Beacon Financial CorpBBT
Beacon Financial Corp Fair Value Disclosure
Fair Value of Financial Instruments
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A description of the valuation methodologies used for assets and liabilities measured at fair value on a recurring and non-recurring basis, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. There were no changes in the valuation techniques used during 2025 and 2024.
Assets and Liabilities Recorded at Fair Value on a Recurring Basis
The following table set forth the carrying value of assets and liabilities measured at fair value on a recurring basis at December 31, 2025 and 2024:
| Carrying Value as of December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Investment securities available-for-sale: | |||||||||||||||||||||||
| GSE debentures | $ | — | $ | 173,677 | $ | — | $ | 173,677 | |||||||||||||||
| GSE CMOs | — | 496,570 | — | 496,570 | |||||||||||||||||||
| GSE MBSs | — | 325,745 | — | 325,745 | |||||||||||||||||||
| Municipal obligations | — | 221,604 | 18,612 | 240,216 | |||||||||||||||||||
| Corporate debt obligations | — | 36,667 | 3,356 | 40,023 | |||||||||||||||||||
| U.S. Treasury bonds | — | 412,037 | — | 412,037 | |||||||||||||||||||
| Foreign government obligations | — | 500 | — | 500 | |||||||||||||||||||
| Total investment securities available-for-sale | $ | — | $ | 1,666,800 | $ | 21,968 | $ | 1,688,768 | |||||||||||||||
| Assets: | |||||||||||||||||||||||
| Derivatives designated as hedging instruments: | |||||||||||||||||||||||
| Interest rate derivatives | $ | — | $ | 185 | $ | — | $ | 185 | |||||||||||||||
| Loan level derivatives | — | 102,237 | — | 102,237 | |||||||||||||||||||
| Risk participation-out agreements | — | 532 | — | 532 | |||||||||||||||||||
| Foreign exchange contracts | — | 274 | — | 274 | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Interest rate derivatives | $ | — | $ | 179 | $ | — | $ | 179 | |||||||||||||||
| Loan level derivatives | — | 115,937 | — | 115,937 | |||||||||||||||||||
| Risk participation-in agreements | — | 139 | — | 139 | |||||||||||||||||||
| Foreign exchange contracts | — | 258 | — | 258 | |||||||||||||||||||
| Carrying Value as of December 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||
| Assets: | |||||||||||||||||||||||
| Investment securities available-for-sale: | |||||||||||||||||||||||
| GSE debentures | $ | — | $ | 176,294 | $ | — | $ | 176,294 | |||||||||||||||
| GSE CMOs | — | 55,543 | — | 55,543 | |||||||||||||||||||
| GSE MBSs | — | 148,285 | — | 148,285 | |||||||||||||||||||
| Municipal obligations | — | 3,198 | 17,056 | 20,254 | |||||||||||||||||||
| Corporate debt obligations | — | 9,853 | 2,434 | 12,287 | |||||||||||||||||||
| U.S. Treasury bonds | — | 481,872 | — | 481,872 | |||||||||||||||||||
| Foreign government obligations | — | 499 | — | 499 | |||||||||||||||||||
| Total investment securities available-for-sale | $ | — | $ | 875,544 | $ | 19,490 | $ | 895,034 | |||||||||||||||
| Interest rate derivatives | — | 18 | — | 18 | |||||||||||||||||||
| Loan level derivatives | — | 102,608 | — | 102,608 | |||||||||||||||||||
| Risk participation-out agreements | — | 495 | — | 495 | |||||||||||||||||||
| Foreign exchange contracts | — | 482 | — | 482 | |||||||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| Interest rate derivatives | $ | — | $ | 2,051 | $ | — | $ | 2,051 | |||||||||||||||
| Loan level derivatives | $ | — | $ | 102,608 | $ | — | $ | 102,608 | |||||||||||||||
| Risk participation-in agreements | — | 137 | — | 137 | |||||||||||||||||||
| Foreign exchange contracts | — | 459 | — | 459 | |||||||||||||||||||
Investment Securities Available-for-Sale
The fair value of investment securities is based principally on market prices and dealer quotes received from third-party and nationally-recognized pricing services for identical investment securities such as U.S. Treasury and agency securities. These prices are validated by comparing the primary pricing source with an alternative pricing source when available. When quoted market prices for identical securities are unavailable, the Company uses market prices provided by independent pricing services based on recent trading activity and other observable information, including but not limited to market interest-rate curves, referenced credit spreads and estimated prepayment speeds where applicable. These investments include GSE debentures, GSE mortgage-related securities, SBA commercial loan asset backed securities, corporate debt securities, municipal obligations and U.S. Treasury bonds, all of which are included in Level 2. As of December 31, 2025, certain corporate debt securities and municipal obligations were valued using pricing models included in Level 3.
