CPI Card Group Inc. Fair Value Disclosure
7. Fair Value of Financial Instruments
Fair value is defined as 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 (exit price). In determining fair value, the Company utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:
| ● | Level 1 — Valuations based on unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. |
| ● | Level 2 — Observable inputs other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term for the assets or liabilities. |
| ● | Level 3 — Valuations based on unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. |
The Company’s financial assets and liabilities that are not required to be re-measured at fair value in the consolidated balance sheets were as follows:
Carrying | Fair Value Measurement at | ||||||||||||||
Value as of | Fair Value as of | December 31, 2025 | |||||||||||||
December 31, | December 31, | (Using Fair Value Hierarchy) | |||||||||||||
| 2025 | | 2025 | | Level 1 | | Level 2 | | Level 3 | ||||||
Liabilities: | |||||||||||||||
Senior Notes |
| $ | 265,000 |
| $ | 281,616 | $ | — |
| $ | 281,616 | $ | — | ||
ABL Revolver | $ | 25,000 | $ | 25,000 | $ | — | $ | 25,000 | $ | — | |||||
Carrying | Fair Value Measurement at | ||||||||||||||
Value as of | Fair Value as of | December 31, 2024 | |||||||||||||
December 31, | December 31, | (Using Fair Value Hierarchy) | |||||||||||||
| 2024 | | 2024 | | Level 1 | | Level 2 | | Level 3 | ||||||
Liabilities: | |||||||||||||||
Senior Notes | $ | 285,000 |
| $ | 304,571 | $ | — |
| $ | 304,571 | $ | — | |||
The aggregate fair value of the Company’s Senior Notes (defined in Note 10, “Long-Term Debt”) was based on quoted prices for identical or similar liabilities in markets that are not active and, as a result, they are classified as Level 2 inputs. The fair value measurement associated with the ABL Revolver approximates its carrying value as of December 31, 2025, given the applicable variable interest rates.
The carrying amounts for cash and cash equivalents, accounts receivable and accounts payable each approximate fair value due to their short-term nature.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 5, 2026 | Showing above |
| 2024 | Mar 4, 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.