Jefferies Financial Group Inc.

Index

Note 1. Organization and Basis of Presentation

Organization

Jefferies Financial Group Inc. is a U.S.-headquartered global

investment banking and capital markets firm. The accompanying

consolidated financial statements represent the accounts of

Jefferies Financial Group Inc. and subsidiaries (together, the

“Company,” “we” or “us”). We, collectively with our consolidated

subsidiaries and through our affiliates, deliver a broad range of

financial services across investment banking, capital markets

and asset management.

We operate intwo reportable business segments: (1) Investment

Banking and Capital Markets and (2) Asset Management. The

Investment Banking and Capital Markets reportable business

segment includes our capital markets activities and our

investment banking business, which provides underwriting and

financial advisory services to our clients. We operate in the

Americas; Europe and the Middle East; and Asia-Pacific.

Investment Banking and Capital Markets also includes our

corporate lending joint venture (“Jefferies Finance LLC” or

“Jefferies Finance”), our commercial real estate joint venture

(“Berkadia Commercial Holding LLC” or “Berkadia”). The Asset

Management reportable business segment provides alternative

investment management services to investors globally and

generates investment income from capital invested in and

managed by us or our affiliated asset managers, and includes

certain remaining businesses and assets of our legacy merchant

banking portfolio.

Basis of Presentation

The accompanying consolidated financial statements have been

prepared in accordance with U.S. generally accepted accounting

principles (“U.S. GAAP”) and should be read in conjunction with

our consolidated financial statements and notes thereto included

in our Annual Report on Form 10-K for the year ended November

30, 2025. Certain footnote disclosures included in our Annual

Report on Form 10-K for the year ended November 30, 2025 have

been condensed or omitted from the consolidated financial

statements as they are not required for interim reporting under

U.S. GAAP. The consolidated financial statements reflect all

adjustments of a normal, recurring nature that are, in the opinion

of management, necessary for the fair presentation of the results

for the interim period. The results presented in our consolidated

financial statements for interim periods are not necessarily

indicative of the results for the entire year.

We have made a number of estimates and assumptions relating

to the reporting of assets and liabilities, the disclosure of

contingent assets and liabilities and the reported amounts of

revenues and expenses during the reporting period to prepare

these consolidated financial statements in conformity with U.S.

GAAP. The most important of these estimates and assumptions

relate to fair value measurements, compensation and benefits,

goodwill and intangible assets and the accounting for income

taxes. Although these and other estimates and assumptions are

based on the best available information, actual results could be

materially different from these estimates.

Certain prior period amounts in ourconsolidated financial

statements and respective notes have been reclassified to be

consistent with the current period presentation. Such

reclassifications had no impact on net earnings, total assets,

total liabilities, or stockholders’ equity.

Consolidation

Our policy is to consolidate all entities that we control by

ownership of a majority of the outstanding voting stock. In

addition, we consolidate entities that meet the definition of a

variable interest entity (“VIE”) for which we are the primary

beneficiary. The primary beneficiary is the party who has the

power to direct the activities of a VIE that most significantly

impact the entity’s economic performance and who has an

obligation to absorb losses of the entity or a right to receive

benefits from the entity that could potentially be significant to the

entity. For consolidated entities that are less than wholly-owned,

the third-party’s holding of equity interest is presented as

Noncontrolling interests in our Consolidated Statements of

Financial Condition and Consolidated Statements of Changes in

Equity. The portion of net earnings attributable to the

noncontrolling interests is presented as Net earnings (losses)

attributable to noncontrolling interests in our Consolidated

Statements of Earnings.

In situations in which we have significant influence, but not

control, of an entity that does not qualify as a VIE, we apply either

the equity method of accounting or fair value accounting

pursuant to the fair value option election under U.S. GAAP, with

our portion of net earnings or gains and losses recorded in Other

revenues or Principal transactions revenues, respectively. We

also have formed nonconsolidated investment vehicles with

third-party investors that are typically organized as partnerships

or limited liability companies and are carried at fair value. We act

as general partner or managing member for these investment

vehicles and have generally provided the third-party investors

with termination or “kick-out” rights.

Intercompany accounts and transactions are eliminated in

Note 2. Summary of Significant Accounting Policies

For a detailed discussion about the Company’s significant

accounting policies, refer to Note 2, Summary of Significant

Accounting Policies in ourconsolidated financial statements

included in Part II, Item 8 of our Annual Report on Form 10-K for

the year ended November 30, 2025.

During thethree months ended February 28, 2026, there were no

significant changes made to the Company’s significant

accounting policies.

Note 3. Accounting Developments

Accounting Standards to be Adopted in Future Periods

Income Taxes. In December 2023, the FASB issued ASU No.

2023-09 (“ASU 2023-09”), Improvements to Income Tax

Disclosures. The guidance is intended to improve income tax

disclosure requirements by requiring (i) consistent categories

and greater disaggregation of information in the rate

reconciliation and (ii) the disaggregation of income taxes paid by

jurisdiction. The guidance makes several other changes to the

income tax disclosure requirements. The amendments in ASU

2023-09 are effective for fiscal years beginning after December

15, 2024 and are required to be applied prospectively with the

option of retrospective application. We are evaluating the impact

of the standard on our income tax disclosures.

Expenses. In November 2024, the FASB issued ASU No. 2024-03

(“ASU 2024-03”), Disaggregation of Income Statement Expenses.

The guidance primarily will require enhanced disclosures about

certain types of expenses. The amendments in ASU 2024-03 are

effective for fiscal years beginning after December 15, 2026, and

interim periods within fiscal years beginning after December 15,

2027 and may be applied either on a prospective or retrospective

basis. We are evaluating the impact of the standard on our

disclosures.

Credit Losses. In July 2025, the FASB issued ASU No. 2025-05

(“ASU 2025-05”), Financial Instruments–Credit Losses. The

guidance provides an optional practical expedient when applying

the guidance related to the estimation of expected credit losses

for current accounts receivable and current contract assets

resulting from transactions arising from contracts with

customers. The amendments in ASU 2025-05 are effective for

fiscal years beginning after December 15, 2025, and interim

reporting periods, with early adoption permitted. We are

evaluating the impact of the standard on our financial

statements.

Internal-Use Software. In September 2025, the FASB issued ASU

No. 2025-06 (“ASU 2025-06”), Intangibles–Goodwill and Other–

Internal-Use Software. The guidance modernizes and clarifies the

threshold for when an entity is required to start capitalizing

software costs and is based on when (i) management has

authorized and committed to funding the software project and (ii)

it is probable that the project will be completed and the software

will be used to perform the function intended. The amendments

in ASU 2025-06 are effective for fiscal years beginning after

December 15, 2027, and interim reporting periods, with early

adoption permitted. We are evaluating the impact of the standard

on our financial statements.

Derivatives and Hedging and Revenue from Contracts with

Customers. In September 2025, the FASB issued ASU No.

2025-07 (“ASU 2025-07”), Derivatives and Hedging (Topic 815)

and Revenue from Contracts with Customers (Topic 606). The

guidance refines the scope of Topic 815 to clarify which

contracts are subject to derivative accounting. The guidance also

provides clarification under Topic 606 for share-based payments

from a customer in a revenue contract. The amendments in ASU

2025-07 are effective for fiscal years beginning after December

15, 2026, and interim reporting periods, with early adoption

permitted. We are evaluating the impact of the standard on our

financial statements.

Adopted Accounting Standards

Segment Reporting. In November 2023, the Financial Accounting

Standards Board (“FASB”) issued ASU No. 2023-07 (“ASU

2023-07”), Improvements to Reportable Segment Disclosures.

The guidance primarily requires enhanced disclosures about

significant segment expenses. We adopted the guidance

beginning with our year ended November 30, 2025, which

impacted our disclosures only. Refer to Note 20, Segment

Reporting for additional information.

Note 4. Assets and Liabilities Held for Sale

Tessellis

During 2026, we accepted a binding offer from a third party for

the sale of Tessellis. We expect the sale to close during first

quarter of 2027.

Assets held for sale are recorded initially at the lower of their

carrying value or estimated fair value, less estimated costs to

sell. Upon designation as an asset held for sale, we discontinue

recording depreciation and amortization expense on such assets.

Tessellis is included within our asset management reportable

segment.

Tessellis’ major classes of assets and liabilities:

Note 5. Fair Value Disclosures

(1)Excludes investments at fair value based on net asset value (“NAV”) of$1.61 billion at February 28, 2026 by level within the fair value hierarchy.

(2)Represents counterparty and cash collateral netting across the levels of the fair value hierarchy for positions with the same counterparty.

(1)Excludes investments at fair value based on NAV of$1.68 billion at November 30, 2025 by level within the fair value hierarchy.

(2)Represents counterparty and cash collateral netting across the levels of the fair value hierarchy for positions with the same counterparty.

There have been no significant changes in valuation techniques

and inputs used in measuring our financial assets and liabilities

that are accounted for at fair value on a recurring basis. Refer to

ourconsolidated financial statements included in Part II, Item 8

of our Annual Report on Form 10-K for the year ended

November 30, 2025.

Investments at Fair Value

Investments at fair value includes investments in hedge funds,

private equity funds, credit funds, real estate funds and other

funds, which are measured at the NAV of the funds, provided by

the fund managers and are excluded from the fair value

hierarchy. Investments at fair value also include direct equity

investments in private companies, which are measured at fair

value using valuation techniques involving quoted prices of or

market data for comparable companies, similar company ratios

and multiples (e.g., price/EBITDA, price/book value), discounted

cash flow analyses and transaction prices observed for

subsequent financing or capital issuance by the company. Direct

equity investments in private companies are categorized within

Level 2 or Level 3 of the fair value hierarchy.

Information about our investments in entities that have the

characteristics of an investment company:

N/R - Not redeemable

(1)Where fair value is calculated based on NAV, fair value has been derived from

each of the funds’ capital statements.

(2)Includes investments in hedge funds that invest, long and short, primarily in

both public and private equity securities in domestic and international

markets, commodities and multi-asset securities.

(3)Includes investments in equity funds that invest in the equity of various U.S.

and foreign private companies in a broad range of industries. These

investments cannot be redeemed; instead, distributions are received through

the liquidation of the underlying assets of the funds which are primarily

expected to be liquidated in approximatelyone tonine years.

(4)Primarily includes investments in funds that invest in:

•Distressed and special situations long/short credit strategies across

sectors and asset types;

•Short-term trade receivables and payables that are expected to generally be

outstanding between 90 to 120 days; and

•Distressed and event-driven opportunities across structured credit,

opportunistic credit, and private credit.

