Fair Value Measurement

9 Months Ended

Feb. 28, 2026


NOTE 12—FAIR VALUE MEASUREMENT

Fair value, also referred to as an exit price, is defined as the price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. The fair value accounting guidance provides a three-level fair value hierarchy for classifying financial instruments. This hierarchy is based on the markets in which the assets or liabilities trade and whether the inputs to the valuation techniques used to measure fair value are observable or unobservable. The fair value measurement of a financial asset or liability is assigned a level based on the lowest level of any input that is significant to the fair value measurement in its entirety. The levels, in priority order based on the extent to which observable inputs are available to measure fair value, are Level 1, Level 2 and Level 3. The accounting guidance for fair value measurements requires that we maximize the use of observable inputs and minimize the use of unobservable inputs in determining fair value.

The following table presents the carrying value and estimated fair value of all of our financial instruments, including those carried at amortized cost, as of February 28, 2026 and May 31, 2025. The table also displays the classification level within the fair value hierarchy based on the degree of observability of the inputs used in the valuation technique for estimating fair value.

Table 12.1: Fair Value of Financial Instruments


	February 28, 2026				Fair Value Measurement Level
(Dollars in thousands)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	240,687	$	240,687	$	240,687	$	—	$	—
Restricted cash	8,547		8,547		8,547		—		—

Equity securities, at fair value	10,228		10,228		10,228		—		—
Debt securities trading, at fair value	42,620		42,620		—		42,620		—

Deferred compensation investments	8,485		8,485		8,485		—		—
Loans to members, net	38,714,170		36,656,864		—		—		36,656,864
Accrued interest receivable	260,735		260,735		—		260,735		—
Derivative assets	418,984		418,984		—		418,984		—
Total financial assets	$	39,704,456	$	37,647,150	$	267,947	$	722,339	$	36,656,864

Liabilities:
Short-term borrowings	$	5,100,828	$	5,103,943	$	—	$	5,103,943	$	—
Long-term debt	28,908,515		28,736,396		—		19,378,581		9,357,815
Accrued interest payable	298,444		298,444		—		298,444		—
Guarantee liability	15,891		17,269		—		—		17,269
Derivative liabilities	48,156		48,156		—		48,156		—
Deferred compensation liability	8,485		8,485		8,485		—		—
Subordinated deferrable debt	1,209,713		1,229,487		238,050		991,437		—
Members’ subordinated certificates	1,127,906		1,127,906		—		—		1,127,906
Total financial liabilities	$	36,717,938	$	36,570,086	$	246,535	$	25,820,561	$	10,502,990


	May 31, 2025				Fair Value Measurement Level
(Dollars in thousands)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Assets:
Cash and cash equivalents	$	134,712	$	134,712	$	134,712	$	—	$	—
Restricted cash	8,410		8,410		8,410		—		—

Equity securities, at fair value	11,252		11,252		11,252		—		—
Debt securities trading, at fair value	113,663		113,663		—		113,663		—

Deferred compensation investments	8,019		8,019		8,019		—		—
Loans to members, net	37,039,363		34,113,178		—		—		34,113,178
Accrued interest receivable	270,222		270,222		—		270,222		—
Derivative assets	555,855		555,855		—		555,855		—
Total financial assets	$	38,141,496	$	35,215,311	$	162,393	$	939,740	$	34,113,178

Liabilities:
Short-term borrowings	$	5,091,416	$	5,094,451	$	—	$	5,094,451	$	—
Long-term debt	27,163,701		26,415,950		—		16,737,855		9,678,095
Accrued interest payable	294,917		294,917		—		294,917		—
Guarantee liability	14,396		15,321		—		—		15,321
Derivative liabilities	51,368		51,368		—		51,368		—
Deferred compensation liability	8,019		8,019		8,019		—		—
Subordinated deferrable debt	1,329,485		1,341,974		238,620		1,103,354		—
Members’ subordinated certificates	1,184,714		1,184,714		—		—		1,184,714
Total financial liabilities	$	35,138,016	$	34,406,714	$	246,639	$	23,281,945	$	10,878,130

For additional information regarding fair value measurements, the fair value hierarchy and a description of the methodologies we use to estimate fair value, see “Note 14—Fair Value Measurement” to the Consolidated Financial Statements in our 2025 Form 10-K.

Transfers Between Levels

We monitor the availability of observable market data to assess the appropriate classification of financial instruments within the fair value hierarchy and transfer between Level 1, Level 2, and Level 3 accordingly. Observable market data include but are not limited to quoted prices and market transactions. Changes in economic conditions or market liquidity generally will drive changes in availability of observable market data. Changes in availability of observable market data, which also may result in changes in the valuation technique used, are generally the cause of transfers between levels. We did not have any transfers into or out of Level 3 of the fair value hierarchy during YTD FY2026 or YTD FY2025.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the carrying value and fair value of financial instruments reported in our consolidated financial statements at fair value on a recurring basis as of February 28, 2026 and May 31, 2025, and the classification of the valuation technique within the fair value hierarchy. We did not have any assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs during YTD FY2026 or YTD FY2025.

Table 12.2: Assets and Liabilities Measured at Fair Value on a Recurring Basis


	February 28, 2026						May 31, 2025
(Dollars in thousands)	Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:
Equity securities, at fair value	$	10,228	$	—	$	10,228	$	11,252	$	—	$	11,252
Debt securities trading, at fair value	—		42,620		42,620		—		113,663		113,663
Deferred compensation investments	8,485		—		8,485		8,019		—		8,019
Derivative assets	—		418,984		418,984		—		555,855		555,855

Liabilities:
Derivative liabilities	$	—	$	48,156	$	48,156	$	—	$	51,368	$	51,368
Deferred compensation liability	8,485		—		8,485		8,019		—		8,019

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

We may be required, from time to time, to measure certain assets and liabilities at fair value on a nonrecurring basis on our consolidated balance sheets. These assets and liabilities are not measured at fair value on an ongoing basis but are subject to fair value adjustments in certain circumstances, such as in the application of the lower of cost or fair value accounting or when we evaluate assets for impairment. We did not have any assets or liabilities measured at fair value on a nonrecurring basis during YTD FY2026 or YTD FY2025.