financial statements in conformity with U.S.
GAAP. The most important of these estimates and assumptions
relate to fair value measurements, compensation and benefits,
goodwill and intangible assets and the accounting for income
taxes. Although these and other estimates and assumptions are
based on the best available information, actual results could be
materially different from these estimates.
Certain prior period amounts in our consolidated financial
statements and respective notes have been reclassified to be
consistent with the current period presentation. Such
reclassifications had no impact on net earnings, total assets,
total liabilities, or stockholders’ equity.
Consolidation
Our policy is to consolidate all entities that we control by
ownership of a majority of the outstanding voting stock. In
addition, we consolidate entities that meet the definition of a
variable interest entity (“VIE”) for which we are the primary
beneficiary. The primary beneficiary is the party who has the
power to direct the activities of a VIE that most significantly
impact the entity’s economic performance and who has an
obligation to absorb losses of the entity or a right to receive
benefits from the entity that could potentially be significant to the
entity. For consolidated entities that are less than wholly-owned,
the third-party’s holding of equity interest is presented as
Noncontrolling interests in our Consolidated Statements of
Financial Condition and Consolidated Statements of Changes in
Equity. The portion of net earnings attributable to the
noncontrolling interests is presented as Net earnings (losses)
attributable to noncontrolling interests in our Consolidated
Statements of Earnings.
In situations in which we have significant influence, but not
control, of an entity that does not qualify as a VIE, we apply either
the equity method of accounting or fair value accounting
pursuant to the fair value option election under U.S. GAAP, with
our portion of net earnings or gains and losses recorded in Other
revenues or Principal transactions revenues, respectively. We
also have formed nonconsolidated investment vehicles with
third-party investors that are typically organized as partnerships
or limited liability companies and are carried at fair value. We act
as general partner or managing member for these investment
vehicles and have generally provided the third-party investors
with termination or “kick-out” rights.
Intercompany accounts and transactions are eliminated in
consolidation.
Note 2. Summary of Significant Accounting Policies
For a detailed discussion about the Company’s significant
accounting policies, refer to Note 2, Summary of Significant
Accounting Policies in our consolidated financial statements
included in Part II, Item 8 of our Annual Report on Form 10-K for
the year ended November 30, 2025.
During the three months ended February 28, 2026, there were no
significant changes made to the Company’s significant
accounting policies.
Note 3. Accounting Developments
Accounting Standards to be Adopted in Future Periods
Income Taxes. In December 2023, the FASB issued ASU No.
2023-09 (“ASU 2023-09”), Improvements to Income Tax
Disclosures. The guidance is intended to improve income tax
disclosure requirements by requiring (i) consistent categories
and greater disaggregation of information in the rate
reconciliation and (ii) the disaggregation of income taxes paid by
jurisdiction. The guidance makes several other changes to the
income tax disclosure requirements. The amendments in ASU
2023-09 are effective for fiscal years beginning after December
15, 2024 and are required to be applied prospectively with the
option of retrospective application. We are evaluating the impact
of the standard on our income tax disclosures.
10
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Expenses. In November 2024, the FASB issued ASU No. 2024-03
(“ASU 2024-03”), Disaggregation of Income Statement Expenses.
The guidance primarily will require enhanced disclosures about
certain types of expenses. The amendments in ASU 2024-03 are
effective for fiscal years beginning after December 15, 2026, and
interim periods within fiscal years beginning after December 15,
2027 and may be applied either on a prospective or retrospective
basis. We are evaluating the impact of the standard on our
disclosures.
Credit Losses. In July 2025, the FASB issued ASU No. 2025-05
(“ASU 2025-05”), Financial Instruments–Credit Losses. The
guidance provides an optional practical expedient when applying
the guidance related to the estimation of expected credit losses
for current accounts receivable and current contract assets
resulting from transactions arising from contracts with
customers. The amendments in ASU 2025-05 are effective for
fiscal years beginning after December 15, 2025, and interim
reporting periods, with early adoption permitted. We are
evaluating the impact of the standard on our financial
statements.
Internal-Use Software. In September 2025, the FASB issued ASU
No. 2025-06 (“ASU 2025-06”), Intangibles–Goodwill and Other–
Internal-Use Software. The guidance modernizes and clarifies the
threshold for when an entity is required to start capitalizing
software costs and is based on when (i) management has
authorized and committed to funding the software project and (ii)
it is probable that the project will be completed and the software
will be used to perform the function intended. The amendments
in ASU 2025-06 are effective for fiscal years beginning after
December 15, 2027, and interim reporting periods, with early
adoption permitted. We are evaluating the impact of the standard
on our financial statements.
Derivatives and Hedging and Revenue from Contracts with
Customers. In September 2025, the FASB issued ASU No.
2025-07 (“ASU 2025-07”), Derivatives and Hedging (Topic 815)
and Revenue from Contracts with Customers (Topic 606). The
guidance refines the scope of Topic 815 to clarify which
contracts are subject to derivative accounting. The guidance also
provides clarification under Topic 606 for share-based payments
from a customer in a revenue contract. The amendments in ASU
2025-07 are effective for fiscal years beginning after December
15, 2026, and interim reporting periods, with early adoption
permitted. We are evaluating the impact of the standard on our
financial statements.
Adopted Accounting Standards
Segment Reporting. In November 2023, the Financial Accounting
Standards Board (“FASB”) issued ASU No. 2023-07 (“ASU
2023-07”), Improvements to Reportable Segment Disclosures.
The guidance primarily requires enhanced disclosures about
significant segment expenses. We adopted the guidance
beginning with our year ended November 30, 2025, which
impacted our disclosures only. Refer to Note 20, Segment
Reporting for additional information.
Note 4. Assets and Liabilities Held for Sale
Tessellis
During 2026, we accepted a binding offer from a third party for
the sale of Tessellis. We expect the sale to close during first
quarter of 2027.
Assets held for sale are recorded initially at the lower of their
carrying value or estimated fair value, less estimated costs to
sell. Upon designation as an asset held for sale, we discontinue
recording depreciation and amortization expense on such assets.
Tessellis is included within our asset management reportable
segment.
Tessellis’ major classes of assets and liabilities:
$ in thousands
February 28, 2026
Assets held for sale:
Cash and cash equivalents ........................................
$6,266
Investments in and loans to related parties ............
6,579
Other receivables ........................................................
25,074
Premises and equipment, net ....................................
66,215
Goodwill ........................................................................
56,850
Other assets .................................................................
108,723
    Total assets held for sale .....................................
$269,707
Liabilities held for sale:
Short term borrowings ................................................
$6,071
Lease liabilities ............................................................
19,291
Accrued expenses and other liabilities ....................
181,699
Long-term debt ............................................................
50,827
    Total liabilities held for sale ................................
$257,888
February 2026 Form 10-Q
11
Notes to Consolidated Financial Statements
(Unaudited)
Note 5. Fair Value Disclosures
February 28, 2026 (1)
$ in thousands
Level 1
Level 2
Level 3
Counterparty
and Cash
Collateral
Netting (2)
Total
Assets:
Financial instruments owned:
Corporate equity securities ..................................................................................
$7,339,191
$354,960
$218,483
$—
$7,912,634
Corporate debt securities .....................................................................................
—
5,401,094
50,755
—
5,451,849
Collateralized debt obligations and collateralized loan obligations ...............
—
591,727
61,455
—
653,182
U.S. government and federal agency securities ................................................
2,524,173
67,934
—
—
2,592,107
Municipal securities ..............................................................................................
—
556,120
—
—
556,120
Sovereign obligations ............................................................................................
928,270
1,038,133
—
—
1,966,403
Residential mortgage-backed securities ............................................................
—
2,123,844
6,134
—
2,129,978
Commercial mortgage-backed securities ..........................................................
—
2,150
355
—
2,505
Other asset-backed securities .............................................................................
—
630,244
244,714
—
874,958
Loans and other receivables ................................................................................
—
2,156,054
85,396
—
2,241,450
Derivatives ..............................................................................................................
155
7,079,249
14,691
(5,186,913)
1,907,182
Investments at fair value ......................................................................................
—
13,569
167,195
—
180,764
Total financial instruments owned, excluding Investments at fair value
based on NAV ....................................................................................................
$10,791,789
$20,015,078
$849,178
$(5,186,913)
$26,469,132
Securities received as collateral ..........................................................................
$393,867
$—
$—
$—
$393,867
Liabilities:
Financial instruments sold, not yet purchased:
Corporate equity securities ..................................................................................
$6,457,960
$119,236
$167
$—
$6,577,363
Corporate debt securities .....................................................................................
—
3,196,057
555
—
3,196,612
Collateralized debt obligations and collateralized loan obligations ...............
—
1,000
—
—
1,000
U.S. government and federal agency securities ................................................
1,590,146
16
—
—
1,590,162
Municipal securities ..............................................................................................
—
88
—
—
88
Sovereign obligations ............................................................................................
688,027
837,099
—
—
1,525,126
Residential mortgage-backed securities ............................................................
—
2,041
—
—
2,041
Loans .......................................................................................................................
—
264,838
921
—
265,759
Derivatives ..............................................................................................................
56
6,858,114
43,253
(5,600,436)
1,300,987
Total financial instruments sold, not yet purchased .......................................
$8,736,189
$11,278,489
$44,896
$(5,600,436)
$14,459,138
Other secured financings ......................................................................................
$—
$412,338
$11,685
$—
$424,023
Obligation to return securities received as collateral .......................................
393,867
—
—
—
393,867
Long-term debt .......................................................................................................
—
2,662,691
1,024,067
—
3,686,758
(1)Excludes investments at fair value based on net asset value (“NAV”) of $1.61 billion at February 28, 2026 by level within the fair value hierarchy.
(2)Represents counterparty and cash collateral netting across the levels of the fair value hierarchy for positions with the same counterparty.
12
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
November 30, 2025 (1)
$ in thousands
Level 1
Level 2
Level 3
Counterparty
and Cash
Collateral
Netting (2)
Total
Assets:
Financial instruments owned:
Corporate equity securities ..................................................................................
$7,664,824
$249,847
$218,853
$—
$8,133,524
Corporate debt securities .....................................................................................
—
5,367,201
37,578
—
5,404,779
Collateralized debt obligations and collateralized loan obligations ...............
—
645,798
40,187
—
685,985
U.S. government and federal agency securities ................................................
2,342,718
106,633
—
—
2,449,351
Municipal securities ..............................................................................................
—
563,994
—
—
563,994
Sovereign obligations ............................................................................................
860,832
815,722
—
—
1,676,554
Residential mortgage-backed securities ............................................................
—
1,827,092
6,663
—
1,833,755
Commercial mortgage-backed securities ..........................................................
—
10,458
348
—
10,806
Other asset-backed securities .............................................................................
—
909,474
133,001
—
1,042,475
Loans and other receivables ................................................................................
—
2,111,517
127,720
—
2,239,237
Derivatives ..............................................................................................................
72
5,519,463
10,311
(3,705,764)
1,824,082
Investments at fair value ......................................................................................
—
13,567
163,107
—
176,674
Total financial instruments owned, excluding Investments at fair value
based on NAV ....................................................................................................
$10,868,446
$18,140,766
$737,768
$(3,705,764)
$26,041,216
Securities received as collateral ..........................................................................
$200,495
$—
$—
$—
$200,495
Liabilities:
Financial instruments sold, not yet purchased:
Corporate equity securities ..................................................................................
$5,571,534
$47,631
$155
$—
$5,619,320
Corporate debt securities .....................................................................................
—
2,761,794
3,720
—
2,765,514
Collateralized debt obligations and collateralized loan obligations ...............
—
627
—
—
627
U.S. government and federal agency securities ................................................
1,913,403
4
—
—
1,913,407
Sovereign obligations ............................................................................................
796,564
540,555
—
—
1,337,119
Loans .......................................................................................................................
—
184,391
9,757
—
194,148
Derivatives ..............................................................................................................
24
5,429,227
45,953
(3,985,187)
1,490,017
Total financial instruments sold, not yet purchased .......................................
$8,281,525
$8,964,229
$59,585
$(3,985,187)
$13,320,152
Other secured financings ......................................................................................
$—
$412,510
$13,454
$—
$425,964
Obligation to return securities received as collateral ......................................
200,495
—
—
—
200,495
Long-term debt .......................................................................................................
—
2,671,485
1,063,358
—
3,734,843
(1)Excludes investments at fair value based on NAV of $1.68 billion at November 30, 2025 by level within the fair value hierarchy.
(2)Represents counterparty and cash collateral netting across the levels of the fair value hierarchy for positions with the same counterparty.
February 2026 Form 10-Q
13
Notes to Consolidated Financial Statements
(Unaudited)
There have been no significant changes in valuation techniques
and inputs used in measuring our financial assets and liabilities
that are accounted for at fair value on a recurring basis. Refer to
our consolidated financial statements included in Part II, Item 8
of our Annual Report on Form 10-K for the year ended
November 30, 2025.
Investments at Fair Value
Investments at fair value includes investments in hedge funds,
private equity funds, credit funds, real estate funds and other
funds, which are measured at the NAV of the funds, provided by
the fund managers and are excluded from the fair value
hierarchy. Investments at fair value also include direct equity
investments in private companies, which are measured at fair
value using valuation techniques involving quoted prices of or
market data for comparable companies, similar company ratios
and multiples (e.g., price/EBITDA, price/book value), discounted
cash flow analyses and transaction prices observed for
subsequent financing or capital issuance by the company. Direct
equity investments in private companies are categorized within
Level 2 or Level 3 of the fair value hierarchy.
Information about our investments in entities that have the
characteristics of an investment company:
February 28, 2026
$ in thousands
Fair Value
(1)
Unfunded
Commitments
Redemption
Frequency
Redemption
Notice Period
Hedge
Funds (2) ..............
$781,873
$—
Quarterly (41%)
Monthly (39%)
N/R (20%)
45 - 90 days
45 - 60 days
N/R
Private Equity
Funds (3) ..............
69,295
23,473
N/R (100%)
N/R
Credit
Funds (4) ..............
497,569
23,847
Quarterly (53%)
Monthly (2%)
N/R (45%)
90 days
30 days
N/R
Real Estate and
Other Funds (5) ....
261,589
111,269
Quarterly (12%)
N/R (88%)
90 days
N/R
Total ......................
$1,610,326
$158,589
November 30, 2025
$ in thousands
Fair Value
(1)
Unfunded
Commitments
Redemption
Frequency
Redemption
Notice Period
Hedge
Funds (2) ............
$888,880
$—
Quarterly (42%)
Monthly (41%)
N/R (17%)
45 - 90 days
45 - 60 days
N/R
Private Equity
Funds (3) ............
66,476
26,828
N/R (100%)
N/R
Credit Funds (4)
490,321
23,847
Quarterly (56%)
Monthly (2%)
N/R (42%)
90 days
30 days
N/R
Real Estate and
Other Funds (5) .
235,846
114,872
Quarterly (19%)
N/R (81%)
90 days
N/R
Total ...................
$1,681,523
$165,547
N/R - Not redeemable
(1)Where fair value is calculated based on NAV, fair value has been derived from
each of the funds’ capital statements.
(2)Includes investments in hedge funds that invest, long and short, primarily in
both public and private equity securities in domestic and international
markets, commodities and multi-asset securities.
(3)Includes investments in equity funds that invest in the equity of various U.S.
and foreign private companies in a broad range of industries. These
investments cannot be redeemed; instead, distributions are received through
the liquidation of the underlying assets of the funds which are primarily
expected to be liquidated in approximately one to nine years.
(4)Primarily includes investments in funds that invest in:
•Distressed and special situations long/short credit strategies across
sectors and asset types;
•Short-term trade receivables and payables that are expected to generally be
outstanding between 90 to 120 days; and
•Distressed and event-driven opportunities across structured credit,
opportunistic credit, and private credit.
(5)Primarily includes investments in corporate real estate strategies focused on
buying or building real estate businesses and investments in venture capital
funds.
14
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
For instruments still held at
February 28, 2026, changes
in unrealized gains/(losses)
included in:
$ in thousands
Balance at
November 30,
2025
Total gains/
losses
(realized
and
unrealized)
(1)
Purchases
Sales
Settlements
Issuances
Net
transfers
into/
(out of)
Level 3
Balance at
February 28,
2026
Earnings (1)
Other
comprehensive
income (1)
Assets:
Financial instruments
owned:
Corporate equity securities ...
$218,853
$(6,089)
$12,452
$(3,342)
$(397)
$—
$(2,994)
$218,483
$(6,456)
$—
Corporate debt securities ......
37,578
1,716
66,717
(66,617)
(629)
—
11,990
50,755
(579)
—
CDOs and CLOs .......................
40,187
(7,026)
39,519
(11,654)
—
—
429
61,455
(5,505)
—
RMBS ........................................
6,663
(127)
—
—
(402)
—
—
6,134
(127)
—
CMBS ........................................
348
7
—
—
—
—
—
355
7
—
Other ABS .................................
133,001
(45,135)
119,288
(7,909)
(2,919)
—
48,388
244,714
(45,257)
—
Loans and other receivables .
127,720
(973)
214,243
(207,158)
(790)
—
(47,646)
85,396
2,488
—
Investments at fair value .......
163,107
4,636
250
(23)
(775)
—
—
167,195
3,895
—
Liabilities:
Financial instruments sold,
not yet purchased:
Corporate equity securities ...
$155
$12
$—
$—
$—
$—
$—
$167
$(12)
$—
Corporate debt securities ......
3,720
192
—
—
—
—
(3,357)
555
(192)
—
CDOs and CLOs .......................
—
3
—
—
(3)
—
—
—
—
—
Loans ........................................
9,757
(40)
(697)
725
—
—
(8,824)
921
(1,687)
—
Net derivatives (2) ...................
35,642
(11,191)
(5,332)
—
1,484
7,638
321
28,562
7,430
—
Other secured financings .......
13,454
(144)
—
120
(1,745)
—
—
11,685
134
Long-term debt ........................
1,063,358
(18,984)
—
—
(23,695)
6,737
(3,349)
1,024,067
(34,884)
53,868
(1)Realized and unrealized gains/losses are primarily reported in Principal transactions revenues. Changes in instrument-specific credit risk related to structured notes
within Long-term debt are presented net of tax in our Consolidated Statements of Comprehensive Income.
(2)Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased —Derivatives.
Analysis of Level 3 Assets and Liabilities for the Three Months
Ended February 28, 2026
Transfers of assets of $81.4 million from Level 2 to Level 3 of the
fair value hierarchy are primarily attributed to:
•Other ABS of $48.5 million, corporate debt securities of $17.2
million, CDOs and CLOs of $12.0 million and loans and other
receivables of $3.5 million due to reduced pricing
transparency.
Transfers of assets of $71.3 million from Level 3 to Level 2 are
primarily attributed to:
•Loans and other receivables of $51.1 million, CDOs and CLOs
of $11.6 million, corporate debt securities of $5.2 million and
corporate equity securities of $3.3 million due to greater
pricing transparency.
Transfers of liabilities of $10.8 million from Level 2 to Level 3 of
the fair value hierarchy are primarily attributed to:
•Structured notes within long-term debt of $9.2 million and net
derivatives of $1.6 million due to reduced pricing and market
transparency.
Transfers of liabilities of $26.0 million from Level 3 to Level 2 of
the fair value hierarchy are primarily attributed to:
•Structured notes within long-term debt of $12.6 million, loans
of $8.8 million, corporate debt securities of $3.4 million and net
derivatives of $1.2 million due to greater pricing and market
transparency.
Net losses on Level 3 assets were $53.0 million and net gains on
Level 3 liabilities were $30.2 million for the three months ended
February 28, 2026. Net losses on Level 3 assets were primarily
due to decreased market values in other ABS, CDOs and CLOs
and corporate equity securities, partially offset by an increase in
investments at fair value. Net gains on Level 3 liabilities were
primarily due to decreased market valuations of certain
structured notes within long-term debt and certain derivatives.
February 2026 Form 10-Q
15
Notes to Consolidated Financial Statements
(Unaudited)
For instruments still held at
February 28, 2025, changes in
unrealized gains/(losses)
included in:
$ in thousands
Balance at
November 30,
2024
Total gains/
losses
(realized
and
unrealized)
(1)
Purchases
Sales
Settlements
Issuances
Net
transfers
into/
(out of)
Level 3
Balance at
February 28,
2025
Earnings (1)
Other
comprehensive
income (1)
Assets:
Financial instruments
owned:
Corporate equity
securities .......................
$239,364
$2,864
$1,703
$(1,016)
$—
$—
$(30,506)
$212,409
$5,300
$—
Corporate debt securities
24,931
(1,002)
6,753
(895)
—
—
(3,862)
25,925
(1,248)
—
CDOs and CLOs .................
63,976
(4,646)
17,177
(9,981)
—
—
5,301
71,827
(4,664)
—
Sovereign obligations .......
172
2
—
(174)
—
—
(1)
—
RMBS ..................................
7,714
(167)
—
—
(21)
—
—
7,526
(59)
—
CMBS ..................................
477
(6)
—
—
—
—
—
471
—
—
Other ABS ...........................
103,214
(1,889)
54,165
(4,709)
(2,312)
—
(1,150)
147,319
(1,318)
—
Loans and other
receivables ....................
152,586
(949)
78,763
(53,590)
(9,170)
—
(13,876)
153,764
(1,545)
—
Investments at fair value .
137,865
393
21,288
—
(1,665)
—
—
157,881
393
—
Liabilities:
Financial instruments
sold, not yet
purchased:
Corporate equity
securities .......................
$208
$(72)
$—
$454
$—
$—
$—
$590
$72
$—
Corporate debt securities
165
(40)
(383)
1,025
—
—
346
1,113
24
—
RMBs ..................................
—
—
—
15
—
—
—
15
—
—
CMBS ..................................
1,153
1
—
35
—
—
(35)
1,154
(1)
—
Loans ..................................
16,864
301
(1,917)
75
—
—
(14,475)
848
89
—
Net derivatives (2) .............
22,286
(16,020)
—
22,588
(279)
299
13,202
42,076
14,559
—
Other secured financings .
14,884
(1,938)
—
—
(241)
—
—
12,705
1,938
—
Long-term debt ..................
821,903
(55,177)
—
—
—
124,554
(30,596)
860,684
29,428
25,749
(1)Realized and unrealized gains/losses are primarily reported in Principal transactions revenues. Changes in instrument-specific credit risk related to structured notes
within Long-term debt are presented net of tax in our Consolidated Statements of Comprehensive Income.
(2)Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased—Derivatives.
Analysis of Level 3 Assets and Liabilities for the Three Months
Ended February 28, 2025
Transfers of assets of $52.5 million from Level 2 to Level 3 of the
fair value hierarchy are primarily attributed to:
•Loans and other receivables of $24.8 million, corporate equity
securities of $20.5 million and CDOs and CLOs of $5.7 million
due to reduced pricing transparency.
Transfers of assets of $96.6 million from Level 3 to Level 2 are
primarily attributed to:
•Corporate equity securities of $51.0 million, loans and other
receivables of $38.7 million, corporate debt securities of $4.2
million and other ABS of $2.3 million due to greater pricing
transparency.
Transfers of liabilities of $22.1 million from Level 2 to Level 3 of
the fair value hierarchy are primarily attributed to:
•Net derivatives of $13.2 million and structured notes within
long-term debt of $8.6 million due to reduced pricing and
market transparency.
Transfers of liabilities of $53.7 million from Level 3 to Level 2 of
the fair value hierarchy are primarily attributed to:
•Structured notes within long-term debt of $39.1 million and
loans of $14.5 million due to greater pricing and market
transparency.
Net losses on Level 3 assets were $5.4 million and net gains on
Level 3 liabilities were $72.9 million for the three months ended
February 28, 2025. Net losses on Level 3 assets were primarily
due to decreased market values in CDOs and CLOs, other ABS,
corporate debt securities and loans and other receivables,
partially offset by an increase in corporate equity securities. Net
gains on Level 3 liabilities were primarily due to decreased
market valuations of certain structured notes within long-term
debt, certain derivatives and other secured financings.
16
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Significant Unobservable Inputs used in Level 3 Fair Value
Measurements
The tables below present information on the valuation
techniques, significant unobservable inputs and their ranges for
our financial assets and liabilities, subject to threshold levels
related to the market value of the positions held, measured at fair
value on a recurring basis with a significant Level 3 balance. The
range of unobservable inputs could differ significantly across
different firms given the range of products across different firms
in the financial services sector. The inputs are not representative
of the inputs that could have been used in the valuation of any
one financial instrument (i.e., the input used for valuing one
financial instrument within a particular class of financial
instruments may not be appropriate for valuing other financial
instruments within that given class). Additionally, the ranges of
inputs presented below should not be construed to represent
uncertainty regarding the fair values of our financial instruments;
rather, the range of inputs is reflective of the differences in the
underlying characteristics of the financial instruments in each
category.
For certain categories, we have provided a weighted average of
the inputs allocated based on the fair values of the financial
instruments comprising the category. We do not believe that the
range or weighted average of the inputs is indicative of the
reasonableness of uncertainty of our Level 3 fair values. The
range and weighted average are driven by the individual financial
instruments within each category and their relative distribution in
the population. The disclosed inputs when compared to the
inputs as disclosed in other periods should not be expected to
necessarily be indicative of changes in our estimates of
unobservable inputs for a particular financial instrument as the
population of financial instruments comprising the category will
vary from period to period based on purchases and sales of
financial instruments during the period as well as transfers into
and out of Level 3 each period.
February 2026 Form 10-Q
17
Notes to Consolidated Financial Statements
(Unaudited)
February 28, 2026
Financial Instruments Owned
Fair Value
(in
thousands)
Valuation
Technique
Significant Unobservable Input(s)
Input / Range
Weighted
Average
Corporate equity securities .....................
$218,483
Non-exchange-traded securities
Market approach
Price
$0
-
$1,115
$90
Volatility
benchmarking
Volatility
45%
-
49%
48%
Corporate debt securities ........................
$50,755
Market approach
Price
$58
-
$122
$92
Discounted cash
flows
Discount rate/yield
22%
-
26%
24%
CDOs and CLOs ..........................................
$31,965
Discounted cash
flows
Constant prepayment rate
15%
-
20%
16%
Constant default rate
2%
—
Loss severity
30%
—
Discount rate/yield
13%
-
15%
14%
Market approach
Price
$98
-
$118
$101
RMBS ...........................................................
$6,134
Discounted cash
flows
Constant prepayment rate
10%
—
Constant default rate
0.5%
—
Loss severity
45%
—
Discount rate/yield
20%
—
Other ABS ...................................................
$242,697
Discounted cash
flows
Discount rate/yield
10.9%
-
15.8%
15.2%
Cumulative loss rate
10.5%
-
17.4%
16.5%
Duration (years)
1.1
-
1.5
1.2
Market approach
Price
$118
-
$135
$132
Scenario analysis
Estimated recovery percentage
64%
-
69%
68%
Loans and other receivables ...................
$85,396
Market approach
Price
$8
-
$118
$106
Scenario analysis
Estimated recovery percentage
18%
-
222%
92%
Derivatives ..................................................
$11,104
Embedded options
Market approach
Basis points upfront
0.3
-
0.5
0.4
Equity options
Volatility
benchmarking
Volatility
51%
—
Investments at fair value ..........................
$161,250
Private equity securities
Market approach
Price
$0
-
$27,989
$2,838
Discount rate/yield
28%
—
Estimated revenue
$29,760,909
—
Financial Instruments Sold, Not Yet Purchased:
Derivatives ..................................................
$43,253
Equity options
Volatility
benchmarking
Volatility
39%
-
67%
53%
Embedded options
Market approach
Basis points upfront
7.2
-
19.9
12.8
Other secured financings .........................
$11,685
Scenario analysis
Estimated recovery percentage
74%
-
100%
95%
Market approach
Price
$117
-
$118
$118
Long-term debt ..........................................
$1,024,067
Structured notes
Market approach
Price
$70
-
$120
$100
18
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
November 30, 2025
Financial Instruments Owned
Fair Value
(in
thousands)
Valuation
Technique
Significant Unobservable Input(s)
Input / Range
Weighted
Average
Corporate equity securities .....................
$218,853
Non-exchange-traded securities
Market approach
Price
$0
-
$486
$85
Volatility
benchmarking
Volatility
44%
-
48%
47%
Corporate debt securities ........................
$37,578
Market approach
Price
$49
-
$121
$72
Discounted cash
flows
Discount rate/yield
18%
-
20%
19%
Scenario analysis
Estimated recovery percentage
30%
—
CDOs and CLOs ..........................................
$25,824
Discounted cash
flows
Constant prepayment rate
20%
—
Constant default rate
2%
—
Loss severity
30%
—
Discount rate/yield
17%
—
Market approach
Price
$98
-
$100
$99
RMBS ...........................................................
$6,663
Discounted cash
flows
Constant prepayment rate
12%
—
Constant default rate
0.3%
—
Loss severity
20%
—
Discount rate/yield
15%
—
Other ABS ...................................................
$129,693
Discounted cash
flows
Discount rate/yield
15.5%
-
15.7%
15.6%
Cumulative loss rate
16.0%
-
16.4%
16.2%
Duration (years)
1.1
-
1.2
1.1
Market approach
Price
$116
-
$133
$130
Scenario analysis
Estimated recovery percentage
66%
—
Loans and other receivables ...................
$127,720
Market approach
Price
$67
-
$129
$97
Scenario analysis
Estimated recovery percentage
8%
-
100%
35%
Derivatives ..................................................
$6,094
Embedded options
Market approach
Basis points upfront
0.4
-
0.5
0.5
Equity options
Volatility
benchmarking
Volatility
34%
—
Investments at fair value ..........................
$157,162
Private equity securities
Market approach
Price
$0
-
$27,989
$2,722
Discount rate/yield
28%
—
Estimated revenue
$29,818,082
—
Financial Instruments Sold, Not Yet Purchased:
Corporate debt securities ........................
$3,720
Scenario analysis
Estimated recovery percentage
30%
—
Loans ...........................................................
$9,757
Market approach
Price
$100
-
$129
$117
Scenario analysis
Estimated recovery percentage
30%
—
Derivatives ..................................................
$45,953
Equity options
Volatility
benchmarking
Volatility
34%
-
61%
58%
Embedded options
Market approach
Basis points upfront
0.0
-
21.0
13.3
Other secured financings .........................
$13,454
Scenario analysis
Estimated recovery percentage
74%
-
100%
96%
Market approach
Price
$114
-
$117
$115
Long-term debt ..........................................