(5)Primarily includes investments in corporate real estate strategies focused on

buying or building real estate businesses and investments in venture capital

funds.

(1)Realized and unrealized gains/losses are primarily reported in Principal transactions revenues. Changes in instrument-specific credit risk related to structured notes

within Long-term debt are presented net of tax in our Consolidated Statements of Comprehensive Income.

(2)Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased —Derivatives.

Analysis of Level 3 Assets and Liabilities for the Three Months

Ended February 28, 2026

Transfers of assets of$81.4 million from Level 2 to Level 3 of the

fair value hierarchy are primarily attributed to:

•Other ABS of$48.5 million, corporate debt securities of$17.2

million, CDOs and CLOs of$12.0 million and loans and other

receivables of$3.5 million due to reduced pricing

Transfers of assets of$71.3 million from Level 3 to Level 2 are

primarily attributed to:

•Loans and other receivables of$51.1 million, CDOs and CLOs

of$11.6 million, corporate debt securities of$5.2 million and

corporate equity securities of$3.3 million due to greater

pricing transparency.

Transfers of liabilities of$10.8 million from Level 2 to Level 3 of

•Structured notes within long-term debt of$9.2 million and net

derivatives of$1.6 million due to reduced pricing and market

Transfers of liabilities of$26.0 million from Level 3 to Level 2 of

•Structured notes within long-term debt of$12.6 million, loans

of$8.8 million, corporate debt securities of$3.4 million and net

derivatives of$1.2 million due to greater pricing and market

Netlosses on Level 3 assets were$53.0 million and netgains on

Level 3 liabilities were$30.2 million for thethree months ended

February 28, 2026. Netlosses on Level 3 assets were primarily

due todecreased market values in other ABS, CDOs and CLOs

and corporate equity securities, partially offset by an increase in

investments at fair value. Netgains on Level 3 liabilities were

primarily due todecreased market valuations of certain

structured notes within long-term debt and certain derivatives.

(1)Realized and unrealized gains/losses are primarily reported in Principal transactions revenues. Changes in instrument-specific credit risk related to structured notes

within Long-term debt are presented net of tax in our Consolidated Statements of Comprehensive Income.

(2)Net derivatives represent Financial instruments owned—Derivatives and Financial instruments sold, not yet purchased—Derivatives.

Analysis of Level 3 Assets and Liabilities for the Three Months

Ended February 28, 2025

Transfers of assets of$52.5 million from Level 2 to Level 3 of the

fair value hierarchy are primarily attributed to:

•Loans and other receivables of$24.8 million, corporate equity

securities of$20.5 million and CDOs and CLOs of$5.7 million

due to reduced pricing transparency.

Transfers of assets of$96.6 million from Level 3 to Level 2 are

primarily attributed to:

•Corporate equity securities of$51.0 million, loans and other

receivables of$38.7 million, corporate debt securities of$4.2

million and other ABS of$2.3 million due to greater pricing

Transfers of liabilities of$22.1 million from Level 2 to Level 3 of

•Net derivatives of$13.2 million and structured notes within

long-term debt of$8.6 million due to reduced pricing and

market transparency.

Transfers of liabilities of$53.7 million from Level 3 to Level 2 of

•Structured notes within long-term debt of$39.1 million and

loans of$14.5 million due to greater pricing and market

Netlosses on Level 3 assets were$5.4 million and netgains on

Level 3 liabilities were$72.9 million for thethree months ended

February 28, 2025. Netlosses on Level 3 assets were primarily

due todecreased market values in CDOs and CLOs, other ABS,

corporate debt securities and loans and other receivables,

partially offset by an increase in corporate equity securities. Net

gains on Level 3 liabilities were primarily due todecreased

market valuations of certain structured notes within long-term

debt, certain derivatives and other secured financings.

Significant Unobservable Inputs used in Level 3 Fair Value

Measurements

The tables below present information on the valuation

techniques, significant unobservable inputs and their ranges for

our financial assets and liabilities, subject to threshold levels

related to the market value of the positions held, measured at fair

value on a recurring basis with a significant Level 3 balance. The

range of unobservable inputs could differ significantly across

different firms given the range of products across different firms

in the financial services sector. The inputs are not representative

of the inputs that could have been used in the valuation of any

one financial instrument (i.e., the input used for valuing one

financial instrument within a particular class of financial

instruments may not be appropriate for valuing other financial

instruments within that given class). Additionally, the ranges of

inputs presented below should not be construed to represent

uncertainty regarding the fair values of our financial instruments;

rather, the range of inputs is reflective of the differences in the

underlying characteristics of the financial instruments in each

category.

For certain categories, we have provided a weighted average of

the inputs allocated based on the fair values of the financial

instruments comprising the category. We do not believe that the

range or weighted average of the inputs is indicative of the

reasonableness of uncertainty of our Level 3 fair values. The

range and weighted average are driven by the individual financial

instruments within each category and their relative distribution in

the population. The disclosed inputs when compared to the

inputs as disclosed in other periods should not be expected to

necessarily be indicative of changes in our estimates of

unobservable inputs for a particular financial instrument as the

population of financial instruments comprising the category will

vary from period to period based on purchases and sales of

financial instruments during the period as well as transfers into

and out of Level 3 each period.

The fair values of certain Level 3 assets and liabilities that were

determined based on third-party pricing information, unadjusted

past transaction prices or a percentage of the reported enterprise

fair value are excluded from the above tables. At February 28,

2026 and November 30, 2025, asset exclusions consisted of

$41.4 million and$28.2 million, respectively, primarily composed

of CDOs and CLOs, Investments at fair value, certain derivatives,

other ABS and CMBS. At February 28, 2026 and November 30,

2025, liability exclusions consisted of$1.7 million and$0.2

million, respectively, primarily composed of loans, corporate

equity securities and corporate debt securities.

Uncertainty of Fair Value Measurement from Use of Significant

Unobservable Inputs

For recurring fair value measurements categorized within Level 3

of the fair value hierarchy, the uncertainty of the fair value

measurement due to the use of significant unobservable inputs

and interrelationships between those unobservable inputs (if any)

are described below:

•Non-exchange-traded securities, corporate debt securities,

CDOs and CLOs, loans and other receivables, other ABS, private

equity securities, certain derivatives, other secured financings

and structured notes using a market approach valuation

technique. A significant increase (decrease) in the price of the

private equity securities, nonexchange-traded securities,

corporate debt securities, CDOs and CLOs, RMBS, other ABS,

loans and other receivables, other secured financings and

structured notes would result in a significantly higher (lower)

fair value measurement. A significant increase (decrease) in

the revenue or revenue multiple related to private equity

securities would result in a significantly higher (lower) fair

value measurement. A significant increase (decrease) in the

discount rate/security yield related to private equity securities

would result in a significantly lower (higher) fair value

measurement. Depending on whether we are a receiver or

(payer) of basis points upfront, a significant increase in basis

points would result in a significant increase (decrease) in the

fair value measurement of options.

•Corporate debt securities, loans and other receivables, other

ABS and other secured financings using a scenario analysis

valuation technique. A significant increase (decrease) in the

possible recovery rates underlying the financial instrument

would result in a significantly higher (lower) fair value

measurement for the financial instrument.

•CDOs and CLOs, corporate debt securities, RMBS and other

ABS using a discounted cash flows valuation technique. A

significant increase (decrease) in isolation in the constant

default rate, loss severity or cumulative loss rate would result

in a significantly lower (higher) fair value measurement. The

impact of changes in the constant prepayment rate and

duration would have differing impacts depending on the capital

structure and type of security. A significant increase

(decrease) in the discount rate/security yield would result in a

significantly lower (higher) fair value measurement.

•Corporate equity securities and derivative equity options using

volatility benchmarking. A significant increase (decrease) in

volatility would result in a significantly higher (lower) fair value

measurement.

Fair Value Option Election

For a description of our financial assets and liabilities for which

we have elected the fair value option, refer to ourconsolidated

Fair value option gains (losses):

(1)Other changes in fair value are included in Principal transactions revenues.

(2)Changes in fair value of structured notes related to instrument-specific credit

risk are presented net of tax in our Consolidated Statements of

Comprehensive Income.

Difference between contractual principal and fair value (1):

(1)Amounts indicate contractual principal greater than or (less than) fair value.

(2)Interest income is recognized separately from other changes in fair value and

is included in Interest revenues.

Fair value of loans and other receivables on nonaccrual status:

Financial Instruments Not Measured at Fair Value

Certain of our financial instruments are not carried at fair value

but are recorded at amounts that approximate fair value due to

their liquid or short-term nature and generally negligible credit

risk. These financial assets include Cash and cash equivalents

and Cash and securities segregated and on deposit for regulatory

purposes or deposited with clearing and depository organizations

and would generally be presented within Level 1 of the fair value

hierarchy.

We have equity securities without readily determinable fair

values, which we account for at cost, minus impairment, which

are presented within Other assets and were$21.9 million at both

February 28, 2026 and November 30, 2025. There wereno

impairments and downward adjustments on these investments

during thethree months ended February 28, 2026 and 2025.

Note 6. Derivative Financial Instruments

Our derivative activities are recorded at fair value in our

Consolidated Statement of Financial Condition in Financial

instruments owned and Financial instruments sold, not yet

purchased, net of cash paid or received under credit support

agreements and on a net counterparty basis when a legally

enforceable right to offset exists under a master netting

agreement. We enter into derivative transactions to satisfy the

needs of our clients and to manage our own exposure to market

and credit risks. In addition, we apply hedge accounting to: (1)

interest rate swaps that have been designated as fair value

hedges of the changes in fair value due to the benchmark interest

rate for certain fixed rate senior long-term debt, and (2) forward

foreign exchange contracts designated as hedges to offset the

change in the value of certain net investments in foreign

operations.

Derivatives are subject to various risks similar to other financial

instruments, including market, credit and operational risk. The

risks of derivatives should not be viewed in isolation, but rather

should be considered on an aggregate basis along with our other

trading-related activities. We manage the risks associated with

derivatives on an aggregate basis along with the risks associated

with proprietary trading as part of our firm wide risk management

policies.

In connection with our derivative activities, we may enter into

International Swaps and Derivatives Association, Inc. master

netting agreements or similar agreements with counterparties.

(1)Exchange-traded derivatives include derivatives executed on an organized

exchange. Cleared OTC derivatives include derivatives executed bilaterally and

subsequently novated to and cleared through central clearing counterparties.

