Fair Value Measurements (Tables)

6 Months Ended

Sep. 29, 2018

Fair Value Transfer, Policy [Policy Text Block]

The Company's policy regarding the recording of transfers between levels is to record any such transfers at the end of the reporting period.

Transfers and Servicing of Financial Assets, Servicing of Financial Assets, Policy [Policy Text Block]

Mortgage Servicing. Mortgage Servicing Rights ("MSRs") are the rights to receive a portion of the interest coupon and fees collected from the mortgagors for performing specified mortgage servicing activities, which consist of collecting loan payments, remitting principal and interest payments to investors, managing escrow accounts, performing loss mitigation activities on behalf of investors and otherwise administering the loan servicing portfolio. MSRs are initially recorded at fair value. Changes in fair value subsequent to the initial capitalization are recorded in the Company's results of operations. The Company recognizes MSRs on all loans sold to investors that meet the requirements for sale accounting and for which servicing rights are retained.

The Company applies fair value accounting to MSRs, with all changes in fair value recorded to Net revenue in accordance with ASC 860-50, Servicing Assets and Liabilities. The fair value of MSRs is based on the present value of the expected future cash flows related to servicing these loans. The revenue components of the cash flows are servicing fees, interest earned on custodial accounts and other ancillary income. The expense components include operating costs related to servicing the loans (including delinquency and foreclosure costs) and interest expenses on servicer advances that the Company believes are consistent with the assumptions major market participants use in valuing MSRs. The expected cash flows are primarily impacted by prepayment estimates, delinquencies and market discounts. Generally, the value of MSRs is expected to increase when interest rates rise and decrease when interest rates decline, due to the effect those changes in interest rates have on prepayment estimates.

Summary of the Fair Value and Carrying Value of Financial Instruments

The book value and estimated fair value of the Company's financial instruments are as follows (in thousands):



	September 29, 2018						March 31, 2018
	Book Value			Estimated Fair Value			Book Value			Estimated Fair Value
Available-for-sale debt securities (1)	$	14,900		$	14,900		$	16,181		$	16,181
Marketable equity securities (1)	12,409			12,409			10,405			10,405
Non-marketable equity investments (2)	19,302			19,302			18,853			18,853
Consumer loans receivable (3)	93,348			107,833			94,951			113,277
Interest rate lock commitment derivatives (4)	(1		)	(1		)	(12		)	(12		)
Forward loan sale commitment derivatives (4)	(88		)	(88		)	26			26
Commercial loans receivable (5)	33,829			31,047			16,601			16,972
Securitized financings and other (6)	(56,128		)	(60,159		)	(59,812		)	(64,509		)
Mortgage servicing rights (7)	1,519			1,519			1,410			1,410


(1)	For Level 1 classified securities, the fair value is based on quoted market prices. The fair value of Level 2 securities is based on other inputs, as further described below.


(2)	The fair value approximates book value based on the non-marketable nature of the investments.

(3)

Includes consumer loans receivable held for investment, held for sale and construction advances. The fair value of the loans held for investment is based on the discounted value of the remaining principal and interest cash flows. The fair value of the loans held for sale are estimated based on recent GSE mortgage-backed bond prices. The fair value of the construction advances approximates book value and the sales price of these loans.


(4)	The fair values are based on changes in GSE mortgage-backed bond prices and, additionally for IRLCs, pull through rates.


(5)	The fair value is estimated using market interest rates of comparable loans.


(6)	The fair value is estimated using recent public transactions of similar asset-backed securities.


(7)	The fair value of the mortgage servicing rights is based on the present value of expected net cash flows related to servicing these loans.