$1,063,358
Structured notes
Market approach
Price
$72
-
$120
$101
February 2026 Form 10-Q
19
Notes to Consolidated Financial Statements
(Unaudited)
The fair values of certain Level 3 assets and liabilities that were
determined based on third-party pricing information, unadjusted
past transaction prices or a percentage of the reported enterprise
fair value are excluded from the above tables. At February 28,
2026 and November 30, 2025, asset exclusions consisted of
$41.4 million and $28.2 million, respectively, primarily composed
of CDOs and CLOs, Investments at fair value, certain derivatives,
other ABS and CMBS. At February 28, 2026 and November 30,
2025, liability exclusions consisted of $1.7 million and $0.2
million, respectively, primarily composed of loans, corporate
equity securities and corporate debt securities.
Uncertainty of Fair Value Measurement from Use of Significant
Unobservable Inputs
For recurring fair value measurements categorized within Level 3
of the fair value hierarchy, the uncertainty of the fair value
measurement due to the use of significant unobservable inputs
and interrelationships between those unobservable inputs (if any)
are described below:
•Non-exchange-traded securities, corporate debt securities,
CDOs and CLOs, loans and other receivables, other ABS, private
equity securities, certain derivatives, other secured financings
and structured notes using a market approach valuation
technique. A significant increase (decrease) in the price of the
private equity securities, nonexchange-traded securities,
corporate debt securities, CDOs and CLOs, RMBS, other ABS,
loans and other receivables, other secured financings and
structured notes would result in a significantly higher (lower)
fair value measurement. A significant increase (decrease) in
the revenue or revenue multiple related to private equity
securities would result in a significantly higher (lower) fair
value measurement. A significant increase (decrease) in the
discount rate/security yield related to private equity securities
would result in a significantly lower (higher) fair value
measurement. Depending on whether we are a receiver or
(payer) of basis points upfront, a significant increase in basis
points would result in a significant increase (decrease) in the
fair value measurement of options.
•Corporate debt securities, loans and other receivables, other
ABS and other secured financings using a scenario analysis
valuation technique. A significant increase (decrease) in the
possible recovery rates underlying the financial instrument
would result in a significantly higher (lower) fair value
measurement for the financial instrument.
•CDOs and CLOs, corporate debt securities, RMBS and other
ABS using a discounted cash flows valuation technique. A
significant increase (decrease) in isolation in the constant
default rate, loss severity or cumulative loss rate would result
in a significantly lower (higher) fair value measurement. The
impact of changes in the constant prepayment rate and
duration would have differing impacts depending on the capital
structure and type of security. A significant increase
(decrease) in the discount rate/security yield would result in a
significantly lower (higher) fair value measurement.
•Corporate equity securities and derivative equity options using
volatility benchmarking. A significant increase (decrease) in
volatility would result in a significantly higher (lower) fair value
measurement.
Fair Value Option Election
For a description of our financial assets and liabilities for which
we have elected the fair value option, refer to our consolidated
financial statements included in Part II, Item 8 of our Annual
Report on Form 10-K for the year ended November 30, 2025.
Fair value option gains (losses):
Three Months Ended
 February 28,
$ in thousands
2026
2025
Financial instruments owned:
Loans and other receivables (1) .............................................
$(28,722)
$13,283
Other secured financings:
Other changes in fair value (1) ................................................
$(309)
$1,938
Long-term debt:
Changes in instrument-specific credit risk (2) ......................
$77,896
$37,898
Other changes in fair value (1) ................................................
(58,916)
16,944
(1)Other changes in fair value are included in Principal transactions revenues.
(2)Changes in fair value of structured notes related to instrument-specific credit
risk are presented net of tax in our Consolidated Statements of
Comprehensive Income.
Difference between contractual principal and fair value (1):
$ in thousands
February 28,
 2026
November 30,
 2025
Financial instruments owned:
Loans and other receivables (2) ................................
$2,219,310
$2,378,747
Loans and other receivables on nonaccrual
status and/or 90 days or greater past due (2) .....
420,878
319,394
Loans and other receivables 90 days or
greater past due (2) ..............................................
70,748
100,300
Long-term debt ............................................................
222,020
166,273
Other secured financings ...........................................
(4,798)
237
(1)Amounts indicate contractual principal greater than or (less than) fair value.
(2)Interest income is recognized separately from other changes in fair value and
is included in Interest revenues.
Fair value of loans and other receivables on nonaccrual status:
$ in thousands
February 28,
 2026
November 30,
 2025
Financial instruments owned:
Loans and other receivables on nonaccrual status
and/or 90 days or greater past due ...........................
$109,143
$119,900
Loans and other receivables 90 days or greater
past due .....................................................................
66,657
47,000
Financial Instruments Not Measured at Fair Value
Certain of our financial instruments are not carried at fair value
but are recorded at amounts that approximate fair value due to
their liquid or short-term nature and generally negligible credit
risk. These financial assets include Cash and cash equivalents
and Cash and securities segregated and on deposit for regulatory
purposes or deposited with clearing and depository organizations
and would generally be presented within Level 1 of the fair value
hierarchy.
We have equity securities without readily determinable fair
values, which we account for at cost, minus impairment, which
are presented within Other assets and were $21.9 million at both
February 28, 2026 and November 30, 2025. There were no
impairments and downward adjustments on these investments
during the three months ended February 28, 2026 and 2025.
20
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Note 6. Derivative Financial Instruments
Our derivative activities are recorded at fair value in our
Consolidated Statement of Financial Condition in Financial
instruments owned and Financial instruments sold, not yet
purchased, net of cash paid or received under credit support
agreements and on a net counterparty basis when a legally
enforceable right to offset exists under a master netting
agreement. We enter into derivative transactions to satisfy the
needs of our clients and to manage our own exposure to market
and credit risks. In addition, we apply hedge accounting to: (1)
interest rate swaps that have been designated as fair value
hedges of the changes in fair value due to the benchmark interest
rate for certain fixed rate senior long-term debt, and (2) forward
foreign exchange contracts designated as hedges to offset the
change in the value of certain net investments in foreign
operations.
Derivatives are subject to various risks similar to other financial
instruments, including market, credit and operational risk. The
risks of derivatives should not be viewed in isolation, but rather
should be considered on an aggregate basis along with our other
trading-related activities. We manage the risks associated with
derivatives on an aggregate basis along with the risks associated
with proprietary trading as part of our firm wide risk management
policies.
In connection with our derivative activities, we may enter into
International Swaps and Derivatives Association, Inc. master
netting agreements or similar agreements with counterparties.
February 28, 2026 (1)
Assets
Liabilities
$ in thousands
Fair Value
Number of
Contracts (2)
Fair Value
Number of
Contracts (2)
Derivatives designated as
accounting hedges:
Interest rate contracts:
Cleared OTC ........................................
$3,515
3
$1,256
1
Foreign exchange contracts:
Bilateral OTC .......................................
10,449
5
2,543
6
Total derivatives designated as
accounting hedges ............................
13,964
3,799
Derivatives not designated as
accounting hedges:
Interest rate contracts:
Exchange-traded ................................
529
44,784
56
48,774
Cleared OTC ........................................
2,331,733
8,403
2,356,258
8,865
Bilateral OTC .......................................
267,009
1,702
577,234
683
Foreign exchange contracts:
Exchange-traded ................................
—
36
—
22
Bilateral OTC .......................................
149,495
35,501
118,551
10,816
Equity contracts:
Exchange-traded ................................
2,553,216
3,135,250
1,875,392
2,233,288
Bilateral OTC .......................................
1,693,580
53,207
1,901,935
44,644
Commodity contracts:
Exchange-traded ................................
3,197
431
61
427
Bilateral OTC .......................................
4,445
7,198
9,626
8,209
Credit contracts:
Cleared OTC ........................................
1,402
71
4,800
10
Bilateral OTC .......................................
75,525
33
53,711
19
Total derivatives not designated
as accounting hedges .......................
7,080,131
6,897,624
Total gross derivative assets/
liabilities:
Exchange-traded ................................
2,556,942
1,875,509
Cleared OTC ........................................
2,336,650
2,362,314
Bilateral OTC .......................................
2,200,503
2,663,600
Amounts offset in our
Consolidated Statements of
Financial Condition (3):
Exchange-traded ................................
(1,318,353)
(1,318,353)
Cleared OTC ........................................
(2,335,539)
(2,338,936)
Bilateral OTC .......................................
(1,533,021)
(1,943,147)
Net amounts per Consolidated
Statements of Financial
Condition (4) .................................
$1,907,182
$1,300,987
(1)Exchange-traded derivatives include derivatives executed on an organized
exchange. Cleared OTC derivatives include derivatives executed bilaterally and
subsequently novated to and cleared through central clearing counterparties.
Bilateral OTC derivatives include derivatives executed and settled bilaterally
without the use of an organized exchange or central clearing counterparty.
(2)The number of exchange-traded contracts may include open futures
contracts. The unsettled fair value of these futures contracts is included in
Receivables from/Payables to brokers, dealers and clearing organizations.
(3)Amounts netted include both netting by counterparty and for cash collateral
paid or received.
(4)We have not received or pledged additional collateral under master netting
agreements and/or other credit support agreements that is eligible to be
offset beyond what has been offset in our Consolidated Statements of
Financial Condition.
February 2026 Form 10-Q
21
Notes to Consolidated Financial Statements
(Unaudited)
November 30, 2025 (1)
Assets
Liabilities
$ in thousands
Fair Value
Number of
Contracts (2)
Fair Value
Number of
Contracts (2)
Derivatives designated as
accounting hedges:
Interest rate contracts:
Cleared OTC .........................................
$—
—
$2,519
4
Foreign exchange contracts:
Bilateral OTC ........................................
40,444
7
574
2
Total derivatives designated as
accounting hedges .............................
40,444
3,093
Derivatives not designated as
accounting hedges:
Interest rate contracts:
Exchange-traded .................................
232
33,107
24
36,811
Cleared OTC .........................................
806,009
8,148
804,799
8,325
Bilateral OTC ........................................
285,053
1,576
614,104
823
Foreign exchange contracts:
Bilateral OTC ........................................
115,068
34,418
103,297
12,028
Equity contracts:
Exchange-traded .................................
2,776,601
3,275,468
2,156,730
2,298,561
Bilateral OTC ........................................
1,367,089
57,254
1,670,215
36,481
Commodity contracts:
Exchange-traded .................................
452
627
73
668
Bilateral OTC .......................................
6,381
18,497
7,293
15,417
Credit contracts:
Cleared OTC .........................................
10,960
58
17,120
13
Bilateral OTC ........................................
121,557
17
98,456
15
Total derivatives not designated as
accounting hedges .............................
5,489,402
5,472,111
Total gross derivative assets/
liabilities:
Exchange-traded .................................
2,777,285
2,156,827
Cleared OTC .........................................
816,969
824,438
Bilateral OTC ........................................
1,935,592
2,493,939
Amounts offset in our
Consolidated Statements of
Financial Condition (3):
Exchange-traded .................................
(1,600,969)
(1,600,969)
Cleared OTC .........................................
(815,810)
(819,548)
Bilateral OTC ........................................
(1,288,985)
(1,564,670)
Net amounts per Consolidated
Statements of Financial
Condition (4) ..................................
$1,824,082
$1,490,017
(1)Exchange-traded derivatives include derivatives executed on an organized
exchange. Cleared OTC derivatives include derivatives executed bilaterally and
subsequently novated to and cleared through central clearing counterparties.
Bilateral OTC derivatives include derivatives executed and settled bilaterally
without the use of an organized exchange or central clearing counterparty.
(2)The number of exchange-traded contracts may include open futures
contracts. The unsettled fair value of these futures contracts is included in
Receivables from/Payables to brokers, dealers and clearing organizations.
(3)Amounts netted include both netting by counterparty and for cash collateral
paid or received.
(4)We have not received or pledged additional collateral under master netting
agreements and/or other credit support agreements that is eligible to be
offset beyond what has been offset in our Consolidated Statements of
Financial Condition.
Gains (losses) recognized in Interest expense related to fair value
hedges:
$ in thousands
Three Months Ended
February 28,
Gains (Losses)
2026
2025
Interest rate swaps (1) ..............................................................
$1,121
$(5,628)
Long-term debt ...........................................................................
(10,916)
(6,691)
Total .............................................................................................
$(9,795)
$(12,319)
(1)Includes net settlements of $9.6 million and $11.9 million for the three months
ended February 28, 2026 and 2025, respectively.
Gains (losses) on our net investment hedges recognized in
Currency translation and other adjustments, a component of
Other comprehensive income (loss), in our Consolidated
Statements of Comprehensive Income:
$ in thousands
Three Months Ended
February 28,
Gains (Losses)
2026
2025
Foreign exchange contracts .....................................................
$(27,965)
$16,854
Total .............................................................................................
$(27,965)
$16,854
Unrealized and realized gains (losses) on derivative contracts
recognized primarily in Principal transactions revenues, which are
utilized in connection with our client activities and our economic
risk management activities:
$ in thousands
Three Months Ended
February 28,
Gains (Losses)
2026
2025
Interest rate contracts ...............................................................
$267
$(22,502)
Foreign exchange contracts .....................................................
(1,731)
(4,875)
Equity contracts .........................................................................
(119,375)
494,216
Commodity contracts ................................................................
4,282
5,734
Credit contracts..........................................................................
(3,058)
1,051
Total .............................................................................................
$(119,615)
$473,624
The net gains (losses) on derivative contracts in the table above
are one of a number of activities comprising our business
activities and are before consideration of economic hedging
transactions, which generally offset the net gains (losses)
included above. We substantially mitigate our exposure to market
risk on our cash instruments through derivative contracts, which
generally provide offsetting revenues, and we manage the risk
associated with these contracts in the context of our overall risk
management framework.
22
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
OTC Derivatives
Remaining contract maturities at February 28, 2026:
OTC Derivative Assets (1) (2) (3)
$ in thousands
0 – 12
Months
1 – 5
Years
Greater
Than 5
Years
Cross-
Maturity
Netting
(4)
Total
Commodity swaps, options and
forwards ....................................
$4,444
$—
$—
$—
$4,444
Equity options and forwards ........
88,003
295,129
5,110
(269)
387,973
Credit default swaps .....................
1,012
25,469
—
—
26,481
Total return swaps .........................
174,444
180,251
—
(5,324)
349,371
Foreign currency forwards,
swaps and options ...................
86,314
520
—
(520)
86,314
Fixed income forwards .................
49,222
—
—
—
49,222
Interest rate swaps, options and
forwards ....................................
57,588
152,609
17,081
(32,665)
194,613
Total .................................................
$461,027
$653,978
$22,191
$(38,778)
1,098,418
Cross-product counterparty
netting ........................................
(61,334)
Total OTC derivative assets
included in Financial
instruments owned ..................
$1,037,084
OTC Derivative Liabilities (1) (2) (3)
$ in thousands
0 – 12
Months
1 – 5
Years
Greater
Than 5
Years
Cross-
Maturity
Netting
(4)
Total
Commodity swaps, options and
forwards ....................................
$9,624
$—
$—
$—
$9,624
Equity options and forwards ........
52,569
293,741
3,879
(269)
349,920
Credit default swaps ......................
—
5,643
—
—
5,643
Total return swaps .........................
331,760
316,070
28
(5,324)
642,534
Foreign currency forwards,
swaps and options ...................
47,768
216
—
(520)
47,464
Fixed income forwards .................
797
—
—
—
797
Interest rate swaps, options and
forwards ....................................
34,569
108,293
421,001
(32,665)
531,198
Total .................................................
$477,087
$723,963
$424,908
$(38,778)
1,587,180
Cross-product counterparty
netting ........................................
(61,334)
Total OTC derivative liabilities
included in Financial
instruments sold, not yet
purchased .................................
$1,525,846
(1)At February 28, 2026, we held net exchange-traded derivative assets and
liabilities with a fair value of $1.24 billion and $557.2 million, respectively,
which are not included in these tables.
(2)OTC derivative assets and liabilities in the tables above are gross of collateral
pledged. OTC derivative assets and liabilities are recorded net of collateral
pledged in our Consolidated Statements of Financial Condition. At
February 28, 2026, cash collateral received and pledged was $368.5 million
and $782.0 million, respectively.
(3)Derivative fair values include counterparty netting within product category.
(4)Amounts represent the netting of receivable balances with payable balances
for the same counterparty within product category across maturity categories.
OTC derivative assets at February 28, 2026:
Counterparty credit quality (1):
$ in thousands
A- or higher ...............................................................................................
$180,384
BBB- to BBB+ ...........................................................................................
100,766
BB+ or lower .............................................................................................
332,366
Unrated .....................................................................................................
423,568
Total ..........................................................................................................
$1,037,084
(1)We utilize internal credit ratings determined by our Risk Management
department. Credit ratings determined by Risk Management use
methodologies that produce ratings generally consistent with those produced
by external rating agencies.
Credit Related Derivative Contracts
External credit ratings of the underlyings or referenced assets for
our written credit related derivative contracts:
February 28, 2026
External Credit Rating
$ in millions
Investment
Grade
Non-
investment
Grade
Total
Notional
Credit protection sold:
Index credit default swaps .....................
$119.8
$808.5
$928.3
November 30, 2025
External Credit Rating
$ in millions
Investment
Grade
Non-
investment
Grade
Total
Notional
Credit protection sold:
Index credit default swaps .....................
$51.4
$873.2
$924.6
Contingent Features
Certain derivative instruments contain provisions that require us
to either post additional collateral or immediately settle any
outstanding liability balances upon a specific event related to our
credit, primarily downgrades in our credit ratings. The following
table presents the aggregate fair value of all derivative
instruments with such credit-risk-related contingent features that
are in a net liability position, the collateral amounts we have
posted or received in the normal course of business and the
potential collateral we could have been required to return and/or
post additionally to our counterparties if the credit-risk-related
contingent features underlying these agreements were triggered:
$ in millions
February 28,
2026
November 30,
2025
Derivative instrument liabilities with credit-risk-
related contingent features ....................................
$98.9
$107.3
Collateral posted ...........................................................
(13.2)
(70.0)
Collateral received ........................................................
611.4
343.3
Return of and additional collateral required in the
event of a credit rating downgrade below
investment grade (1) ...............................................
697.1
380.5
(1)These potential outflows include initial margin received from counterparties at
the execution of the derivative contract. The initial margin will be returned if
counterparties elect to terminate the contract after a downgrade.
February 2026 Form 10-Q
23
Notes to Consolidated Financial Statements
(Unaudited)
Note 7. Collateralized Transactions
February 28, 2026
$ in millions
Securities
Lending
Arrangements
Repurchase
Agreements
Obligation to
Return
Securities
Received as
Collateral, at
Fair Value
Total
Collateral Pledged:
Corporate equity
securities .....................
$1,954.8
$1,604.3
$168.4
$3,727.5
Corporate debt
securities .....................
594.4
3,465.1
—
4,059.5
Mortgage-backed and
asset-backed
securities .....................
89.0
2,208.7
—
2,297.7
U.S. government and
federal agency
securities .....................
22.1
6,057.8
—
6,079.9
Municipal securities ........
—
421.7
—
421.7
Sovereign obligations .....
30.1
1,666.5
225.5
1,922.1
Loans and other
receivables ..................
—
406.9
—
406.9
Total ..................................
$2,690.4
$15,831.0
$393.9
$18,915.3
November 30, 2025
$ in millions
Securities
Lending
Arrangements
Repurchase
Agreements
Obligation to
Return
Securities
Received as
Collateral, at
Fair Value
Total
Collateral Pledged:
Corporate equity
securities .....................
$1,875.2
$1,028.6
$—
$2,903.8
Corporate debt
securities .....................
589.7
3,271.5
—
3,861.2
Mortgage-backed and
asset-backed
securities .....................
—
2,062.6
—
2,062.6
U.S. government and
federal agency
securities .....................
21.6
9,183.1
—
9,204.7
Municipal securities ........
—
422.3
—
422.3
Sovereign obligations .....
54.3
1,487.7
200.5
1,742.5
Loans and other
receivables ..................
—
805.4
—
805.4
Total ..................................
$2,540.8
$18,261.2
$200.5
$21,002.5
February 28, 2026
$ in millions
Overnight
and
Continuous
Up to 30
Days
31-90
Days
Greater
than 90
Days
Total
Securities lending
arrangements ..............
$2,252.7
$89.0
$150.7
$198.0
$2,690.4
Repurchase agreements .
1,719.2
7,290.3
3,104.3
3,717.2
15,831.0
Obligation to return
securities received as
collateral, at fair
value .............................
393.9
—
—
—
393.9
Total ...................................
$4,365.8
$7,379.3
$3,255.0
$3,915.2
$18,915.3
November 30, 2025
$ in millions
Overnight
and
Continuous
Up to 30
Days
31-90
Days
Greater
than 90
Days
Total
Securities lending
arrangements ..............
$2,072.7
$123.8
$81.3
$263.0
$2,540.8
Repurchase agreements .
2,108.1
9,569.4
2,959.8
3,623.9
18,261.2
Obligation to return
securities received as
collateral, at fair
value .............................
200.5
—
—
—
200.5
Total ...................................
$4,381.3
$9,693.2
$3,041.1
$3,886.9
$21,002.5
We receive securities as collateral under resale agreements,
securities borrowing transactions, customer margin loans, and in
connection with securities-for-securities transactions in which we
are the lender of securities. We also receive securities as initial
margin on certain derivative transactions. In many instances, we
are permitted by contract to rehypothecate the securities
received as collateral. These securities may be used to secure
repurchase agreements, enter into securities lending
transactions, satisfy margin requirements on derivative
transactions or cover short positions. At February 28, 2026 and
November 30, 2025, the approximate fair value of securities
received as collateral by us that may be sold or repledged was
$52.59 billion and $49.68 billion, respectively. At February 28,
2026 and November 30, 2025, a substantial portion of the
securities received by us had been sold or repledged.
24
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Securities Financing Agreements
To manage our exposure to credit risk associated with securities financing transactions, we may enter into master netting agreements
and collateral arrangements with counterparties. Generally, transactions are executed under standard industry agreements, including,
but not limited to, master securities lending agreements (securities lending transactions) and master repurchase agreements
(repurchase transactions).
February 28, 2026
$ in millions
Gross
Amounts
Netting in
Consolidated
Statements
of Financial
Condition
Net Amounts in
Consolidated
Statements of
Financial
Condition
Additional
Amounts
Available for
Setoff (1)
Available
Collateral (2)
Net
Amount (3)
Assets:
Securities borrowing arrangements ...................................
$7,675.9
$—
$7,675.9
$(682.6)
$(1,762.3)
$5,231.0
Reverse repurchase agreements .........................................
13,234.8
(5,450.7)
7,784.1
(1,970.8)
(5,766.1)
47.2
Securities received as collateral, at fair value ...................
393.9
—
393.9
—
(393.9)
—
Liabilities:
Securities lending arrangements ........................................
$2,690.4
$—
$2,690.4
$(682.6)
$(1,908.3)
$99.5
Repurchase agreements .......................................................
15,831.0
(5,450.7)
10,380.3
(1,970.8)
(8,109.0)
300.5
Obligation to return securities received as collateral, at
fair value .............................................................................
393.9
—
393.9
—
(393.9)
—
November 30, 2025
$ in millions
Gross
Amounts
Netting in
Consolidated
Statements
of Financial
Condition
Net Amounts in
Consolidated
Statements of
Financial
Condition
Additional
Amounts
Available for
Setoff (1)
Available
Collateral (2)
Net
Amount (4)
Assets:
Securities borrowing arrangements ...................................
$8,295.2
$—
$8,295.2
$(512.3)
$(1,913.5)
$5,869.4
Reverse repurchase agreements .........................................
14,553.6
(6,104.5)
8,449.1
(2,727.2)
(5,670.2)
51.7
Securities received as collateral, at fair value ...................
200.5
—
200.5
—
(200.5)
—
Liabilities:
Securities lending arrangements ........................................
$2,540.8
$—
$2,540.8
$(512.3)
$(1,920.0)
$108.5
Repurchase agreements .......................................................
18,261.2
(6,104.5)
12,156.7
(2,727.2)
(8,666.7)
762.8
Obligation to return securities received as collateral, at
fair value .............................................................................
200.5
—
200.5
—
(200.5)
—
(1)Under master netting agreements with our counterparties, we have the legal right of offset with a counterparty, which incorporates all of the counterparty’s outstanding
rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by a counterparty in the event of a counterparty’s
default, but which are not netted in our Consolidated Statements of Financial Condition because other netting provisions of U.S. GAAP are not met.
(2)Includes securities received or paid under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset
against a counterparty’s rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements.
(3)Includes $5.16 billion of securities borrowing arrangements, for which we have received securities collateral of $4.99 billion, and $250.0 million of repurchase
agreements, for which we have pledged securities collateral of $272.5 million, which are subject to master netting agreements, but we have not determined the
agreements to be legally enforceable.
(4)Includes $5.81 billion of securities borrowing arrangements, for which we have received securities collateral of $5.69 billion, and $670.0 million of repurchase
agreements, for which we have pledged securities collateral of $688.0 million, which are subject to master netting agreements, but we have not determined the
agreements to be legally enforceable.
Note 8. Securitization Activities
We engage in securitization activities related to corporate loans,
mortgage loans, consumer loans and mortgage-backed and other
asset-backed securities. In our securitization transactions, we
transfer these assets to special purpose entities (“SPEs”) and act
as the placement or structuring agent for the beneficial interests
sold to investors by the SPE. A portion of our securitization
transactions are the securitization of assets issued or
guaranteed by U.S. government agencies. These SPEs generally
meet the criteria of VIEs; however, we generally do not
consolidate the SPEs as we are not considered the primary
beneficiary for these SPEs. Refer to Note 9, Variable Interest
Entities for further discussion on VIEs and our determination of
the primary beneficiary.
We account for our securitization transactions as sales, provided
we have relinquished control over the transferred assets.
Transferred assets are carried at fair value with unrealized gains
and losses reflected in Principal transactions revenues prior to
the identification and isolation for securitization. Subsequently,
revenues recognized upon securitization are reflected as net
underwriting revenues. We generally receive cash proceeds in
connection with the transfer of assets to an SPE. We may,
however, have continuing involvement with the transferred
assets, which is limited to retaining one or more tranches of the
securitization (primarily senior and subordinated debt securities
in the form of mortgage-backed and other-asset backed
securities or CLOs). These securities are included in Financial
instruments owned, at fair value and are generally initially
categorized as Level 2 within the fair value hierarchy.
February 2026 Form 10-Q
25
Notes to Consolidated Financial Statements
(Unaudited)
Securitizations that were accounted for as sales in which we had
continuing involvement:
Three Months Ended
February 28,
$ in millions
2026
2025
Transferred assets ....................................................................
$1,368.7
$42.0
Proceeds on new securitizations ............................................
1,368.7
42.0
Cash flows received on retained interests .............................
14.9
6.4
We have no explicit or implicit arrangements to provide additional
financial support to these SPEs, have no liabilities related to
these SPEs and do not have any outstanding derivative contracts
executed in connection with these securitization activities at
February 28, 2026 and November 30, 2025.
Our retained interests in SPEs where we transferred assets and
have continuing involvement and received sale accounting
treatment:
$ in millions
February 28, 2026
November 30, 2025
Securitization Type
Total
Assets
Retained
Interests
Total
Assets
Retained
Interests
U.S. government agency RMBS ...
$333.6
$6.0
$405.7
$4.0
U.S. government agency CMBS ...
1,104.9
1.1
1,108.2
1.1
CLOs .................................................
10,907.4
50.3
10,970.6
436.6
Consumer and other loans ...........
2,835.1
108.7
2,596.7
104.9
Total assets represent the unpaid principal amount of assets in
the SPEs in which we have continuing involvement and are
presented solely to provide information regarding the size of the
transactions and the size of the underlying assets supporting our
retained interests and are not considered representative of the
risk of potential loss. Assets retained in connection with a
securitization transaction represent the fair value of the
securities of one or more tranches issued by an SPE, including
senior and subordinated tranches. Our risk of loss is limited to
this fair value amount which is included in total Financial
instruments owned in our Consolidated Statements of Financial
Condition.
Although not obligated, in connection with secondary market-
making activities we may make a market in the securities issued
by these SPEs. In these market-making transactions, we buy
these securities from and sell these securities to investors.
Securities purchased through these market-making activities are
not considered to be continuing involvement in these SPEs. To
the extent we purchased securities through these market-making
activities, and we are not deemed to be the primary beneficiary of
the VIE, these securities are included in agency and non-agency
mortgage-backed and asset-backed securitizations in the
nonconsolidated VIEs section presented in Note 9, Variable
Interest Entities.
If we have not relinquished control over the transferred assets,
the assets continue to be recognized in Financial instruments
owned and a corresponding liability is recognized in Other
secured financings. The related liabilities do not have recourse to
our general credit.
$ in millions
February 28, 2026
November 30, 2025
Financial instruments owned .................
$—
$456.1
Other secured financings .......................
—
456.1
Note 9. Variable Interest Entities
VIEs are entities in which equity investors lack the characteristics
of a controlling financial interest. VIEs are consolidated by the
primary beneficiary. The primary beneficiary is the party who has
both (1) the power to direct the activities of a VIE that most
significantly impact the entity’s economic performance and (2)
an obligation to absorb losses of the entity or a right to receive
benefits from the entity that could potentially be significant to the
entity.
Our variable interests in VIEs include debt and equity interests,
commitments, guarantees and certain fees. Our involvement with
VIEs arises primarily from:
•Purchases of securities in connection with our trading and
secondary market making activities;
•Retained interests held as a result of securitization activities;
•Acting as placement agent and/or underwriter in connection
with client-sponsored securitizations;
•Financing of agency and non-agency mortgage-backed and
other asset-backed securities;
•Warehouse funding arrangements for client-sponsored
consumer and mortgage loan vehicles and CLOs through
participation agreements, forward sale agreements, reverse
repurchase agreements, and revolving loan and note
commitments; and
•Loans to, investments in and fees from various investment
vehicles.
We determine whether we are the primary beneficiary of a VIE
upon our initial involvement with the VIE and we reassess
whether we are the primary beneficiary of a VIE on an ongoing
basis. Our determination of whether we are the primary
beneficiary of a VIE is based upon the facts and circumstances
for each VIE and requires judgment. Our considerations in
determining the VIE’s most significant activities and whether we
have power to direct those activities include, but are not limited
to, the VIE’s purpose and design and the risks passed through to
investors, the voting interests of the VIE, management, service
and/or other agreements of the VIE, involvement in the VIE’s
initial design and the existence of explicit or implicit financial
guarantees. In situations where we have determined that the
power over the VIE’s significant activities is shared, we assess
whether we are the party with the power over the most significant
activities. If we are the party with the power over the most
significant activities, we meet the “power” criteria of the primary
beneficiary. If we do not have the power over the most significant
activities or we determine that decisions require consent of each
sharing party, we do not meet the “power” criteria of the primary
beneficiary.