Bilateral OTC derivatives include derivatives executed and settled bilaterally

without the use of an organized exchange or central clearing counterparty.

(2)The number of exchange-traded contracts may include open futures

contracts. The unsettled fair value of these futures contracts is included in

Receivables from/Payables to brokers, dealers and clearing organizations.

(3)Amounts netted include both netting by counterparty and for cash collateral

paid or received.

(4)We have not received or pledged additional collateral under master netting

agreements and/or other credit support agreements that is eligible to be

offset beyond what has been offset in our Consolidated Statements of

Financial Condition.

(1)Exchange-traded derivatives include derivatives executed on an organized

exchange. Cleared OTC derivatives include derivatives executed bilaterally and

subsequently novated to and cleared through central clearing counterparties.

Bilateral OTC derivatives include derivatives executed and settled bilaterally

without the use of an organized exchange or central clearing counterparty.

(2)The number of exchange-traded contracts may include open futures

contracts. The unsettled fair value of these futures contracts is included in

Receivables from/Payables to brokers, dealers and clearing organizations.

(3)Amounts netted include both netting by counterparty and for cash collateral

paid or received.

(4)We have not received or pledged additional collateral under master netting

agreements and/or other credit support agreements that is eligible to be

offset beyond what has been offset in our Consolidated Statements of

Financial Condition.

Gains (losses) recognized in Interest expense related to fair value

hedges:

(1)Includes net settlements of$9.6 million and$11.9 million for thethree months

ended February 28, 2026 and 2025, respectively.

Gains (losses) on our net investment hedges recognized in

Currency translation and other adjustments, a component of

Other comprehensive income (loss), in our Consolidated

Statements of Comprehensive Income:

Unrealized and realized gains (losses) on derivative contracts

recognized primarily in Principal transactions revenues, which are

utilized in connection with our client activities and our economic

risk management activities:

The net gains (losses) on derivative contracts in the table above

are one of a number of activities comprising our business

activities and are before consideration of economic hedging

transactions, which generally offset the net gains (losses)

included above. We substantially mitigate our exposure to market

risk on our cash instruments through derivative contracts, which

generally provide offsetting revenues, and we manage the risk

associated with these contracts in the context of our overall risk

management framework.

OTC Derivatives

Remaining contract maturities at February 28, 2026:

(1)At February 28, 2026, we held net exchange-traded derivative assets and

liabilities with a fair value of$1.24 billion and$557.2 million, respectively,

which are not included in these tables.

(2)OTC derivative assets and liabilities in the tables above are gross of collateral

pledged. OTC derivative assets and liabilities are recorded net of collateral

pledged in our Consolidated Statements of Financial Condition. At

February 28, 2026, cash collateral received and pledged was$368.5 million

and$782.0 million, respectively.

(3)Derivative fair values include counterparty netting within product category.

(4)Amounts represent the netting of receivable balances with payable balances

for the same counterparty within product category across maturity categories.

OTC derivative assets at February 28, 2026:

(1)We utilize internal credit ratings determined by our Risk Management

department. Credit ratings determined by Risk Management use

methodologies that produce ratings generally consistent with those produced

by external rating agencies.

Credit Related Derivative Contracts

External credit ratings of the underlyings or referenced assets for

our written credit related derivative contracts:

Contingent Features

Certain derivative instruments contain provisions that require us

to either post additional collateral or immediately settle any

outstanding liability balances upon a specific event related to our

credit, primarily downgrades in our credit ratings. The following

table presents the aggregate fair value of all derivative

instruments with such credit-risk-related contingent features that

are in a net liability position, the collateral amounts we have

posted or received in the normal course of business and the

potential collateral we could have been required to return and/or

post additionally to our counterparties if the credit-risk-related

contingent features underlying these agreements were triggered:

(1)These potential outflows include initial margin received from counterparties at

the execution of the derivative contract. The initial margin will be returned if

counterparties elect to terminate the contract after a downgrade.

Note 7. Collateralized Transactions

We receive securities as collateral under resale agreements,

securities borrowing transactions, customer margin loans, and in

connection with securities-for-securities transactions in which we

are the lender of securities. We also receive securities as initial

margin on certain derivative transactions. In many instances, we

are permitted by contract to rehypothecate the securities

received as collateral. These securities may be used to secure

repurchase agreements, enter into securities lending

transactions, satisfy margin requirements on derivative

transactions or cover short positions. At February 28, 2026 and

November 30, 2025, the approximate fair value of securities

received as collateral by us that may be sold or repledged was

$52.59 billion and$49.68 billion, respectively. At February 28,

2026 and November 30, 2025, a substantial portion of the

securities received by us had been sold or repledged.

Securities Financing Agreements

To manage our exposure to credit risk associated with securities financing transactions, we may enter into master netting agreements

and collateral arrangements with counterparties. Generally, transactions are executed under standard industry agreements, including,

but not limited to, master securities lending agreements (securities lending transactions) and master repurchase agreements

(repurchase transactions).

(1)Under master netting agreements with our counterparties, we have the legal right of offset with a counterparty, which incorporates all of the counterparty’s outstanding

rights and obligations under the arrangement. These balances reflect additional credit risk mitigation that is available by a counterparty in the event of a counterparty’s

default, but which are not netted in our Consolidated Statements of Financial Condition because other netting provisions of U.S. GAAP are not met.

(2)Includes securities received or paid under collateral arrangements with counterparties that could be liquidated in the event of a counterparty default and thus offset

against a counterparty’s rights and obligations under the respective repurchase agreements or securities borrowing or lending arrangements.

(3)Includes$5.16 billion of securities borrowing arrangements, for which we have received securities collateral of$4.99 billion, and$250.0 million of repurchase

agreements, for which we have pledged securities collateral of$272.5 million, which are subject to master netting agreements, but we have not determined the

agreements to be legally enforceable.

(4)Includes$5.81 billion of securities borrowing arrangements, for which we have received securities collateral of$5.69 billion, and$670.0 million of repurchase

agreements, for which we have pledged securities collateral of$688.0 million, which are subject to master netting agreements, but we have not determined the

agreements to be legally enforceable.

Note 8. Securitization Activities

We engage in securitization activities related to corporate loans,

mortgage loans, consumer loans and mortgage-backed and other

asset-backed securities. In our securitization transactions, we

transfer these assets to special purpose entities (“SPEs”) and act

as the placement or structuring agent for the beneficial interests

sold to investors by the SPE. A portion of our securitization

transactions are the securitization of assets issued or

guaranteed by U.S. government agencies. These SPEs generally

meet the criteria of VIEs; however, we generally do not

consolidate the SPEs as we are not considered the primary

beneficiary for these SPEs. Refer to Note 9, Variable Interest

Entities for further discussion on VIEs and our determination of

the primary beneficiary.

We account for our securitization transactions as sales, provided

we have relinquished control over the transferred assets.

Transferred assets are carried at fair value with unrealized gains

and losses reflected in Principal transactions revenues prior to

the identification and isolation for securitization. Subsequently,

revenues recognized upon securitization are reflected as net

underwriting revenues. We generally receive cash proceeds in

connection with the transfer of assets to an SPE. We may,

however, have continuing involvement with the transferred

assets, which is limited to retaining one or more tranches of the

securitization (primarily senior and subordinated debt securities

in the form of mortgage-backed and other-asset backed

securities or CLOs). These securities are included in Financial

instruments owned, at fair value and are generally initially

categorized as Level 2 within the fair value hierarchy.

Securitizations that were accounted for as sales in which we had

continuing involvement:

We have no explicit or implicit arrangements to provide additional

financial support to these SPEs, have no liabilities related to

these SPEs and do not have any outstanding derivative contracts

executed in connection with these securitization activities at

February 28, 2026 and November 30, 2025.

Our retained interests in SPEs where we transferred assets and

have continuing involvement and received sale accounting

treatment:

Total assets represent the unpaid principal amount of assets in

the SPEs in which we have continuing involvement and are

presented solely to provide information regarding the size of the

transactions and the size of the underlying assets supporting our

retained interests and are not considered representative of the

risk of potential loss. Assets retained in connection with a

securitization transaction represent the fair value of the

securities of one or more tranches issued by an SPE, including

senior and subordinated tranches. Our risk of loss is limited to

this fair value amount which is included in total Financial

instruments owned in our Consolidated Statements of Financial

Condition.

Although not obligated, in connection with secondary market-

making activities we may make a market in the securities issued

by these SPEs. In these market-making transactions, we buy

these securities from and sell these securities to investors.

Securities purchased through these market-making activities are

not considered to be continuing involvement in these SPEs. To

the extent we purchased securities through these market-making

activities, and we are not deemed to be the primary beneficiary of

the VIE, these securities are included in agency and non-agency

mortgage-backed and asset-backed securitizations in the

nonconsolidated VIEs section presented in Note 9, Variable

Interest Entities.

If we have not relinquished control over the transferred assets,

the assets continue to be recognized in Financial instruments

owned and a corresponding liability is recognized in Other

secured financings. The related liabilities do not have recourse to

our general credit.

Note 9. Variable Interest Entities

VIEs are entities in which equity investors lack the characteristics

of a controlling financial interest. VIEs are consolidated by the

primary beneficiary. The primary beneficiary is the party who has

both (1) the power to direct the activities of a VIE that most

significantly impact the entity’s economic performance and (2)

an obligation to absorb losses of the entity or a right to receive

benefits from the entity that could potentially be significant to the

entity.

Our variable interests in VIEs include debt and equity interests,

commitments, guarantees and certain fees. Our involvement with

VIEs arises primarily from:

•Purchases of securities in connection with our trading and

secondary market making activities;

•Retained interests held as a result of securitization activities;

•Acting as placement agent and/or underwriter in connection

with client-sponsored securitizations;

•Financing of agency and non-agency mortgage-backed and

other asset-backed securities;

•Warehouse funding arrangements for client-sponsored

consumer and mortgage loan vehicles and CLOs through

participation agreements, forward sale agreements, reverse

repurchase agreements, and revolving loan and note

commitments; and

•Loans to, investments in and fees from various investment

vehicles.