Fair Value Measurement, Policy [Policy Text Block]

In accordance with ASC 820, Fair Value Measurements and Disclosures ("ASC 820"), fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:



Level 1 –	Quoted prices in active markets for identical assets or liabilities.
Level 2 –	Observable inputs other than Level 1 prices, such as quoted prices for similar assets or 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 of the assets or liabilities.
Level 3 –	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company utilizes the market approach to measure fair value for its financial assets and liabilities. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

When the Company uses observable market prices for identical securities that are traded in less active markets, it classifies such securities as Level 2. When observable market prices for identical securities are not available, the Company prices its marketable debt instruments using non-binding market consensus prices that are corroborated with observable market data; quoted market prices for similar instruments; or pricing models, such as a discounted cash flow model, with all significant inputs derived from or corroborated with observable market data. Non-binding market consensus prices are based on the proprietary valuation models of pricing providers or brokers. These valuation models incorporate a number of inputs, including non-binding and binding broker quotes; observable market prices for identical or similar securities; and the internal assumptions of pricing providers or brokers that use observable market inputs and, to a lesser degree, unobservable market inputs.

Summary of Assets Measured at Fair Value on a Recurring Basis

Financial instruments measured at fair value on a recurring basis are summarized below (in thousands):



	September 29, 2018
	Total			Level 1		Level 2		Level 3
Securities issued by the U.S Treasury and Government (1)	$	290		$	—	$	290	$	—
Mortgage-backed securities (1)	7,507			—		7,507		—
Securities issued by states and political subdivisions (1)	5,481			—		5,481		—
Corporate debt securities (1)	1,622			—		1,622		—
Marketable equity securities (2)	12,409			12,409		—		—
Interest rate lock commitment derivatives (3)	(1		)	—		—		(1		)
Forward loan sale commitment derivatives (3)	(88		)	—		—		(88		)
Mortgage servicing rights (4)	1,519			—		—		1,519


(1)	Unrealized gains or losses on investments are recorded in accumulated other comprehensive income (loss) at each measurement date.


(2)	Unrealized gains or losses on investments are recorded in earnings at each measurement date.


(3)	Gains or losses on derivatives are recognized in current period earnings through cost of sales.


(4)	Changes in the fair value of mortgage servicing rights are recognized in the current period earnings through Net revenue.

Summary of Assets and Liabilities Measured at Fair Value for Disclosure

Financial instruments for which fair value is disclosed but not required to be recognized in the balance sheet on a recurring basis are summarized below (in thousands):



	September 29, 2018
	Total			Level 1		Level 2			Level 3
Loans held for investment	$	83,139		$	—	$	—		$	83,139
Loans held for sale	13,693			—		—			13,693
Loans held—construction advances	11,001			—		—			11,001
Commercial loans receivable	31,047			—		—			31,047
Securitized financings and other	(60,159		)	—		(60,159		)	—
Non-marketable equity investments	19,302			—		—			19,302

Assumptions for Mortgage Servicing Rights



	September 29, 2018			March 31, 2018
Number of loans serviced with MSRs	4,456			4,346
Weighted average servicing fee (basis points)	31.96			32.03
Capitalized servicing multiple	88.17		%	84.76		%
Capitalized servicing rate (basis points)	28.18			27.15
Serviced portfolio with MSRs (in thousands)	$	538,920		$	519,167
Mortgage servicing rights (in thousands)	$	1,519		$	1,410

- Definition

Disclosure of accounting policy for servicing assets and liabilities including, but not necessarily limited to: (a) how a servicing asset or servicing liability is initially recognized and measured, (b) management's basis for determining its classes of servicing assets and servicing liabilities, (c) where contractually specified fees, late fees or ancillary fees are reported in the statement of income, (d) how the entity subsequently measures each class of servicing assets and servicing liabilities (that is, by using the amortization method or fair value method), and the methodology and significant assumptions used to value such servicing, (e) for those classes subsequently measured using the amortization method, where changes in the carrying amount are reported in the statement of income and how such servicing assets and liabilities are evaluated for impairment, and (f) for those classes subsequently measured at fair value, where changes in the fair value are reported in the statement of income.

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