We assess our variable interests in a VIE both individually and in
aggregate to determine whether we have an obligation to absorb
losses of or a right to receive benefits from the VIE that could
potentially be significant to the VIE. The determination of whether
our variable interest is significant to the VIE requires judgment. In
determining the significance of our variable interest, we consider
the terms, characteristics and size of the variable interests, the
design and characteristics of the VIE, our involvement in the VIE
and our market-making activities related to the variable interests.
26
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Consolidated VIEs:
February 28, 2026 (1)
$ in millions
Secured
Funding
Vehicles
Other
Cash ...................................................................................
$0.1
$2.1
Segregated cash ..............................................................
—
2.3
Financial instruments owned ........................................
14.9
163.5
Securities purchased under agreements to resell (2)
2,860.1
0.8
Receivables from brokers (3) .........................................
—
69.6
Other receivables .............................................................
0.5
3.1
Other assets (4) ...............................................................
—
86.1
Total assets ......................................................................
$2,875.6
$327.5
Financial instruments sold, not yet purchased ...........
$—
$94.8
Other secured financings (5) .........................................
2,874.2
18.7
Payables to brokers and dealers ...................................
—
1.2
Other liabilities (6) ...........................................................
6.6
85.7
Long-term debt ................................................................
—
70.2
Total liabilities .................................................................
$2,880.8
$270.6
November 30, 2025 (1)
$ in millions
Secured
Funding
Vehicles
Other
Cash ...................................................................................
$—
$1.7
Segregated cash ..............................................................
—
1.4
Financial instruments owned .........................................
1.4
142.6
Securities purchased under agreements to resell (2)
3,043.4
121.5
Receivables from brokers (3) .........................................
—
104.1
Other receivables .............................................................
—
3.1
Other assets (4) ...............................................................
—
87.1
Total assets ......................................................................
$3,044.8
$461.5
Financial instruments sold, not yet purchased ...........
$—
$83.8
Other secured financings (5) .........................................
3,042.4
21.6
Repurchase agreement ...................................................
—
147.8
Other liabilities (6) ...........................................................
7.3
85.1
Long-term debt ................................................................
—
70.2
Total liabilities .................................................................
$3,049.7
$408.5
(1)Assets and liabilities are presented prior to consolidation and thus a portion of
these assets and liabilities are eliminated in consolidation.
(2)Securities purchased under agreements to resell primarily represent amounts
due under collateralized transactions on related consolidated entities, all of
which are eliminated in consolidation.
(3)Includes $0.5 million and $0.5 million at February 28, 2026 and November 30,
2025, respectively, with related consolidated entities, which are eliminated in
consolidation.
(4)Includes $3.5 million and $3.4 million at February 28, 2026 and November 30,
2025, respectively, with related consolidated entities, which are eliminated in
consolidation.
(5)Includes $709.0 million and $780.5 million at February 28, 2026 and
November 30, 2025, respectively, with related consolidated entities, which are
eliminated in consolidation.
(6)Includes $84.3 million and $84.0 million at February 28, 2026 and
November 30, 2025, respectively, with related consolidated entities, which are
eliminated in consolidation.
Secured Funding Vehicles. We sell agency and non-agency
residential and commercial mortgage loans, and asset-backed
securities to asset-backed financing vehicles pursuant to the
terms of a master repurchase agreement. Our variable interests
in these vehicles consist of our collateral margin maintenance
obligations under the master repurchase agreement, and retained
interests in securities issued. The assets of these VIEs consist of
reverse repurchase agreements, which are available for the
benefit of the vehicle’s debt holders. We also from time to time
securitize other financial instruments and own variable interests
in other securitization vehicles.
Other. We manage investment vehicles for external investors and
for the benefit of our employees and we may also hold a
controlling financial interest in investment vehicles managed by
third parties. The assets of these VIEs consist primarily of equity
securities and broker receivables. Our variable interests in these
vehicles consist of equity securities, management and
performance fees and revenue share arrangements. The
creditors of these VIEs do not have recourse to our general credit
and each such VIE’s assets are not available to satisfy any other
debt.
We are the primary beneficiary of a real estate syndication entity
that develops multi-family residential property and manages the
property. The assets of the VIE consist primarily of real estate
and its liabilities primarily consist of accrued expenses and long-
term debt secured by the real estate property. Our variable
interest in the VIE primarily consists of our limited liability
company interest, a sponsor promote and development and
asset management fees for managing the project.
We are the primary beneficiary of special purpose vehicles that
hold risk retention notes issued as part of unsecured loan asset-
backed transactions. Our variable interests in the VIEs primarily
consist of our ownership of certificates issued by the VIEs.
Nonconsolidated VIEs
February 28, 2026
Carrying Amount
Maximum
Exposure to
Loss
VIE Assets
$ in millions
Assets
Liabilities
CLOs ......................................
$739.9
$51.7
$6,221.1
$20,689.2
Asset-backed vehicles ........
1,392.5
—
1,900.2
7,582.6
Related party private equity
vehicles ............................
3.5
—
13.4
61.3
Other investment vehicles ..
1,715.1
—
1,908.0
71,800.9
Total .......................................
$3,851.0
$51.7
$10,042.7
$100,134.0
November 30, 2025
Carrying Amount
Maximum
Exposure to
Loss
VIE Assets
$ in millions
Assets
Liabilities
CLOs ......................................
$1,245.3
$96.5
$7,055.5
$17,600.4
Asset-backed vehicles ........
1,207.3
—
1,797.1
6,616.0
Related party private equity
vehicles ............................
3.5
—
14.3
57.7
Other investment vehicles ..
1,722.7
—
2,009.6
74,007.9
Total .......................................
$4,178.8
$96.5
$10,876.5
$98,282.0
Maximum Exposure to Loss
Maximum exposure to loss represents the total of the carrying
value of our on-balance sheet interests in the unconsolidated
VIEs and the notional amount of any unfunded off-balance sheet
arrangements with the unconsolidated VIEs. With respect to
CLOs and asset-backed vehicles, the off-balance sheet
arrangements typically represent the undrawn notional amount of
arrangements to finance the acquisition of assets during the
warehousing and pre-closing phase of the vehicles. The
maximum exposure to loss is based on the unlikely event that all
of the assets in the VIEs become worthless and incorporates not
only potential losses associated with the carrying amounts of
assets recognized on the Consolidated Statements of Financial
Condition but also potential losses associated with unfunded
commitments and other contractual arrangements. The
maximum exposure to loss does not include the offsetting
benefit of any financial instruments that may be utilized to hedge
the risks associated with our variable interests, is not reduced by
the amount of collateral held as part of a transaction with a VIE
February 2026 Form 10-Q
27
Notes to Consolidated Financial Statements
(Unaudited)
and does not consider any executed forward sale agreements
where we have committed to sell ownership interests in any of
the investment vehicles.
Collateralized Loan Obligations. Assets collateralizing the CLOs
include bank loans, participation interests, sub-investment grade
and senior secured U.S. loans, and senior secured Euro-
denominated corporate leveraged loans and bonds. We
underwrite securities issued in CLO transactions on behalf of
sponsors and provide advisory services to the sponsors. We may
also sell corporate loans to the CLOs. Our variable interests
where we have been involved in providing underwriting and/or
advisory services include:
•Forward sale agreements whereby we commit to sell, at a fixed
price, corporate loans and ownership interests in a CLO;
•Warehouse funding arrangements in the form of:
◦Participation interests in corporate loans and commitments
to fund such participation interests;
◦Reverse repurchase agreements and commitments to fund
such reverse repurchase agreements;
◦Variable funding notes; and
◦Senior and subordinated notes issued in connection with
CLO warehousing activities.
•Trading positions in securities issued in CLO transactions.
Asset-Backed Vehicles. We provide financing and lending related
services to certain client-sponsored VIEs in the form of revolving
funding note agreements, revolving credit facilities, forward
purchase agreements and reverse repurchase agreements. We
also may transfer originated corporate loans to certain VIEs and
hold subordinated interests issued by the vehicle. The underlying
assets, which are collateralizing the vehicles, are primarily
composed of unsecured consumer loans, mortgage loans and
corporate loans. In addition, we may provide structuring and
advisory services and act as an underwriter or placement agent
for securities issued by the vehicles. We do not control the
activities of these entities.
Related Party Private Equity Vehicles. We have committed to
invest in private equity funds, (the “JCP Funds”, including JCP
Fund V (refer to Note 10, Investments for further information))
managed by Jefferies Capital Partners, LLC (the “JCP Manager”).
Additionally, we have committed to invest in the general partners
of the JCP Funds (the “JCP General Partners”) and the JCP
Manager. Our variable interests consist of equity interests that, in
total, provide us with limited and general partner investment
returns of the JCP Funds, a portion of the carried interest earned
by the JCP General Partners and a portion of the management
fees earned by the JCP Manager. At February 28, 2026 and
November 30, 2025, our remaining equity commitment in the JCP
Entities was $8.8 million and $9.7 million, respectively. At both
February 28, 2026 and November 30, 2025, we also had
remaining commitments of $0.4 million, to a private equity fund
managed by us for the benefit of our employees. The carrying
value of our collective equity interests were $3.5 million and $3.4
million at February 28, 2026 and November 30, 2025,
respectively. Our exposure to loss is limited to the total of our
carrying value and unfunded equity commitment. The assets of
the vehicles primarily consist of private equity and equity related
investments.
Other Investment Vehicles. At February 28, 2026 and
November 30, 2025, our remaining equity commitment in various
other investment vehicles was $188.2 million and $282.2 million,
respectively. The carrying value of our equity investments was
$1.72 billion at both February 28, 2026 and November 30, 2025.
Our exposure to loss is limited to the total of our carrying value
and unfunded equity commitment. These investment vehicles
have assets primarily consisting of private and public equity
investments, debt instruments, trade and insurance claims,
various oil and gas assets and energy tax credits.
Mortgage-Backed and Other Asset-Backed Secured Funding
Vehicles. In connection with our secondary trading and market-
making activities, we buy and sell agency and non-agency
mortgage-backed securities and other asset-backed securities,
which are issued by third-party securitization SPEs and are
generally considered variable interests in VIEs. Securities issued
by securitization SPEs are backed by residential mortgage loans,
U.S. agency collateralized mortgage obligations, commercial
mortgage loans, CDOs and CLOs and other consumer loans, such
as installment receivables, automobile loans and student loans.
These securities are accounted for at fair value and included in
Financial instruments owned. We have no other involvement with
the related SPEs and therefore do not consolidate these entities.
We also engage in underwriting, placement and structuring
activities for third-party-sponsored securitization trusts generally
through agency (Fannie Mae, Federal Home Loan Mortgage
Corporation (“Freddie Mac”) or Ginnie Mae) or non-agency-
sponsored SPEs and may purchase loans or mortgage-backed
securities from third-parties that are subsequently transferred
into the securitization trusts. The securitizations are backed by
residential and commercial mortgage, home equity and
automobile loans. We do not consolidate agency-sponsored
securitizations as we do not have the power to direct the
activities of the SPEs that most significantly impact their
economic performance. Further, we are not the servicer of non-
agency-sponsored securitizations and therefore do not have
power to direct the most significant activities of the SPEs and
accordingly, do not consolidate these entities. We may retain
unsold senior and/or subordinated interests at the time of
securitization in the form of securities issued by the SPEs.
At February 28, 2026 and November 30, 2025, we held $1.39
billion and $1.06 billion of agency mortgage-backed securities,
respectively, and $183.4 million and $156.3 million of non-agency
mortgage-backed and other asset-backed securities, respectively,
as a result of our secondary trading and market-making activities,
and underwriting, placement and structuring activities. Our
maximum exposure to loss on these securities is limited to the
carrying value of our investments in these securities. These
mortgage-backed and other asset-backed secured funding
vehicles discussed are not included in the above table containing
information about our variable interests in nonconsolidated VIEs.
Note 10. Investments
Investments for which we exercise significant influence over the
investee are accounted for under the equity method of
accounting with our shares of the investees’ earnings recognized
in Other revenues. Equity method investments, including any
loans to the investees, are reported within Investments in and
loans to related parties.
$ in millions
February 28,
2026
November 30,
2025
Total Investments in and loans to related
parties ........................................................
$1,560.6
$1,496.1
28
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
The following presents summarized financial information about
our significant equity method investees. For certain investees, we
receive financial information on a lag and the summarized
information provided for these investees is based on the latest
financial information available as of February 28, 2026 and 2025.
Three Months Ended February 28,
$ in millions
2026
2025
Total equity method pickup earnings
recognized in Other revenues .................
$24.5
$7.1
Jefferies Finance
Jefferies Finance, our 50/50 joint venture with Massachusetts
Mutual Life Insurance Company (“MassMutual”) structures,
underwrites and syndicates primarily senior secured loans to
corporate borrowers; and manages proprietary and third-party
investments in both broadly syndicated and direct lending loans.
In connection with its Leveraged Finance business, loans are
originated primarily through our investment banking efforts and
Jefferies Finance typically syndicates to third-party investors
substantially all of its arranged volume through us. The Asset
Management business is a multi-strategy private credit platform
that manages proprietary and third-party capital across
commingled funds, funds-of-one, separately managed accounts,
business development companies, CLOs and levered balance
sheet funds. Broadly syndicated loan investments are sourced
through transactions arranged by Jefferies Finance and third-
party arrangers and managed through its subsidiary, Apex Credit
Partners LLC. Direct lending investments are primarily sourced
through us. Jefferies Finance and its subsidiaries that are
involved in investment management are registered investment
advisers with the SEC.
At February 28, 2026, we and MassMutual each had equity
commitments to Jefferies Finance of $750.0 million, for a
combined total commitment of $1.5 billion. The equity
commitment is reduced quarterly based on our share of any
undistributed earnings from Jefferies Finance and the
commitment is increased only to the extent the share of such
earnings are distributed. At February 28, 2026, our unfunded
commitment to Jefferies Finance was $15.4 million. The
investment commitment is scheduled to expire on March 1, 2027
with automatic one year extensions absent a 60 day termination
notice by either party.
Jefferies Finance has executed a secured revolving credit facility
with us and MassMutual, to be funded equally, to support loan
underwritings by Jefferies Finance, which bears interest based on
the interest rates of the related Jefferies Finance underwritten
loans and is secured by the underlying loans funded by the
proceeds of the facility. The total facility is a committed amount
of $500.0 million at February 28, 2026. Advances are shared
equally between us and MassMutual. The facility is scheduled to
mature on March 1, 2027 with automatic one year extensions
absent a 60 day termination notice by either party. At
February 28, 2026, our $250.0 million commitment was undrawn.
Activity related to the facility:
Three Months Ended February 28,
$ in millions
2026
2025
Unfunded commitment fees ........................
$0.3
$0.3
Selected financial information for Jefferies Finance:
$ in millions
February 28,
2026
November 30,
2025
Total assets ....................................................
$6,903.7
$7,356.1
Total liabilities ................................................
5,467.6
5,959.2
Total mezzanine equity .................................
14.9
14.8
$ in millions
February 28,
2026
November 30,
2025
Our total investment balance .......................
$710.6
$691.0
Three Months Ended February 28,
$ in millions
2026
2025
Net earnings (losses) attributable to
members ....................................................
$33.1
$(1.7)
Activity related to our other transactions with Jefferies Finance:
Three Months Ended February 28,
$ in millions
2026
2025
Origination and syndication fee revenues
(1) ...............................................................
$53.1
$60.2
Origination fee expenses (1) ........................
18.6
18.5
CLO placement and structuring fee
revenues (2) .............................................
1.0
0.2
Placement and referral fees (3) ...................
6.3
0.6
Underwriting revenues (expenses) (4) .......
(1.0)
—
Service fees (5) ..............................................
65.6
54.4
(1)We engage in the origination and syndication of loans underwritten by
Jefferies Finance. In connection with such services, we earned fees, which are
recognized in Investment banking revenues. In addition, we paid fees to
Jefferies Finance in respect of certain loans originated by Jefferies Finance,
which are recognized as Business development expenses.
(2)We act as a placement and/or structuring agent for CLOs managed by
Jefferies Finance, which are recognized as fees and included in Investment
banking revenues.
(3)We act as a placement agent for investment funds managed by Jefferies
Finance, which are recognized as fees and included in Commissions and other
fees.
(4)We act as an underwriter in connection with term loans issued by Jefferies
Finance.
(5)Under a service agreement, we charge Jefferies Finance for various
administrative services provided.
Additional balances with Jefferies Finance as reported in our
Consolidated Statements of Financial Condition.
$ in millions
February 28,
2026
November 30,
2025
Assets
Financial instruments owned, at fair value
(1) .....................................................................
$2.6
$10.9
Other assets (2) .............................................
17.0
7.0
Liabilities
Financial instruments sold, not yet
purchased, at fair value (1) (3) ...............
$7.5
$0.4
Payables:
Brokers, dealers and clearing
organizations (4) ......................................
16.8
17.2
Customers (5) ...........................................
4.8
3.3
(1)In connection with our capital markets activities, from time to time we make a
market in long-term debt securities and term loans of Jefferies Finance (i.e.,
we buy and sell debt securities and tern loans of Jefferies Finance).
(2)Receivable for services and certain fees from Jefferies Finance.
(3)Includes OTC foreign currency derivatives.
(4)Cash collateral received from Jefferies Finance on OTC foreign currency
derivatives.
February 2026 Form 10-Q
29
Notes to Consolidated Financial Statements
(Unaudited)
(5)Payable to Jefferies Finance in connection with loans originated by Jefferies
Finance to borrowers who are investment banking clients of ours. We have
also entered into an agreement to indemnify Jefferies Finance with respect to
any foreign currency exposure on these loans.
Berkadia
Berkadia is a commercial real estate finance and investment
sales joint venture that was formed by us and Berkshire
Hathaway Inc. We are entitled to receive 45.0% of the profits of
Berkadia. Berkadia originates commercial and multifamily real
estate loans that are sold to U.S. government agencies or other
investors with Berkadia retaining the servicing rights. Berkadia
also provides advisory services in connection with sales of
multifamily assets. Berkadia is a servicer of commercial real
estate loans in the U.S., performing primary, master and special
servicing functions for U.S. government agency programs and
financial services companies.
Commercial paper issued by Berkadia is supported by a
$1.50 billion surety policy issued by a Berkshire Hathaway
insurance subsidiary, for which we receive a surety fee, and a
corporate guaranty, and we have agreed to reimburse Berkshire
Hathaway for one-half of any losses incurred thereunder. At
February 28, 2026, the aggregate amount of commercial paper
outstanding was $1.47 billion.
Selected financial information for Berkadia:
$ in millions
February 28,
2026
November 30,
2025
Total assets ...................................................
$5,146.4
$5,269.8
Total liabilities ...............................................
3,686.4
3,953.1
Total noncontrolling interest .......................
521.0
369.0
$ in millions
February 28,
2026
November 30,
2025
Our total investment balance .......................
$426.6
$429.7
Three Months Ended February 28,
$ in millions
2026
2025
Net earnings attributable to members .......
$40.5
$37.8
Three Months Ended February 28,
$ in millions
2026
2025
Distributions ...................................................
$21.2
$16.1
At February 28, 2026 and November 30, 2025, we had
commitments to purchase $13.4 million and $13.6 million,
respectively, of agency CMBS from Berkadia.
Revenues from other transactions with Berkadia for the three
months ended February 28, 2026 and 2025 were $0.0 million and
$0.1 million, respectively.
Real Estate Investments
Our real estate equity method investments primarily consist of
our equity interests in Brooklyn Renaissance Plaza and Hotel and
54 Madison. Brooklyn Renaissance Plaza is composed of a hotel,
office building complex and parking garage located in Brooklyn,
New York. We have a 25.4% equity interest in the hotel and a
61.3% equity interest in the office building and garage. Although
we have a majority interest in the office building and garage, we
do not have control, but only have the ability to exercise
significant influence on this investment. We are amortizing our
basis difference between the estimated fair value and the
underlying book value of Brooklyn Renaissance office building
and garage over the respective useful lives (weighted average life
of 39 years).
We own a 48.1% equity interest in 54 Madison, a fund that most
recently owned an interest in one real estate project and the fund
is in the process of being liquidated.
Selected financial information for the real estate investments:
$ in millions
February 28,
2026
November 30,
2025
Total assets ....................................................
$309.4
$312.6
Total liabilities ................................................
463.7
470.7
February 28,
2026
November 30,
2025
Our total investment balance .......................
$99.5
$98.7
Three Months Ended February 28,
$ in millions
2026
2025
Net earnings ...................................................
$3.8
$4.6
JCP Fund V
We have limited partnership interests of 11% and 50% in Jefferies
Capital Partners V L.P. and Jefferies SBI USA Fund L.P. (together,
“JCP Fund V”), respectively, which are private equity funds
managed by a team led by our President and which are in the
process of being fully liquidated. The amount of our investments
in JCP Fund V included in Financial instruments owned, at fair
value was $2.8 million at both February 28, 2026 and
November 30, 2025. We account for these investments at fair
value based on the NAV of the funds provided by the fund
managers. The following summarizes the results from these
investments which are included in Principal transactions
revenues:
Three Months Ended February 28,
$ in millions
2026
2025
Net gains (losses) from our investments
in JCP Fund V ............................................
$—
$(0.2)
At both February 28, 2026 and November 30, 2025, we were
committed to invest equity of up to $85.0 million in JCP Fund V.
At both February 28, 2026 and November 30, 2025, our unfunded
commitment relating to JCP Fund V was $8.7 million. We do not
expect any further capital to be called by JCP Fund V.
The following is a summary of the Net change in net assets
resulting from operations for 100.0% of JCP Fund V, in which we
owned effectively 35.1% at February 28, 2026 of the combined
equity interests:
Three Months Ended (1)
$ in millions
December 31,
2025
December 31,
2024
Net increase (decrease) in net assets resulting
from operations .......................................................
$—
$(0.6)
(1)Financial information for JCP Fund V within our results of operations for the
three months ended February 28, 2026 and 2025 is included based on the
periods presented.
Hildene
In July 2024, we invested $25.0 million in the Class A Common
Equity Units of Hildene Insurance Holdings, LLC (“Hildene
Insurance”), an investment fund with insurance exposures. On
March 1, 2025, we made an additional investment of
$75.0 million in Hildene Insurance, which resulted in an increase
of our effective ownership from 8.83% to 23.5%. The investment
is accounted for under the equity method with a carrying amount
of $117.1 million and $113.8 million at February 28, 2026 and
November 30, 2025, respectively.
30
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Selected financial information for Hildene Insurance:
$ in millions
December 31,
2025 (1)
September 30,
2025 (1)
Total assets ...............................................................
$564.6
$498.4
Total liabilities ...........................................................
20.1
0.7
Total members’ equity .............................................
544.5
497.7
Three Months Ended (1)
$ in millions
December 31,
2025
December 31,
2024
Net increase in members’ equity resulting from
operations .............................................................
$16.6
$8.4
(1)Financial information for Hildene Insurance Holdings, LLC included in our
financial position at February 28, 2026 and November 30, 2025 is based on
the dates presented, and in our results of operations for the three months
ended February 28, 2026 and 2025 is based on the periods presented.
On December 9, 2025, we entered into an agreement to acquire a
50% interest in Hildene Holding Company, LLC, parent of Hildene
Capital Management, LLC, a credit-focused asset manager and
the parent of Hildene Insurance. We will contribute our existing
revenue share, a portion of our interest in a Hildene-managed
fund, and $340.0 million in cash. Hildene’s principals will
contribute their ownership interests and approximately
$250.0 million of the fund and related equity interests. Closing is
expected in the third quarter of 2026, subject to customary
approvals.
ApiJect
We own shares that represent a 37.9% and 33.6% economic
interest in ApiJect at February 28, 2026 and November 30, 2025,
respectively, which are accounted for at fair value by electing the
fair value option available under U.S. GAAP, and are included
within corporate equity securities in Financial instruments owned,
at fair value. At both February 28, 2026 and November 30, 2025,
the total fair value of our total equity investment in common
shares of ApiJect was $97.9 million, which is classified within
Level 3 of the fair value hierarchy. Additionally, we own warrants
to purchase up to 950,000 shares of common stock at any time
or from time to time on or before April 15, 2032.
We also have a term loan agreement with a principal of ApiJect
for $23.3 million, which matures on April 30, 2026. The loan is
accounted for at amortized cost and is reported within Other
assets. The loan has a fair value of $23.3 million at both
February 28, 2026 and November 30, 2025, which would be
classified as Level 3 in the fair value hierarchy.
In December 2025, we purchased two secured convertible
promissory notes totaling $9.8 million from ApiJect. These
promissory notes are accounted for at fair value in Financial
instruments owned and classified within Level 3 of the fair value
hierarchy.
Aircadia
In December 2023, Aircadia Leasing II LLC (“Aircadia”), a wholly
owned subsidiary, purchased airplanes from one of our clients
and simultaneously entered into a lease with the seller to lease
the airplanes for a term of 42 months. The transaction was
accounted for as a sale leaseback and the airplanes were
recorded within Premises and equipment at $57.7 million. During
the third quarter of 2025, we sold the airplanes.
Three Months Ended February 28,
$ in millions
2026
2025
Operating lease income ................................
$—
$5.6
Also in December 2023, we provided a loan to the seller for
$30.0 million, which was paid off on April 1, 2025. The loan was
accounted for at amortized cost and included within Investments
in and loans to related parties. We recognized interest income of
$0.0 million and $0.7 million on the loan during the three months
ended February 28, 2026 and 2025, respectively. We also hold
preferred shares in the seller, which are accounted for at fair
value in Financial instruments owned with a fair value of $43.2
million at both February 28, 2026 and November 30, 2025, and
are classified within Level 3 of the fair value hierarchy.
In September 2024, we provided a €15.0 million loan, maturing in
May 15, 2026, to an individual related to the seller, secured by a
privately owned aircraft and guaranteed by the individual. We
recognized interest income of $0.5 million for both the three
months ended February 28, 2026 and 2025.
Note 11. Credit Losses on Financial Assets Measured at
Amortized Cost
Secured Financing Receivables. In evaluating secured financing
receivables (reverse repurchases agreements, securities
borrowing arrangements, and margin loans), the underlying
collateral maintenance provisions are taken into consideration.
The underlying contractual collateral maintenance for
significantly all of our secured financing receivables requires that
the counterparty continually adjust the collateralization amount,
securing the credit exposure on these contracts. Collateralization
levels for our secured financing receivables are initially
established based upon the counterparty, the type of acceptable
collateral that is monitored daily and adjusted to mitigate the
potential of any credit losses. Credit losses are not recognized
for secured financing receivables where the underlying
collateral’s fair value is equal to or exceeds the asset’s amortized
cost basis. In cases where the collateral’s fair value does not
equal or exceed the amortized cost basis, the allowance for
credit losses, if any, is limited to the difference between the fair
value of the collateral at the reporting date and the amortized
cost basis of the financial assets.
Broker Receivables. Our receivables from brokers, dealers, and
clearing organizations include deposits of cash with exchange
clearing organizations to meet margin requirements, amounts
due from clearing organizations for daily variation settlements,
securities failed-to-deliver or receive and receivables and
payables for fees and commissions. These receivables generally
do not give rise to material credit risk and have a remote
probability of default either because of their short-term nature or
due to the credit protection framework inherent in the design and
operations of brokers, dealers and clearing organizations. As
such, generally, no allowance for credit losses is held against
these receivables.
Investment Banking Fee Receivables. Our allowance for credit
losses on our investment banking fee receivables uses a
provisioning matrix based on the shared risk characteristics and
historical loss experience for such receivables. In some
instances, we may adjust the allowance calculated based on the
provision matrix to incorporate a specific allowance based on the
unique credit risk profile of a receivable. The provisioning matrix
is periodically updated to reflect changes in the underlying
portfolio’s credit characteristics and most recent historical loss
data.
February 2026 Form 10-Q
31
Notes to Consolidated Financial Statements
(Unaudited)
Allowance for credit losses for investment banking receivables:
Three Months Ended
 February 28,
$ in thousands
2026
2025
Beginning balance ........................................................
$3,681
$5,277
Bad debt expense .........................................................
10,164
1,347
Charge-offs ...................................................................
—
(3,076)
Recoveries collected ....................................................
(1,885)
(1,502)
Ending balance (1) ..............................................................
$11,960
$2,046
(1)Substantially all of the allowance for doubtful accounts relate to mergers and
acquisitions and restructuring fee receivables, which include recoverable
expense receivables.
Other Financial Assets. For all other financial assets measured at
amortized cost, we estimate expected credit losses over the
financial assets’ life as of the reporting date based on relevant
information about past events, current conditions, and
reasonable and supportable forecasts.
Note 12. Goodwill and Intangible Assets
Goodwill
Three Months Ended February 28, 2026
$ in thousands
Investment
Banking and
Capital
Markets
Asset
Management
Total
Balance, at beginning of period ...................
$1,535,961
$301,609
$1,837,570
Currency translation and other
adjustments ..............................................
1,281
2,115
3,396
Impairment (1) ................................................
—
(58,240)
(58,240)
Reclassification to held for sale (1) ............
—
(56,850)
(56,850)
Balance, at end of period .............................
$1,537,242
$188,634
$1,725,876
(1)Following the acceptance of a binding offer for Tessellis during the first
quarter of 2026, we recorded a $58.2 million goodwill impairment charge. The
remaining goodwill balance was reclassified as held for sale at February 28,
2026. See Note 4, Assets and Liabilities Held for Sale.
Three Months Ended February 28, 2025
$ in thousands
Investment
Banking and
Capital
Markets
Asset
Management
Total
Balance, at beginning of period ...................
$1,533,013
$294,925
$1,827,938
Currency translation and other
adjustments ..............................................
(1,151)
(2,140)
(3,291)
Balance, at end of period .............................
$1,531,862
$292,785
$1,824,647
Carrying values of goodwill by reporting unit:
$ in millions
February 28,
2026
November 30,
2025
Investment banking ..............................................................
$702.6
$702.0
Equities and wealth management ......................................
256.1
255.9
Fixed income .........................................................................
578.5
578.0
Asset management ..............................................................
143.0
143.0
Other investments .................................................................
45.7
158.7
Total ........................................................................................
$1,725.9
$1,837.6
Intangible Assets
February 28, 2026
Weighted
Average
Remaining
Lives
(Years)
$ in thousands
Gross
Cost
Accumulated
Amortization
Net
Carrying
Amount
Customer relationships (1) ........................................
$127,693
$(104,980)
$22,713
5.0
Trademarks and trade names (1) .............................