Additionally, management reviews changes in fair value from period to period and performs testing to ensure that prices received from the third parties are consistent with management's expectation of the market. Changes in the prices obtained from the pricing service are analyzed from month to month, taking into consideration changes in market conditions including changes in mortgage spreads, changes in U.S. Treasury security yields and changes in generic pricing of 15-year and 30-year securities. Additional analysis may include a review of prices provided by other independent parties, a yield analysis, a review of average life changes using Bloomberg analytics and a review of historical pricing for a particular security.
Derivatives and Hedging Instruments
The fair value of interest rate derivatives designated as hedging instruments, loan level derivatives, risk participation agreements (RPA in/out), and foreign exchange contracts represent a Level 2 valuation and are based on settlement values adjusted for credit risks associated with the counterparties and the Company and observable market interest rate curves and foreign exchange rates where applicable. Credit risk adjustments consider factors such as the likelihood of default by the Company and its counterparties, its net exposures and remaining contractual life. To date, the Company has not realized any losses due to a counterparty's inability to pay any net uncollateralized position. Refer also to Note 16, "Derivatives and Hedging Activities."
There were no transfers between levels for assets and liabilities recorded at fair value on a recurring basis during 2024 or 2023.
The following tables summarize information about significant unobservable inputs related to the Company's categories of Level 3 financial assets and liabilities measured on a recurring basis.
| Quantitative Information About Level 3 Fair Value Measurements - Recurring Basis | |||||||||||||||||||||||||||||
| Financial Instrument | Estimated Fair Value | Valuation Technique(s) | Significant Unobservable Inputs | Range of Inputs | Weighted Average | ||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||
| December 31, 2025 | |||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||
| Municipal obligations | $ | 18,612 | Discounted Cash Flow | Discount Rate from Bloomberg BVAL | 0.00%-3.29% | 1.85 | % | ||||||||||||||||||||||
| Corporate debt obligations | 3,356 | Discounted Cash Flow | Discount Rate from Bloomberg BVAL | 0.00%-5.54% | 0.25 | % | |||||||||||||||||||||||
The following table summarizes the changes in estimated fair value for all assets and liabilities measured at estimated fair value on a recurring basis using significant unobservable inputs (Level 3).
| Changes in Estimated Fair Value of Level 3 Financial Assets and Liabilities - Recurring Basis | |||||||||||
| Twelve Months Ended December 31, 2025 | |||||||||||
| (In Thousands) | |||||||||||
| Municipal obligations | Corporate debt obligations | ||||||||||
| Beginning balance | $ | 17,056 | $ | 2,434 | |||||||
| Purchases | 2,841 | 9,159 | |||||||||
| Unrealized gains (losses) included in comprehensive income | 141 | 64 | |||||||||
| Transfer in | 6,441 | — | |||||||||
| Transfers out | — | (8,347) | |||||||||
| Sales | — | — | |||||||||
Maturities, calls, and paydowns (1) | (7,867) | 46 | |||||||||
| Ending balance | $ | 18,612 | $ | 3,356 | |||||||
(1) The $46 thousand includes amortization of purchase discount which exceeded maturities, calls and paydowns during the period resulting in an increase in balance.
Assets and Liabilities Recorded at Fair Value on a Non-Recurring Basis
Assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2025 and 2024 are summarized below:
| Carrying Value as of December 31, 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||
| Assets measured at fair value on a non-recurring basis: | |||||||||||||||||||||||
| Collateral-dependent impaired loans and leases | $ | — | $ | — | $ | 112,142 | $ | 112,142 | |||||||||||||||
| OREO | — | — | — | — | |||||||||||||||||||
| Repossessed assets | — | 2,591 | — | 2,591 | |||||||||||||||||||
| Total assets measured at fair value on a non-recurring basis | $ | — | $ | 2,591 | $ | 112,142 | $ | 114,733 | |||||||||||||||
| Carrying Value as of December 31, 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||
| Assets measured at fair value on a non-recurring basis: | |||||||||||||||||||||||
| Collateral-dependent impaired loans and leases | $ | — | $ | — | $ | 28,100 | $ | 28,100 | |||||||||||||||
| OREO | $ | — | $ | — | $ | 700 | $ | 700 | |||||||||||||||
| Repossessed assets | — | 403 | — | 403 | |||||||||||||||||||
| Total assets measured at fair value on a non-recurring basis | $ | — | $ | 403 | $ | 28,800 | $ | 29,203 | |||||||||||||||
Collateral-Dependent Impaired Loans and Leases
For nonperforming loans and leases where the credit quality of the borrower has deteriorated significantly, fair values of the underlying collateral were estimated using purchase and sales agreements (Level 2), or comparable sales or recent appraisals (Level 3), adjusted for selling costs and other expenses.
