Note 2 - Fair Value Measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

All of our financial instruments are recognized in our consolidated balance sheets. Carrying values approximate fair value of most financial assets and liabilities. Investments and restricted cash and investments are recorded at market value. The interest rates on our investments approximate current market rates for these types of investments.

In determining the fair value of our financial assets, the Company predominantly uses the market approach. In determining the fair value of all its corporate bonds, mortgage-backed securities, U.S. treasuries, U.S. government agency securities, mutual funds, money market funds, asset-backed securities, and emerging markets, the Company utilizes non-binding quotes provided by our investment brokers.

Factors used in determining the fair value of our financial assets and liabilities are summarized into three levels as established in the fair value hierarchy framework. The three levels of the fair value hierarchy are described below.

Level 1 – Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets.

Level 2 – Inputs to the valuation methodology include:

•

Quoted prices for similar assets or liabilities in active markets;

•

Quoted prices for identical or similar assets or liabilities in inactive markets;

•

Inputs other than quoted prices that are observable for the asset or liability;

•

Inputs that are derived principally from or corroborated by observable market data by correlation or other means.

Level 3 – Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

In determining the fair value measurement of our financial assets, the fair value measurement level within the hierarchy is based on the lowest level input and is applied to each financial asset. Valuation techniques are used to maximize the use of observable inputs and minimize the use of unobservable inputs.

The following table summarizes the Company’s investments at December 31, 2025 and 2024 measured at fair value on a recurring basis (in thousands):


	December 31, 2025									December 31, 2024
			Gross		Gross							Gross		Gross
			Unrealized		Unrealized			Recorded				Unrealized		Unrealized			Recorded
	Cost		Gains		Losses			Basis		Cost		Gains		Losses			Basis
Current:
Cash equivalents:
Money market funds	$	44,394	$	—	$	—		$	44,394	$	26,661	$	—	$	—		$	26,661
Total cash equivalents		44,394		—		—			44,394		26,661		—		—			26,661
Investments:
Corporate bonds		27,827		5		(1,238	)		26,594		27,954		3		(2,365	)		25,592
U.S. treasuries		14,261		—		(634	)		13,627		12,460		—		(1,140	)		11,320
Mortgage-backed securities		11,174		—		(2,026	)		9,148		12,128		—		(2,592	)		9,536
Asset-backed securities		7,564		17		(63	)		7,518		7,610		12		(109	)		7,513
U.S. government agency securities		5,309		—		(42	)		5,267		12,734		—		(203	)		12,531
Total current investments		66,135		22		(4,003	)		62,154		72,886		15		(6,409	)		66,492
Restricted cash and investments (1):
Corporate bonds		79,178		8		(3,876	)		75,310		100,030		16		(7,302	)		92,744
U.S. treasuries		51,809		—		(3,767	)		48,042		54,900		—		(6,348	)		48,552
Mortgage-backed securities		32,560		10		(4,000	)		28,570		40,858		10		(5,674	)		35,194
Mutual funds		13,602		—		—			13,602		10,961		—		—			10,961
U.S. government agency securities		5,947		—		(336	)		5,611		16,785		—		(914	)		15,871
Asset-backed securities		980		11		—			991		1,666		6		(1	)		1,671
Money market funds		486		—		—			486		216		—		—			216
Emerging markets		—		—		—			—		200		1		—			201
Total restricted cash and investments		184,562		29		(11,979	)		172,612		225,616		33		(20,239	)		205,410
Total investments	$	295,091	$	51	$	(15,982	)	$	279,160	$	325,163	$	48	$	(26,648	)	$	298,563

(1) Included in restricted cash and investments within the consolidated balance sheets as of December 31, 2025 and 2024 is restricted cash of $30.8 million and $26.7 million, respectively, which is excluded from the table above. Restricted cash and investments are classified as current and noncurrent on the balance sheet based on the nature of the restriction.

The following table summarizes the Company's investments at December 31, 2025 and 2024 measured at fair value on a recurring basis by fair value hierarchy level (in thousands):


	December 31, 2025										December 31, 2024
	Total										Total
	Recorded										Recorded
	Basis		Level 1		Level 2		Level 3		Other (1)		Basis		Level 1		Level 2		Level 3		Other (1)
Cash equivalents:
Money market funds	$	44,394	$	—	$	—	$	—	$	44,394	$	26,661	$	—	$	—	$	—	$	26,661
Investments:		—
Corporate bonds		26,594		—		26,594		—		—		25,592		—		25,592		—		—
U.S. treasuries		13,627		—		13,627		—		—		11,320		—		11,320		—		—
Mortgage-backed securities		9,148		—		9,148		—		—		9,536		—		9,536		—		—
Asset-backed securities		7,518		—		7,518		—		—		7,513		—		7,513		—		—
U.S. government agency securities		5,267		—		5,267		—		—		12,531		—		12,531		—		—
Restricted cash and investments:
Corporate bonds		75,310		—		75,310		—		—		92,744		—		92,744		—		—
U.S. treasuries		48,042		—		48,042		—		—		48,552		—		48,552		—		—
Mortgage-backed securities		28,570		—		28,570		—		—		35,194		—		35,194		—		—
Mutual funds		13,602		13,602		—		—		—		10,961		10,961		—		—		—
U.S. government agency securities		5,611		—		5,611		—		—		15,871		—		15,871		—		—
Asset-backed securities		991		—		991		—		—		1,671		—		1,671		—		—
Money market funds		486		—		—		—		486		216		—		—		—		216
Emerging markets		—		—		—		—		—		201		—		201		—		—
Total investments	$	279,160	$	13,602	$	220,678	$	—	$	44,880	$	298,563	$	10,961	$	260,725	$	—	$	26,877

(1) Investments in money market funds measured at fair value using the net asset value per share practical expedient are not subject to hierarchy level classification disclosure. The Company invests in money market funds that seek to maintain a stable net asset value. These investments include commingled funds that comprise high-quality short-term securities representing liquid debt and monetary instruments where the redemption value is likely to be the fair value. Redemption is permitted daily without written notice.