128,981
(47,963)
81,018
22.0
Exchange and clearing organization membership
interests and registrations ........................................
8,735
—
8,735
N/A
Other (1) .......................................................................
15,128
(14,374)
754
2.5
Total ..............................................................................
$280,537
$(167,317)
$113,220
November 30, 2025
Weighted
Average
Remaining
Lives
(Years)
$ in thousands
Gross
Cost
Assets
Acquired
Accumulated
Amortization
Net
Carrying
Amount
Customer relationships ..........................
$166,328
$622
$(116,810)
$50,140
4.6
Trademarks and trade names ................
160,674
—
(55,948)
104,726
20.6
Exchange and clearing organization
membership interests and
registrations ..............................................
8,717
—
—
8,717
N/A
Other ...........................................................
86,815
99
(47,920)
38,994
2.8
Total ...........................................................
$422,534
$721
$(220,678)
$202,577
(1)Following the acceptance of a binding offer for Tessellis during the first
quarter of 2026, the remaining intangible asset balance of $82.7 million was
reclassified as held for sale at February 28, 2026. See Note 4, Assets and
Liabilities Held for Sale.
Amortization Expense
For finite life intangible assets, we recognized aggregate
amortization expense of $8.5 million and $7.8 million for the
three months ended February 28, 2026 and 2025, respectively.
These expenses are included in Depreciation and amortization.
Estimated future amortization expense for the next five fiscal
years:
Year
$ in thousands
Remainder of fiscal year 2026 ............................................................
$6,535
Year ending November 30, 2027 ........................................................
8,685
Year ending November 30, 2028 ........................................................
8,567
Year ending November 30, 2029 ........................................................
8,380
Year ending November 30, 2030 ........................................................
8,322
Note 13. Revenues from Contracts with Customers
Three Months Ended
 February 28,
$ in thousands
2026
2025
Revenues from contracts with customers:
Investment banking ..........................................................
$1,014,955
$725,661
Commissions and other fees .........................................
361,073
287,965
Asset management fees ..................................................
6,899
45,808
Real estate revenues ........................................................
2,246
11,081
Internet connection and broadband revenues .............
52,412
57,804
Other contracts with customers .....................................
18,064
16,107
Total revenue from contracts with customers ............
1,455,649
1,144,426
Other sources of revenue:
Principal transactions ......................................................
487,498
407,230
Revenues from strategic affiliates .................................
69,292
43,449
Interest ...............................................................................
813,119
845,171
Other ..................................................................................
45,707
32,588
Total revenues ..................................................................
$2,871,265
$2,472,864
32
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Disaggregation of Revenue
Three Months Ended February 28, 2026
$ in thousands
Investment
Banking and
Capital Markets
Asset
Management
Total
Major business activity:
Investment banking - Advisory ................
$527,128
$—
$527,128
Investment banking - Underwriting .........
487,827
—
487,827
Equities (1) .................................................
359,381
—
359,381
Fixed income (1) ........................................
1,692
—
1,692
Asset management ...................................
—
6,899
6,899
Other investments .....................................
—
72,722
72,722
Total ............................................................
$1,376,028
$79,621
$1,455,649
Primary geographic region:
Americas .....................................................
$1,042,946
$25,226
$1,068,172
Europe and the Middle East .....................
237,296
53,523
290,819
Asia-Pacific ................................................
95,786
872
96,658
Total ............................................................
$1,376,028
$79,621
$1,455,649
Three Months Ended February 28, 2025
$ in thousands
Investment
Banking and
Capital Markets
Asset
Management
Total
Major business activity:
Investment banking - Advisory ................
$397,780
$—
$397,780
Investment banking - Underwriting .........
327,881
—
327,881
Equities (1) .................................................
286,050
—
286,050
Fixed income (1) ........................................
1,915
—
1,915
Asset management ...................................
—
45,808
45,808
Other investments ....................................
—
84,992
84,992
Total ............................................................
$1,013,626
$130,800
$1,144,426
Primary geographic region:
Americas .....................................................
$748,675
$71,070
$819,745
Europe and the Middle East ....................
173,121
58,794
231,915
Asia-Pacific ................................................
91,830
936
92,766
Total ............................................................
$1,013,626
$130,800
$1,144,426
(1)Revenues from contracts with customers associated with the equities and
fixed income businesses primarily represent commissions and other fee
revenue.
Refer to Note 20, Segment Reporting, for a further discussion on
the allocation of revenues to geographic regions.
Information on Remaining Performance Obligations and Revenue
Recognized from Past Performance
We do not disclose information about remaining performance
obligations pertaining to contracts that have an original expected
duration of one year or less. The transaction price allocated to
remaining unsatisfied or partially unsatisfied performance
obligations with an original expected duration exceeding one year
was not material at February 28, 2026. Investment banking
advisory fees that are contingent upon completion of a specific
milestone and fees associated with certain distribution services
are also excluded as the fees are considered variable and not
included in the transaction price.
During the three months ended February 28, 2026 and 2025, we
recognized $10.9 million and $58.2 million, respectively, of
revenue related to performance obligations satisfied (or partially
satisfied) in previous periods, mainly due to resolving
uncertainties in variable consideration that was constrained in
prior periods. In addition, we recognized $7.8 million and $7.7
million of revenues primarily associated with distribution services
for the three months ended February 28, 2026 and 2025,
respectively, a portion of which relates to prior periods.
Contract Balances
The timing of our revenue recognition may differ from the timing
of payment by our customers. We record a receivable when
revenue is recognized prior to payment and we have an
unconditional right to payment. Alternatively, when payment
precedes the provision of the related services, we record deferred
revenue until the performance obligations are satisfied.
Our deferred revenue primarily relates to retainer and milestone
fees received in investment banking advisory engagements
where the performance obligation has not yet been satisfied.
Deferred revenue at February 28, 2026 and November 30, 2025
was $69.5 million and $92.3 million, respectively, which is
recorded in Accrued expenses and other liabilities. During the
three months ended February 28, 2026 and 2025, we recognized
revenues of $46.0 million and $27.4 million, respectively, that
were recorded as deferred revenue at the beginning of the
periods.
We had receivables related to revenues from contracts with
customers of $353.9 million and $396.8 million at February 28,
2026 and November 30, 2025, respectively.
Contract Costs
We capitalize costs to fulfill contracts associated with
investment banking advisory engagements where the revenue is
recognized at a point in time and the costs are determined to be
recoverable. Capitalized costs to fulfill a contract are recognized
at the point in time that the related revenue is recognized.
At February 28, 2026 and November 30, 2025, capitalized costs
to fulfill a contract were $5.3 million and $5.2 million,
respectively, which are recorded in Receivables – Fees, interest
and other. During the three months ended February 28, 2026 and
2025, we recognized expenses of $2.0 million and $0.9 million,
respectively, related to costs to fulfill a contract that were
capitalized as of the beginning of the year. There were no
significant impairment charges recognized in relation to these
capitalized costs for the three months ended February 28, 2026
and 2025.
Note 14. Compensation Plans
For a description of Restricted Stock, Restricted Stock Units, the
Senior Executive Compensation Plan and other compensation
plans refer to Note 15. Compensation Plans in our consolidated
financial statements included in Part II, Item 8 of our Annual
Report on Form 10-K for the year ended November 30, 2025.
At February 28, 2026, there were approximately 2.1 million shares
of restricted stock outstanding with future service required,
6.4 million RSUs outstanding with future service required
(including target RSUs that may be issued under the senior
executive compensation plan), 10.3 million RSUs outstanding
with no future service required, and 5.1 million stock options
outstanding. The maximum potential increase to common shares
outstanding resulting from these outstanding awards is
21.8 million at February 28, 2026.
February 2026 Form 10-Q
33
Notes to Consolidated Financial Statements
(Unaudited)
In December 2025, the Compensation Committee of our Board of
Directors granted RSUs and performance stock units (“PSUs”) to
each of our senior executives as follows:
$ in millions
Grant Terms
RSUs
Aggregate grant date fair value ......................................
$14.3
Vesting period ...................................................................
3-year cliff
PSUs
Aggregate target fair value ..............................................
$14.3
Service period ....................................................................
3 years
Performance period ..........................................................
Fiscal 2025 to Fiscal 2027
Performance target (1) ....................................................
10% ROTE
Performance range (2) .....................................................
7.5% - 15% ROTE
(1)ROTE is defined as return on tangible equity measured over three years.
(2)Performance below an ROTE of 7.5% results in forfeiture of all PSUs. An ROTE
of 15% or greater results in earning 150% of target PSUs and between 7.5% to
15%, the level of earning PSUs is linearly interpolated.
In addition, we sponsor non-share-based compensation plans.
Non-share-based compensation plans sponsored by us include a
profit sharing plan and other forms of restricted cash awards.
Restricted cash awards are subject to ratable vesting terms with
service requirements. These awards are amortized as
compensation expense over the relevant service period, which is
generally considered to start at the beginning of the annual
compensation year.
Components of total compensation cost associated with certain
of our compensation plans:
Three Months Ended
 February 28,
$ in millions
2026
2025
Restricted cash awards .....................................................
$132.6
$115.1
Restricted stock and RSUs (1) ..........................................
50.7
35.6
Profit sharing plan ...............................................................
7.8
7.4
Total compensation cost...................................................
$191.1
$158.1
(1)Total compensation cost associated with restricted stock and RSUs includes
the amortization of sign-on, retention and senior executive awards, less
forfeitures and clawbacks.
Remaining unamortized amounts related to certain
compensation plans at February 28, 2026:
$ in millions
Remaining
Unamortized
Amounts
Weighted Average
Vesting Period
(in Years)
Non-vested share-based awards ..............
$225.9
3.4
Restricted cash awards (1) ........................
1,229.3
3.0
Total ..............................................................
$1,455.2
(1)The remaining unamortized amount is included within Other assets.
Note 15. Borrowings
Short-Term Borrowings
$ in thousands
February 28,
2026
November 30,
 2025
Bank loans and other credit facilities ........................
$768,904
$568,418
Fixed rate callable note ...............................................
1,148,588
1,198,788
Total short-term borrowings (1) ...............................
$1,917,492
$1,767,206
(1)Short-term borrowings mature in one year or less and are recorded at cost,
which is a reasonable approximation of their fair values due to their liquid and
short-term nature.
At February 28, 2026 and November 30, 2025, the weighted
average interest rate on bank loans outstanding is 4.94% and
4.92% per annum, respectively.
Our borrowings include credit facilities that contain certain
covenants that, among other things, require us to maintain a
specified level of tangible net worth, require a minimum
regulatory net capital requirement for our U.S. broker-dealer,
Jefferies LLC, and impose certain restrictions on the future
indebtedness of certain of our subsidiaries that are borrowers.
Interest is based on rates at spreads over the federal funds rate
or other adjusted rates, as defined in the various credit
agreements, or at a rate as agreed between the bank and us in
reference to the bank’s cost of funding. At February 28, 2026, we
were in compliance with all covenants under these credit
facilities.
34
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Long-Term Debt
$ in thousands
Maturity (Fiscal Years)
February 28, 2026
November 30, 2025
Parent Co. unsecured borrowings
Fixed rate
2026
$925,851
$869,461
2027
1,118,840
1,117,106
2028
995,065
1,029,501
2029
597,501
586,495
2030
1,051,878
1,063,637
2031 and Later
6,225,104
4,782,178
Variable rate
2026
46,087
45,235
2029
1,313
1,312
2031 and Later
71,928
71,924
Structured notes (1)
2026
69,176
102,743
2027
96,528
94,777
2028
152,160
176,009
2029
138,890
178,956
2030
431,876
443,825
2031 and Later
2,206,359
2,156,638
Total Parent Co. unsecured borrowings (2) ..........................................................................................................................................
14,128,556
12,719,797
Subsidiaries secured borrowings
Fixed rate
2026
112,725
166,414
2027
653,483
630,114
2028
758,938
746,556
2029
230,994
191,068
Variable rate
2026
—
525,000
2027
124,559
124,458
2028
525,000
—
Total Subsidiaries secured borrowings .................................................................................................................................................
2,405,699
2,383,610
Subsidiaries unsecured borrowings
Fixed rate
2029
—
3,937
2030
—
1,416
2031 and Later
641,706
633,372
Variable rate
2026
—
100,000
2027
53,458
53,759
Total Subsidiaries unsecured borrowings .............................................................................................................................................
695,164
792,484
Total long-term debt (3) ..........................................................................................................................................................................
$17,229,419
$15,895,891
Fair value ....................................................................................................................................................................................................
$17,384,685
$16,122,970
Weighted-average interest rate (4) .......................................................................................................................................................
5.10%
5.11%
Interest rate range (4) ..............................................................................................................................................................................
0.00% - 7.40%
0.00% - 7.50%
(1)Structured notes have various interest rate payment terms and are accounted for at fair value, with changes in fair value resulting from non-credit components
recognized in Principal transactions revenues. The structured notes are classified as Level 2 or Level 3 in the fair value hierarchy. All of our long-term debt with exception
of certain of the structured notes would be classified as Level 2 in the fair value hierarchy.
(2)Carrying values of certain borrowings, totaling $2.70 billion and $2.68 billion for February 28, 2026 and November 30, 2025, respectively, include cumulative hedging
adjustments of $131.9 million and $142.8 million at February 28, 2026 and November 30, 2025, respectively, associated with interest rate swaps based on designation
as fair value hedges.
(3)Carrying values include unamortized discounts and premiums, valuation adjustments and debt issuance costs. At February 28, 2026 and November 30, 2025, our
borrowings under several credit facilities classified within Long-term debt amounted to $703.0 million and $803.2 million, respectively. Interest on these credit facilities
is based on an adjusted Secured Overnight Financing Rate (“SOFR”) plus a spread or other adjusted rates, as defined in the various credit agreements. Certain of our
long-term borrowings are callable by us prior to maturity reflected at their contractual maturity dates. Additionally, certain of our borrowings are under agreements
containing covenants that, among other things, require us to maintain specified levels of tangible net worth and liquidity amounts, certain credit and rating levels and
impose certain restrictions on future indebtedness of and require specified levels of regulated capital and cash reserves for certain of our subsidiaries. At February 28,
2026, we were in compliance with all covenants under theses credit agreements.
(4)Interest rates exclude structured notes.
February 2026 Form 10-Q
35
Notes to Consolidated Financial Statements
(Unaudited)
For the three months ended February 28, 2026, long-term debt
increased by $1.33 billion to $17.23 billion at February 28, 2026,
primarily due to proceeds of $1.63 billion from the issuances of
unsecured senior notes and $74.8 million from currency gains on
foreign currency borrowings. These increases were partially
offset by repayments of $188.2 million on our unsecured senior
notes, $52.2 million from net repayments of structured notes, the
reclassification of $51.9 million of Tessellis’ borrowings to Held
for sale (refer to Note 4, Assets and Liabilities Held for Sale for
further information), and $42.3 million from decreased
subsidiaries’ borrowings.
Note 16. Total Equity
Common Stock
At February 28, 2026 and November 30, 2025, we had
565,000,000 authorized shares of voting common stock with a
par value of $1.00 per share. At February 28, 2026 and November
30, 2025, we had outstanding 204,422,673 and 206,296,167
common shares outstanding, respectively.
During the three months ended February 28, 2026, we
repurchased a total 3.0 million of our common shares for $174.3
million, or an average price of $58.18 per share, including 2.5
million of our common shares for $143.8 million in the open
market under our share repurchase program, and 0.5 million of
our common shares for $30.5 million in connection with net-
share tax withholding under our equity compensation plan. In
March 2026, the Board of Directors has authorized the
repurchase of common stock up to $250.0 million under a share
repurchase program.
Preferred Shares
At February 28, 2026 and November 30, 2025, 6.0 million of
preferred shares, par value $1.00 per share, were authorized and
55,125 shares issued and outstanding.
On April 27, 2023, we established Series B Non-Voting
Convertible Preferred Shares with a par value of $1.00 per share
(“Series B Preferred Stock”) and designated 70,000 shares as
Series B Preferred Stock. The Series B Preferred Stock has a
liquidation preference of $17,500 per share and rank senior to our
voting common stock upon dissolution, liquidation or winding up
of Jefferies Financial Group Inc. Each share of Series B Preferred
Stock is automatically convertible into 500 shares of non-voting
common stock, subject to certain anti-dilution adjustments, three
years after issuance. The Series B Preferred Stock participates in
cash dividends and distributions alongside our voting common
stock on an as-converted basis.
Additionally, on April 27, 2023, we entered into an Exchange
Agreement with Sumitomo Mitsui Banking Corporation (“SMBC”),
which entitles SMBC to exchange shares of our voting common
stock for shares of the Series B Preferred Stock at a rate of 500
shares of voting common stock for one share of Series B
Preferred Stock. The Exchange Agreement is limited to 55,125
shares of Preferred Stock and SMBC will pay $1.50 per share of
voting common stock exchanged. As of November 30, 2025,
SMBC had exchanged approximately 27.6 million shares of
voting common stock for 55,125 shares of Series B Preferred
Stock. At February 28, 2026, SMBC owns approximately 15.9% of
our common stock on an as-converted basis and 14.4% on a
fully-diluted, as-converted basis. Since August 2024, the CEO of
Sumitomo Mitsui Financial Group, Inc. has served on our Board,
with the President and Executive Officer of SMBC taking over the
position following his election at the Annual Shareholder Meeting
in March 2026. Additionally, Refer to Note 21, Related Party
Transactions for further information regarding transactions with
SMBC.
On September 19, 2025, our Board of Directors established Series
B-1 Non-Voting Convertible Preferred Shares with a par value of
$1.00 per share (“Series B-1 Preferred Stock”) and designated
17,500 shares as Series B-1 Preferred Stock. The Series B-1
Preferred Stock has a liquidation preference of $500 per share
and ranks senior to our voting common stock and equal to the
Series B Preferred Stock upon dissolution, liquidation or winding
up of Jefferies Financial Group Inc. Each share of Series B-1
Preferred Stock is automatically convertible into 500 shares of
non-voting common stock as soon as such non-voting common
stock exists, subject to certain anti-dilution adjustments. The
Series B-1 Preferred Stock also participates in cash dividends
and distributions alongside our voting common stock on an as-
converted basis.
Additionally, on September 19, 2025, we entered into an amended
and restated Exchange Agreement (the “Amended and Restated
Exchange Agreement”) with SMBC, which entitles SMBC to
exchange shares of our voting common stock for shares of the
Series B-1 Preferred Stock at a rate of 500 shares of voting
common stock for one share of Series B-1 Preferred Stock. The
Amended and Restated Exchange Agreement is limited to 17,500
shares of Series B-1 Preferred Stock. Under the Amended and
Restated Exchange Agreement, SMBC is permitted to increase its
economic ownership in the Company to up to 20% on an as-
converted and fully diluted basis, while continuing to own less
than 5% of a voting interest in the Company.
36
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Earnings Per Common Share
Basic and diluted earnings per common share amounts were calculated by dividing net earnings by the weighted-average number of
common shares outstanding. The numerators and denominators used to calculate basic and diluted earnings per common share are as
follows:
Three Months Ended
February 28,
In thousands, except per share amounts
2026
2025
Numerator for earnings per common share from continuing operations:
Net earnings from continuing operations .................................................................................................................................................
$159,346
$136,849
Less: Net losses attributable to noncontrolling interests .......................................................................................................................
(15,858)
(6,983)
Allocation of earnings to participating securities (1) ..............................................................................................................................
(19,504)
(16,039)
Net earnings from continuing operations attributable to common shareholders for basic earnings per share .........................
$155,700
$127,793
Net earnings from continuing operations attributable to common shareholders for diluted earnings per share ......................
$155,700
$127,793
Denominator for earnings per common share:
Weighted average common shares outstanding .....................................................................................................................................
206,093
206,046
Weighted average shares of restricted stock outstanding with future service required ...................................................................
(2,147)
(2,200)
Weighted average RSUs outstanding with no future service required .................................................................................................
11,761
10,690
Weighted average basic common shares ................................................................................................................................................
215,707
214,536
Stock options and other share-based awards .........................................................................................................................................
5,152
5,287
Senior executive compensation plan RSU awards ..................................................................................................................................
2,411
2,625
Weighted average diluted common shares (2) .......................................................................................................................................
223,270
222,448
Earnings per common share:
Basic ...............................................................................................................................................................................................................
$0.72
$0.60
Diluted ............................................................................................................................................................................................................
$0.70
$0.57
(1)Represents dividends declared during the period on participating securities plus an allocation of undistributed earnings to participating securities. Net losses are not
allocated to participating securities. Participating securities represent certain preferred stock, restricted stock and RSUs for which requisite service has not yet been
rendered and amounted to weighted average shares of 27.6 million and 27.7 million for the three months ended February 28, 2026 and 2025, respectively. Undistributed
earnings are allocated to participating securities based upon their right to share in earnings if all earnings for the period had been distributed.
(2)Certain securities have been excluded as they would be antidilutive. However, these securities could potentially dilute earnings per share in the future. Antidilutive shares
were 12.3% and 13.4% of the weighted average common shares outstanding for the three months ended February 28, 2026 and 2025, respectively.
February 2026 Form 10-Q
37
Notes to Consolidated Financial Statements
(Unaudited)
Dividends
Three Months Ended February 28, 2026
Declaration Date
Record Date
Payment Date
Per Common
Share Amount
January 7, 2026
February 17, 2026
February 27, 2026
$0.40
Three Months Ended February 28, 2025
Declaration Date
Record Date
Payment Date
Per Common
Share Amount
January 8, 2025
February 14, 2025
February 27, 2025
$0.40
On March 25, 2026, the Board of Directors declared a dividend of
$0.40 per common share to be paid on May 29, 2026 to common
shareholders of record at May 18, 2026.
During both three months ended February 28, 2026 and 2025, we
paid cash dividends of $11.0 million with respect to the Series B
Preferred stock.
The payment of dividends is subject to the discretion of our
Board of Directors and depends upon general business
conditions and other factors that our Board of Directors may
deem to be relevant.
Accumulated Other Comprehensive Income (Loss)
$ in thousands
February 28,
 2026
November 30,
 2025
Net unrealized losses on available-for-sale
securities .......................................................................
$(1,212)
$(1,796)
Net currency translation adjustments and other .....
(136,256)
(145,280)
Net unrealized losses related to instrument-
specific credit risk .......................................................
(141,040)
(200,688)
Net minimum pension liability ....................................
(36,515)
(36,670)
Total accumulated other comprehensive loss, net
of tax ..............................................................................
$(315,023)
$(384,434)
Amounts reclassified out of accumulated other comprehensive
income (loss) to net earnings:
Three Months Ended
February 28,
$ in thousands
2026
2025
Net unrealized gains on instrument-specific credit
risk at fair value (1) .......................................................
$3,307
$2,538
Amortization of defined benefit pension plan
actuarial losses (2) .......................................................
(155)
(759)
Total reclassifications for the period, net of tax .....
$3,152
$1,779
(1)The amounts include income tax expense of $1.1 million and $0.9 million for
the three months ended February 28, 2026 and 2025, respectively.
(2)The amount includes income tax benefit of $0.2 million for the three months
ended February 28, 2025, which were reclassified to Compensation and
benefits expenses.
Note 17. Income Taxes
At February 28, 2026 and November 30, 2025, our total gross
unrecognized tax benefits were $240.0 million and
$241.6 million, respectively.
At February 28, 2026 and November 30, 2025, we had interest
accrued of $184.6 million and $177.9 million, respectively,
included in Accrued expenses and other liabilities.
The total amount of unrecognized tax benefits that, if recognized,
would favorably affect the effective tax rate was $189.5 million
and $190.9 million (net of Federal benefit) at February 28, 2026
and November 30, 2025, respectively.
We recognize interest and penalties, if any, related to
unrecognized tax benefits in income tax expense.
We are currently under examination by a number of taxing
jurisdictions. Though we do not expect that resolution of these
examinations will have a material effect on our consolidated
financial position, they may have a material impact on our
consolidated results of operations for the period in which
resolution occurs.
Earliest tax years that remain subject to examination in the major
tax jurisdictions in which we operate:
Jurisdiction
Tax Year
United States ...........................................................................................
2022
New York State ........................................................................................
2001
New York City ..........................................................................................
2006
United Kingdom .......................................................................................
2023
Germany ...................................................................................................
2020
Hong Kong ...............................................................................................
2019
India ...........................................................................................................
2010
Three Months Ended February 28,
$ in millions
2026
2025
Income tax expense ......................................
$52.9
$14.2
Effective tax rate ............................................
24.9%
9.4%
Note 18. Commitments, Contingencies and Guarantees
Commitments
Expected Maturity Date (Fiscal Years)
$ in millions
2026
2027
2028
and
2029
2030
and
2031
2032
and
Later
Maximum
Payout
Equity commitments (1) ....
$14.1
$115.6
$—
$0.1
$123.9
$253.7
Loan commitments (1) ......
85.6
252.5
88.0
137.7
8.8
572.6
Loan purchase
commitments (2) ................
3,607.5
—
—
—
—
3,607.5
Forward starting reverse
repos (3) ..............................
4,970.2
—
—
—
—
4,970.2
Forward starting repos (3)
3,421.7
—
—
—
—
3,421.7
Other unfunded
commitments (1) ................
134.2
1,516.6
1,276.0
—
16.5
2,943.3
Total commitments ...........
$12,233.3
$1,884.7
$1,364.0
$137.8
$149.2
$15,769.0
(1)Equity, loan and other unfunded commitments are presented by contractual
maturity date. The amounts, however, are available on demand.
(2)Loan purchase commitments consist of unfunded commitments to acquire
secondary market loans. For the population of loans to be acquired under the
loan purchase commitments, at February 28, 2026, Jefferies had also entered
into back-to-back committed sale contracts aggregating to $3.29 billion.
(3)At February 28, 2026, all of the of the forward starting securities purchased
under agreements to resell and all of the forward starting securities sold under
agreements to repurchase settled within three business days.
Equity Commitments. Includes commitments to invest in our joint
venture, Jefferies Finance, asset management funds and in
Jefferies Capital Partners, LLC, a manager of private equity funds,
which consists of a team led by our President and a director. At
February 28, 2026, our outstanding commitments relating to
Jefferies Capital Partners, LLC and its private equity funds were
$9.7 million.
Additionally, at February 28, 2026, we had other outstanding
equity commitments to invest up to $192.9 million with strategic
affiliates and $35.7 million to various other investments.
38
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Loan Commitments. From time to time, we make commitments
to extend credit to clients and to strategic affiliates. These
commitments and any related drawdowns of these facilities
typically have fixed maturity dates and are contingent on certain
representations, warranties and contractual conditions applicable
to the borrower. At February 28, 2026, we had outstanding loan
commitments of $319.2 million to a client and $3.4 million to
strategic affiliates.
Loan commitments outstanding at February 28, 2026 also
include our portion of the outstanding secured revolving credit
facility provided to Jefferies Finance, to support loan
underwritings by Jefferies Finance.
Underwriting Commitments. In connection with investment
banking activities, we may from time to time provide underwriting
commitments to our clients in connection with capital raising
transactions.
Forward Starting Reverse Repos and Repos. We enter into
commitments to take possession of securities with agreements
to resell on a forward starting basis and to sell securities with
agreements to repurchase on a forward starting basis that are
primarily secured by U.S. government and agency securities.
Other Unfunded Commitments. Other unfunded commitments
include obligations in the form of revolving notes, warehouse
financings and debt securities to provide financing to asset-
backed and CLO vehicles. Upon advancing funds, drawn amounts
are collateralized by the assets of an entity. Other unfunded
commitments also include written put options to certain
bondholders of an equity method investee.
Guarantees
Derivative Contracts. As a dealer, we make markets and trade in a
variety of derivative instruments. Certain derivative contracts that
we have entered into meet the accounting definition of a
guarantee under U.S. GAAP, including credit default swaps,
written foreign currency options and written equity put options.
On certain of these contracts, such as written interest rate caps
and foreign currency options, the maximum payout cannot be
quantified since the increase in interest or foreign exchange rates
are not contractually limited by the terms of the contract. As
such, we have disclosed notional values as a measure of our
maximum potential payout under these contracts.
Notional amounts associated with our derivative contracts
meeting the definition of a guarantee under U.S. GAAP at
February 28, 2026:
Expected Maturity Date (Fiscal Years)
$ in millions
2026
2027
2028 and
2029
2030 and
2031
Notional/
Maximum
Payout
Guarantee Type:
Derivative contracts—
non-credit related .........
$8,221.6
$15,704.9
$13,773.3
$1,459.0
$39,158.8
Total derivative contracts .......
$8,221.6
$15,704.9
$13,773.3
$1,459.0
$39,158.8
The derivative contracts deemed to meet the definition of a
guarantee under U.S. GAAP are before consideration of hedging
transactions and only reflect a partial or “one-sided” component
of any risk exposure. Written equity options and written credit
default swaps are often executed in a strategy that is in tandem
with long cash instruments (e.g., equity and debt securities). We
substantially mitigate our exposure to market risk on these
contracts through hedges, such as other derivative contracts
and/or cash instruments, and we manage the risk associated
with these contracts in the context of our overall risk
management framework. We believe notional amounts overstate
our expected payout and that fair value of these contracts is a
more relevant measure of our obligations. At February 28, 2026,
the fair value of derivative contracts meeting the definition of a
guarantee, gross of any counterparty and cash collateral netting,
is a liability of approximately $635.0 million.
HomeFed. For real estate development projects, we are generally
required to obtain infrastructure improvement bonds at the
beginning of construction work and warranty bonds upon
completion of such improvements. These bonds are issued by
surety companies to guarantee a municipality satisfactory
completion of a project. As the planned area is developed and the
municipality accepts the improvements, the bonds are released.
At February 28, 2026, the aggregate amount of infrastructure
improvement bonds outstanding was $74.4 million.
Standby Letters of Credit. At February 28, 2026, we provided
guarantees to certain counterparties in the form of standby
letters of credit in the amount of $345.6 million, with a weighted
average maturity of less than one year. Standby letters of credit
commit us to make payment to the beneficiary if the guaranteed
party fails to fulfill its obligation under a contractual arrangement
with that beneficiary. Since commitments associated with these
collateral instruments may expire unused, the amount shown
does not necessarily reflect the actual future cash funding
requirement.
Other Guarantees. We are members of various exchanges and
clearing houses. In the normal course of business, we provide
guarantees to securities clearing houses and exchanges. These
guarantees generally are required under the standard
membership agreements, such that members are required to
guarantee the performance of other members. Additionally, if a
member becomes unable to satisfy its obligations to the clearing
house, other members would be required to meet these
shortfalls. To mitigate these performance risks, the exchanges
and clearing houses often require members to post collateral.