We determine whether we are the primary beneficiary of a VIE

upon our initial involvement with the VIE and we reassess

whether we are the primary beneficiary of a VIE on an ongoing

basis. Our determination of whether we are the primary

beneficiary of a VIE is based upon the facts and circumstances

for each VIE and requires judgment. Our considerations in

determining the VIE’s most significant activities and whether we

have power to direct those activities include, but are not limited

to, the VIE’s purpose and design and the risks passed through to

investors, the voting interests of the VIE, management, service

and/or other agreements of the VIE, involvement in the VIE’s

initial design and the existence of explicit or implicit financial

guarantees. In situations where we have determined that the

power over the VIE’s significant activities is shared, we assess

whether we are the party with the power over the most significant

activities. If we are the party with the power over the most

significant activities, we meet the “power” criteria of the primary

beneficiary. If we do not have the power over the most significant

activities or we determine that decisions require consent of each

sharing party, we do not meet the “power” criteria of the primary

beneficiary.

We assess our variable interests in a VIE both individually and in

aggregate to determine whether we have an obligation to absorb

losses of or a right to receive benefits from the VIE that could

potentially be significant to the VIE. The determination of whether

our variable interest is significant to the VIE requires judgment. In

determining the significance of our variable interest, we consider

the terms, characteristics and size of the variable interests, the

design and characteristics of the VIE, our involvement in the VIE

and our market-making activities related to the variable interests.

Consolidated VIEs:

(1)Assets and liabilities are presented prior to consolidation and thus a portion of

these assets and liabilities are eliminated in consolidation.

(2)Securities purchased under agreements to resell primarily represent amounts

due under collateralized transactions on related consolidated entities, all of

which are eliminated in consolidation.

(3)Includes$0.5 million and$0.5 million at February 28, 2026 and November 30,

2025, respectively, with related consolidated entities, which are eliminated in

(4)Includes$3.5 million and$3.4 million at February 28, 2026 and November 30,

2025, respectively, with related consolidated entities, which are eliminated in

(5)Includes$709.0 million and$780.5 million at February 28, 2026 and

November 30, 2025, respectively, with related consolidated entities, which are

eliminated in consolidation.

(6)Includes$84.3 million and$84.0 million at February 28, 2026 and

November 30, 2025, respectively, with related consolidated entities, which are

eliminated in consolidation.

Secured Funding Vehicles. We sell agency and non-agency

residential and commercial mortgage loans, and asset-backed

securities to asset-backed financing vehicles pursuant to the

terms of a master repurchase agreement. Our variable interests

in these vehicles consist of our collateral margin maintenance

obligations under the master repurchase agreement, and retained

interests in securities issued. The assets of these VIEs consist of

reverse repurchase agreements, which are available for the

benefit of the vehicle’s debt holders. We also from time to time

securitize other financial instruments and own variable interests

in other securitization vehicles.

Other. We manage investment vehicles for external investors and

for the benefit of our employees and we may also hold a

controlling financial interest in investment vehicles managed by

third parties. The assets of these VIEs consist primarily of equity

securities and broker receivables. Our variable interests in these

vehicles consist of equity securities, management and

performance fees and revenue share arrangements. The

creditors of these VIEs do not have recourse to our general credit

and each such VIE’s assets are not available to satisfy any other

debt.

We are the primary beneficiary of a real estate syndication entity

that develops multi-family residential property and manages the

property. The assets of the VIE consist primarily of real estate

and its liabilities primarily consist of accrued expenses and long-

term debt secured by the real estate property. Our variable

interest in the VIE primarily consists of our limited liability

company interest, a sponsor promote and development and

asset management fees for managing the project.

We are the primary beneficiary of special purpose vehicles that

hold risk retention notes issued as part of unsecured loan asset-

backed transactions. Our variable interests in the VIEs primarily

consist of our ownership of certificates issued by the VIEs.

Nonconsolidated VIEs

Maximum Exposure to Loss

Maximum exposure to loss represents the total of the carrying

value of our on-balance sheet interests in the unconsolidated

VIEs and the notional amount of any unfunded off-balance sheet

arrangements with the unconsolidated VIEs. With respect to

CLOs and asset-backed vehicles, the off-balance sheet

arrangements typically represent the undrawn notional amount of

arrangements to finance the acquisition of assets during the

warehousing and pre-closing phase of the vehicles. The

maximum exposure to loss is based on the unlikely event that all

of the assets in the VIEs become worthless and incorporates not

only potential losses associated with the carrying amounts of

assets recognized on the Consolidated Statements of Financial

Condition but also potential losses associated with unfunded

commitments and other contractual arrangements. The

maximum exposure to loss does not include the offsetting

benefit of any financial instruments that may be utilized to hedge

the risks associated with our variable interests, is not reduced by

the amount of collateral held as part of a transaction with a VIE

and does not consider any executed forward sale agreements

where we have committed to sell ownership interests in any of

the investment vehicles.

Collateralized Loan Obligations. Assets collateralizing the CLOs

include bank loans, participation interests, sub-investment grade

and senior secured U.S. loans, and senior secured Euro-

denominated corporate leveraged loans and bonds. We

underwrite securities issued in CLO transactions on behalf of

sponsors and provide advisory services to the sponsors. We may

also sell corporate loans to the CLOs. Our variable interests

where we have been involved in providing underwriting and/or

advisory services include:

•Forward sale agreements whereby we commit to sell, at a fixed

price, corporate loans and ownership interests in a CLO;

•Warehouse funding arrangements in the form of:

◦Participation interests in corporate loans and commitments

to fund such participation interests;

◦Reverse repurchase agreements and commitments to fund

such reverse repurchase agreements;

◦Variable funding notes; and

◦Senior and subordinated notes issued in connection with

CLO warehousing activities.

•Trading positions in securities issued in CLO transactions.

Asset-Backed Vehicles. We provide financing and lending related

services to certain client-sponsored VIEs in the form of revolving

funding note agreements, revolving credit facilities, forward

purchase agreements and reverse repurchase agreements. We

also may transfer originated corporate loans to certain VIEs and

hold subordinated interests issued by the vehicle. The underlying

assets, which are collateralizing the vehicles, are primarily

composed of unsecured consumer loans, mortgage loans and

corporate loans. In addition, we may provide structuring and

advisory services and act as an underwriter or placement agent

for securities issued by the vehicles. We do not control the

activities of these entities.

Related Party Private Equity Vehicles. We have committed to

invest in private equity funds, (the “JCP Funds”, including JCP

Fund V (refer to Note 10, Investments for further information))

managed by Jefferies Capital Partners, LLC (the “JCP Manager”).

Additionally, we have committed to invest in the general partners

of the JCP Funds (the “JCP General Partners”) and the JCP

Manager. Our variable interests consist of equity interests that, in

total, provide us with limited and general partner investment

returns of the JCP Funds, a portion of the carried interest earned

by the JCP General Partners and a portion of the management

fees earned by the JCP Manager. At February 28, 2026 and

November 30, 2025, our remaining equity commitment in the JCP

Entities was $8.8 million and$9.7 million, respectively. At both

February 28, 2026 and November 30, 2025, we also had

remaining commitments of $0.4 million, to a private equity fund

managed by us for the benefit of our employees. The carrying

value of our collective equity interests were$3.5 million and$3.4

million at February 28, 2026 and November 30, 2025,

respectively. Our exposure to loss is limited to the total of our

carrying value and unfunded equity commitment. The assets of

the vehicles primarily consist of private equity and equity related

investments.

Other Investment Vehicles. At February 28, 2026 and

November 30, 2025, our remaining equity commitment in various

other investment vehicles was$188.2 million and$282.2 million,

respectively. The carrying value of our equity investments was

$1.72 billion at both February 28, 2026 and November 30, 2025.

Our exposure to loss is limited to the total of our carrying value

and unfunded equity commitment. These investment vehicles

have assets primarily consisting of private and public equity

investments, debt instruments, trade and insurance claims,

various oil and gas assets and energy tax credits.

Mortgage-Backed and Other Asset-Backed Secured Funding

Vehicles. In connection with our secondary trading and market-

making activities, we buy and sell agency and non-agency

mortgage-backed securities and other asset-backed securities,

which are issued by third-party securitization SPEs and are

generally considered variable interests in VIEs. Securities issued

by securitization SPEs are backed by residential mortgage loans,

U.S. agency collateralized mortgage obligations, commercial

mortgage loans, CDOs and CLOs and other consumer loans, such

as installment receivables, automobile loans and student loans.

These securities are accounted for at fair value and included in

Financial instruments owned. We have no other involvement with

the related SPEs and therefore do not consolidate these entities.

We also engage in underwriting, placement and structuring

activities for third-party-sponsored securitization trusts generally

through agency (Fannie Mae, Federal Home Loan Mortgage

Corporation (“Freddie Mac”) or Ginnie Mae) or non-agency-

sponsored SPEs and may purchase loans or mortgage-backed

securities from third-parties that are subsequently transferred

into the securitization trusts. The securitizations are backed by

residential and commercial mortgage, home equity and

automobile loans. We do not consolidate agency-sponsored

securitizations as we do not have the power to direct the

activities of the SPEs that most significantly impact their

economic performance. Further, we are not the servicer of non-

agency-sponsored securitizations and therefore do not have

power to direct the most significant activities of the SPEs and

accordingly, do not consolidate these entities. We may retain

unsold senior and/or subordinated interests at the time of

securitization in the form of securities issued by the SPEs.

At February 28, 2026 and November 30, 2025, we held$1.39

billion and$1.06 billion of agency mortgage-backed securities,

respectively, and$183.4 million and$156.3 million of non-agency

mortgage-backed and other asset-backed securities, respectively,

as a result of our secondary trading and market-making activities,

and underwriting, placement and structuring activities. Our

maximum exposure to loss on these securities is limited to the

carrying value of our investments in these securities. These

mortgage-backed and other asset-backed secured funding

vehicles discussed are not included in the above table containing

information about our variable interests in nonconsolidated VIEs.

Note 10. Investments

Investments for which we exercise significant influence over the

investee are accounted for under the equity method of

accounting with our shares of the investees’ earnings recognized

in Other revenues. Equity method investments, including any

loans to the investees, are reported within Investments in and

loans to related parties.

The following presents summarized financial information about

our significant equity method investees. For certain investees, we

receive financial information on a lag and the summarized

information provided for these investees is based on the latest

financial information available as of February 28, 2026 and 2025.

Jefferies Finance

Jefferies Finance, our 50/50 joint venture with Massachusetts

Mutual Life Insurance Company (“MassMutual”) structures,

underwrites and syndicates primarily senior secured loans to

corporate borrowers; and manages proprietary and third-party

investments in both broadly syndicated and direct lending loans.

