Jefferies Financial Group Inc. 10-Q

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 F ixed 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 u nit: $ 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 i s 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, d uring 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, 202 6. 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 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: 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.