Our obligations under such guarantees could exceed the
collateral amounts posted. Our maximum potential liability under
these arrangements cannot be quantified; however, the potential
for us to be required to make payments under such guarantees is
deemed remote. Accordingly, no liability has been recognized for
these arrangements. Additionally, we provide certain
indemnifications in connection with third-party clearing and
execution arrangements whereby a third-party may clear and
settle transactions on behalf of our clients. These
indemnifications generally have standard contractual terms and
are entered into in the ordinary course of business. Our
obligations in respect of such transactions are secured by the
assets in our client’s account, as well as any proceeds received
from the transactions cleared and settled on behalf of our client.
However, we believe that it is unlikely we would have to make any
material payments under these arrangements and no material
liabilities related to these indemnifications have been recognized.
Note 19. Regulatory Requirements
Net Capital
Jefferies LLC is a broker-dealer registered with the SEC and a
member firm of the Financial Industry Regulatory Authority
(“FINRA”) and is subject to the SEC Uniform Net Capital Rule
(“Rule 15c3-1”), which requires the maintenance of minimum net
capital, and has elected to calculate minimum capital
requirements using the alternative method permitted by Rule
15c3-1 in calculating net capital. Jefferies LLC, as a dually-
registered U.S. broker-dealer and futures commission merchant
February 2026 Form 10-Q
39
Notes to Consolidated Financial Statements
(Unaudited)
(“FCM”), is also subject to Regulation 1.17 of the Commodity
Futures Trading Commission (“CFTC”) under the Commodity
Exchange Act, which sets forth minimum financial requirements.
The minimum net capital requirement in determining excess net
capital for a dually registered U.S. broker-dealer and FCM is equal
to the greater of the requirement under Rule 15c3-1 or Regulation
1.17. FINRA is the designated examining authority for Jefferies
LLC and the National Futures Association (“NFA”) is the
designated self-regulatory organization (“DSRO”) for Jefferies
LLC as an FCM.
Jefferies Financial Services, Inc. (“JFSI”) is registered with the
SEC as a Security-Based Swap Dealer (“SBS Dealer”) and an OTC
Derivatives Dealer (“OTCDD”) subject to the SEC’s SBS dealer
regulatory rules and the SEC’s net capital requirements. JFSI is
also registered as a swap dealer with the CFTC and is subject to
the CFTC’s regulatory capital requirements pursuant to the
minimum financial requirements for swap dealers. Additionally,
as a registered member firm, JFSI is subject to the net capital
requirements of the NFA. The SEC is the designated examining
authority for JFSI in its capacity as an SBS Dealer and OTCDD,
while the NFA is the DSRO for JFSI, as a CFTC registered swap
dealer.
Certain non-U.S. subsidiaries are subject to capital adequacy
requirements as prescribed by the regulatory authorities in their
respective jurisdictions. This includes Jefferies International
Limited (“JIL”), which is subject to the regulatory supervision and
requirements of the Financial Conduct Authority in the U.K. and
Jefferies GmbH, which is subject to the regulatory supervision of
the German Federal Financial Supervisory Authority.
At February 28, 2026, net capital and excess net capital were as
follows:
$ in thousands
Net
Capital
Excess Net
Capital
Jefferies LLC .................................................................
$1,448,011
$1,277,695
JFSI - SEC ......................................................................
333,245
298,800
JFSI - CFTC ...................................................................
333,245
300,126
JIL (1) .............................................................................
2,095,104
1,045,119
Jefferies GmbH (1) ......................................................
386,316
158,187
(1)Represents an equivalent capital requirement in the respective jurisdiction.
At February 28, 2026, Jefferies LLC, JFSI, JIL and Jefferies GmbH
are in compliance with their applicable requirements.
The regulatory capital requirements referred to above may
restrict our ability to withdraw capital from our regulated
subsidiaries.
Customer Protection and Segregation Requirement
As a registered broker dealer that clears and carries customer
accounts, Jefferies LLC is subject to the customer protection
provisions under SEC Rule 15c3-3 and is required to compute a
reserve formula requirement for customer accounts and deposit
cash or qualified securities into a special reserve bank account
for the exclusive benefit of customers. At February 28, 2026,
Jefferies LLC had $1.02 billion in cash and qualified U.S.
Government securities on deposit in special reserve bank
accounts for the exclusive benefit of customers.
As a registered broker dealer that clears and carries proprietary
accounts of brokers or dealers (commonly referred to as “PAB”),
Jefferies LLC is also required to compute a reserve requirement
for PABs pursuant to SEC Rule 15c3-3. At February 28, 2026,
Jefferies LLC had $596.1 million in cash and qualified U.S.
Government securities in special reserve bank accounts for the
exclusive benefit of PABs.
The qualified securities meeting the SEC Rule 15c3-3 customer
and PAB requirements are included in Cash and securities
segregated and Securities purchased under agreements to resell.
JFSI is exempt from the CFTC and SEC segregation rules.
Note 20. Segment Reporting
We operate in two reportable business segments: (1) Investment
Banking and Capital Markets and (2) Asset Management. The
Investment Banking and Capital Markets reportable business
segment includes our capital markets activities and investment
banking business, which is composed of financial advisory and
underwriting activities. The Investment Banking and Capital
Markets reportable business segment provides the sales, trading,
origination and advisory effort for various fixed income, equity
and advisory products and services. The Asset Management
reportable business segment provides investment management
services to investors globally and invests capital in hedge funds,
separately managed accounts and third-party asset managers.
Our reportable business segment information is prepared using
the following methodologies:
•Net revenues, expenses and income (loss) from equity method
investments directly associated with each reportable business
segment are included in determining earnings (losses) from
continuing operations before income taxes.
•Net revenues and expenses not directly associated with
specific reportable business segments are allocated based on
the most relevant measures applicable, including each
reportable business segment’s net revenues, headcount and
other factors.
•Reportable business segment assets include an allocation of
indirect corporate assets that have been fully allocated to our
reportable business segments, generally based on each
reportable business segment’s capital utilization.
Net revenues presented for our Investment Banking and Capital
Markets reportable segment include allocations of interest
income and interest expense as we assess the profitability of
these businesses inclusive of the net interest revenue or expense
associated with the respective activities, including the net
interest cost of allocated long-term debt, which is a function of
the mix of each business's associated assets and liabilities and
the related funding costs.
40
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Our Chief Executive Officer and President serve collectively as
our chief operating decision maker (“CODM”). In this capacity, the
CODM evaluates the performance of each business segment and
allocates resources based on a variety of strategic and financial
considerations. These considerations include measures of
segment results and profitability, including net revenues and
earnings before income taxes, which are calculated in
accordance with U.S. GAAP and align with the amounts reported
in our Consolidated Statements of Earnings. The CODM regularly
reviews results and profitability measures to monitor budget
versus actual results. Furthermore, the ongoing monitoring of
budget versus actual results is used to assess the performance
of each reportable business segment and significantly influences
decisions about allocating resources.
Summary of our results by reportable business segment:
Three Months Ended
 February 28,
$ in millions
2026
2025
Investment Banking and Capital Markets:
Revenues
Non-interest revenues ............................................................
$1,801.4
$1,403.7
Interest income .......................................................................
770.1
802.6
Total revenues (1) ..................................................................
2,571.5
2,206.3
Interest expense .....................................................................
775.5
807.3
Net revenues (1) .....................................................................
1,796.0
1,399.0
Non-interest expenses
Compensation and benefits ..................................................
1,021.3
769.1
Brokerage and clearing fees .................................................
121.8
100.2
Technology and communications .......................................
142.5
127.6
Business development ..........................................................
70.3
58.7
Other segment items (3) (4) .................................................
189.1
176.4
Total non-interest expenses ................................................
1,545.0
1,232.0
Earnings before income taxes ..............................................
$251.0
$167.0
Asset Management:
Revenues
Non-interest revenues ............................................................
$255.9
$221.7
Interest income .......................................................................
43.0
42.5
Total revenues (2) ..................................................................
298.9
264.2
Interest expense .....................................................................
78.6
72.5
Net revenues (2) .....................................................................
220.3
191.7
Non-interest expenses
Compensation and benefits ..................................................
64.6
72.0
Brokerage and clearing fees .................................................
11.3
9.2
Technology and communications .......................................
17.3
11.9
Business development ..........................................................
5.2
13.6
Cost of sales ...........................................................................
29.9
41.6
Other segment items (3) (5) .................................................
131.6
61.6
Total non-interest expenses ................................................
259.9
209.9
Losses before income taxes (6) (7) ....................................
$(39.6)
$(18.2)
Total of Reportable Business Segments:
Revenues
Non-interest revenues ............................................................
$2,057.3
$1,625.4
Interest income .......................................................................
813.1
845.1
Total revenues ........................................................................
2,870.4
2,470.5
Interest expense .....................................................................
854.1
879.8
Net revenues ...........................................................................
2,016.3
1,590.7
Non-interest expenses
Compensation and benefits ..................................................
1,085.9
841.1
Brokerage and clearing fees .................................................
133.1
109.4
Technology and communications .......................................
159.8
139.5
Business development ..........................................................
75.5
72.3
Cost of sales ...........................................................................
29.9
41.6
Other segment items (3) .......................................................
320.7
238.0
Total non-interest expenses ................................................
1,804.9
1,441.9
Earnings before income taxes .............................................
$211.4
$148.8
(1)Includes total net earnings related to equity method investees of $20.3 million
and $4.7 million, respectively.
(2)Includes total net earnings (losses) related to equity method investees of $4.2
million and $2.4 million, respectively.
(3)Primarily consists of underwriting costs, occupancy and equipment rental,
professional services, and depreciation and amortization.
(4)Includes depreciation and amortization of $33.5 million and $9.9 million,
respectively.
(5)Includes depreciation and amortization of $23.4 million and $21.1 million,
respectively.
(6)Consists of earnings before income taxes of $80.0 million and $13.3 million,
respectively, related to asset management fees and investment return and
consists of losses before income taxes of $119.6 million and $31.5 million,
respectively, related to Other investments.
(7)Includes losses before income taxes related to non-controlling interests of
$15.8 million and $7.0 million, respectively.
February 2026 Form 10-Q
41
Notes to Consolidated Financial Statements
(Unaudited)
Reconciliation of Reportable Segment Information:
Three Months Ended
 February 28,
$ in millions
2026
2025
Total revenues for reportable segments .................
$2,016.3
$1,590.7
Other revenues not allocated to segments ...............
0.8
2.3
Total consolidated net revenues ...............................
$2,017.1
$1,593.0
Total earnings for reportable segments ..................
$211.4
$148.8
Earnings not allocated to segments ..........................
0.8
2.3
Total consolidated earnings .......................................
$212.2
$151.1
Assets by reportable business segment:
$ in millions
February 28,
2026
November 30,
2025
Investment Banking and Capital Markets .................
$68,934.9
$70,335.5
Asset Management ......................................................
5,445.6
5,676.8
Total assets ..................................................................
$74,380.5
$76,012.3
Net Revenues by Geographic Region
Net revenues for the Investment Banking and Capital Markets
reportable business segment are recorded in the geographic
region in which the position was risk-managed or, in the case of
investment banking, in which the senior coverage banker is
located. For the Asset Management reportable business
segment, net revenues are allocated according to the location of
the investment advisor or the location of the invested capital.
Three Months Ended
 February 28,
$ in millions
2026
2025
Americas (1) .................................................................
$1,405.8
$1,084.3
Europe and the Middle East (2) ..................................
436.3
370.6
Asia-Pacific ...................................................................
175.0
138.1
Net revenues ................................................................
$2,017.1
$1,593.0
(1)Primarily relates to U.S. results.
(2)Primarily relates to U.K. results.
Note 21. Related Party Transactions
Officers, Directors and Employees
The following sets forth information regarding related party
transactions with our officers, directors and employees:
•At February 28, 2026 and November 30, 2025, we had $16.7
million and $19.2 million, respectively, of loans, net of
allowance, outstanding to certain of our officers and
employees (none of whom are executive officers or directors)
that are included in Other assets.
•Receivables from and payables to customers include balances
arising from officers’, directors’ and employees’ individual
security transactions. These transactions are subject to the
same regulations as all customer transactions and are
provided on substantially the same terms.
•Two of our directors and certain of our officers have total
investments in entities managed by us of approximately
$10.5 million and $10.4 million at February 28, 2026 and
November 30, 2025, respectively.
SMBC
We have a strategic alliance with Sumitomo Mitsui Financial
Group, Inc., Sumitomo Mitsui Banking Corporation (“SMBC”) and
SMBC Nikko Securities Inc. (together referred to as “SMBC
Group”) to collaborate on corporate and investment banking
business opportunities as well as opportunities related to equity
sales, trading and research.
The following tables summarize balances with SMBC as reported
in our Consolidated Statements of Financial Condition and
Consolidated Statements of Earnings. In addition, the synergies
and value creation resulting from our strategic alliance with
SMBC generate additive benefits for us, which are not necessarily
reflected by the activity presented in the following tables.
$ in thousands
February 28,
2026
November 30,
2025
Assets
Cash and cash equivalents .........................................
$398,415
$444,506
Cash and securities segregated and on deposit
for regulatory purposes or deposited with
clearing and depository organizations ................
27,444
27,975
Financial instruments owned, at fair value ...............
6,312
395
Securities borrowed .....................................................
7,466
3,872
Securities purchased under agreements to resell ...
263,644
357,261
Receivables:
Brokers, dealers and clearing organizations ........
4,240
7,752
Customers .................................................................
—
206
Fees, interest and other ...........................................
6,514
5,438
Other assets ..................................................................
9,267
6,203
Total assets ..................................................................
$723,302
$853,608
Liabilities
Financial instruments sold, not yet purchased, at
fair value ...................................................................
$2,814
$6,763
Securities loaned ..........................................................
89,662
620
Securities sold under agreements to repurchase ...
562,528
638,581
Payables:
Brokers, dealers and clearing organizations .......
3,403
470
Accrued expenses and other liabilities .....................
10,496
9,537
Long-term debt (1) .......................................................
—
—
Total liabilities ..............................................................
$668,903
$655,971
(1)We have credit facilities with SMBC totaling $1.15 billion with interest rates
based on various benchmark rates and associated spreads.
Three Months Ended
 February 28,
$ in thousands
2026
2025
Revenues
Investment banking ...............................................................
$3,329
$3,849
Principal transactions (1) .....................................................
326
(4,192)
Commissions and other fees ...............................................
523
649
Interest ....................................................................................
4,525
7,617
Total revenues .......................................................................
8,703
7,923
Interest expense ....................................................................
6,948
10,871
Net revenues ..........................................................................
$1,755
$(2,948)
Non-interest expenses
Compensation and benefits
$1,243
$—
Technology and communications .......................................
1,024
—
Business development .........................................................
9,575
4,688
Other expenses ......................................................................
1,090
4
Total non-interest expenses ...............................................
$12,932
$4,692
(1)Primarily represents net gains (losses) on interest rate derivatives executed
with SMBC.
42
Jefferies Financial Group Inc.
Notes to Consolidated Financial Statements
(Unaudited)
Other Related Party Transactions
We have other related party transactions with equity method
investees. Refer to Note 10, Investments for further information.
February 2026 Form 10-Q
43
Item 2. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Forward-Looking Statements
This report may contain or incorporate by reference certain
“forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933, Section 21E of the Securities
Exchange Act of 1934 and/or the Private Securities Litigation
Reform Act of 1995. Forward-looking statements include
statements about our future and statements that are not
historical or current facts. These forward-looking statements are
often preceded by the words “should,” “expect,” “believe,”
“intend,” “may,” “will,” “would,” “could” or similar expressions.
Forward-looking statements may contain expectations regarding
revenues, earnings, operations and other results, and may include
statements of future performance, plans and objectives. Forward-
looking statements also include statements pertaining to our
strategies for future development of our business and products.
Forward-looking statements represent only our belief regarding
future events, many of which by their nature are inherently
uncertain. It is possible that the actual results may differ, possibly
materially, from the anticipated results indicated in these
forward-looking statements. Information regarding important
factors that could cause actual results to differ, perhaps
materially, from those in our forward-looking statements is
contained in this report and other documents we file. You should
read and interpret any forward-looking statement together with
these documents, including the following:
•the description of our business and risk factors contained in
our Annual Report on Form 10-K for the year ended
November 30, 2025 and filed with the Securities and Exchange
Commission (“SEC”) on January 28, 2026;
•the discussion of our analysis of financial condition and results
of operations contained in this report under the caption
“Management’s Discussion and Analysis of Financial Condition
and Results of Operations” herein;
•the discussion of our risk management policies, procedures
and methodologies contained in this report under the caption
“Management’s Discussion and Analysis of Financial Condition
and Results of Operations – Risk Management” herein;
•the consolidated financial statements and notes to the
consolidated financial statements contained in this report; and
•cautionary statements we make in our public documents,
reports and announcements.
Any forward looking statement speaks only as of the date on
which that statement is made. We undertake no obligation to
update any forward looking statement to reflect events or
circumstances that occur after the date on which the statement
is made, except as required by applicable law.
Our business, by its nature, does not produce predictable or
necessarily recurring earnings. Our results in any given period
can be materially affected by conditions in global financial
markets, economic conditions generally and our own activities
and positions.
Consolidated Results of Operations
Overview
Three Months Ended
 February 28,
$ in thousands
2026
2025
% Change
Net revenues ....................................................
$2,017,130
$1,593,019
26.6%
Non-interest expenses ....................................
1,804,914
1,441,954
25.2%
Earnings from continuing operations
before income taxes ........................................
212,216
151,065
40.5%
Income tax expense from continuing
operations ..........................................................
52,870
14,216
271.9%
Net earnings from continuing operations .....
159,346
136,849
16.4%
Net losses attributable to noncontrolling
interests .............................................................
(15,858)
(6,983)
127.1%
Preferred stock dividends ...............................
19,504
16,039
21.6%
Net earnings attributable to common
shareholders .....................................................
155,700
127,793
21.8%
Effective tax rate from continuing
operations ........................................................
24.9%
9.4%
Executive Summary
Three Months Ended February 28, 2026 Versus February 28, 2025
Net earnings attributable to common shareholders were
$155.7 million and $127.8 million for the three months ended
February 28, 2026 and 2025, respectively.
Our effective tax rate was 24.9%, and 9.4% for the three months
ended February 28, 2026 and 2025, respectively.
The remainder of our “Consolidated Results of Operations” is
presented on a detailed product and expense basis. Our
“Revenues by Source” is reported along the following business
lines: Investment Banking, Equities, Fixed Income and Asset
Management.
At February 28, 2026, we had 7,596 employees globally across all
of our consolidated subsidiaries within our Investment Banking
and Capital Markets and Asset Management reportable
segments, compared to 7,787 at November 30, 2025. Included
within our global headcount are 1,578 employees at February 28,
2026 and 1,797 employees at November 30, 2025 of our Stratos,
Tessellis, HomeFed and M Science subsidiaries.
Revenues by Source
We present our results as two reportable business segments:
Investment Banking and Capital Markets and Asset Management.
Additionally, corporate activities are fully allocated to each of
these reportable business segments.
Net revenues presented for our Investment Banking and Capital
Markets reportable segment include allocations of interest
income and interest expense as we assess the profitability of
these businesses inclusive of these costs, including the net
interest cost of allocated short- and long-term debt, which is a
function of the mix of each business’s associated assets and
liabilities and the related funding costs.
Debt valuation adjustments on derivative contracts, gains and
losses on investments held in deferred compensation plans,
foreign currency transaction gains or losses or certain other
corporate income items are not considered by management in
assessing the financial performance of our operating businesses
and are, therefore, not reported as part of our business segment
results.
44
Jefferies Financial Group Inc.
Three Months Ended February 28,
2026
2025
$ in thousands
Amount
% of Net
Revenues
Amount
% of Net
Revenues
% Change
Advisory ..................................
$527,128
26.2%
$397,780
25.0%
32.5%
Equity underwriting ...............
305,969
15.2
128,520
8.1
138.1
Debt underwriting ..................
181,858
9.0
199,362
12.5
(8.8)
Other investment banking ....
2,338
0.1
(24,970)
(1.6)
N/M
Total Investment Banking ...
1,017,293
50.5
700,692
44.0
45.2
Equities ...................................
558,488
27.7
409,058
25.7
36.5
Fixed income .........................
220,268
10.9
289,226
18.2
(23.8)
Total Capital Markets ..........
778,756
38.6
698,284
43.9
11.5
Total Investment Banking
and Capital Markets (1) .
1,796,049
89.1
1,398,976
87.9
28.4
Asset management fees
and revenues ...................
69,910
3.5
88,630
5.6
(21.1)
Investment return ..................
88,992
4.4
(5,634)
(0.4)
N/M
Allocated net interest (2) .....
(22,238)
(1.1)
(17,221)
(1.1)
29.1
Other investments,
inclusive of net interest ..
83,598
4.1
125,940
7.9
(33.6)
Total Asset Management ....
220,262
10.9
191,715
12.0
14.9
Other .......................................
819
—
2,328
0.1
(64.8)
Net revenues .........................
$2,017,130
100.0%
$1,593,019
100.0%
26.6%
N/M — Not Meaningful
(1)Allocated net interest is not separately disaggregated for Investment Banking
and Capital Markets. This presentation is aligned to our Investment Banking
and Capital Markets internal performance measurement.
(2)Allocated net interest represents an allocation to Asset Management of our
long-term debt interest expense, net of interest income on our Cash and cash
equivalents and other sources of liquidity. Allocated net interest has been
disaggregated to increase transparency and to make clearer actual
Investment return. We believe that aggregating Investment return and
Allocated net interest would obscure the Investment return by including an
amount that is unique to our credit spreads, debt maturity profile, capital
structure, liquidity risks and allocation methods.
Investment Banking Revenues
Investment banking is composed of revenues from:
•advisory services with respect to mergers and acquisitions,
debt financing, restructurings and private capital transactions;
•underwriting services, which include debt underwriting and
placement services related to investment grade debt, high yield
bonds, leveraged loans, emerging market debt, global
structured notes, municipal debt and mortgage-backed and
asset-backed securities; equity underwriting and placement
services related to equity offerings, preferred stock and equity-
linked securities; and loan syndication;
•our 50% share of net earnings from our Jefferies Finance joint
venture;
•our 45% share of net earnings from our commercial real estate
joint venture, Berkadia, which includes commercial mortgage
origination and servicing as well as investment sales;
•securities and loans received or acquired in connection with
our investment banking activities; and
•certain revenue-sharing agreements with SMBC primarily
associated with investment banking transactions.
Deals Completed
Three Months Ended
February 28,
2026
February 28,
2025
Advisory transactions ..................................................
99
92
Public and private equity and convertible offerings .
56
35
Public and private debt financings .............................
257
213
Aggregate Value
Three Months Ended
$ in billions
February 28,
2026
February 28,
2025
Advisory transactions ..................................................
$87.5
$111.8
Public and private equity and convertible offerings .
37.1
22.4
Public and private debt financings .............................
143.9
147.2
Three Months Ended February 28, 2026 Versus February 28, 2025
Investment banking net revenues were $1.02 billion, up 45.2%
compared to $700.7 million for the prior year quarter.
Advisory net revenues of $527.1 million were up 32.5% compared
to $397.8 million for the prior year quarter, partially driven by
increased deal volumes across several sectors.
Total underwriting net revenues were $487.8 million, up 48.8%
from $327.9 million for the prior year quarter, primarily driven by
market share gains and increased activity in Equity underwriting
across a range of sectors. Debt underwriting remained solid but
decreased compared to the prior year quarter.
Other investment banking net revenues were $2.3 million,
compared to net revenues of $(25.0) million for the prior year
quarter and include mark-to-market net gains on certain
investment positions for the current quarter. Performance from
our Jefferies Finance joint venture improved and performance
from our Berkadia joint venture modestly increased from the prior
year quarter.
Our investment banking backlog remains strong, although the
extent and timing of its realization is always subject to change.
Backlog snapshots are subject to limitations as the time frame
for the realization of revenues from these expected transactions
varies and is influenced by factors we do not control.
Transactions not included in the estimate may occur, and
expected transactions may be modified or cancelled.
Equities Net Revenues
Equities is composed of net revenues from:
•services provided to our clients from which we earn
commissions or spread revenue by executing, settling and
clearing transactions for clients;
•advisory services offered to clients;
•financing, securities lending and other prime brokerage
services offered to clients, including capital introductions and
outsourced trading;
•corporate equity derivative transactions; and
•wealth management services.
February 2026 Form 10-Q
45
Three Months Ended February 28, 2026 Versus February 28, 2025
Equities net revenues were $558.5 million, up 36.5% from
$409.1 million for the prior year quarter, marking our strongest
first quarter on record, due to market share gains and higher
global trading volumes driving stronger results, particularly within
our equity options, corporate derivatives and global electronic
trading businesses. Our prime services, and Europe and U.S.
equity cash businesses also produced strong results.
Fixed Income Net Revenues
Fixed income is composed of net revenues from:
•executing transactions for clients and making markets in
securitized products, investment grade, high-yield, distressed,
emerging markets, municipal, sovereign and emerging markets
securities and loans;
•customized products and corporate hedging and foreign
currency solutions through derivative products; and
•financing and other structuring services.
Three Months Ended February 28, 2026 Versus February 28, 2025
Fixed income net revenues were $220.3 million, down 23.8%
compared to $289.2 million for the prior year quarter as credit
markets remained challenging in the current quarter for the
products and services where we are most active, impacting the
overall trading environment and several of our businesses.
Strong performance in our municipal securities and emerging
markets businesses was more than offset by lower results from
our securitized products business, which includes a gross mark-
to-market loss of $42.8 million associated with Market Financial
Solutions during the current quarter.
Asset Management
We operate a diversified alternative asset management platform
that provides institutional clients with a broad range of
investment strategies, both directly and through our strategic
affiliated asset managers. Certain affiliated managers also
benefit from access to our global marketing and distribution
platform, as well as operational infrastructure and support. Our
asset management business makes seed and additional
strategic investments directly in alternative asset management
separately managed accounts and co-mingled funds where we
act as the asset manager or in affiliated asset managers where
we have strategic relationships and participate in the revenues or
profits of the affiliated manager.
Asset management fees and revenues primarily consist of:
•Management and performance fees from funds and accounts
managed by us;
•Placement and distribution fees for raising capital from
investors; and
•Revenue from strategic affiliated asset managers where we are
entitled to portions of their operating revenues and income
based on our ownership interests in the affiliates.
Fees and revenues are generally tied to the value of assets under
management and the performance of those assets.
Performance-based fees are earned when returns exceed
specified benchmarks or performance targets and are typically
recognized annually generally in our first quarter, once they
become fixed and determinable and are not subject to significant
reversal.
We also generate an investment return from capital invested in
our managed funds and in funds managed by our affiliated asset
managers. Additionally, we earn revenues from other
investments, including our portfolio of real estate development
activities, foreign exchange trading, and telecommunications
operations.
Three Months Ended
 February 28,
$ in thousands
2026
2025
% Change
Asset management fees and other ..
$6,899
$45,808
(84.9)%
Revenue from strategic affiliates (1)
63,011
42,822
47.1%
Total asset management fees and
revenues ..........................................
69,910
88,630
(21.1)%
Investment return ................................
88,992
(5,634)
N/M
Allocated net interest ..........................
(22,238)
(17,221)
29.1%
Other investments ...............................
83,598
126,128
(33.7)%
Total Asset Management ..................
$220,262
$191,903
14.8%
N/M — Not Meaningful
(1)Amounts include our share of fees received by affiliated asset management
companies with which we have revenue and profit share arrangements, as
well as earnings on our ownership interest in affiliated asset managers.
Three Months Ended February 28, 2026 Versus February 28, 2025
Asset management fees and revenues were $69.9 million, down
21.1% compared to $88.6 million for the prior year quarter,
reflecting higher performance fees on funds managed through
our strategic affiliates, offset by lower performance fees largely
associated with Point Bonita.
Investment return was $89.0 million, compared to $(5.6) million
for the prior year quarter due to improved returns generated
across a number of fund strategies, particularly those with a long
equity bias.
Other investments net revenues were $83.6 million, down 33.6%
compared to $125.9 million in the prior year quarter, as
performance from Stratos and HomeFed was lower than the prior
year quarter and mark-to-market gains on certain investments
were lower than the prior year quarter. In February 2026, we
entered into a binding offer with a third party to sell Tessellis. We
expect the sale to close during the first quarter of 2027.
Assets Under Management
Assets under management (“AUM”) represents the assets we
manage or are managed by our affiliated asset managers with
whom we have revenue sharing arrangements. AUM primarily
refers to the basis of assets from which we are entitled to earn
fees and revenues though the measure also includes funds and
separately managed accounts for which we do not charge fees.
AUM includes:
•the net asset value of a fund or separately managed account
managed by us or our affiliated managers and may include an
agreed target AUM utilizing leverage;
•unfunded capital commitments to a fund; and
•the fair value of any invested capital in our consolidated funds
or separately managed accounts.
Net asset value generally refers to the fair value the assets less
the liabilities of a fund or account.
46
Jefferies Financial Group Inc.
Assets under management:
$ in millions
February 28,
 2026
November 30,
2025
Net asset value seeded by us:
Jefferies funds or separately managed
accounts ..............................................................
$376
$358
Our affiliates funds or separately managed
accounts ..............................................................
1,712
1,741
Total net asset value of Jefferies’ invested
capital (1) .............................................................
2,088
2,099
Fair value of investment purchased with
leverage ................................................................
539
699
Total AUM attributed to Jefferies as investor ....
$2,627
$2,798
Net asset value of third-party investors:
Jefferies funds or separately managed
accounts (2) ........................................................
1,618
2,462
Our affiliates funds or separately managed
accounts (3) ........................................................
26,898
25,387
Total AUM attributed to third-party investors ....
$28,516
$27,849
Unfunded capital commitments ............................
194
195
Aggregated AUM .....................................................
$31,337
$30,842
(1)Revenues related to the investments made by us are presented in Investment
return within the results of our asset management businesses.
(2)We earn asset management fees as a result of the third-party investments,
which are presented in Asset management fees and revenues within the
results of our asset management business.
(3)Revenues from our share of fees received by affiliated asset managers are
presented in Revenue from strategic affiliates within the results of our asset
management business.
Our definition of assets under management may differ from the
calculations of other asset managers; and as a result, this
measure may not be comparable to similar measures presented
by other asset managers. Our definition of AUM may differ from
that referenced in any of our investment management
agreements, differs from the manner in which “Regulatory Assets
Under Management” is reported to the SEC on Form ADV, and
includes assets for which we do not act as an asset manager.