In connection with its Leveraged Finance business, loans are

originated primarily through our investment banking efforts and

Jefferies Finance typically syndicates to third-party investors

substantially all of its arranged volume through us. The Asset

Management business is a multi-strategy private credit platform

that manages proprietary and third-party capital across

commingled funds, funds-of-one, separately managed accounts,

business development companies, CLOs and levered balance

sheet funds. Broadly syndicated loan investments are sourced

through transactions arranged by Jefferies Finance and third-

party arrangers and managed through its subsidiary, Apex Credit

Partners LLC. Direct lending investments are primarily sourced

through us. Jefferies Finance and its subsidiaries that are

involved in investment management are registered investment

advisers with the SEC.

At February 28, 2026, we and MassMutual each had equity

commitments to Jefferies Finance of$750.0 million, for a

combined total commitment of$1.5 billion. The equity

commitment is reduced quarterly based on our share of any

undistributed earnings from Jefferies Finance and the

commitment is increased only to the extent the share of such

earnings are distributed. At February 28, 2026, our unfunded

commitment to Jefferies Finance was$15.4 million. The

investment commitment is scheduled to expire on March 1, 2027

with automaticone year extensions absent a 60 day termination

notice by either party.

Jefferies Finance has executed a secured revolving credit facility

with us and MassMutual, to be funded equally, to support loan

underwritings by Jefferies Finance, which bears interest based on

the interest rates of the related Jefferies Finance underwritten

loans and is secured by the underlying loans funded by the

proceeds of the facility. The total facility is a committed amount

of$500.0 million at February 28, 2026. Advances are shared

equally between us and MassMutual. The facility is scheduled to

mature on March 1, 2027 with automaticone year extensions

absent a 60 day termination notice by either party. At

February 28, 2026, our$250.0 million commitment was undrawn.

Activity related to the facility:

Selected financial information for Jefferies Finance:

Activity related to our other transactions with Jefferies Finance:

(1)We engage in the origination and syndication of loans underwritten by

Jefferies Finance. In connection with such services, we earned fees, which are

recognized in Investment banking revenues. In addition, we paid fees to

Jefferies Finance in respect of certain loans originated by Jefferies Finance,

which are recognized as Business development expenses.

(2)We act as a placement and/or structuring agent for CLOs managed by

Jefferies Finance, which are recognized as fees and included in Investment

banking revenues.

(3)We act as a placement agent for investment funds managed by Jefferies

Finance, which are recognized as fees and included in Commissions and other

fees.

(4)We act as an underwriter in connection with term loans issued by Jefferies

Finance.

(5)Under a service agreement, we charge Jefferies Finance for various

administrative services provided.

Additional balances with Jefferies Finance as reported in our

Consolidated Statements of Financial Condition.

(1)In connection with our capital markets activities, from time to time we make a

market in long-term debt securities and term loans of Jefferies Finance (i.e.,

we buy and sell debt securities and tern loans of Jefferies Finance).

(2)Receivable for services and certain fees from Jefferies Finance.

(3)Includes OTC foreign currency derivatives.

(4)Cash collateral received from Jefferies Finance on OTC foreign currency

derivatives.

(5)Payable to Jefferies Finance in connection with loans originated by Jefferies

Finance to borrowers who are investment banking clients of ours. We have

also entered into an agreement to indemnify Jefferies Finance with respect to

any foreign currency exposure on these loans.

Berkadia

Berkadia is a commercial real estate finance and investment

sales joint venture that was formed by us and Berkshire

Hathaway Inc. We are entitled to receive 45.0% of the profits of

Berkadia. Berkadia originates commercial and multifamily real

estate loans that are sold to U.S. government agencies or other

investors with Berkadia retaining the servicing rights. Berkadia

also provides advisory services in connection with sales of

multifamily assets. Berkadia is a servicer of commercial real

estate loans in the U.S., performing primary, master and special

servicing functions for U.S. government agency programs and

financial services companies.

Commercial paper issued by Berkadia is supported by a

$1.50 billion surety policy issued by a Berkshire Hathaway

insurance subsidiary, for which we receive a surety fee, and a

corporate guaranty, and we have agreed to reimburse Berkshire

Hathaway for one-half of any losses incurred thereunder. At

February 28, 2026, the aggregate amount of commercial paper

outstanding was$1.47 billion.

Selected financial information for Berkadia:

commitments to purchase$13.4 million and$13.6 million,

respectively, of agency CMBS from Berkadia.

Revenues from other transactions with Berkadia for thethree

months ended February 28, 2026 and 2025 were$0.0 million and

$0.1 million, respectively.

Real Estate Investments

Our real estate equity method investments primarily consist of

our equity interests in Brooklyn Renaissance Plaza and Hotel and

54 Madison. Brooklyn Renaissance Plaza is composed of a hotel,

office building complex and parking garage located in Brooklyn,

New York. We have a 25.4% equity interest in the hotel and a

61.3% equity interest in the office building and garage. Although

we have a majority interest in the office building and garage, we

do not have control, but only have the ability to exercise

significant influence on this investment. We are amortizing our

basis difference between the estimated fair value and the

underlying book value of Brooklyn Renaissance office building

and garage over the respective useful lives (weighted average life

of 39 years).

We own a 48.1% equity interest in 54 Madison, a fund that most

recently owned an interest in one real estate project and the fund

is in the process of being liquidated.

Selected financial information for the real estate investments:

JCP Fund V

We have limited partnership interestsof 11% and 50% in Jefferies

Capital Partners V L.P. and Jefferies SBI USA Fund L.P. (together,

“JCP Fund V”), respectively, which are private equity funds

managed by a team led by our President and which are in the

process of being fully liquidated. The amount of our investments

in JCP Fund V included in Financial instruments owned, at fair

value was$2.8 million at both February 28, 2026 and

November 30, 2025. We account for these investments at fair

value based on the NAV of the funds provided by the fund

managers. The following summarizes the results from these

investments which are included in Principal transactions

revenues:

At both February 28, 2026 and November 30, 2025, we were

committed to invest equity of up to$85.0 million in JCP Fund V.

At both February 28, 2026 and November 30, 2025, our unfunded

commitment relating to JCP Fund V was$8.7 million. We do not

expect any further capital to be called by JCP Fund V.

The following is a summary of the Net change in net assets

resulting from operations for 100.0% of JCP Fund V, in which we

owned effectively 35.1% at February 28, 2026 of the combined

equity interests:

(1)Financial information for JCP Fund V within our results of operations for the

three months ended February 28, 2026 and 2025 is included based on the

periods presented.

Hildene

In July 2024, we invested$25.0 million in the Class A Common

Equity Units of Hildene Insurance Holdings, LLC (“Hildene

Insurance”), an investment fund with insurance exposures. On

March 1, 2025, we made an additional investment of

$75.0 million in Hildene Insurance, which resulted in an increase

of our effective ownership from 8.83% to 23.5%. The investment

is accounted for under the equity method with a carrying amount

of$117.1 million and$113.8 million at February 28, 2026 and

November 30, 2025, respectively.

Selected financial information for Hildene Insurance:

(1)Financial information for Hildene Insurance Holdings, LLC included in our

financial position at February 28, 2026 and November 30, 2025 is based on

the dates presented, and in our results of operations for thethree months

ended February 28, 2026 and 2025 is based on the periods presented.

On December 9, 2025, we entered into an agreement to acquire a

50% interest in Hildene Holding Company, LLC, parent of Hildene

Capital Management, LLC, a credit-focused asset manager and

the parent of Hildene Insurance. We will contribute our existing

revenue share, a portion of our interest in a Hildene-managed

fund, and$340.0 million in cash. Hildene’s principals will

contribute their ownership interests and approximately

$250.0 million of the fund and related equity interests. Closing is

expected in the third quarter of 2026, subject to customary

approvals.

ApiJect

We own shares that represent a 37.9% and 33.6% economic

interest in ApiJect at February 28, 2026 and November 30, 2025,

respectively, which are accounted for at fair value by electing the

fair value option available under U.S. GAAP, and are included

within corporate equity securities in Financial instruments owned,

at fair value. At both February 28, 2026 and November 30, 2025,

the total fair value of our total equity investment in common

shares of ApiJect was$97.9 million, which is classified within

Level 3 of the fair value hierarchy. Additionally, we own warrants

to purchase up to 950,000 shares of common stock at any time

or from time to time on or before April 15, 2032.

We also have a term loan agreement with a principal of ApiJect

for$23.3 million, which matures on April 30, 2026. The loan is

accounted for at amortized cost and is reported within Other

assets. The loan has a fair value of$23.3 million at both

February 28, 2026 and November 30, 2025, which would be

classified as Level 3 in the fair value hierarchy.

In December 2025, we purchased two secured convertible

promissory notes totaling$9.8 million from ApiJect. These

promissory notes are accounted for at fair value in Financial

instruments owned and classified within Level 3 of the fair value

hierarchy.

Aircadia

In December 2023, Aircadia Leasing II LLC (“Aircadia”), a wholly

owned subsidiary, purchased airplanes from one of our clients

and simultaneously entered into a lease with the seller to lease

the airplanes for a term of 42 months. The transaction was

accounted for as a sale leaseback and the airplanes were

recorded within Premises and equipment at$57.7 million. During

the third quarter of 2025, we sold the airplanes.

Also in December 2023, we provided a loan to the seller for

$30.0 million, which was paid off on April 1, 2025. The loan was

accounted for at amortized cost and included within Investments

in and loans to related parties. We recognized interest income of

$0.0 million and$0.7 million on the loan during thethree months

ended February 28, 2026 and 2025, respectively. We also hold

preferred shares in the seller, which are accounted for at fair

value in Financial instruments owned with a fair value of$43.2

million at both February 28, 2026 and November 30, 2025, and

are classified within Level 3 of the fair value hierarchy.

In September 2024, we provided a€15.0 million loan, maturing in

May 15, 2026, to an individual related to the seller, secured by a

privately owned aircraft and guaranteed by the individual. We

recognized interest income of$0.5 million for both the three

months ended February 28, 2026 and 2025.

Note 11. Credit Losses on Financial Assets Measured at

Amortized Cost

Secured Financing Receivables. In evaluating secured financing

receivables (reverse repurchases agreements, securities

borrowing arrangements, and margin loans), the underlying

collateral maintenance provisions are taken into consideration.