The following table summarizes the contractual maturities of the Company’s available for sale securities at December 31, 2025 and 2024. Actual maturities may differ from contractual maturities because borrowers may have the right to prepay obligations with or without prepayment penalties. The table also includes money market funds, which are classified as cash and cash equivalents on the Company’s consolidated balance sheets.


	December 31, 2025
(In thousands)	Less than 1 Year		Between 1 to 5 Years		Between 5 to 10 Years		After 10 Years		Total
Corporate bonds	$	11,486	$	85,088	$	5,330	$	—	$	101,904
U.S. treasuries		3,237		49,405		9,027		—		61,669
Money market funds		44,880		—		—		—		44,880
U.S. government agency securities		2,096		8,782		—		—		10,878
Asset-backed securities		—		578		151		7,780		8,509
Total	$	61,699	$	143,853	$	14,508	$	7,780	$	227,840

	December 31, 2024
(In thousands)	Less than 1 Year		Between 1 to 5 Years		Between 5 to 10 Years		After 10 Years		Total
Corporate bonds	$	18,815	$	76,574	$	22,947	$	—	$	118,336
U.S. treasuries		497		42,333		17,042		—		59,872
U.S. government agency securities		8,014		19,333		1,055		—		28,402
Money market funds		26,877		—		—		—		26,877
Asset-backed securities		—		1,228		6,654		1,302		9,184
Emerging markets		—		—		201		—		201
Total	$	54,203	$	139,468	$	47,899	$	1,302	$	242,872

The average contractual maturity of mortgage-backed securities, which are excluded from the table above, was 20 years and 21 years as of December 31, 2025 and 2024, respectively.

The fair values and gross unrealized losses of the Company’s available for sale securities that were in an unrealized loss position as of December 31, 2025 and 2024, aggregated by investment category and length of time that individual securities have been in a continuous loss position, were as follows (in thousands):


	December 31, 2025
	Less than 12 months					12 months or longer					Total
			Gross					Gross					Gross
	Recorded		Unrealized			Recorded		Unrealized			Recorded		Unrealized
	Basis		Losses			Basis		Losses			Basis		Losses
Investments:
Corporate bonds	$	—	$	—		$	26,394	$	(1,238	)	$	26,394	$	(1,238	)
U.S. treasuries		—		—			13,627		(634	)		13,627		(634	)
Mortgage-backed securities		—		—			9,148		(2,026	)		9,148		(2,026	)
U.S. government agency securities		—		—			5,267		(42	)		5,267		(42	)
Asset-backed securities		—		—			1,302		(63	)		1,302		(63	)
Total investments		—		—			55,738		(4,003	)		55,738		(4,003	)
Restricted investments:
Corporate bonds		100		—			73,745		(3,876	)		73,845		(3,876	)
U.S. treasuries		729		(1	)		47,313		(3,766	)		48,042		(3,767	)
Mortgage-backed securities		—		—			26,916		(4,000	)		26,916		(4,000	)
U.S. government agency securities		—		—			5,611		(336	)		5,611		(336	)
Total restricted investments		829		(1	)		153,585		(11,978	)		154,414		(11,979	)
Total investments and restricted investments	$	829	$	(1	)	$	209,323	$	(15,981	)	$	210,152	$	(15,982	)

	December 31, 2024
	Less than 12 months					12 months or longer					Total
			Gross					Gross					Gross
	Recorded		Unrealized			Recorded		Unrealized			Recorded		Unrealized
	Basis		Losses			Basis		Losses			Basis		Losses
Investments:
Corporate bonds	$	20	$	—		$	25,377	$	(2,365	)	$	25,397	$	(2,365	)
U.S. government agency securities		—		—			12,531		(203	)		12,531		(203	)
U.S. treasuries		—		—			11,320		(1,140	)		11,320		(1,140	)
Mortgage-backed securities		—		—			9,536		(2,592	)		9,536		(2,592	)
Asset-backed securities		—		—			1,301		(109	)		1,301		(109	)
Total investments		20		—			60,065		(6,409	)		60,085		(6,409	)
Restricted investments:
Corporate bonds		11,142		(15	)		71,716		(7,287	)		82,858		(7,302	)
U.S. treasuries		1,399		(29	)		46,656		(6,319	)		48,055		(6,348	)
Mortgage-backed securities		3,360		(37	)		29,877		(5,637	)		33,237		(5,674	)
U.S. government agency securities		—		—			15,871		(914	)		15,871		(914	)
Asset-backed securities		443		(1	)		—		—			443		(1	)
Total restricted investments		16,344		(82	)		164,120		(20,157	)		180,464		(20,239	)
Total investments and restricted investments	$	16,364	$	(82	)	$	224,185	$	(26,566	)	$	240,549	$	(26,648	)

We have determined that the gross unrealized losses on our investments as of December 31, 2025 and 2024 were temporary in nature. The decline in fair value was due to changes in market interest rates, rather than credit losses.

Historical Timeline

Fiscal Year	Filed
2025	Feb 26, 2026	Showing above
2024	Feb 28, 2025

2023	Mar 1, 2024

2022	Mar 6, 2023

2021	Mar 7, 2022

2020	Mar 8, 2021

2019	Mar 3, 2020

2018	Mar 5, 2019

2017	Mar 6, 2018

2016	Mar 8, 2017

2015	May 26, 2016

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

BARRETT BUSINESS SERVICES INC Fair Value Disclosure

Historical Timeline

About Fair Value Disclosures

Other Available Disclosures