In addition to our investments directly in Jefferies’ and our
strategic affiliates funds and separately managed accounts, we
have capital invested in other equity method investees as part of
our asset management business of $178.0 million and
$174.0 million at February 28, 2026 and November 30, 2025,
respectively.
Other
Other revenues include foreign currency transaction gains or
losses, debt valuation adjustments on derivative contracts, gains
and losses on investments held in deferred compensation plans
or certain other corporate income items that are not attributed to
business segments as management does not consider such
amounts in assessing the financial performance of our operating
businesses.
Non-interest Expenses
Three Months Ended
 February 28,
$ in thousands
2026
2025
% Change
Compensation and benefits ...........
$1,085,890
$841,127
29.1%
Brokerage and clearing fees ..........
133,132
109,436
21.7
Underwriting costs ..........................
31,383
17,846
75.9
Technology and communications
159,858
139,475
14.6
Occupancy and equipment rental .
33,860
30,199
12.1
Business development ...................
75,422
72,291
4.3
Professional services .....................
76,944
72,466
6.2
Depreciation and amortization ......
56,865
30,988
83.5
Cost of sales ....................................
29,920
41,568
(28.0)
Other ..................................................
121,640
86,558
40.5
Total non-interest expenses .........
$1,804,914
$1,441,954
25.2%
Total Non-interest Expenses
Three Months Ended February 28, 2026 Versus February 28, 2025
Non-interest expenses were $1.80 billion, an increase of 25.2%,
compared to $1.44 billion for the prior year quarter, primarily due
to an increase in compensation and benefits expenses
attributable to higher net revenues.
Compensation and Benefits
Compensation and benefits expense consists of salaries,
benefits, commissions, annual cash compensation and share-
based awards and the amortization of share-based and cash
compensation awards to employees.
Cash and share-based awards granted to employees may contain
provisions such that employees who terminate their employment
or are terminated without cause may continue to vest in their
awards, so long as those awards are not forfeited as a result of
other forfeiture provisions (primarily non-compete clauses) of
those awards. Accordingly, the compensation expense for a
portion of awards granted at year end as part of annual
compensation is recorded during the year of the award.
Compensation and benefits expense includes amortization
expense associated with these awards to the extent vesting is
contingent on future service. In addition, certain awards to our
Chief Executive Officer and our President contain performance
conditions and the awards are amortized over their service
periods.
Compensation and benefits expense was $1.09 billion compared
to $841.1 million for the prior year quarter. A significant portion
of our compensation expense is highly variable with net
revenues. Compensation and benefits expense as a percentage
of Net revenues was 53.8% compared with 52.8% for prior year
quarter.
Compensation expense related to the amortization of share- and
cash-based awards was $183.3 million compared to $150.7
million for the prior year quarter.
At February 28, 2026, we had 7,596 employees globally across all
of our consolidated subsidiaries within our Investment Banking
and Capital Markets and Asset Management reportable
segments, compared to 7,787 at November 30, 2025. Included
within our global headcount are 1,578 employees at February 28,
2026 and 1,797 employees at November 30, 2025 of our Stratos,
Tessellis, HomeFed, and M Science subsidiaries.
February 2026 Form 10-Q
47
Non-interest Expenses (Excluding Compensation and Benefits)
Three Months Ended February 28, 2026 Versus February 28, 2025
Non-compensation expenses as a percentage of Net revenues
was 35.6% compared to 37.7% for the current quarter and prior
year quarter, respectively, and was impacted by the following:
•Brokerage and clearing fees were higher by $23.7 million
primarily tied to strong equities revenue growth across regions.
•Technology and communication expenses were higher by
$20.4 million related to the continued development of various
trading and management systems as well as higher data
related costs.
•Other expenses were higher by $35.1 million compared to the
prior year period, primarily due to the write-down of goodwill
associated with the expected sale of Tessellis.
Income Taxes
Three Months Ended February 28, 2026 Versus February 28, 2025
The provision for income taxes on continuing operations was
$52.9 million and $14.2 million for the three months ended
February 28, 2026 and 2025, respectively, representing an
effective tax rate of 24.9%, and 9.4%, respectively. The fluctuation
in rate was primarily driven by the resolution of certain state and
local tax matters in the prior year quarter.
Accounting Developments
There are no accounting standard updates, except as discussed
in Note 3, Accounting Developments in our consolidated financial
statements including in this quarterly report on Form 10-Q which
we have either determined are applicable or expected to have a
material impact on our consolidated financial statements.
48
Jefferies Financial Group Inc.
Critical Accounting Estimates
Our consolidated financial statements are prepared in conformity
with U.S. generally accepted accounting principles (“U.S. GAAP”),
which requires management to make estimates and
assumptions that affect the amounts reported in our
consolidated financial statements and related notes. Actual
results can and may differ from estimates. These differences
could be material to our consolidated financial statements.
We believe our application of U.S. GAAP and the associated
estimates are reasonable. Our accounting estimates are
reevaluated, and adjustments are made when facts and
circumstances dictate a change. Historically, we have found our
application of accounting policies to be appropriate, and actual
results have not differed materially from those determined using
necessary estimates.
For further discussions of the following significant accounting
policies and other significant accounting policies, refer to Note 2,
Summary of Significant Accounting Policies, in our consolidated
financial statements included in Part II, Item 8 of our Annual
Report on Form 10-K for the year ended November 30, 2025.
Valuation of Financial Instruments
Financial instruments owned and Financial instruments sold, not
yet purchased are recorded at fair value. The fair value of a
financial instrument is the amount that would be received to sell
an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date (the exit
price). Unrealized gains or losses are generally recognized in
Principal transactions revenues.
Fair Value Hierarchy – In determining fair value, we maximize the
use of observable inputs and minimize the use of unobservable
inputs by requiring that observable inputs be used when
available. Observable inputs are inputs that market participants
would use in pricing the asset or liability based on market data
obtained from independent sources. Unobservable inputs reflect
our assumptions that market participants would use in pricing
the asset or liability developed based on the best information
available in the circumstances. We apply a hierarchy to
categorize our fair value measurements broken down into three
levels based on the transparency of inputs, where Level 1 uses
observable prices in active markets and Level 3 uses valuation
techniques that incorporate significant unobservable inputs.
Greater use of management judgment is required in determining
fair value when inputs are less observable or unobservable in the
marketplace, such as when the volume or level of trading activity
for a financial instrument has decreased and when certain
factors suggest that observed transactions may not be reflective
of orderly market transactions. Judgment must be applied in
determining the appropriateness of available prices, particularly
in assessing whether available data reflects current prices and/or
reflects the results of recent market transactions. Prices or
quotes are weighed when estimating fair value with greater
reliability placed on information from transactions that are
considered to be representative of orderly market transactions.
Fair value is a market-based measure; therefore, when market
observable inputs are not available, our judgment is applied to
reflect those judgments that a market participant would use in
valuing the same asset or liability. The availability of observable
inputs can vary for different products. We use prices and inputs
that are current as of the measurement date even in periods of
market disruption or illiquidity. The valuation of financial
instruments categorized within Level 3 of the fair value hierarchy
involves the greatest extent of management judgment. (Refer to
Note 2, Summary of Significant Accounting Policies, in our
consolidated financial statements included in Part II, Item 8 of
our Annual Report on Form 10-K for the year ended November 30,
2025 and Note 5, Fair Value Disclosures in our consolidated
financial statements included in this Quarterly Report on Form
10-Q for further information on the definitions of fair value, Level
1, Level 2 and Level 3 and related valuation techniques).
For information on the composition of our Financial instruments
owned and Financial instruments sold, not yet purchased
recorded at fair value and the composition of activity of our Level
3 assets and Level 3 liabilities, refer to Note 5, Fair Value
Disclosures in our consolidated financial statements included in
this Quarterly Report on Form 10-Q.
Controls Over the Valuation Process for Financial Instruments –
Our Independent Price Verification Group, independent of the
trading function, plays an important role in determining that our
financial instruments are appropriately valued and that fair value
measurements are reliable. This is particularly important where
prices or valuations that require inputs are less observable. In the
event that observable inputs are not available, the control
processes are designed to assure that the valuation approach
utilized is appropriate and consistently applied and that the
assumptions are reasonable. Where a pricing model is used to
determine fair value, these control processes include reviews of
the pricing model’s theoretical soundness and appropriateness
by risk management personnel with relevant expertise who are
independent from the trading desks. In addition, recently
executed comparable transactions and other observable market
data are considered for purposes of validating assumptions
underlying the model.
Income Taxes
Significant judgment is required in estimating our provision for
income taxes. In determining the provision for income taxes, we
must make judgments and interpretations about how to apply
inherently complex tax laws to numerous transactions and
business events. In addition, we must make estimates about the
amount, timing and geographic mix of future taxable income,
which includes various tax planning strategies to utilize tax
attributes and deferred tax assets before they expire.
We record a valuation allowance to reduce our net deferred tax
asset to the amount that is more likely than not to be realized. We
are required to consider all available evidence, both positive and
negative, and to weigh the evidence when determining whether a
valuation allowance is required and the amount of such valuation
allowance. Generally, greater weight is required to be placed on
objectively verifiable evidence when making this assessment, in
particular on recent historical operating results.
We also record reserves for unrecognized tax benefits based on
our assessment of the probability of successfully sustaining tax
filing positions. Management exercises significant judgment
when assessing the probability of successfully sustaining tax
filing positions, and in determining whether a contingent tax
liability should be recorded and if so, estimating the amount. If
our tax filing positions are successfully challenged, payments
could be required that are in excess of reserved amounts or we
may be required to reduce the carrying amount of our net
deferred tax asset, either of which could be significant to our
financial condition or results of operations.
Impairment of Equity Method Investments
We evaluate equity method investments for impairment when
operating losses or other factors may indicate a decrease in
value which is other than temporary. We consider a variety of
February 2026 Form 10-Q
49
factors including economic conditions nationally and in an
investment’s geographic area of operation, adverse changes in
the industry in which an investment operates, declines in
business prospects, deterioration in earnings, increasing costs of
operations and other relevant factors specific to the
investee. Whenever we believe conditions or events indicate that
one of these investments might be significantly impaired, we
generally obtain from such investee updated cash flow
projections and obtain other relevant information related to
assessing the overall valuation of the investee. Utilizing this
information, we assess whether the investment is considered to
be other-than-temporarily impaired. To the extent an investment
is deemed to be other-than-temporarily impaired, an impairment
charge is recognized for the amount, if any, by which the
investment’s book value exceeds our estimate of the
investment’s fair value.
Goodwill
At February 28, 2026, goodwill of $1.73 billion (excluding goodwill
classified as held for sale) represents 2.3% of total assets. The
nature and accounting for goodwill is discussed in Note 2,
Summary of Significant Accounting Policies in our consolidated
financial statements included in Part II, Item 8 of our Annual
Report on Form 10-K for the year ended November 30, 2025 and
Note 12, Goodwill and Intangible Assets in our consolidated
financial statements included in this Quarterly Report on Form
10-Q. Goodwill must be allocated to reporting units and tested for
impairment at least annually, or when circumstances or events
make it more likely than not that an impairment occurred.
Goodwill is tested by comparing the estimated fair value of each
reporting unit with its carrying value. Our annual goodwill
impairment testing date for a substantial portion of our reporting
units is August 1 and November 30 for other identified reporting
units. The results of our annual tests did not indicate any
goodwill impairment.
Estimating the fair value of a reporting unit requires management
judgment and often involves the use of estimates and
assumptions that could have a significant effect on whether or
not an impairment charge is recorded and the magnitude of such
a charge. Estimated fair values for our reporting units utilize
market valuation methods that incorporate price-to-earnings and
price-to-book multiples of comparable public companies and/or
projected cash flows. Under the market valuation approach, the
key assumptions are the selected multiples and our internally
developed projections of future profitability, growth and return on
equity for each reporting unit. The weight assigned to the
multiples requires judgment in qualitatively and quantitatively
evaluating the size, profitability and the nature of the business
activities of the reporting units as compared to the comparable
publicly-traded companies. Under the income approach, the key
assumptions include our internally developed projections of
future cash flows, growth rates and risk adjusted discount rates,
which are sensitive to the interest rate environment and capital
market conditions. The valuation methodologies for our reporting
units are sensitive to management’s forecasts of future
profitability, which are a significant component of the valuation
and come with a level of uncertainty regarding trading volumes
and capital market transaction levels. In addition, as the fair
values determined under the market valuation approach
represent a noncontrolling interest, we apply a control premium
to arrive at the estimate fair value of each reporting unit on a
controlling basis.
We use allocated tangible equity plus allocated goodwill and
intangible assets for the carrying amount of each reporting unit.
The amount of tangible equity allocated to a reporting unit is
based on our cash capital model deployed in managing our
businesses, which seeks to approximate the capital a business
would require if it were operating independently. For further
information on our Cash Capital Policy, refer to the Liquidity,
Financial Condition and Capital Resources section herein.
Intangible assets are allocated to a reporting unit based on either
specifically identifying a particular intangible asset as pertaining
to a reporting unit or, if shared among reporting units, based on
an assessment of the reporting unit’s benefit from the intangible
asset in order to generate results.
For certain of our reporting units included within Other
investments we may first assess qualitative factors to determine
whether it is more likely than not that the fair value of the
reporting unit is less than its carrying amount. If we determine on
the basis of this qualitative assessment that it is not more likely
than not that a reporting unit’s fair value is less than its carrying
amount, we place reliance on our qualitative assessment and no
quantitative calculation of the fair value of the reporting unit is
performed.
Carrying values of goodwill by reporting unit:
$ in millions
February 28,
 2026
November 30,
2025
Investment banking ..........................................................
$702.6
$702.0
Equities and wealth management ..................................
256.1
255.9
Fixed income .....................................................................
578.5
578.0
Asset management ..........................................................
143.0
143.0
Other investments ............................................................
45.7
158.7
Total ....................................................................................
$1,725.9
$1,837.6
The results of our annual assessments indicated that all of our
reporting units had a fair value in excess of their carrying
amounts. Our valuation methodologies and the assessment of
qualitative factors are sensitive to management’s forecasts of
future probability. At February 28, 2026, our Stratos reporting unit
with allocated goodwill of $5.5 million is highly sensitive to the
forecast assumptions used in our market approach valuation.
Reductions in trading volumes and/or a decline in performance
from the expected levels assumed in our forecast could cause a
decline in the estimated fair value of our Stratos reporting unit
and a resulting impairment of a portion of our goodwill.
During the current quarter, a binding offer to sell our Tessellis
reporting unit was accepted. We have evaluated the goodwill
allocated to Tessellis and, based on the estimated sales
proceeds, recorded an impairment to goodwill of $58.2 million in
the current quarter, which is recognized within Other expenses. At
February 28, 2026, the remaining goodwill allocated to our
Tessellis reporting unit is $56.9 million.
Refer to Note 4, Assets and Liabilities Held for Sale and Note 12,
Goodwill and Intangible Assets in our consolidated financial
statements included in this Quarterly Report on Form 10-Q for
further details on goodwill.
50
Jefferies Financial Group Inc.
Liquidity, Financial Condition and Capital Resources
Our CFO and Global Treasurer are responsible for developing and
implementing our liquidity, funding and capital management
strategies. These policies are determined by the nature and
needs of our day-to-day business operations, business
opportunities, regulatory obligations, and liquidity requirements.
Our actual levels of capital, total assets and financial leverage are
a function of a number of factors, including asset composition,
business initiatives and opportunities, regulatory requirements,
rating agency ratios and cost and availability of both long term
and short-term funding. We have historically maintained a
balance sheet consisting of a large portion of our total assets in
cash and liquid marketable securities. The liquid nature of these
assets provides us with flexibility in financing and managing our
business.
We also own a legacy portfolio of businesses and investments
that are reflected as consolidated subsidiaries, equity
investments or securities. Over the most recent years, we
completed several critical steps to substantially liquidate our
legacy Other investments portfolio of businesses. We recently
announced the sale of our interest in Tessellis S.p.A., which we
anticipate to close during the first quarter of 2027.
In keeping with our strategy of returning excess liquidity to
shareholders, during the three months ended February 28, 2026,
we repurchased a total 3.0 million of our common shares for
$174.3 million, or an average price of $58.18 per share,
comprised of 2.5 million of our common shares for $143.8
million in the open market under our share repurchase program,
and 0.5 million of our common shares for $30.5 million in
connection with net-share tax withholding under our equity
compensation plan.
We maintain modest leverage to support our investment grade
ratings. The growth of our balance sheet is supported by our
equity and we have quantitative metrics in place to monitor
leverage and double leverage. Our capital plan is robust, in order
to sustain our operating model through stressed conditions. We
maintain adequate financial resources to support business
activities in both normal and stressed market conditions,
including a buffer in excess of our regulatory, or other internal or
external, requirements. Our access to funding and liquidity is
stable and efficient to ensure that there is sufficient liquidity to
meet our financial obligations in normal and stressed market
conditions.
Our Balance Sheet
A business unit level balance sheet and cash capital analysis are
prepared and reviewed with senior management on a weekly
basis. As a part of this balance sheet review process, capital is
allocated to all assets and gross balance sheet limits are
adjusted, as necessary. This process ensures that the allocation
of capital and costs of capital are incorporated into business
decisions. The goals of this process are to protect the firm’s
platform, enable our businesses to remain competitive, maintain
the ability to manage capital proactively and hold businesses
accountable for both balance sheet and capital usage.
We actively monitor and evaluate our financial condition and the
composition of our assets and liabilities. We continually monitor
our overall securities inventory, including the inventory turnover
rate, which confirms the liquidity of our overall assets. A
significant portion of our financial instruments are valued on a
daily basis and we monitor and employ balance sheet limits for
our various businesses.
$ in millions
February 28,
2026
November 30,
 2025
% Change
Total assets ...........................................
$74,380.5
$76,012.3
(2.1)%
Cash and cash equivalents ..................
11,963.2
14,043.9
(14.8)
Cash and securities segregated and
on deposit for regulatory
purposes or deposited with
clearing and depository
organizations ....................................
1,752.5
917.7
91.0
Financial instruments owned ..............
28,079.5
27,722.7
1.3
Financial instruments sold, not yet
purchased .........................................
14,459.1
13,320.2
8.6
Total Level 3 assets ..............................
849.2
737.8
15.1
Securities borrowed ..............................
$7,675.9
$8,295.2
(7.5)%
Securities purchased under
agreements to resell ........................
7,784.1
8,449.1
(7.9)
Total securities borrowed and
securities purchased under
    agreements to resell .......................
$15,460.0
$16,744.3
(7.7)%
Securities loaned ...................................
$2,690.4
$2,540.8
5.9%
Securities sold under agreements to
repurchase ........................................
10,380.3
12,156.7
(14.6)
Total securities loaned and
securities sold under agreements
to repurchase ...................................
$13,070.7
$14,697.5
(11.1)%
Total assets at February 28, 2026 and November 30, 2025 were
$74.38 billion and $76.01 billion, respectively, a decrease of 2.1%.
During the three months ended February 28, 2026, average total
assets were higher by 12.9% than total assets at February 28,
2026.
Our total Financial instruments owned inventory was $28.08
billion and $27.72 billion at February 28, 2026 and November 30,
2025, respectively. During the three months ended February 28,
2026, our total Financial instruments owned increased primarily
due to increased sovereign obligations and U.S. government and
agency securities, partially offset by a decrease in corporate
equity securities. Financial instruments sold, not yet purchased
inventory was $14.46 billion at February 28, 2026, an increase of
8.6% from $13.32 billion at November 30, 2025, with the increase
primarily driven by increases in corporate debt securities,
corporate equity securities and sovereign obligations, partially
offset by a decrease in U.S. government and agency securities
and derivative contracts. Our overall net inventory position was
$13.62 billion and $14.40 billion at February 28, 2026 and
November 30, 2025, respectively, with the decrease primarily due
to decreases in corporate equity securities and corporate debt
securities, partially offset by increases in U.S. government and
agency securities and derivative contracts.
Level 3 assets:
$ in millions
February 28,
 2026
Percent
November 30,
2025
Percent
Investment Banking ............
$119.5
14.1%
$111.7
15.1%
Equities and Fixed Income .
441.2
52.0
343.6
46.7
Asset Management (1) .......
232.8
27.4
230.5
31.2
Other ......................................
55.7
6.5
52.0
7.0
Total ......................................
$849.2
100.0%
$737.8
100.0%
February 2026 Form 10-Q
51
(1)At February 28, 2026 and November 30, 2025, $200.5 million and $195.8
million, respectively, are attributed to Other investments within our Asset
Management reportable segment.
Securities financing assets and liabilities include financing for
our financial instruments trading activity, matched book
transactions and mortgage finance transactions. Matched book
transactions accommodate customers, as well as obtain
securities for the settlement and financing of inventory positions.
Our average month end balance of total reverse repos and stock
borrows during three months ended February 28, 2026 was 28.3%
higher than the balance at February 28, 2026. Our average month
end balance of total repos and stock loans during the three
months ended February 28, 2026 was 50.6% higher than the
balance at February 28, 2026.
Select information related to repurchase agreements:
$ in millions
Three Months Ended
February 28, 2026
Year Ended
 November 30, 2025
Securities Purchased Under
Agreements to Resell:
Period end ..........................................
$7,784
$8,449
Month end average ...........................
10,217
10,526
Maximum month end .......................
23,202
14,927
Securities Sold Under
Agreements to Repurchase:
Period end ..........................................
$10,380
$12,157
Month end average ...........................
15,991
16,497
Maximum month end .......................
18,914
19,785
Fluctuations in the balance of our repurchase agreements from
period to period and intraperiod are dependent on business
activity in those periods. Additionally, the fluctuations in the
balances of our securities purchased under agreements to resell
are influenced in any given period by our clients’ balances and
our clients’ desires to execute collateralized financing
arrangements via the repurchase market or via other financing
products. Average balances and period end balances will
fluctuate based on market and liquidity conditions and we
consider the fluctuations intraperiod to be typical for the
repurchase market.
Leverage Ratios:
$ in millions
February 28,
 2026
November 30,
2025
Total assets ..................................................................
$74,380
$76,012
Total equity ...................................................................
$10,662
$10,642
Total shareholders’ equity ..........................................
$10,611
$10,575
Deduct: Goodwill and intangible assets, net ............
(1,979)
(2,040)
Tangible shareholders’ equity ...................................
$8,632
$8,535
Leverage ratio (1) .........................................................
7.0
7.1
Tangible gross leverage ratio (2) ...............................
8.4
8.7
(1)Leverage ratio equals total assets divided by total equity.
(2)Tangible gross leverage ratio (a non-GAAP financial measure) equals total
assets less goodwill and identifiable intangible assets, net divided by tangible
shareholders’ equity. The tangible gross leverage ratio is used by rating
agencies in assessing our leverage ratio.
Liquidity Management
The key objectives of the liquidity management framework are to
support the successful execution of our business strategies
while ensuring sufficient liquidity through the business cycle and
during periods of financial and idiosyncratic distress. Our liquidity
management policies are designed to mitigate the potential risk
that we may be unable to access adequate financing to service
our financial obligations without material franchise or business
impact.
The principal elements of our liquidity management framework
are our Cash Capital Policy, our assessment of Modeled Liquidity
Outflow (“MLO”) and our Contingency Funding Plan (“CFP”).
Liquidity Management Framework. Our Liquidity Management
Framework is based on a model of a potential liquidity
contraction over a one-year time period. This incorporates
potential cash outflows during a market or our idiosyncratic
liquidity stress event, including, but not limited to, the following:
•Repayment of all unsecured debt maturing within one year and
no incremental unsecured debt issuance;
•Maturity rolloff of outstanding letters of credit with no further
issuance and replacement with cash collateral;
•Higher margin requirements than currently exist on assets on
securities financing activity, including repurchase agreements
and other secured funding including central counterparty
clearinghouses;
•Liquidity outflows related to possible credit downgrade;
•Lower availability of secured funding;
•Client cash withdrawals;
•The anticipated funding of outstanding investment and loan
commitments; and
•Certain accrued expenses and other liabilities and fixed costs.
Cash Capital Policy. We maintain a cash capital model that
measures long-term funding sources against requirements.
Sources of cash capital include our equity, mezzanine equity and
the noncurrent portion of long-term borrowings. Uses of cash
capital include the following:
•Illiquid assets such as equipment, goodwill, net intangible
assets, exchange memberships, deferred tax assets and
certain investments;
•A portion of securities inventory and other assets not expected
to be financed on a secured basis in a credit stressed
environment (i.e., margin requirements); and
•Drawdowns of unfunded commitments.
To ensure that we do not need to liquidate inventory in the event
of a funding stress, we seek to maintain surplus cash capital. Our
total long-term capital of $23.70 billion at February 28, 2026
exceeded our cash capital requirements.
MLO. Our businesses are diverse, and our liquidity needs are
determined by many factors, including market movements,
collateral requirements and client commitments, all of which can
change dramatically in a difficult funding environment. During a
liquidity stress, credit-sensitive funding, including unsecured debt
and some types of secured financing agreements, may be
unavailable, and the terms (e.g., interest rates, collateral
provisions and tenor) or availability of other types of secured
financing may change. As a result of our policy to ensure we have
sufficient funds to cover what we estimate may be needed in a
liquidity stress, we hold more cash and unencumbered securities
and have greater long-term debt balances than our businesses
would otherwise require. As part of this estimation process, we
calculate an MLO that could be experienced in a liquidity stress.
MLO is based on a scenario that includes both a market-wide
stress and firm-specific stress, characterized by some or all of
the following elements:
52
Jefferies Financial Group Inc.
•Global recession, default by a medium-sized sovereign, low
consumer and corporate confidence, and general financial
instability.
•Severely challenged market environment with material declines
in equity markets and widening of credit spreads.
•Damaging follow-on impacts to financial institutions leading to
the failure of a large bank.
•A firm-specific crisis potentially triggered by material losses,
reputational damage, litigation, executive departure, and/or a
ratings downgrade.
The following are the critical modeling parameters of the MLO:
•Liquidity needs over a 30-day scenario.
•A two-notch downgrade of our long-term senior unsecured
credit ratings.
•No support from government funding facilities.
•A combination of contractual outflows, such as upcoming
maturities of unsecured debt, and contingent outflows (e.g.,
actions though not contractually required, we may deem
necessary in a crisis). We assume that most contingent
outflows will occur within the initial days and weeks of a
stress.
•No diversification benefit across liquidity risks. We assume
that liquidity risks are additive.
The calculation of our MLO under the above stresses and
modeling parameters considers the following potential
contractual and contingent cash and collateral outflows:
•All upcoming maturities of unsecured long-term debt,
promissory notes and other unsecured funding products
assuming we will be unable to issue new unsecured debt or
rollover any maturing debt.
•Repurchases of our outstanding long-term debt in the ordinary
course of business as a market maker.
•A portion of upcoming contractual maturities of secured
funding activity due to either the inability to refinance or the
ability to refinance only at wider haircuts (i.e., on terms which
require us to post additional collateral). Our assumptions
reflect, among other factors, the quality of the underlying
collateral and counterparty concentration.
•Collateral postings to counterparties due to adverse changes in
the value of our over-the-counter (“OTC”) derivatives and other
outflows due to trade terminations, collateral substitutions,
collateral disputes, collateral calls or termination payments
required by a two-notch downgrade in our credit ratings.
•Variation margin postings required due to adverse changes in
the value of our outstanding exchange-traded derivatives and
any increase in initial margin and guarantee fund requirements
by derivative clearing houses.
•Liquidity outflows associated with our prime services business,
including withdrawals of customer credit balances, and a
reduction in customer short positions.
•Liquidity outflows to clearing banks to ensure timely
settlements of cash and securities transactions.
•Draws on our unfunded commitments considering, among
other things, the type of commitment and counterparty.
•Other upcoming large cash outflows, such as employee
compensation, tax and dividend payments, with no expectation
of future dividends from any subsidiaries.
Based on the sources and uses of liquidity calculated under the
MLO scenarios, we determine, based on a calculated surplus or
deficit, additional long-term funding that may be needed versus
funding through the repurchase financing market and consider
any adjustments that may be necessary to our inventory balances
and cash holdings. At February 28, 2026, we had sufficient
excess liquidity to meet all contingent cash outflows detailed in
the MLO for at least 30 days without balance sheet reduction. We
regularly refine our model to reflect changes in market or
economic conditions and our business mix.
CFP. Our CFP ensures the ability to access adequate liquid
financial resources to meet liquidity shortfalls that may arise in
emergency situations. The CFP triggers the following actions:
•Sets out the governance for managing liquidity during a
liquidity crisis;
•Identifies key liquidity and capital early warning indicators that
will help guide the response to the liquidity crisis;
•Identifies the actions and escalation procedures should we
experience a liquidity crisis including coordination amongst
senior management and the Board of Directors;
•Sets out the sources of funding available during a liquidity
crisis;
•Sets out the communication plan during a liquidity crisis for
key external stakeholders including regulators, relationship
banks, rating agencies and funding counterparties; and
•Sets out an action plan to source additional funding.
Sources of Liquidity
Financial instruments that are cash and cash equivalents or are
deemed by management to be generally readily convertible into
cash, marginable or accessible for liquidity purposes within a
relatively short period of time:
$ in thousands
February 28,
 2026
Average
Balance
Quarter Ended
February 28,
2026 (1)
November 30,
2025
Cash and cash equivalents:
Cash in banks .............................................
$5,153,327
$5,282,239
$3,903,807
Money market investments (2) ...............
6,809,838
6,686,432
10,140,082
Total cash and cash equivalents ............
11,963,165
11,968,671
14,043,889
Other sources of liquidity:
Debt securities owned and securities
purchased under agreements to
resell (3) ................................................
1,961,124
2,115,211
1,823,733
Other (4) ......................................................
1,065,391
1,168,287
1,836,150
Total other sources ...................................
3,026,515
3,283,498
3,659,883
Total cash and cash equivalents and
other liquidity sources .......................
$14,989,680
$15,252,169
$17,703,772
Total cash and cash equivalents and
other liquidity sources as % of Total
assets ....................................................
20.2%
23.3%
Total cash and cash equivalents and
other liquidity sources as % of Total
assets less goodwill and intangible
assets ....................................................
20.7%
23.9%
(1)Average balances are calculated based on weekly balances.
February 2026 Form 10-Q
53
(2)At February 28, 2026 and November 30, 2025, $6.80 billion and $10.12 billion,
respectively, was invested in U.S. government money funds that invest
primarily in cash, securities issued by the U.S. government and U.S.
government-sponsored entities, and repurchase agreements that are fully
collateralized by cash or government securities. The remaining balances at
February 28, 2026 and November 30, 2025 are primarily invested in AAA-rated
prime money funds. The average balance of U.S. government money funds for
the quarter ended February 28, 2026 was $6.67 billion.