The underlying contractual collateral maintenance for

significantly all of our secured financing receivables requires that

the counterparty continually adjust the collateralization amount,

securing the credit exposure on these contracts. Collateralization

levels for our secured financing receivables are initially

established based upon the counterparty, the type of acceptable

collateral that is monitored daily and adjusted to mitigate the

potential of any credit losses. Credit losses are not recognized

for secured financing receivables where the underlying

collateral’s fair value is equal to or exceeds the asset’s amortized

cost basis. In cases where the collateral’s fair value does not

equal or exceed the amortized cost basis, the allowance for

credit losses, if any, is limited to the difference between the fair

value of the collateral at the reporting date and the amortized

cost basis of the financial assets.

Broker Receivables. Our receivables from brokers, dealers, and

clearing organizations include deposits of cash with exchange

clearing organizations to meet margin requirements, amounts

due from clearing organizations for daily variation settlements,

securities failed-to-deliver or receive and receivables and

payables for fees and commissions. These receivables generally

do not give rise to material credit risk and have a remote

probability of default either because of their short-term nature or

due to the credit protection framework inherent in the design and

operations of brokers, dealers and clearing organizations. As

such, generally, no allowance for credit losses is held against

these receivables.

Investment Banking Fee Receivables. Our allowance for credit

losses on our investment banking fee receivables uses a

provisioning matrix based on the shared risk characteristics and

historical loss experience for such receivables. In some

instances, we may adjust the allowance calculated based on the

provision matrix to incorporate a specific allowance based on the

unique credit risk profile of a receivable. The provisioning matrix

is periodically updated to reflect changes in the underlying

portfolio’s credit characteristics and most recent historical loss

data.

Allowance for credit losses for investment banking receivables:

(1)Substantially all of the allowance for doubtful accounts relate to mergers and

acquisitions and restructuring fee receivables, which include recoverable

expense receivables.

Other Financial Assets. For all other financial assets measured at

amortized cost, we estimate expected credit losses over the

financial assets’ life as of the reporting date based on relevant

information about past events, current conditions, and

reasonable and supportable forecasts.

Note 12. Goodwill and Intangible Assets

Goodwill

(1)Following the acceptance of a binding offer for Tessellis during the first

quarter of 2026, we recorded a$58.2 million goodwill impairment charge. The

remaining goodwill balance was reclassified as held for sale at February 28,

2026. See Note 4, Assets and Liabilities Held for Sale.

Carrying values of goodwill by reporting unit:

Intangible Assets

(1)Following the acceptance of a binding offer for Tessellis during the first

quarter of 2026, the remaining intangible asset balance of$82.7 million was

reclassified as held for sale at February 28, 2026. See Note 4, Assets and

Liabilities Held for Sale.

Amortization Expense

For finite life intangible assets, we recognized aggregate

amortization expense of$8.5 million and$7.8 million for the

three months ended February 28, 2026 and 2025, respectively.

These expenses are included in Depreciation and amortization.

Estimated future amortization expense for the next five fiscal

years:

Note 13. Revenues from Contracts with Customers

Disaggregation of Revenue

(1)Revenues from contracts with customers associated with the equities and

fixed income businesses primarily represent commissions and other fee

revenue.

Refer to Note 20, Segment Reporting, for a further discussion on

the allocation of revenues to geographic regions.

Information on Remaining Performance Obligations and Revenue

Recognized from Past Performance

We do not disclose information about remaining performance

obligations pertaining to contracts that have an original expected

duration of one year or less. The transaction price allocated to

remaining unsatisfied or partially unsatisfied performance

obligations with an original expected duration exceeding one year

was not material at February 28, 2026. Investment banking

advisory fees that are contingent upon completion of a specific

milestone and fees associated with certain distribution services

are also excluded as the fees are considered variable and not

included in the transaction price.

During thethree months ended February 28, 2026 and 2025, we

recognized$10.9 million and$58.2 million, respectively, of

revenue related to performance obligations satisfied (or partially

satisfied) in previous periods, mainly due to resolving

uncertainties in variable consideration that was constrained in

prior periods. In addition, we recognized$7.8 million and$7.7

million of revenues primarily associated with distribution services

for thethree months ended February 28, 2026 and 2025,

respectively, a portion of which relates to prior periods.

Contract Balances

The timing of our revenue recognition may differ from the timing

of payment by our customers. We record a receivable when

revenue is recognized prior to payment and we have an

unconditional right to payment. Alternatively, when payment

precedes the provision of the related services, we record deferred

revenue until the performance obligations are satisfied.

Our deferred revenue primarily relates to retainer and milestone

fees received in investment banking advisory engagements

where the performance obligation has not yet been satisfied.

Deferred revenue at February 28, 2026 and November 30, 2025

was$69.5 million and$92.3 million, respectively, which is

recorded in Accrued expenses and other liabilities. During the

three months ended February 28, 2026 and 2025, we recognized

revenues of$46.0 million and$27.4 million, respectively, that

were recorded as deferred revenue at the beginning of the

periods.

We had receivables related to revenues from contracts with

customers of$353.9 million and$396.8 million at February 28,

2026 and November 30, 2025, respectively.

Contract Costs

We capitalize costs to fulfill contracts associated with

investment banking advisory engagements where the revenue is

recognized at a point in time and the costs are determined to be

recoverable. Capitalized costs to fulfill a contract are recognized

at the point in time that the related revenue is recognized.

At February 28, 2026 and November 30, 2025, capitalized costs

to fulfill a contract were$5.3 million and$5.2 million,

respectively, which are recorded in Receivables – Fees, interest

and other. During thethree months ended February 28, 2026 and

2025, we recognized expenses of$2.0 million and$0.9 million,

respectively, related to costs to fulfill a contract that were

capitalized as of the beginning of the year. There were no

significant impairment charges recognized in relation to these

capitalized costs for thethree months ended February 28, 2026

and 2025.

Note 14. Compensation Plans

For a description of Restricted Stock, Restricted Stock Units, the

Senior Executive Compensation Plan and other compensation

plans refer to Note 15. Compensation Plans in ourconsolidated

At February 28, 2026, there were approximately 2.1 million shares

of restricted stock outstanding with future service required,

6.4 million RSUs outstanding with future service required

(including target RSUs that may be issued under the senior

executive compensation plan),10.3 million RSUs outstanding

with no future service required, and 5.1 million stock options

outstanding. The maximum potential increase to common shares

outstanding resulting from these outstanding awards is

21.8 million at February 28, 2026.

In December 2025, the Compensation Committee of our Board of

Directors granted RSUs and performance stock units (“PSUs”) to

each of our senior executives as follows:

(1)ROTE is defined as return on tangible equity measured over three years.

(2)Performance below an ROTE of 7.5% results in forfeiture of all PSUs. An ROTE

of 15% or greater results in earning 150% of target PSUs and between 7.5% to

15%, the level of earning PSUs is linearly interpolated.

In addition, we sponsor non-share-based compensation plans.

Non-share-based compensation plans sponsored by us include a

profit sharing plan and other forms of restricted cash awards.

Restricted cash awards are subject to ratable vesting terms with

service requirements. These awards are amortized as

compensation expense over the relevant service period, which is

generally considered to start at the beginning of the annual

compensation year.

Components of total compensation cost associated with certain

of our compensation plans:

(1)Total compensation cost associated with restricted stock and RSUs includes

the amortization of sign-on, retention and senior executive awards, less

forfeitures and clawbacks.

Remaining unamortized amounts related to certain

compensation plans at February 28, 2026:

(1)The remaining unamortized amount is included within Other assets.

Note 15. Borrowings

Short-Term Borrowings

(1)Short-term borrowings mature in one year or less and are recorded at cost,

which is a reasonable approximation of their fair values due to their liquid and

short-term nature.

At February 28, 2026 and November 30, 2025, the weighted

average interest rate on bank loans outstanding is 4.94% and

4.92% per annum, respectively.

Our borrowings include credit facilities that contain certain

covenants that, among other things, require us to maintain a

specified level of tangible net worth, require a minimum

regulatory net capital requirement for our U.S. broker-dealer,

Jefferies LLC, and impose certain restrictions on the future

indebtedness of certain of our subsidiaries that are borrowers.

Interest is based on rates at spreads over the federal funds rate

or other adjusted rates, as defined in the various credit

agreements, or at a rate as agreed between the bank and us in

reference to the bank’s cost of funding. At February 28, 2026, we

were in compliance with all covenants under these credit

Long-Term Debt

(1)Structured notes have various interest rate payment terms and are accounted for at fair value, with changes in fair value resulting from non-credit components

recognized in Principal transactions revenues. The structured notes are classified as Level 2 or Level 3 in the fair value hierarchy. All of our long-term debt with exception

of certain of the structured notes would be classified as Level 2 in the fair value hierarchy.

(2)Carrying values of certain borrowings, totaling$2.70 billion and$2.68 billion for February 28, 2026 and November 30, 2025, respectively, include cumulative hedging

adjustments of$131.9 million and$142.8 million at February 28, 2026 and November 30, 2025, respectively, associated with interest rate swaps based on designation

as fair value hedges.

(3)Carrying values include unamortized discounts and premiums, valuation adjustments and debt issuance costs. At February 28, 2026 and November 30, 2025, our

borrowings under several credit facilities classified within Long-term debt amounted to$703.0 million and$803.2 million, respectively. Interest on these credit facilities

is based on an adjusted Secured Overnight Financing Rate (“SOFR”) plus a spread or other adjusted rates, as defined in the various credit agreements. Certain of our

long-term borrowings are callable by us prior to maturity reflected at their contractual maturity dates. Additionally, certain of our borrowings are under agreements

containing covenants that, among other things, require us to maintain specified levels of tangible net worth and liquidity amounts, certain credit and rating levels and

impose certain restrictions on future indebtedness of and require specified levels of regulated capital and cash reserves for certain of our subsidiaries. At February 28,

2026, we were in compliance with all covenants under theses credit agreements.

(4)Interest rates exclude structured notes.

For thethree months ended February 28, 2026, long-term debt

increased by$1.33 billion to$17.23 billion at February 28, 2026,

primarily due to proceeds of$1.63 billion from the issuances of

unsecured senior notes and$74.8 million from currency gains on

foreign currency borrowings. These increases were partially

offset by repayments of$188.2 million on our unsecured senior

notes,$52.2 million from net repayments of structured notes, the

reclassification of$51.9 million of Tessellis’ borrowings to Held

for sale (refer to Note 4, Assets and Liabilities Held for Sale for

further information), and$42.3 million from decreased

subsidiaries’ borrowings.

Note 16. Total Equity

Common Stock

565,000,000 authorized shares of voting common stock with a

par value of$1.00 per share. At February 28, 2026 and November

30, 2025, we had outstanding 204,422,673 and 206,296,167

common shares outstanding, respectively.

