Annual report pursuant to Section 13 and 15(d)

Fair Value of Financial Instruments

v3.10.0.1
Fair Value of Financial Instruments
12 Months Ended
Dec. 31, 2018
Fair Value of Financial Instruments [Abstract]  
Fair Value of Financial Instruments

10.  Fair Value of Financial Instruments



ASC 820 Fair Value Measurements and Disclosures (Topic 820) defines fair value 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).  The inputs used to measure fair value are classified into the following hierarchy:





 

Level 1:

Unadjusted quoted prices in active markets for identical assets or liabilities



 

Level 2:

Unadjusted quoted prices in active markets for similar assets or liabilities, or unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or inputs other than quoted prices that are observable for the asset or liability



 

Level 3:

Unobservable inputs for the asset or liability



The carrying amounts of financial instruments included in the consolidated financial statements and their estimated fair values are as follows (in thousands):







 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

As of December 31, 2018

 

As of December 31, 2017

 

 

Carrying
Amount

 

Estimated
Fair Value

 

Carrying
Amount

 

Estimated
Fair Value

Cash and cash equivalents

 

$

219,408 

 

$

219,408 

 

$

197,337 

 

$

197,337 

Restricted cash

 

 

53,726 

 

 

53,726 

 

 

46,012 

 

 

46,012 

Notes receivable, net

 

 

439,167 

 

 

537,000 

 

 

426,858 

 

 

525,000 

Lines-of-credit, notes payable, and

 

 

 

 

 

 

 

 

 

 

 

 

receivable-backed notes payable

 

 

592,322 

 

 

596,900 

 

 

521,312 

 

 

529,400 

Junior subordinated debentures

 

 

71,323 

 

 

87,000 

 

 

70,384 

 

 

88,500 





Cash and cash equivalents.  The amounts reported in the consolidated balance sheets for cash and cash equivalents approximate fair value.



Restricted cash.  The amounts reported in the consolidated balance sheets for restricted cash approximate fair value.



Notes receivable, net.  The fair value of our notes receivable is estimated using Level 3 inputs and is based on estimated future cash flows considering contractual payments and estimates of prepayments and defaults, discounted at a market rate.



Lines-of-credit, notes payable, and receivable-backed notes payable. The amounts reported in the consolidated balance sheets for our lines of credit, notes payable, and receivable-backed notes payable, approximate fair value for indebtedness that provides for variable interest rates.  The fair value of our fixed-rate, receivable-backed notes payable was determined using Level 3 inputs by discounting the net cash outflows estimated to be used to repay the debt.  These obligations are to be satisfied using the proceeds from the consumer loans that secure the obligations.



Junior subordinated debentures. The fair value of our junior subordinated debentures is estimated using Level 3 inputs based on the contractual cash flows discounted at a market rate or based on market price quotes from the over-the-counter bond market.