(3)Consists of unencumbered high-quality sovereign government securities and
reverse repurchase agreements collateralized by U.S. government securities
and other high quality sovereign government securities; deposits with a central
bank within the European Economic Area, United Kingdom, Canada, Australia,
Japan, Switzerland or the U.S.; and securities issued by a designated
multilateral development bank and reverse repurchase agreements with
underlying collateral composed of these securities.
(4)Other includes unencumbered inventory representing an estimate of the
amount of additional secured financing that could be reasonably expected to
be obtained from our Financial instruments owned that are currently not
pledged after considering reasonable financing haircuts.
In addition to the cash balances and liquidity pool presented
above, the majority of financial instruments (both long and short)
in our trading accounts are actively traded and readily
marketable. At February 28, 2026, we had the ability to readily
obtain repurchase financing for 73.1% of our inventory at haircuts
of 10% or less, which reflects the liquidity of our inventory. In
addition, as a matter of our policy, all of these assets have
internal capital assessed, which is in addition to the funding
haircuts provided in the securities finance markets. Additionally,
certain of our Financial instruments owned primarily consisting
of loans and investments are predominantly funded by long term
capital. Under our cash capital policy, we model capital allocation
levels that are more stringent than the haircuts used in the
market for secured funding; and we maintain surplus capital at
these more stringent levels. We continually assess the liquidity of
our inventory based on the level at which we could obtain
financing in the marketplace for a given asset. Assets are
considered to be liquid if financing can be obtained in the
repurchase market or the securities lending market at collateral
haircut levels of 10% or less.
Financial instruments by asset class that we consider to be of a
liquid nature and the amount of such assets that have not been
pledged as collateral:
February 28, 2026
November 30, 2025
$ in thousands
Liquid Financial
Instruments
Unencumbered
Liquid Financial
Instruments (1)
Liquid Financial
Instruments
Unencumbered
Liquid Financial
Instruments (1)
Corporate equity
securities .............
$6,846,950
$1,260,037
$7,433,971
$2,715,099
Corporate debt
securities .............
4,971,407
414,057
4,788,698
280,512
U.S. government,
agency and
municipal
securities .............
3,148,135
160,097
3,013,344
55,781
Other sovereign
obligations ..........
1,779,436
1,698,650
1,460,571
1,731,074
Agency mortgage-
backed
securities (2) .......
3,635,424
—
3,060,262
—
Loans and other
receivables ..........
145,675
—
159,939
—
Total ...........................
$20,527,027
$3,532,841
$19,916,785
$4,782,466
(1)Unencumbered liquid balances represent assets that can be sold or used as
collateral for a loan but have not been.
(2)Consists solely of agency mortgage-backed securities issued by the Federal
Home Loan Mortgage Corporation (“Freddie Mac”), the Federal National
Mortgage Association (“Fannie Mae”) and the Government National Mortgage
Association (“Ginnie Mae”).
In addition to being able to be readily financed at reasonable
haircut levels, we estimate that each of the individual securities
within each asset class above could be sold into the market and
converted into cash within three business days under normal
market conditions, assuming that the entire portfolio of a given
asset class was not simultaneously liquidated. There are no
restrictions on the unencumbered liquid securities, nor have they
been pledged as collateral.
Sources of Funding and Capital Resources
Our assets are funded by equity capital, senior debt, securities
loaned, securities sold under agreements to repurchase,
customer free credit balances, bank loans and other payables.
Secured Financing
We rely principally on readily available secured funding to finance
our inventory of financial instruments owned and financial
instruments sold. Our ability to support increases in total assets
is largely a function of our ability to obtain short- and
intermediate-term secured funding, primarily through securities
financing transactions. We finance a portion of our long inventory
and cover some of our short inventory by pledging and borrowing
securities in the form of repurchase or reverse repurchase
agreements (collectively “repos”), respectively. A portion of our
cash and noncash repurchase financing activities is used as
collateral that is considered eligible collateral by central clearing
corporations. Central clearing corporations are situated between
participating members who borrow cash and lend securities (or
vice versa); accordingly, repo participants contract with the
central clearing corporation and not one another individually.
Therefore, counterparty credit risk is borne by the central clearing
corporation which mitigates the risk through initial margin
demands and variation margin calls from repo participants. The
comparatively large proportion of our total repo activity that is
eligible for central clearing reflects the high quality and liquid
composition of the inventory we carry in our trading books. For
those asset classes not eligible for central clearing house
financing, we seek to execute our bi-lateral financings on an
extended term basis and the tenor of our repurchase and reverse
repurchase agreements generally exceeds the expected holding
period of the assets we are financing. The weighted average
maturity of cash and noncash repurchase agreements for non-
clearing corporation eligible funded inventory is approximately
seven months at February 28, 2026.
Our ability to finance our inventory via central clearinghouses and
bi-lateral arrangements is augmented by our ability to draw bank
loans on an uncommitted basis under our various banking
arrangements. At February 28, 2026, short-term borrowings,
which must be repaid within one year or less include bank loans,
overdrafts and borrowings under revolving credit facilities.
Letters of credit are used in the normal course of business
mostly to satisfy various collateral requirements in favor of
exchanges in lieu of depositing cash or securities. Average short-
term borrowings outstanding were $1.85 billion for the three
months ended February 28, 2026.
At February 28, 2026 and November 30, 2025, our borrowings
under bank loans in Short-term borrowings were $750.8 million
and $533.8 million, respectively. Our borrowings include credit
facilities that contain certain covenants that, among other things,
require us to maintain a specified level of tangible net worth,
require a minimum regulatory net capital requirement for our U.S.
broker-dealer, Jefferies LLC, and impose certain restrictions on
the future indebtedness of certain of our subsidiaries that are
54
Jefferies Financial Group Inc.
borrowers. Interest is based on rates at spreads over the federal
funds rate or other adjusted rates, as defined in the various credit
agreements, or at a rate as agreed between the bank and us in
reference to the bank’s cost of funding. At February 28, 2026, we
were in compliance with all covenants under these credit
facilities.
In addition to the above financing arrangements, we issue notes
backed by eligible collateral under master repurchase
agreements, which provide an additional financing source for our
inventory (our “repurchase agreement financing program”). The
notes issued under the program are presented within Other
secured financings. At February 28, 2026, the outstanding notes
totaled $2.16 billion, bear interest primarily at a spread over the
Secured Overnight Funding Rate (“SOFR”) and mature from April
2026 to October 2028.
Total Long-Term Capital
At February 28, 2026 and November 30, 2025, we had total long-
term capital of $23.70 billion and $23.14 billion, respectively,
resulting in a long-term debt to equity capital ratio of 1.22:1 and
1.17:1, respectively.
$ in thousands
February 28,
 2026
November 30,
2025
Unsecured Long-Term Debt (1) ..................................
$13,037,385
$12,494,842
Total Mezzanine Equity ...............................................
406
406
Total Equity ...................................................................
10,661,728
10,642,203
Total Long-Term Capital ............................................
$23,699,519
$23,137,451
(1)Amounts at February 28, 2026 and November 30, 2025 exclude our secured
long-term debt, $886.2 million and $869.5 million, respectively, of our Callable
Notes as the note matured on April 16, 2026, and $46.1 million and
$45.2 million, respectively, of our Floating Senior Notes as the notes matured
on June 19, 2026. The amount at February 28, 2026 excludes $39.7 million of
our Callable Notes as the note has been called. The amounts at February 28,
2026 and November 30, 2025 also exclude $74.8 million and $102.7 million,
respectively, of structured notes as the notes mature within one year.
Long-Term Debt
During the three months ended February 28, 2026, long-term debt
increased by $1.33 billion to $17.23 billion at February 28, 2026,
as presented in our Consolidated Statements of Financial
Condition. This increase is primarily due to proceeds of
$1.63 billion from the issuances of unsecured senior notes and
$74.8 million from currency gains on foreign currency
borrowings. These increases were partially offset by repayments
of $188.2 million on our unsecured senior notes, $52.2 million
from net repayments of structured notes, the reclassification of
$51.9 million of Tessellis’ borrowings to liabilities held for sale
(refer to Note 4, Assets and Liabilities Held for Sale for further
information), and $42.3 million from decreased subsidiaries’
borrowings.
At February 28, 2026, our unsecured long-term debt has a
weighted average maturity of approximately 7.6 years.
At February 28, 2026 and November 30, 2025, our borrowings
under several credit facilities classified within Long-term debt in
our Consolidated Statements of Financial Condition amounted to
$703.0 million and $803.2 million, respectively. Interest on these
credit facilities is based on an adjusted SOFR plus a spread or
other adjusted rates, as defined in the various credit agreements.
The credit facility agreements contain certain covenants that,
among other things, require us to maintain specified levels of
tangible net worth and liquidity amounts, certain credit and rating
levels and impose certain restrictions on future indebtedness of
and require specified levels of regulated capital and cash
reserves for certain of our subsidiaries. At February 28, 2026, we
were in compliance with all covenants under theses credit
facilities.
Long-term debt ratings:
Rating
Outlook
Moody’s Investors Service .........................................
Baa2
Stable
Standard & Poor’s ........................................................
BBB
Stable
Fitch Ratings .................................................................
BBB+
Stable
Jefferies LLC
Jefferies
International
Limited
Jefferies GmbH
Rating
Outlook
Rating
Outlook
Rating
Outlook
Moody’s
Investors
Service ..........
Baa1
Stable
Baa1
Stable
Baa1
Stable
Standard &
Poor’s ............
BBB+
Stable
BBB+
Stable
BBB+
Stable
Access to external financing to finance our day-to-day operations,
as well as the cost of that financing, is dependent upon various
factors, including our debt ratings. Our current debt ratings are
dependent upon many factors, including industry dynamics,
operating and economic environment, operating results,
operating margins, earnings trend and volatility, balance sheet
composition, liquidity and liquidity management, our capital
structure, our overall risk management, business diversification
and our market share and competitive position in the markets in
which we operate. Deterioration in any of these factors could
impact our credit ratings. While certain aspects of a credit rating
downgrade are quantifiable pursuant to contractual provisions,
the impact on our business and trading results in future periods
is inherently uncertain and depends on a number of factors,
including the magnitude of the downgrade, the behavior of
individual clients and future mitigating action taken by us.
Equity Capital
Common Stock
At February 28, 2026 and November 30, 2025, we had
565,000,000 authorized shares of voting common stock with a
par value of $1.00 per share and had 204,422,673 and
206,296,167 common shares outstanding, respectively. At
February 28, 2026, we had 16,746,087 share-based awards that
do not require the holder to pay any exercise price and 5,064,740
stock options that require the holder to pay an exercise price of
$22.69 per share.
During the three months ended February 28, 2026, we
repurchased a total 3.0 million of our common shares for $174.3
million, or an average price of $58.18 per share, including 2.5
million of our common shares for $143.8 million in the open
market under our share repurchase program, and 0.5 million of
our common shares for $30.5 million in connection with net-
share tax withholding under our equity compensation plan. In
March 2026, the Board of Directors has authorized the
repurchase of common stock up to $250.0 million under a share
repurchase program.
Dividends
Three Months Ended February 28, 2026
Declaration Date
Record Date
Payment Date
Per Common
Share Amount
January 7, 2026
February 17, 2026
February 27, 2026
$0.40
On March 25, 2026, the Board of Directors declared a dividend of
$0.40 per common share to be paid on May 29, 2026 to common
shareholders of record at March 18, 2026.
February 2026 Form 10-Q
55
During both three months ended February 28, 2026 and 2025, we
paid cash dividends of $11.0 million with respect to the Series B
Preferred stock.
The payment of dividends is subject to the discretion of our
Board of Directors and depends upon general business
conditions and other factors that our Board of Directors may
deem to be relevant.
Non-Voting Common Stock
On June 28, 2023, shareholders approved an Amended and
Restated Certificate of Incorporation, which authorized the
issuance of 35,000,000 shares of non-voting common stock with
a par value of $1.00 per share (the “Non-Voting Common
Shares”). The Non-Voting Common Shares are entitled to share
equally, on a per share basis, with the voting common stock, in
dividends and distributions. Upon the effectiveness of the
Amended and Restated Certificate of Corporation on June 30,
2023, the number of authorized shares of common stock
remains at 600,000,000 shares, composed of 565,000,000 shares
of voting common stock and 35,000,000 shares of Non-Voting
Common Shares.
Preferred Stock
On April 27, 2023, we established Series B Non-Voting
Convertible Preferred Shares with a par value of $1.00 per share
(“Series B Preferred Stock”) and designated 70,000 shares as
Series B Preferred Stock. The Series B Preferred Stock has a
liquidation preference of $17,500 per share and rank senior to our
voting common stock upon dissolution, liquidation or winding up
of Jefferies Financial Group Inc. Each share of Series B Preferred
Stock is automatically convertible into 500 shares of non-voting
common stock, subject to certain anti-dilution adjustments, three
years after issuance. The Series B Preferred Stock participates in
cash dividends and distributions alongside our voting common
stock on an as-converted basis.
Additionally, on April 27, 2023, we entered into an Exchange
Agreement with Sumitomo Mitsui Banking Corporation (“SMBC”),
which entitles SMBC to exchange shares of our voting common
stock for shares of the Series B Preferred Stock at a rate of 500
shares of voting common stock for one share of Series B
Preferred Stock. The Exchange Agreement is limited to 55,125
shares of Preferred Stock and SMBC is required to pay $1.50 per
share of voting common stock so exchanged. As of November
30, 2025, SMBC had exchanged approximately 27.6 million
shares of voting common stock for 55,125 shares of Series B
Preferred Stock. At February 28, 2026, SMBC owns approximately
15.9% of our common stock on an as-converted basis and 14.4%
on a fully-diluted, as-converted basis. Since August 2024, the CEO
of Sumitomo Mitsui Financial Group, Inc. has served on our
Board, with the President and Executive Officer of SMBC taking
over the position following his election at the Annual Shareholder
Meeting in March 2026. Additionally, Refer to Note 21, Related
Party Transactions for further information regarding transactions
with SMBC.
On September 19, 2025, our Board of Directors established Series
B-1 Non-Voting Convertible Preferred Shares with a par value of
$1.00 per share (“Series B-1 Preferred Stock”) and designated
17,500 shares as Series B-1 Preferred Stock. The Series B-1
Preferred Stock has a liquidation preference of $500 per share
and ranks senior to our voting common stock and equal to the
Series B Preferred Stock upon dissolution, liquidation or winding
up of Jefferies Financial Group Inc. Each share of Series B-1
Preferred Stock is automatically convertible into 500 shares of
non-voting common stock as soon as such non-voting common
stock exists, subject to certain anti-dilution adjustments. The
Series B-1 Preferred Stock also participates in cash dividends
and distributions alongside our voting common stock on an as-
converted basis.
Additionally, on September 19, 2025, we entered into an amended
and restated Exchange Agreement (the “Amended and Restated
Exchange Agreement”) with SMBC, which entitles SMBC to
exchange shares of our voting common stock for shares of the
Series B-1 Preferred Stock at a rate of 500 shares of voting
common stock for one share of Series B-1 Preferred Stock. The
Amended and Restated Exchange Agreement is limited to 17,500
shares of Series B-1 Preferred Stock. Under the Amended and
Restated Exchange Agreement, SMBC is permitted to increase its
economic ownership in the Company to up to 20% on an as-
converted and fully diluted basis, while continuing to own less
than 5% of a voting interest in the Company.
Net Capital
Jefferies LLC is a broker-dealer registered with the SEC and a
member firm of the Financial Industry Regulatory Authority
(“FINRA”) and is subject to the SEC Uniform Net Capital Rule
(“Rule 15c3-1”), which requires the maintenance of minimum net
capital, and has elected to calculate minimum capital
requirements using the alternative method permitted by Rule
15c3-1 in calculating net capital. Jefferies LLC, as a dually-
registered U.S. broker-dealer and futures commission merchant
(“FCM”), is also subject to Regulation 1.17 of the Commodity
Futures Trading Commission (“CFTC”) under the Commodity
Exchange Act, which sets forth minimum financial requirements.
The minimum net capital requirement in determining excess net
capital for a dually registered U.S. broker-dealer and FCM is equal
to the greater of the requirement under SEA Rule 15c3-1 or CFTC
Regulation 1.17. FINRA is the designated examining authority for
Jefferies LLC and the National Futures Association (“NFA”) is the
designated self-regulatory organization (“DSRO”) for Jefferies
LLC as an FCM.
Jefferies Financial Services, Inc. (“JFSI”) is registered with the
SEC as a Security-Based Swap Dealer (“SBS Dealer”) and an OTC
Derivatives Dealer (“OTCDD”) subject to the SEC’s SBS dealer
regulatory rules and the SEC’s net capital requirements. JFSI is
also registered as a swap dealer with the CFTC and is subject to
the CFTC’s regulatory capital requirements pursuant to the
minimum financial requirements for swap dealers. Additionally,
as a registered member firm, JFSI is subject to the net capital
requirements of the NFA. The SEC is the designated examining
authority for JFSI in its capacity as an SBS Dealer and OTCDD,
while the NFA is the DSRO for JFSI, as a CFTC registered swap
dealer.
Certain non-U.S. subsidiaries are subject to capital adequacy
requirements as prescribed by the regulatory authorities in their
respective jurisdictions. This includes Jefferies International
Limited (“JIL”), which is subject to the regulatory supervision and
requirements of the Financial Conduct Authority in the U.K. and
Jefferies GmbH, which is subject to the regulatory supervision of
the German Federal Financial Supervisory Authority.
56
Jefferies Financial Group Inc.
At February 28, 2026, net capital and excess net capital were as
follows:
$ in thousands
Net
Capital
Excess Net
Capital
Jefferies LLC .................................................................
$1,448,011
$1,277,695
JFSI - SEC ......................................................................
333,245
298,800
JFSI - CFTC ...................................................................
333,245
300,126
JIL (1) .............................................................................
2,095,104
1,045,119
Jefferies GmbH (1) ......................................................
386,316
158,187
(1)Represents an equivalent capital requirement in the respective jurisdiction.
At February 28, 2026, Jefferies LLC, JFSI, JIL and Jefferies GmbH
are in compliance with their applicable requirements.
The regulatory capital requirements referred to above may
restrict our ability to withdraw capital from our regulated
subsidiaries.
Customer Protection and Segregation Requirement
As a registered broker dealer that clears and carries customer
accounts, Jefferies LLC is subject to the customer protection
provisions under SEC Rule 15c3-3 and is required to compute
reserve formula requirement for customer accounts and deposit
cash or qualified securities into a special reserve bank account
for the exclusive benefit of customers. At February 28, 2026,
Jefferies LLC had $1.02 billion in cash and qualified U.S.
Government securities on deposit in special reserve bank
accounts for the exclusive benefit of customers.
As a registered broker dealer that clears and carries proprietary
accounts of brokers or dealers (commonly referred to as “PAB”),
Jefferies LLC is also required to compute a reserve requirement
for PABs pursuant to SEC Rule 15c3-3. At February 28, 2026,
Jefferies LLC had $596.1 million in cash and qualified U.S.
Government securities in special reserve bank accounts for the
exclusive benefit of PABs.
The qualified securities meeting the 15c3-3 customer and PAB
requirements are included in Cash and securities segregated and
Securities purchased under agreements to resell.
JFSI is exempt from the CFTC and SEC segregation rules.
Other Developments
Following Russia’s 2022 invasion of Ukraine, the U.S., the U.K.,
and the European Union governments, among others, developed
financial and economic sanctions targeting Russia that, in
various ways, constrain transactions with numerous Russian
entities, including major Russian banks and individuals;
transactions in Russian sovereign debt; and investment, trade
and financing to, from, or in Ukraine. We do not have any
operations in Russia or any clients with significant Russian
operations, and we have minimal market risk related to securities
of companies either domiciled or operating in Russia. We
continue to closely monitor the status of global sanctions and
restrictions, trading conditions related to Russian securities and
the credit risk and nature of our counterparties.
Global markets continue to experience disruption and volatility
following the geopolitical instability from the ongoing conflicts
along Israel’s border with the Gaza Strip and elsewhere in the
Middle East, including the recent military conflict among the U.S.,
Israel, and Iran. Our investments and assets in our growing
business in the Persian Gulf, Saudi Arabia and Israel, as well as
the related global macroeconomic climate, could be negatively
affected by consequences from the geopolitical instability,
including disruptions in the Strait of Hormuz, and military conflict
throughout the region. We continue to monitor these and other
geopolitical conflicts, including recent developments between the
United States, Venezuela and other Latin American countries, and
assess their potential impact on our business.
Throughout 2025, the United States introduced actions through
various means to increase import tariffs at various rates,
including on certain products imported from almost all countries.
Other countries have responded with retaliatory actions or plans
for retaliatory actions. Some of these tariff announcements have
since been followed by announcements of limited exemptions
and temporary pauses, and wholly new arrangements with key
trading partners of the United States. These actions, along with
recent legal and policy developments, have led to increased
economic uncertainty, and could negatively impact global supply
chains and trade flow. The potential impact of tariffs on
corporate earnings remains uncertain. We continue to closely
monitor the impact of these matters on our business.
Beginning on September 24, 2025, First Brands Group, LLC and
certain of its affiliates (“First Brands”) filed voluntary petitions for
Chapter 11 bankruptcy protection. First Brands is an aftermarket
auto parts manufacturer that sells its products to major auto-
parts retailers (the “Obligors”). Point Bonita Capital, a division of
Leucadia Asset Management (“LAM”), managed on behalf of
third-party institutional and other investors an approximately $3
billion portfolio of trade-finance assets, which was supported by
total invested equity of $1.9 billion, of which $113 million, or
5.9%, is owned by LAM. Since 2019, the portfolio has included
purported accounts receivable purchased from First Brands and
arising from the sale of First Brands’ products to Obligors. The
purchase of receivables in this fashion is called factoring, and as
of the Chapter 11 filing the Point Bonita portfolio had
approximately $715 million in purported receivables due from
retailers, including Walmart, AutoZone, NAPA, O’Reilly Auto Parts,
and Advanced Auto Parts, with First Brands, as the servicer,
responsible for collecting and remitting the Obligors’ payments to
Point Bonita. For almost six years until September 15, 2025, Point
Bonita had been paid on time and in full. On September 15, 2025,
First Brands stopped directing timely transfers of funds to Point
Bonita.
The First Brands bankruptcy proceedings have uncovered what is
alleged to be a massive fraud that has resulted in the bankrupt
estate bringing claims against its former CEO, its former
Executive Vice President, one of its significant financing
counterparties, and various related entities to recover billions of
dollars in allegedly fraudulent transfers. As it relates to factoring,
the alleged fraudulent activities included First Brands selling
certain receivables more than once, selling receivables that had
been inflated in amount, and selling fabricated receivables. The
Company is exerting every effort to recover assets from First
Brands and from the various Obligors. That process will take
months to years to complete and, given the fraud, the recovery is
highly uncertain. Our investment as it relates to exposure to First
Brands as of this quarter has been valued at zero.
Separately, Apex Credit Partners LLC (“Apex”), a wholly owned
subsidiary of Jefferies Finance, 50%-owned by us, manages on
behalf of third-party institutional and other investors certain CLOs
that invest in broadly syndicated loans with approximately $4.5
billion in assets under management. 12 CLOs managed by Apex
own approximately $49 million in the aggregate of First Brands’
term loans (including PIK interest) and $9 million of First Brands’
debtor-in-possession term loans, which is approximately 1% of
the CLO assets managed by Apex. Additionally, approximately, $1
million of First Brands’ term loans (including PIK interest) and
February 2026 Form 10-Q
57
$0.2 million of debt-in-possession term loans were transferred
from an Apex-managed CLO warehouse to Apex in anticipation of
a CLO closing in January 2026. Apex beneficially owns a portion
of the equity tranche and other senior tranches in an amount to
comply with applicable securitization risk-retention rules and in
certain instances such additional amounts which are not
material.
In February 2026, we entered into a binding offer with a third
party to sell our interest in Tessellis S.p.A. We expect the sale to
close during first quarter of 2027.
Off-Balance Sheet Arrangements
We have contractual commitments arising in the ordinary course
of business for securities loaned or purchased under agreements
to resell, repurchase agreements, future purchases and sales of
foreign currencies, securities transactions on a when-issued
basis, purchases and sales of corporate loans in the secondary
market and underwriting. Each of these financial instruments and
activities contains varying degrees of off-balance sheet risk
whereby the fair values of the securities underlying the financial
instruments may be in excess of, or less than, the contract
amount. The settlement of these transactions is not expected to
have a material effect upon our consolidated financial
statements.
In the normal course of business, we engage in other off balance-
sheet arrangements, including derivative contracts. Neither
derivatives’ notional amounts nor underlying instrument values
are reflected as assets or liabilities in our Consolidated
Statements of Financial Condition. Rather, the fair values of
derivative contracts are reported in our Consolidated Statements
of Financial Condition as Financial instruments owned or
Financial instruments sold, not yet purchased as applicable.
Derivative contracts are reflected net of cash paid or received
pursuant to credit support agreements and are reported on a net
by counterparty basis when a legal right of offset exists under an
enforceable master netting agreement. For additional information
about our accounting policies and our derivative activities, refer
to Note 2, Summary of Significant Accounting Policies, in our
consolidated financial statements included in Part II, Item 8 of
our Annual Report on Form 10-K for the year ended November 30,
2025 and Note 5, Fair Value Disclosures and Note 6, Derivative
Financial Instruments in our consolidated financial statements
included in this Quarterly Report on Form 10-Q.
Risk Management
Overview
Risk is an inherent part of our business and activities. The extent
to which we properly and effectively identify, assess, monitor and
manage each of the various types of risk involved in our activities
is critical to our financial soundness, viability and profitability.
Accordingly, we have a comprehensive risk management
approach, with a formal governance structure and policies and
procedures outlining frameworks and processes to identify,
assess, monitor and manage risk. Principal risks involved in our
business activities include market, credit, liquidity and capital,
operational, model and strategic risk. Legal and compliance, new
business and reputational risk are also included within our
principal risks.
Risk management is a multifaceted process that requires
communication, judgment and knowledge of financial products
and markets. Our risk management process encompasses the
active involvement of executive and senior management, and
also many departments independent of the revenue-producing
business units, including Risk Management, Operations,
Information Technology, Compliance, Legal and Finance. Our risk
management policies, procedures and methodologies are flexible
in nature and are subject to ongoing review and modification.
In achieving our strategic business objectives, our risk appetite
incorporates keeping our clients’ interests as top priority and
ensuring we are in compliance with applicable laws, rules and
regulations, as well as adhering to the highest ethical standards.
We undertake prudent risk-taking that protects the capital base
and franchise, utilizing risk limits and tolerances that avoid
outsized risk-taking. We maintain a diversified business mix and
avoid significant concentrations to any sector, product,
geography or activity and set quantitative concentration limits to
manage this risk. We consider contagion, second order effects
and correlation in our risk assessment process and actively seek
out value opportunities of all sizes. We manage the risk of
opportunities larger than our approved risk levels through risk
sharing and risk distribution, sell-down and hedging as
appropriate. We have a limited appetite for illiquid assets and
complex derivative financial instruments. We maintain the asset
quality of our balance sheet through conducting trading activity in
liquid markets and generally ensure high turnover of our
inventory. We subject less liquid positions and derivative financial
instruments to particular scrutiny and use a wide variety of
specific metrics, limits and constraints to manage these risks.
We protect our reputation and franchise, as well as our standing
within the market. We operate a federated approach to risk
management and assign risk oversight responsibilities to a
number of functions with specific areas of focus.
For discussion of liquidity and capital risk management, refer to
the “Liquidity, Financial Condition and Capital Resources” section
herein.
Governance and Risk Management Structure
For a discussion of our governance and risk management
structure and our risk management framework, see
“Management’s Discussion and Analysis of Financial Condition
and Results of Operations—Risk Management” in Part II, Item 7 of
our Annual Report on Form 10-K for the year ended November 30,
2025.
Risk Considerations
We apply a comprehensive framework of limits on a variety of
key metrics to constrain the risk profile of our business activities.
The size of the limits reflects our risk appetite for a certain
activity under normal business conditions. Key metrics included
in our risk management framework include inventory position
and exposure limits on a gross and net basis, scenario analysis
and stress tests, Value-at-Risk (“VaR”), sensitivities, exposure
concentrations, aged inventory, Level 3 assets, counterparty
exposure, leverage and cash capital.
Market Risk
Market risk is defined as the risk of loss due to fluctuations in the
market value of financial assets and liabilities attributable to
changes in market variables.
Our market risk principally arises from interest rate risk, from
exposure to changes in the yield curve, the volatility of interest
rates, and credit spreads, and from equity price risks from
exposure to changes in prices and volatilities of individual
equities, equity baskets and equity indices. In addition,
commodity price risk results from exposure to the changes in
prices and volatilities of individual commodities, commodity
58
Jefferies Financial Group Inc.
baskets and commodity indices, and foreign exchange risk
results from changes in foreign currency rates.
Market risk is present in our capital markets business through
market making, proprietary trading, underwriting and investing
activities and is present in our asset management business
through investments in separately managed accounts and direct
investments in funds. Given our involvement in a broad set of
financial products and markets, market risk exposures are
diversified and economic hedges are established as appropriate.
Market risk is monitored and managed through a set of key risk
metrics such as VaR, stress scenarios, risk sensitivities and
position exposures. Limits are set on the key risk metrics to
monitor and control the risk exposure ensuring that it is in line
with our risk appetite. Our risk appetite, including the market risk
limits, is periodically reviewed to reflect business strategy and
market environment. Material risk changes, top/emerging risks
and limit utilizations/breaches are highlighted through risk
reporting and escalated as necessary.
Trading is principally managed through front office trader
mandates, where each trader is provided a specific mandate in
line with our product registry. Mandates set out the activities,
currencies, countries and products that a desk is permitted to
trade in and set the limits applicable to a desk. Traders are
responsible for knowing their trading limits and trading in a
manner consistent with their mandate.
VaR
VaR is a statistical estimate of the potential loss from adverse
market movements over a specified time horizon within a
specified probability (confidence level). It provides a common
risk measure across financial instruments, markets and asset
classes. We estimate VaR using a model that simulates revenue
and loss distributions by applying historical market changes to
the current portfolio. We calculate a one-day VaR using a one-
year look-back period measured at a 95% confidence level.
VaR at
February 28,
2026
Daily Firmwide VaR
$ in millions
Daily VaR for the Three Months
Ended February 28, 2026
Risk Categories
Average
High
Low
Interest Rates and Credit
  Spreads .............................