During thethree months ended February 28, 2026, we

repurchased a total 3.0 million of our common shares for$174.3

million, or an average price of$58.18 per share, including 2.5

million of our common shares for$143.8 million in the open

market under our share repurchase program, and 0.5 million of

our common shares for$30.5 million in connection with net-

share tax withholding under our equity compensation plan. In

March 2026, the Board of Directors has authorized the

repurchase of common stock up to$250.0 million under a share

repurchase program.

Preferred Shares

At February 28, 2026 and November 30, 2025,6.0 million of

preferred shares, par value$1.00 per share, were authorized and

55,125 shares issued and outstanding.

On April 27, 2023, we established Series B Non-Voting

Convertible Preferred Shares with a par value of$1.00 per share

(“Series B Preferred Stock”) and designated 70,000 shares as

Series B Preferred Stock. The Series B Preferred Stock has a

liquidation preference of$17,500 per share and rank senior to our

voting common stock upon dissolution, liquidation or winding up

of Jefferies Financial Group Inc. Each share of Series B Preferred

Stock is automatically convertible into 500 shares of non-voting

common stock, subject to certain anti-dilution adjustments, three

years after issuance. The Series B Preferred Stock participates in

cash dividends and distributions alongside our voting common

stock on an as-converted basis.

Additionally, on April 27, 2023, we entered into an Exchange

Agreement with Sumitomo Mitsui Banking Corporation (“SMBC”),

which entitles SMBC to exchange shares of our voting common

stock for shares of the Series B Preferred Stock at a rate of 500

shares of voting common stock for one share of Series B

Preferred Stock. The Exchange Agreement is limited to 55,125

shares of Preferred Stock and SMBC will pay$1.50 per share of

voting common stock exchanged. As of November 30, 2025,

SMBC had exchanged approximately 27.6 million shares of

voting common stock for 55,125 shares of Series B Preferred

Stock. At February 28, 2026, SMBC owns approximately 15.9% of

our common stock on an as-converted basis and 14.4% on a

fully-diluted, as-converted basis. Since August 2024, the CEO of

Sumitomo Mitsui Financial Group, Inc. has served on our Board,

with the President and Executive Officer of SMBC taking over the

position following his election at the Annual Shareholder Meeting

in March 2026. Additionally, Refer to Note 21, Related Party

Transactions for further information regarding transactions with

SMBC.

On September 19, 2025, our Board of Directors established Series

B-1 Non-Voting Convertible Preferred Shares with a par value of

$1.00 per share (“Series B-1 Preferred Stock”) and designated

17,500 shares as Series B-1 Preferred Stock. The Series B-1

Preferred Stock has a liquidation preference of$500 per share

and ranks senior to our voting common stock and equal to the

Series B Preferred Stock upon dissolution, liquidation or winding

up of Jefferies Financial Group Inc. Each share of Series B-1

Preferred Stock is automatically convertible into 500 shares of

non-voting common stock as soon as such non-voting common

stock exists, subject to certain anti-dilution adjustments. The

Series B-1 Preferred Stock also participates in cash dividends

and distributions alongside our voting common stock on an as-

converted basis.

Additionally, on September 19, 2025, we entered into an amended

and restated Exchange Agreement (the “Amended and Restated

Exchange Agreement”) with SMBC, which entitles SMBC to

exchange shares of our voting common stock for shares of the

Series B-1 Preferred Stock at a rate of 500 shares of voting

common stock for one share of Series B-1 Preferred Stock. The

Amended and Restated Exchange Agreement is limited to 17,500

shares of Series B-1 Preferred Stock. Under the Amended and

Restated Exchange Agreement, SMBC is permitted to increase its

economic ownership in the Company to up to 20% on an as-

converted and fully diluted basis, while continuing to own less

than 5% of a voting interest in the Company.

Earnings Per Common Share

Basic and diluted earnings per common share amounts were calculated by dividing net earnings by the weighted-average number of

common shares outstanding. The numerators and denominators used to calculate basic and diluted earnings per common share are as

(1)Represents dividends declared during the period on participating securities plus an allocation of undistributed earnings to participating securities. Net losses are not

allocated to participating securities. Participating securities represent certain preferred stock, restricted stock and RSUs for which requisite service has not yet been

rendered and amounted to weighted average shares of 27.6 million and 27.7 million for thethree months ended February 28, 2026 and 2025, respectively. Undistributed

earnings are allocated to participating securities based upon their right to share in earnings if all earnings for the period had been distributed.

(2)Certain securities have been excluded as they would be antidilutive. However, these securities could potentially dilute earnings per share in the future. Antidilutive shares

were 12.3% and 13.4% of the weighted average common shares outstanding for thethree months ended February 28, 2026 and 2025, respectively.

Dividends

On March 25, 2026, the Board of Directors declared a dividend of

$0.40 per common share to be paid on May 29, 2026 to common

shareholders of record at May 18, 2026.

During both three months ended February 28, 2026 and 2025, we

paid cash dividends of$11.0 million with respect to the Series B

Preferred stock.

The payment of dividends is subject to the discretion of our

Board of Directors and depends upon general business

conditions and other factors that our Board of Directors may

deem to be relevant.

Accumulated Other Comprehensive Income (Loss)

Amounts reclassified out of accumulated other comprehensive

income (loss) to net earnings:

(1)The amounts include income tax expense of$1.1 million and$0.9 million for

thethree months ended February 28, 2026 and 2025, respectively.

(2)The amount includes income tax benefit of$0.2 million for thethree months

ended February 28, 2025, which were reclassified to Compensation and

benefits expenses.

Note 17. Income Taxes

At February 28, 2026 and November 30, 2025, our total gross

unrecognized tax benefits were$240.0 million and

$241.6 million, respectively.

At February 28, 2026 and November 30, 2025, we had interest

accrued of$184.6 million and$177.9 million, respectively,

included in Accrued expenses and other liabilities.

The total amount of unrecognized tax benefits that, if recognized,

would favorably affect the effective tax rate was$189.5 million

and$190.9 million (net of Federal benefit) at February 28, 2026

and November 30, 2025, respectively.

We recognize interest and penalties, if any, related to

unrecognized tax benefits in income tax expense.

We are currently under examination by a number of taxing

jurisdictions. Though we do not expect that resolution of these

examinations will have a material effect on our consolidated

financial position, they may have a material impact on our

consolidated results of operations for the period in which

resolution occurs.

Earliest tax years that remain subject to examination in the major

tax jurisdictions in which we operate:

Note 18. Commitments, Contingencies and Guarantees

Commitments

(1)Equity, loan and other unfunded commitments are presented by contractual

maturity date. The amounts, however, are available on demand.

(2)Loan purchase commitments consist of unfunded commitments to acquire

secondary market loans. For the population of loans to be acquired under the

loan purchase commitments, at February 28, 2026, Jefferies had also entered

into back-to-back committed sale contracts aggregating to$3.29 billion.

(3)At February 28, 2026, all of the of the forward starting securities purchased

under agreements to resell andall of theforward starting securities sold under

agreements to repurchase settled within three business days.

Equity Commitments. Includes commitments to invest in our joint

venture, Jefferies Finance, asset management funds and in

Jefferies Capital Partners, LLC, a manager of private equity funds,

which consists of a team led by our President and a director. At

February 28, 2026, our outstanding commitments relating to

Jefferies Capital Partners, LLC and its private equity funds were

$9.7 million.

Additionally, at February 28, 2026, we had other outstanding

equity commitments to invest up to$192.9 million with strategic

affiliates and$35.7 million to various other investments.

Loan Commitments. From time to time, we make commitments

to extend credit to clients and to strategic affiliates. These

commitments and any related drawdowns of these facilities

typically have fixed maturity dates and are contingent on certain

representations, warranties and contractual conditions applicable

to the borrower. At February 28, 2026, we had outstanding loan

commitments of$319.2 million to a client and$3.4 million to

strategic affiliates.

Loan commitments outstanding at February 28, 2026 also

include our portion of the outstanding secured revolving credit

facility provided to Jefferies Finance, to support loan

underwritings by Jefferies Finance.

Underwriting Commitments. In connection with investment

banking activities, we may from time to time provide underwriting

commitments to our clients in connection with capital raising

transactions.

Forward Starting Reverse Repos and Repos. We enter into

commitments to take possession of securities with agreements

to resell on a forward starting basis and to sell securities with

agreements to repurchase on a forward starting basis that are

primarily secured by U.S. government and agency securities.

Other Unfunded Commitments. Other unfunded commitments

include obligations in the form of revolving notes, warehouse

financings and debt securities to provide financing to asset-

backed and CLO vehicles. Upon advancing funds, drawn amounts

are collateralized by the assets of an entity. Other unfunded

commitments also include written put options to certain

bondholders of an equity method investee.

Guarantees

Derivative Contracts. As a dealer, we make markets and trade in a

variety of derivative instruments. Certain derivative contracts that

we have entered into meet the accounting definition of a

guarantee under U.S. GAAP, including credit default swaps,

written foreign currency options and written equity put options.

On certain of these contracts, such as written interest rate caps

and foreign currency options, the maximum payout cannot be

quantified since the increase in interest or foreign exchange rates

are not contractually limited by the terms of the contract. As

such, we have disclosed notional values as a measure of our

maximum potential payout under these contracts.

Notional amounts associated with our derivative contracts

meeting the definition of a guarantee under U.S. GAAP at

February 28, 2026:

The derivative contracts deemed to meet the definition of a

guarantee under U.S. GAAP are before consideration of hedging

transactions and only reflect a partial or “one-sided” component

of any risk exposure. Written equity options and written credit

default swaps are often executed in a strategy that is in tandem

with long cash instruments (e.g., equity and debt securities). We

substantially mitigate our exposure to market risk on these

contracts through hedges, such as other derivative contracts

and/or cash instruments, and we manage the risk associated

with these contracts in the context of our overall risk

management framework. We believe notional amounts overstate

our expected payout and that fair value of these contracts is a

more relevant measure of our obligations. At February 28, 2026,

the fair value of derivative contracts meeting the definition of a

guarantee, gross of any counterparty and cash collateral netting,

is a liability of approximately$635.0 million.

HomeFed. For real estate development projects, we are generally

required to obtain infrastructure improvement bonds at the

beginning of construction work and warranty bonds upon

completion of such improvements. These bonds are issued by

surety companies to guarantee a municipality satisfactory

completion of a project. As the planned area is developed and the

municipality accepts the improvements, the bonds are released.

