Credit Losses on Financial Assets Measured at Amortized Cost

3 Months Ended

Feb. 28, 2025

Credit Loss [Abstract]

Credit Losses on Financial Assets Measured at Amortized Cost

Note 12. 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:

	Three Months Ended
$ in thousands	February 28, 2025	February 29, 2024
Beginning balance .............................................	$5,277	$6,306
Bad debt expense ..............................................	1,347	1,011
Charge-offs .........................................................	(3,076)	(2,500)
Recoveries collected .........................................	(1,502)	(1,854)
Ending balance (1) .............................................	$2,046	$2,963

(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. During the three months

ended February 29, 2024, we recognized bad debt expense of

$27.0 million related to receivables associated with our asset

management arrangements with Weiss Multi-Strategy Advisers.