Investment Securities

12 Months Ended

May 31, 2026


NOTE 3—INVESTMENT SECURITIES

Our investment securities portfolio consists of debt securities classified as trading and equity securities with readily determinable fair values. We therefore record changes in the fair value of our debt and equity securities in earnings and report these unrealized changes together with realized gains and losses from the sale of securities as a component of non-interest income in our consolidated statements of operations. For additional information on our investments in debt securities, see “Note 1—Summary of Significant Accounting Policies.”

Debt Securities

Our debt securities portfolio consists of corporate debt securities, municipality debt securities, commercial mortgage-backed securities (“MBS”) and other asset-backed securities (“ABS”). Pursuant to our investment policy guidelines, all fixed-income debt securities, at the time of purchase, must be rated at least investment grade based on external credit ratings from at least two of the leading global credit rating agencies, when available, or the corresponding equivalent, when not available. Securities rated investment grade, that is those rated Baa3 or higher by Moody’s Investors Service (“Moody’s”) or BBB- or higher by S&P Global Inc. (“S&P”) or BBB- or higher by Fitch Ratings Inc. (“Fitch”), are generally considered by the rating agencies to be of lower credit risk than non-investment-grade securities.

The following table presents the composition of our investment debt securities portfolio and the fair value as of May 31, 2026 and 2025.

Table 3.1: Investments in Debt Securities, at Fair Value


	May 31,
(Dollars in thousands)	2026		2025
Debt securities, at fair value:



Corporate debt securities	$	30,765	$	107,957

Commercial agency MBS(1)	379		525


U.S. state and municipality debt securities	—		1,049

Other ABS(2)	—		4,132
Total debt securities trading, at fair value	$	31,144	$	113,663

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(1)Consists of securities backed by the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”).

(2)Consists primarily of securities backed by auto lease loans, equipment-backed loans, auto loans and credit card loans.

We recognized net unrealized gains of $1 million, $9 million and $15 million on our debt securities for FY2026, FY2025 and FY2024, respectively.

We sold $19 million and $14 million in principal amount of debt securities during FY2026 and FY2025, respectively, and recorded an immaterial amount of realized gains on the sale of these securities in both periods. We did not sell any debt securities during FY2024.

Equity Securities

Our equity securities consisted of the Federal Agricultural Mortgage Corporation (“Farmer Mac”) Class A common stock recorded at fair value of $11 million as of both May 31, 2026 and 2025.

We recognized net unrealized losses on our equity securities of less than $1 million and $1 million for FY2026 and FY2025, respectively, and net unrealized gains of $1 million for FY2024. These unrealized amounts are reported as a component of non-interest income in our consolidated statements of operations.