At February 28, 2026, the aggregate amount of infrastructure

improvement bonds outstanding was$74.4 million.

Standby Letters of Credit. At February 28, 2026, we provided

guarantees to certain counterparties in the form of standby

letters of credit in the amount of$345.6 million, with a weighted

average maturity of less thanone year. Standby letters of credit

commit us to make payment to the beneficiary if the guaranteed

party fails to fulfill its obligation under a contractual arrangement

with that beneficiary. Since commitments associated with these

collateral instruments may expire unused, the amount shown

does not necessarily reflect the actual future cash funding

requirement.

Other Guarantees. We are members of various exchanges and

clearing houses. In the normal course of business, we provide

guarantees to securities clearing houses and exchanges. These

guarantees generally are required under the standard

membership agreements, such that members are required to

guarantee the performance of other members. Additionally, if a

member becomes unable to satisfy its obligations to the clearing

house, other members would be required to meet these

shortfalls. To mitigate these performance risks, the exchanges

and clearing houses often require members to post collateral.

Our obligations under such guarantees could exceed the

collateral amounts posted. Our maximum potential liability under

these arrangements cannot be quantified; however, the potential

for us to be required to make payments under such guarantees is

deemed remote. Accordingly, no liability has been recognized for

these arrangements. Additionally, we provide certain

indemnifications in connection with third-party clearing and

execution arrangements whereby a third-party may clear and

settle transactions on behalf of our clients. These

indemnifications generally have standard contractual terms and

are entered into in the ordinary course of business. Our

obligations in respect of such transactions are secured by the

assets in our client’s account, as well as any proceeds received

from the transactions cleared and settled on behalf of our client.

However, we believe that it is unlikely we would have to make any

material payments under these arrangements and no material

liabilities related to these indemnifications have been recognized.

Note 19. Regulatory Requirements

Net Capital

Jefferies LLC is a broker-dealer registered with the SEC and a

member firm of the Financial Industry Regulatory Authority

(“FINRA”) and is subject to the SEC Uniform Net Capital Rule

(“Rule 15c3-1”), which requires the maintenance of minimum net

capital, and has elected to calculate minimum capital

requirements using the alternative method permitted by Rule

15c3-1 in calculating net capital. Jefferies LLC, as a dually-

registered U.S. broker-dealer and futures commission merchant

(“FCM”), is also subject to Regulation 1.17 of the Commodity

Futures Trading Commission (“CFTC”) under the Commodity

Exchange Act, which sets forth minimum financial requirements.

The minimum net capital requirement in determining excess net

capital for a dually registered U.S. broker-dealer and FCM is equal

to the greater of the requirement under Rule 15c3-1 or Regulation

1.17. FINRA is the designated examining authority for Jefferies

LLC and the National Futures Association (“NFA”) is the

designated self-regulatory organization (“DSRO”) for Jefferies

LLC as an FCM.

Jefferies Financial Services, Inc. (“JFSI”) is registered with the

SEC as a Security-Based Swap Dealer (“SBS Dealer”) and an OTC

Derivatives Dealer (“OTCDD”) subject to the SEC’s SBS dealer

regulatory rules and the SEC’s net capital requirements. JFSI is

also registered as a swap dealer with the CFTC and is subject to

the CFTC’s regulatory capital requirements pursuant to the

minimum financial requirements for swap dealers. Additionally,

as a registered member firm, JFSI is subject to the net capital

requirements of the NFA. The SEC is the designated examining

authority for JFSI in its capacity as an SBS Dealer and OTCDD,

while the NFA is the DSRO for JFSI, as a CFTC registered swap

dealer.

Certain non-U.S. subsidiaries are subject to capital adequacy

requirements as prescribed by the regulatory authorities in their

respective jurisdictions. This includes Jefferies International

Limited (“JIL”), which is subject to the regulatory supervision and

requirements of the Financial Conduct Authority in the U.K. and

Jefferies GmbH, which is subject to the regulatory supervision of

the German Federal Financial Supervisory Authority.

At February 28, 2026, net capital and excess net capital were as

(1)Represents an equivalent capital requirement in the respective jurisdiction.

At February 28, 2026, Jefferies LLC, JFSI, JIL and Jefferies GmbH

are in compliance with their applicable requirements.

The regulatory capital requirements referred to above may

restrict our ability to withdraw capital from our regulated

subsidiaries.

Customer Protection and Segregation Requirement

As a registered broker dealer that clears and carries customer

accounts, Jefferies LLC is subject to the customer protection

provisions under SEC Rule 15c3-3 and is required to compute a

reserve formula requirement for customer accounts and deposit

cash or qualified securities into a special reserve bank account

for the exclusive benefit of customers. At February 28, 2026,

Jefferies LLC had$1.02 billion in cash and qualified U.S.

Government securities on deposit in special reserve bank

accounts for the exclusive benefit of customers.

As a registered broker dealer that clears and carries proprietary

accounts of brokers or dealers (commonly referred to as “PAB”),

Jefferies LLC is also required to compute a reserve requirement

for PABs pursuant to SEC Rule 15c3-3. At February 28, 2026,

Jefferies LLC had$596.1 million in cash and qualified U.S.

Government securities in special reserve bank accounts for the

exclusive benefit of PABs.

The qualified securities meeting the SEC Rule 15c3-3 customer

and PAB requirements are included in Cash and securities

segregated and Securities purchased under agreements to resell.

JFSI is exempt from the CFTC and SEC segregation rules.

Note 20. Segment Reporting

We operate intwo reportable business segments: (1) Investment

Banking and Capital Markets and (2) Asset Management. The

Investment Banking and Capital Markets reportable business

segment includes our capital markets activities and investment

banking business, which is composed of financial advisory and

underwriting activities. The Investment Banking and Capital

Markets reportable business segment provides the sales, trading,

origination and advisory effort for various fixed income, equity

and advisory products and services. The Asset Management

reportable business segment provides investment management

services to investors globally and invests capital in hedge funds,

separately managed accounts and third-party asset managers.

Our reportable business segment information is prepared using

the following methodologies:

•Net revenues, expenses and income (loss) from equity method

investments directly associated with each reportable business

segment are included in determining earnings (losses) from

continuing operations before income taxes.

•Net revenues and expenses not directly associated with

specific reportable business segments are allocated based on

the most relevant measures applicable, including each

reportable business segment’s net revenues, headcount and

other factors.

•Reportable business segment assets include an allocation of

indirect corporate assets that have been fully allocated to our

reportable business segments, generally based on each

reportable business segment’s capital utilization.

Net revenues presented for our Investment Banking and Capital

Markets reportable segment include allocations of interest

income and interest expense as we assess the profitability of

these businesses inclusive of the net interest revenue or expense

associated with the respective activities, including the net

interest cost of allocated long-term debt, which is a function of

the mix of each business's associated assets and liabilities and

the related funding costs.

Our Chief Executive Officer and President serve collectively as

our chief operating decision maker (“CODM”). In this capacity, the

CODM evaluates the performance of each business segment and

allocates resources based on a variety of strategic and financial

considerations. These considerations include measures of

segment results and profitability, including net revenues and

earnings before income taxes, which are calculated in

accordance with U.S. GAAP and align with the amounts reported

in our Consolidated Statements of Earnings. The CODM regularly

reviews results and profitability measures to monitor budget

versus actual results. Furthermore, the ongoing monitoring of

budget versus actual results is used to assess the performance

of each reportable business segment and significantly influences

decisions about allocating resources.

Summary of our results by reportable business segment:

(1)Includes total net earnings related to equity method investees of$20.3 million

and$4.7 million, respectively.

(2)Includes total net earnings (losses) related to equity method investees of$4.2

million and$2.4 million, respectively.

(3)Primarily consists of underwriting costs, occupancy and equipment rental,

professional services, and depreciation and amortization.

(4)Includes depreciation and amortization of$33.5 million and$9.9 million,

(5)Includes depreciation and amortization of$23.4 million and$21.1 million,

(6)Consists of earnings before income taxes of$80.0 million and$13.3 million,

respectively, related to asset management fees and investment return and

consists of losses before income taxes of$119.6 million and$31.5 million,

respectively, related to Other investments.

(7)Includes losses before income taxes related to non-controlling interests of

$15.8 million and$7.0 million, respectively.

Reconciliation of Reportable Segment Information:

Assets by reportable business segment:

Net Revenues by Geographic Region

Net revenues for the Investment Banking and Capital Markets

reportable business segment are recorded in the geographic

region in which the position was risk-managed or, in the case of

investment banking, in which the senior coverage banker is

located. For the Asset Management reportable business

segment, net revenues are allocated according to the location of

the investment advisor or the location of the invested capital.

(1)Primarily relates to U.S. results.

(2)Primarily relates to U.K. results.

Note 21. Related Party Transactions

Officers, Directors and Employees

The following sets forth information regarding related party

transactions with our officers, directors and employees:

•At February 28, 2026 and November 30, 2025, we had$16.7

million and$19.2 million, respectively, of loans, net of

allowance, outstanding to certain of our officers and

employees (none of whom are executive officers or directors)

that are included in Other assets.

•Receivables from and payables to customers include balances

arising from officers’, directors’ and employees’ individual

security transactions. These transactions are subject to the

same regulations as all customer transactions and are

provided on substantially the same terms.

•Two of our directors and certain of our officers have total

investments in entities managed by us of approximately

$10.5 million and$10.4 million at February 28, 2026 and

November 30, 2025, respectively.

SMBC

We have a strategic alliance with Sumitomo Mitsui Financial

Group, Inc., Sumitomo Mitsui Banking Corporation (“SMBC”) and

SMBC Nikko Securities Inc. (together referred to as “SMBC

Group”) to collaborate on corporate and investment banking

business opportunities as well as opportunities related to equity

sales, trading and research.

The following tables summarize balances with SMBC as reported

in our Consolidated Statements of Financial Condition and

Consolidated Statements of Earnings. In addition, the synergies

and value creation resulting from our strategic alliance with

SMBC generate additive benefits for us, which are not necessarily

reflected by the activity presented in the following tables.

(1)We have credit facilities with SMBC totaling$1.15 billion with interest rates

based on various benchmark rates and associated spreads.

(1)Primarily represents net gains (losses) on interest rate derivatives executed

with SMBC.

Other Related Party Transactions

We have other related party transactions with equity method

investees. Refer to Note 10, Investments for further information.