Other Real Estate Owned
The Company records OREO at the lower of cost or fair value. In estimating fair value, the Company utilizes purchase and sales agreements (Level 2) or comparable sales, recent appraisals or cash flows discounted at an interest rate commensurate with the risk associated with these cash flows (Level 3), adjusted for selling costs and other expenses.
Repossessed Assets
Repossessed assets are carried at estimated fair value less costs to sell based on auction pricing (Level 2).
The table below presents quantitative information about significant unobservable inputs (Level 3) for assets measured at fair value on a recurring basis at the dates indicated.
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| Fair Value | Valuation Technique | ||||||||||||||||
| At December 31, 2025 | At December 31, 2024 | ||||||||||||||||
| (Dollars in Thousands) | |||||||||||||||||
| Collateral-dependent impaired loans and leases | $ | 112,142 | $ | 28,100 | Appraisal of collateral (1) | ||||||||||||
| Other real estate owned | — | 700 | Appraisal of collateral (1) | ||||||||||||||
(1) Fair value is generally determined through independent appraisals of the underlying collateral. The Company may also use another available source of collateral assessment to determine a reasonable estimate of the fair value of the collateral. Appraisals may be adjusted by management for qualitative factors such as economic factors and estimated liquidation expenses. The range of the unobservable inputs used may vary but is generally 0% - 10% on the discount for costs to sell and 0% - 15% on appraisal adjustments.
Summary of Estimated Fair Values of Financial Instruments
The following table presents the carrying amount, estimated fair value, and placement in the fair value hierarchy of the Company's financial instruments at the dates indicated. This table excludes financial instruments for which the carrying amount approximates fair value. Financial assets for which the fair value approximates carrying value include cash and cash equivalents, restricted equity securities, and accrued interest receivable. Financial liabilities for which the fair value approximates carrying value include non-maturity deposits, short-term borrowings, and accrued interest payable. There were no transfers between levels during 2025.
| Fair Value Measurements | |||||||||||||||||||||||||||||
| Carrying Value | Estimated Fair Value | Level 1 Inputs | Level 2 Inputs | Level 3 Inputs | |||||||||||||||||||||||||
| (In Thousands) | |||||||||||||||||||||||||||||
| At December 31, 2025 | |||||||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||
| Loans and leases, net | $ | 17,776,713 | $ | 17,672,269 | $ | — | $ | — | $ | 17,672,269 | |||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
| Certificates of deposits and brokered deposits | 4,566,899 | 4,566,386 | — | 4,566,386 | — | ||||||||||||||||||||||||
| Borrowed funds | 788,360 | 796,543 | — | 796,543 | — | ||||||||||||||||||||||||
| At December 31, 2024 | |||||||||||||||||||||||||||||
| Financial assets: | |||||||||||||||||||||||||||||
| Loans and leases, net | $ | 9,654,205 | $ | 9,298,057 | $ | — | $ | — | $ | 9,298,057 | |||||||||||||||||||
| Financial liabilities: | |||||||||||||||||||||||||||||
| Certificates of deposits and brokered deposits | 2,754,397 | 2,749,092 | — | 2,749,092 | — | ||||||||||||||||||||||||
| Borrowed funds | 1,519,846 | 1,547,183 | — | 1,547,183 | — | ||||||||||||||||||||||||
Loans and Leases
The fair values of performing loans and leases was estimated by segregating the portfolio into its primary loan and lease categories—commercial real estate mortgage, multi-family mortgage, construction, commercial, equipment financing, condominium association, residential mortgage, home equity and other consumer. These categories were further disaggregated based upon significant financial characteristics such as type of interest rate (fixed / variable) and payment status (current / past-due). Using the exit price valuation method, the Company discounts the contractual cash flows for each loan category using interest rates currently being offered for loans with similar terms to borrowers of similar quality and incorporates estimates of future loan prepayments.
Deposits
The fair values of deposit liabilities with no stated maturity (demand, NOW, savings and money market savings accounts) are equal to the carrying amounts payable on demand. The fair value of certificates of deposit represents contractual cash flows discounted using interest rates currently offered on deposits with similar characteristics and remaining maturities. The fair value estimates for deposits do not include the benefit that results from the low-cost funding provided by the Company's core deposit relationships (deposit-based intangibles).
Borrowed Funds
The fair value of federal funds purchased is equal to the amount borrowed. The fair value of FHLB advances and repurchase agreements represents contractual repayments discounted using interest rates currently available for borrowings with similar characteristics and remaining maturities. The fair values reported for retail repurchase agreements are based on the discounted value of contractual cash flows. The discount rates used are representative of approximate rates currently offered on borrowings with similar characteristics and maturities. The fair values reported for subordinated deferrable interest debentures are based on the discounted value of contractual cash flows. The discount rates used are representative of approximate rates currently offered on instruments with similar terms and maturities.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 2, 2026 | Showing above |
| 2024 | Mar 3, 2025 | |
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.