$3.18
$4.06
$8.05
$1.41
Equity Prices ........................
8.24
8.45
11.85
5.13
Currency Rates ....................
2.54
2.50
3.51
2.03
Commodity Prices ..............
0.19
0.40
0.87
0.07
Diversification Effect (1) ....
(5.61)
(5.63)
N/A
N/A
Firmwide VaR (2) ................
$8.54
$9.78
$13.07
$7.74
VaR at
November 30,
2025
Daily Firmwide VaR
$ in millions
Daily VaR for the Three Months
Ended November 30, 2025
Risk Categories
Average
High
Low
Interest Rates and Credit
  Spreads .............................
$4.52
$4.79
$6.72
$3.37
Equity Prices ........................
7.83
7.53
9.18
5.73
Currency Rates ....................
1.91
1.79
2.54
1.37
Commodity Prices ..............
0.56
0.45
0.93
0.15
Diversification Effect (1) ....
(5.86)
(5.06)
N/A
N/A
Firmwide VaR (2) ................
$8.96
$9.50
$11.05
$7.60
(1)The diversification effect is not applicable for the maximum and minimum
VaR values as the firmwide VaR and the VaR values for the four risk categories
might have occurred on different days during the period.
(2)The aggregated VaR presented here is less than the sum of the individual
components (i.e., interest rate risk, foreign exchange rate risk, equity risk and
commodity price risk) due to the benefit of diversification among the four risk
categories. Diversification benefit equals the difference between aggregated
VaR and the sum of VaRs for the four risk categories and arises because the
market risk categories are not perfectly correlated.
VaR for our capital markets trading activities, which excludes the
impact on VaR for each component of market risk from our asset
management activities, by interest rate and credit spreads, equity,
currency and commodity products:
VaR at
February 28,
2026
Daily Capital Markets VaR
$ in millions
Daily VaR for the Three Months
Ended February 28, 2026
Risk Categories
Average
High
Low
Interest Rates and Credit
  Spreads .............................
$2.79
$3.90
$7.87
$1.26
Equity Prices ........................
4.55
5.05
8.94
3.03
Currency Rates ....................
2.30
2.10
2.97
1.56
Diversification Effect (1) ....
(3.03)
(3.81)
N/A
N/A
Capital Markets VaR (2) ....
$6.61
$7.24
$9.74
$5.26
VaR at
November 30,
2025
Daily Capital Markets VaR
$ in millions
Daily VaR for the Three Months
Ended November 30, 2025
Risk Categories
Average
High
Low
Interest Rates and Credit
  Spreads .............................
$4.46
$4.96
$7.26
$3.59
Equity Prices ........................
4.37
4.34
5.06
3.58
Currency Rates ....................
1.72
1.47
1.99
1.18
Commodity Prices ..............
—
0.03
0.09
—
Diversification Effect (1) ....
(4.11)
(4.01)
N/A
N/A
Capital Markets VaR (2) ....
$6.44
$6.79
$9.04
$4.48
(1)The diversification effect is not applicable for the maximum and minimum
VaR values as the capital markets VaR and the VaR values for the four risk
categories might have occurred on different days during the period.
(2)The aggregated VaR presented here is less than the sum of the individual
components (i.e., interest rate risk, foreign exchange rate risk, equity risk and
commodity price risk) due to the benefit of diversification among the four risk
categories. Diversification benefit equals the difference between aggregated
VaR and the sum of VaRs for the four risk categories and arises because the
market risk categories are not perfectly correlated.
February 2026 Form 10-Q
59
The efficacy of the VaR model is tested by comparing our actual daily net revenues for those positions included in the calculation of
VaR with the daily VaR estimate. This evaluation is performed at various levels, from the overall level down to specific business lines.
For the VaR model, revenue is defined as principal transactions revenues, trading related commissions, revenue from securitization
activities and net interest income. VaR backtesting methodologies differ for regulated entities with approved capital models.
For a 95% confidence one day VaR model (i.e., no intra-day trading), assuming current changes in market value are consistent with the
historical changes used in the calculation, losses would not be expected to exceed the VaR estimates more than twelve times on an
annual basis (i.e., once in every 20 days). During the three months ended February 28, 2026, there were zero days when the aggregate
net trading loss exceeded the 95% one day VaR.
The chart below presents our daily firmwide and capital markets VaR over the last four quarters. The fluctuations in VaR during the first
quarter of 2026 were primarily driven by volatility in the equity markets.
Daily VaR Graph.jpg
Daily Net Trading Revenue
There was 1 day with firmwide trading loss out of a total of 61 trading days during the three months ended February 28, 2026. The
histogram below presents the distribution of our actual daily net trading revenue for substantially all of our trading activities:
9922
60
Jefferies Financial Group Inc.
Other Risk Measures
The VaR model does not include certain positions that are best measured and monitored using sensitivity analysis. Risk Management
has additional procedures in place to assure that the level of potential loss driven by those positions not in the VaR model arising from
market movements are within acceptable levels. Such procedures include performing stress tests and profit and loss analysis. The
table below presents the potential reduction in earnings associated with a 10% stress of the fair value of the positions that are not
included in the VaR model at February 28, 2026:
$ in thousands
10% Sensitivity
Investment in funds and other (1) ..........................................................................................................................................................................
$172,770
Private investments ..................................................................................................................................................................................................
60,180
Corporate debt securities in default .......................................................................................................................................................................
23,722
Trade claims ..............................................................................................................................................................................................................
2,141
(1)Primarily includes investments in hedge funds, fund of funds and private equity funds classified within Level 3 of the fair value hierarchy and
excluded from the fair value hierarchy based on net asset value.
The impact of changes in our own credit spreads on our structured notes for which the fair value option was elected is not included in
VaR. The estimated credit spread risk sensitivity for each one basis point widening in our own credit spreads on financial liabilities for
which the fair value option was elected was an increase in value of approximately $2.0 million at February 28, 2026, which is included in
other comprehensive income.
Other Risk
We are also subject to interest rate risk on our long-term fixed interest rate debt. Generally, the fair market value of debt securities with
a fixed interest rate will increase as interest rates fall, and the fair market value will decrease as interest rates rise. The following table
represents principal cash flows by expected maturity dates and the related weighted-average interest rate on those maturities for our
consolidated long-term debt obligations, inclusive of any related interest rate hedges. For the variable rate borrowings, the weighted-
average interest rates are based on the rates in effect at the reporting date. Our market risk with respect to foreign currency exposure
on our long-term debt is also presented in the table below.
 
Expected Maturity Date (Fiscal Years)
$ in thousands
2026
2027
2028
2029
2030
Thereafter
Total
Fair Value
Rate Sensitive Liabilities:
Fixed Interest Rate Borrowings ..........................
$214,299
$666,604
$1,316,474
$376,878
$1,481,879
$7,044,653
$11,100,787
$11,143,530
Weighted-Average Interest Rate ........................
3.36%
5.23%
5.12%
5.31%
4.48%
5.65%
 
 
Variable Interest Rate Borrowings .....................
$—
$726,500
$528,544
$1,317
$3,878
$1,377,786
$2,638,025
$2,495,295
Weighted-Average Interest Rate ........................
—%
6.30%
6.08%
4.67%
4.48%
5.57%
 
 
Borrowings with Foreign Currency Exposure ...
$932,519
$644,408
$590,950
$590,950
$—
$1,157,316
$3,916,143
$3,745,860
Weighted-Average Interest Rate ........................
3.90%
3.03%
3.37%
4.05%
—%
—%
 
 
Stress Tests and Scenario Analysis
Stress tests are used to analyze the potential impact of specific
events or extreme market moves on the current portfolio both
firm-wide and within business segments. Stress testing is an
important part of our risk management approach because it
allows us to quantify our exposure to tail risks, highlight potential
loss concentrations, undertake risk/reward analysis, set risk
controls and overall assess and mitigate our risk.
We employ a range of stress scenarios, which comprise both
historical market price and rate changes and hypothetical market
environments, and generally involve simultaneous changes of
many risk factors. Indicative market changes in the scenarios
include, but are not limited to, a large widening of credit spreads,
a substantial decline in equities markets, significant moves in
selected emerging markets, large moves in interest rates and
changes in the shape of the yield curve.
Unlike our VaR, which measures potential losses within a given
confidence interval, stress scenarios do not have an associated
implied probability. Rather, stress testing is used to estimate the
potential loss from market moves that tend to be larger than
those embedded in the VaR calculation. Stress testing
complements VaR to cover for potential limitations of VaR such
as the breakdown in correlations, non-linear risks, tail risk and
extreme events and capturing market moves beyond the
confidence levels assumed in the VaR calculations.
Stress testing is performed and reported at least weekly as part
of our risk management process and on an ad hoc basis in
response to market events or concerns. Current stress tests
provide estimated revenue and loss of the current portfolio
through a range of both historical and hypothetical events. The
stress scenarios are reviewed and assessed at least annually so
that they remain relevant and up to date with market
developments. Additional hypothetical scenarios are also
conducted on a sub-portfolio basis to assess the impact of any
relevant idiosyncratic stress events as needed.
February 2026 Form 10-Q
61
Counterparty Credit Risk
Credit risk is the risk of loss due to adverse changes in a
counterparty’s credit worthiness or its ability or willingness to
meet its financial obligations in accordance with the terms and
conditions of a financial contract.
We are exposed to credit risk as a trading counterparty to other
broker-dealers and customers, as a counterparty to derivative
contracts, as a direct lender and through extending loan
commitments and providing securities-based lending and as a
member of exchanges and clearing organizations. Credit
exposure exists across a wide range of products, including cash
and cash equivalents, loans, securities finance transactions and
over-the-counter derivative contracts. The main sources of credit
risk are:
•Loans and lending arising in connection with our investment
banking and capital markets activities, which reflects our
exposure at risk on a default event with no recovery of loans.
Current exposure represents loans that have been drawn by the
borrower and lending commitments that are outstanding. In
addition, credit exposures on forward settling traded loans are
included within our loans and lending exposures for
consistency with the balance sheet categorization of these
items. Loans and lending also arise in connection with our
portion of a Secured Revolving Credit Facility that is with us
and Massachusetts Mutual Life Insurance Company, to be
funded equally, to support loan underwritings by Jefferies
Finance. For further information on this facility, refer to Note
10, Investments in our consolidated financial statements
included in this Quarterly Report on Form 10-Q.
•Securities and margin financing transactions, which reflect our
credit exposure arising from reverse repurchase agreements,
repurchase agreements and securities lending agreements to
the extent the fair value of the underlying collateral differs from
the contractual agreement amount and from margin provided
to customers.
•OTC derivatives, which are reported net by counterparty when a
legal right of setoff exists under an enforceable master netting
agreement. OTC derivative exposure is based on a contract at
fair value, net of cash collateral received or posted under credit
support agreements. In addition, credit exposures on forward
settling trades are included within our derivative credit
exposures.
•Cash and cash equivalents, which includes both interest-
bearing and non-interest-bearing deposits at banks.
Credit is extended to counterparties in a controlled manner and in
order to generate acceptable returns, whether such credit is
granted directly or is incidental to a transaction. All extensions of
credit are monitored and managed as a whole to limit exposure
to loss related to credit risk. Credit risk is managed according to
the Credit Risk Management Policy, which sets out the process
for identifying counterparty credit risk, establishing counterparty
limits, and managing and monitoring credit limits. The policy
includes our approach for:
•Client on-boarding and approving counterparty credit limits;
•Negotiating, approving and monitoring credit terms in legal and
master documentation;
•Determining the analytical standards and risk parameters for
ongoing management and monitoring credit risk books;
•Actively managing daily exposure, exceptions and breaches;
and
•Monitoring daily margin call activity and counterparty
performance.
Counterparty credit exposure limits are granted within our credit
ratings framework, as detailed in the Credit Risk Management
Policy. The Credit Risk Department assesses counterparty credit
risk and sets credit limits at the counterparty master agreement
level. Limits must be approved by appropriate credit officers and
initiated in our credit and trading systems before trading
commences. All credit exposures are reviewed against approved
limits on a daily basis.
Our Secured Revolving Credit Facility, which supports loan
underwritings by Jefferies Finance, is governed under separate
policies other than the Credit Risk Management Policy and is
approved by our Board. The loans outstanding to certain of our
officers and employees are extended pursuant to a review by our
most senior management.
Current counterparty credit exposures at February 28, 2026 and
November 30, 2025 are summarized in the tables below and
provided by credit quality, region and industry. Credit exposures
presented take netting and collateral into consideration by
counterparty and master agreement. Collateral taken into
consideration includes both collateral received as cash as well as
collateral received in the form of securities or other
arrangements. Current exposure is the loss that would be
incurred on a particular set of positions in the event of default by
the counterparty, assuming no recovery. Current exposure equals
the fair value of the positions less collateral. Issuer risk is the
credit risk arising from inventory positions (for example,
corporate debt securities and secondary bank loans). Issuer risk
is included in our country risk exposure within the following
tables.
62
Jefferies Financial Group Inc.
Counterparty Credit Exposure by Credit Rating
Loans and Lending
Securities and Margin
Finance
OTC Derivatives
Total
Cash and
Cash Equivalents
Total with Cash and
Cash Equivalents
At
At
At
At
At
At
$ in millions
February
28,
2026
November
30,
2025
February
28,
2026
November
30,
2025
February
28,
2026
November
30,
2025
February
28,
2026
November
30,
2025
February
28,
2026
November
30,
2025
February
28,
2026
November
30,
2025
AAA Range
$—
$—
$1.8
$10.7
$—
$—
$1.8
$10.7
$6,809.9
$10,140.1
$6,811.7
$10,150.8
AA Range
86.6
91.1
328.4
218.8
291.1
270.5
706.1
580.4
101.1
156.8
807.2
737.2
A Range
36.2
24.5
1,385.9
1,081.5
158.9
173.6
1,581.0
1,279.6
4,808.1
3,514.5
6,389.1
4,794.1
BBB Range
266.2
263.7
218.7
166.7
23.2
20.2
508.1
450.6
242.9
232.5
751.0
683.1
BB or Lower
32.5
38.4
62.6
42.6
192.4
173.8
287.5
254.8
1.2
—
288.7
254.8
Unrated
399.4
279.5
—
—
3.0
9.9
402.4
289.4
—
—
402.4
289.4
Total
$820.9
$697.2
$1,997.4
$1,520.3
$668.6
$648.0
$3,486.9
$2,865.5
$11,963.2
$14,043.9
$15,450.1
$16,909.4
Counterparty Credit Exposure by Region
Loans and Lending
Securities and Margin
Finance
OTC Derivatives
Total
Cash and
Cash Equivalents
Total with Cash and
Cash Equivalents
At
At
At
At
At
At
$ in millions
February
28,
2026
November
30,
2025
February
28,
2026
November
30,
2025
February
28,
2026
November
30,
2025
February
28,
2026
November
30,
2025
February
28,
2026
November
30,
2025
February
28,
2026
November
30,
2025
Asia-Pacific/Latin
America/Other
$15.8
$15.8
$333.4
$234.6
$2.7
$0.4
$351.9
$250.8
$568.0
$766.3
$919.9
$1,017.1
Europe and the Middle
East
44.9
1.7
622.3
426.5
62.3
88.4
729.5
516.6
67.4
71.3
796.9
587.9
North America
760.2
679.7
1,041.7
859.2
603.6
559.2
2,405.5
2,098.1
11,327.8
13,206.3
13,733.3
15,304.4
Total
$820.9
$697.2
$1,997.4
$1,520.3
$668.6
$648.0
$3,486.9
$2,865.5
$11,963.2
$14,043.9
$15,450.1
$16,909.4
Counterparty Credit Exposure by Industry
Loans and Lending
Securities and Margin
Finance
OTC Derivatives
Total
Cash and
Cash Equivalents
Total with Cash and
Cash Equivalents
At
At
At
At
At
At
$ in millions
February
28,
2026
November
30,
2025
February
28,
2026
November
30,
2025
February
28,
2026
November
30,
2025
February
28,
2026
November
30,
2025
February
28,
2026
November
30,
2025
February
28,
2026
November
30,
2025
Asset Managers, Funds
and Investment
Advisors (1)
$607.3
$438.6
$112.3
$83.6
$21.7
$—
$741.3
$522.2
$6,809.9
$10,140.1
$7,551.2
$10,662.3
Banks, Broker-Dealers
5.9
5.7
1,157.8
863.8
481.0
478.9
1,644.7
1,348.4
5,153.3
3,903.8
6,798.0
5,252.2
Corporates
148.0
145.3
—
—
161.2
165.8
309.2
311.1
—
—
309.2
311.1
As Agent Banks
—
—
675.1
529.9
—
—
675.1
529.9
—
—
675.1
529.9
Other
59.7
107.6
52.2
43.0
4.7
3.3
116.6
153.9
—
—
116.6
153.9
Total
$820.9
$697.2
$1,997.4
$1,520.3
$668.6
$648.0
$3,486.9
$2,865.5
$11,963.2
$14,043.9
$15,450.1
$16,909.4
(1)Includes a $250.0 million secured revolving credit facility to Jefferies Finance at both February 28, 2026 and November 30, 2025.
February 2026 Form 10-Q
63
Country Risk Exposure
Country risk is the risk that events or developments that occur in the general environment of a country or countries due to economic,
political, social, regulatory, legal or other factors, will affect the ability of obligors of the country to honor their obligations. We define the
country of risk as the country of jurisdiction or domicile of the obligor and monitor country risk resulting from both trading positions and
counterparty exposure, which may not include the offsetting benefit of any financial instruments utilized to manage market risk. The
following tables reflect our top ten exposures at February 28, 2026 and November 30, 2025 to the sovereign governments, corporations
and financial institutions in those non- U.S. countries in which we have net long issuer and counterparty exposure:
February 28, 2026
Issuer Risk
Counterparty Risk
Issuer and Counterparty Risk
$ in millions
Fair Value of
Long Debt
Securities
Fair Value of
Short Debt
Securities
Net Derivative
Notional
Exposure
Loans and
Lending
Securities and
Margin
Finance
OTC
Derivatives
Cash and
Cash
Equivalents
Excluding
Cash and
Cash
Equivalents
Including
Cash and
Cash
Equivalents
United Kingdom
$2,310.7
$(926.1)
$(591.1)
$40.4
$94.9
$54.7
$(7.6)
$983.5
$975.9
Canada
201.8
(162.3)
17.7
0.9
56.7
387.2
0.4
502.0
502.4
Germany
1,037.6
(814.1)
(63.5)
1.6
113.0
0.8
33.7
275.4
309.1
Japan
3,149.1
(3,070.3)
0.5
—
84.8
—
103.7
164.1
267.8
Hong Kong
89.0
(69.3)
1.7
—
39.5
—
191.5
60.9
252.4
France
757.3
(573.0)
(201.1)
1.5
240.1
0.1
7.0
224.9
231.9
India
28.0
(16.8)
0.8
—
—
—
203.4
12.0
215.4
Taiwan
2,204.7
(2,130.3)
(41.6)
—
166.0
—
—
198.8
198.8
China
1,851.7
(1,623.3)
(42.8)
—
0.6
2.4
—
188.6
188.6
Italy
874.1
(815.3)
101.6
—
0.7
—
2.6
161.1
163.7
Total
$12,504.0
$(10,200.8)
$(817.8)
$44.4
$796.3
$445.2
$534.7
$2,771.3
$3,306.0
November 30, 2025
Issuer Risk
Counterparty Risk
Issuer and Counterparty Risk
$ in millions
Fair Value of
Long Debt
Securities
Fair Value of
Short Debt
Securities
Net Derivative
Notional
Exposure
Loans and
Lending
Securities and
Margin
Finance
OTC
Derivatives
Cash and
Cash
Equivalents
Excluding
Cash and
Cash
Equivalents
Including
Cash and
Cash
Equivalents
Canada
$175.2
$(152.5)
$46.3
$—
$56.9
$373.3
$—
$499.2
$499.2
United Kingdom
1,391.5
(806.6)
(260.2)
0.9
44.6
84.1
7.8
454.3
462.1
Hong Kong
54.6
(41.0)
1.7
—
24.3
—
294.9
39.6
334.5
Australia
837.8
(611.8)
(87.4)
—
11.6
0.2
92.8
150.4
243.2
France
628.5
(405.8)
(131.4)
0.9
149.2
—
0.1
241.4
241.5
Japan
1,570.6
(1,929.7)
364.7
—
67.6
0.1
140.0
73.3
213.3
Spain
546.6
(341.8)
(76.3)
—
74.9
0.2
1.1
203.6
204.7
India
19.9
(17.8)
0.6
—
—
—
198.9
2.7
201.6
Sweden
250.9
(168.4)
52.7
—
—
—
10.5
135.2
145.7
Taiwan
1,119.2
(903.9)
(172.2)
—
101.5
—
—
144.6
144.6
Total
$6,594.8
$(5,379.3)
$(261.5)
$1.8
$530.6
$457.9
$746.1
$1,944.3
$2,690.4
Operational Risk
Operational risk is the risk of financial or non-financial impact,
resulting from inadequate or failed internal processes, people
and systems or from external events. We interpret this definition
as including not only financial loss or gain but also other negative
impacts to our objectives such as reputational impact, legal/
regulatory impact and impact on our clients. Third-party risk is
also included as a subset of operational risk and is defined as the
potential threat presented to us, our employees or clients from
our supply chain and other third parties used to perform a
process, service or activity on our behalf.
Our Operational Risk framework includes governance as well as
operational risk processes, comprises operational risk event
capture and analysis, risk and control self-assessments,
operational risk key indicators, action tracking, risk monitoring
and reporting, deep dive risk assessments, new business
approvals and vendor risk management. Each revenue producing
and support department is responsible for the management and
reporting of operational risks and the implementation of the
Operational Risk Management Policy and processes within the
department with regular operational risk training provided to our
employees.
Operational risk events are mapped to risk categories used for
the consistent classification of risk data to support root cause
and trend analysis, which includes:
•Fraud and Theft
•Clients and Business Practices
•Market Conduct / Regulatory Compliance
•Business Disruption
•Technology
•Data Protection and Privacy
•Trading
•Transaction and Process Management
•People
•Cybersecurity
•Vendor Risk
Our Operational Risk Management Policy and operational risk
management framework, infrastructure, methodology, processes,
guidance and oversight of the operational risk processes are
centralized and consistent firmwide and, additionally, subject to
regional and legal entity operational risk governance, as required.
64
Jefferies Financial Group Inc.
We also maintain a Third-Party (“Vendor”) Risk Management
Policy and Framework to ensure adequate control and monitoring
over our critical third parties, which includes processes for
conducting periodic reviews covering areas of risk including
financial health, information security, privacy, business continuity
management, disaster recovery and operational risk of our
vendors.
Model Risk
Model risk refers to the risk of loss resulting from decisions that
are based on the output of models, due to errors or weaknesses
in the design and development, implementation or improper use
of models. We use quantitative models primarily to value certain
financial assets and liabilities and to monitor and manage our
risk. Model risk is a function of the model materiality, frequency
of use, complexity and uncertainty around inputs and
assumptions used in a given model. Robust model risk
management is a core part of our risk management approach
and is overseen through our risk governance structure and risk
management controls.
Legal and Compliance Risk
Legal and compliance risk includes the risk of noncompliance
with applicable legal and regulatory requirements. We are subject
to extensive regulation in the different jurisdictions in which we
conduct our business. We have various procedures addressing
issues such as regulatory capital requirements, sales and trading
practices, use of and safekeeping of customer funds, credit
granting, collection activities, anti-money laundering and record
keeping. These risks also reflect the potential impact that
changes in local and international laws and tax statutes have on
the economics and viability of current or future transactions. In
an effort to mitigate these risks, we continuously review new and
pending regulations and legislation and participate in various
industry interest groups. We also maintain an anonymous hotline
for employees or others to report suspected inappropriate
actions by us or by our employees or agents.
New Business Risk
New business risk refers to the risks of entering into a new line of
business or offering a new product. By entering a new line of
business or offering a new product, we may face risks that we are
unaccustomed to dealing with and may increase the magnitude
of the risks we currently face. The New Business Committee
reviews proposals for new businesses and new products to
determine if we are prepared to handle the additional or
increased risks associated with entering into such activities.
Reputational Risk
We recognize that maintaining our reputation among clients,
investors, regulators and the general public is an important
aspect of minimizing legal and operational risks. Maintaining our
reputation depends on a large number of factors, including the
selection of our clients and the conduct of our business
activities. We seek to maintain our reputation by screening
potential clients and by conducting our business activities in
accordance with high ethical standards. Our reputation and
business activity can be affected by statements and actions of
third parties, even false or misleading statements by them. We
actively monitor public comment concerning us and are vigilant
in seeking to assure accurate information and perception
prevails.
Item 3. Quantitative and Qualitative Disclosures About Market
Risk
Quantitative and qualitative disclosures about market risk are set
forth under “Management’s Discussion and Analysis of Financial
Condition and Results of Operations —Risk Management” in
Part I, Item 2 of this Form 10-Q.
Item 4. Controls and Procedures
Our Management, under the direction of our Chief Executive
Officer and Chief Financial Officer, evaluated the effectiveness of
our disclosure controls and procedures as of February 28, 2026.
Based on that evaluation, our Chief Executive Officer and Chief
Financial Officer concluded that our disclosure controls and
procedures as of February 28, 2026 are functioning effectively to
provide reasonable assurance that the information required to be
disclosed by us in reports filed under the Securities Exchange Act
of 1934 is (i) recorded, processed, summarized and reported
within the time periods specified in the SEC’s rules and forms and
(ii) accumulated and communicated to our management,
including our Chief Executive Officer and Chief Financial Officer,
as appropriate, to allow timely decisions regarding disclosure. A
controls system cannot provide absolute assurance that the
objectives of the controls system are met, and no evaluation of
controls can provide absolute assurance that all control issues
and instances of fraud, if any, within a company have been
detected.
No change in our internal control over financial reporting
occurred during the quarter ended February 28, 2026 that has
materially affected, or is reasonably likely to materially affect, our
internal control over financial reporting.
February 2026 Form 10-Q
65
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Many aspects of our business involve substantial risks of legal
and regulatory liability. In the normal course of business, we have
been named as defendants or co-defendants in lawsuits involving
primarily claims for damages. We are also involved in a number
of judicial and regulatory matters, including exams, investigations
and similar reviews, arising out of the conduct of our business.
Based on currently available information, we do not believe that
any matter will have a material adverse effect on our
consolidated financial statements.
In July 2024, we commenced litigation against the former
portfolio manager of 3ǀ5ǀ2 Capital ABS Master Fund LP (the
“Fund”) and a variety of individuals and entities (collectively, the
“defendants”), alleging that the defendants engaged in a
longstanding Ponzi scheme resulting in the misappropriation of
approximately $106 million from investors in the Fund and in
certain related accounts, including a separately managed
account held by the Company. In June 2025, we commenced
litigation against First Fed Bank alleging that it participated in and
aided and abetted the Ponzi scheme. The Company has
recognized a loss of $17.2 million in respect of our investment in
the Fund. We anticipate that this litigation, which will not be
resolved in the near term, will result in the recovery of some or all
of our losses but cannot, with any reliable accuracy, estimate
how much we will be able to recover, or the outcome of this
litigation, which may lead to additional proceedings.
On February 26, 2026, Eugena II Investment Holdings Limited and
Eugenia III Investment Holdings Limited, investors in Point Bonita
Capital Fund (Cayman) LP, filed a lawsuit against us in the
Supreme Court for the State of New York alleging that the
defendants have liability for approximately $18.4 million in losses
allegedly suffered in connection with investments in receivables
purchased from First Brands Group.
On March 6, 2026, Western Alliance Trust Company, N.A. and
Western Alliance Bank filed a lawsuit against the Company in the
Supreme Court for the State of New York alleging that the
Company is responsible, based on theories of veil piercing and
fraud, for $126 million in loan obligations incurred by special
purpose vehicles that purchased receivables from affiliates of
First Brands Group, LLC.
Item 1A. Risk Factors
Information regarding our risk factors appears in Item 1A. of our
Annual Report on Form 10-K for the year ended November 30,
2025. These risk factors describe some of the assumptions,
risks, uncertainties and other factors that could adversely affect
our business or that could otherwise result in changes that differ
materially from our expectations.
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
(a) We did not have any unregistered sales of equity securities
during the three months ended February 28, 2026.
(c) Issuer Purchases of Equity Securities.
Purchases of our common shares during the three months ended
February 28, 2026:
$ in thousands, except share
and per share amounts
(a) Total
Number of
Shares
Purchased
(1)
(b) Average
Price Paid
per Share
(c) Total
Number of
Shares
Purchased as
Part of
Publicly
Announced
Plans
or Programs
(d)
Approximate
Dollar Value
of Shares
that May Yet
Be
Purchased
Under the
Plans or
Programs
December 1, 2025 to
December 31, 2025 .................
406,618
$61.16
—
$250,000
January 1, 2026 to
January 31, 2026 .....................
457,264
$62.05
450,000
$222,077
February 1, 2026 to
February 28, 2026 ....................
2,132,262
$56.78
2,048,000
$106,159
Total...........................................
2,996,144
$58.18
2,498,000
(1)An aggregate 498,144 shares repurchased other than as part of our publicly
announced Board authorized repurchase program. We repurchased securities in
connection with our share compensation plans which allow participants to satisfy
certain tax liabilities arising from the vesting of restricted shares and the distribution
of restricted share units with shares.
Item 5. Other Information
Rule 10b5-1 Trading Plans
During the three months ended February 28, 2026, no directors or
executive officers entered into, modified or terminated, contracts,
instructions or written plans for the sale or purchase of the
Company’s securities that were intended to satisfy the
affirmative defense conditions of Rule 10b5-1.
Item 6. Exhibits
Exhibit
No.
Description
Restated Certificate of Incorporation of Jefferies Financial
Group Inc. is incorporated by reference to Exhibit 3.1 of the
Company’s Current Report on Form 8-K filed on March 31,
2026. *
Certification of Chief Executive Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
Certification of Chief Executive Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002. **
Certification of Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002. **
101
Interactive Data Files pursuant to Rule 405 of Regulation S-T,
formatted in Inline Extensible Business Reporting Language
(iXBRL).
104
Cover page interactive data file pursuant to Rule 406 of
Regulation S-T, formatted in iXBRL (included in exhibit 101)
*
Incorporated by reference.
**
Furnished herewith pursuant to item 601(b) (32) of
Regulation S-K.
66
Jefferies Financial Group Inc.
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Jefferies Financial Group Inc.
/s/     MATT LARSON
Matt Larson
Executive Vice President and Chief Financial Officer
Dated: April 7, 2026