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Note 20 - Fair Value of Financial Instruments
 3 Months Ended
Jan. 31, 2025
Fair Value of Financial Instruments  
Fair Value of Financial Instruments

20.

Fair Value of Financial Instruments


We use a fair-value hierarchy which prioritizes the inputs used in measuring fair value as follows:


Level 1:

Fair value determined based on quoted prices in active markets for identical assets.


Level 2:

Fair value determined using significant other observable inputs.


Level 3:

Fair value determined using significant unobservable inputs.


Our financial instruments measured at fair value on a recurring basis are summarized below:


Fair Value at

Fair Value at

Fair Value

January 31,

October 31,

(In thousands)

Hierarchy

2025

2024

Mortgage loans held for sale (1)

Level 2

$ 116,153 $ 148,925


(1) The aggregate unpaid principal balance was $116.9 million and $149.4 million at January 31, 2025 and October 31, 2024, respectively.


Fair value of mortgage loans held for sale is based on independent quoted market prices, where available, or the prices for other mortgage loans with similar characteristics.


The financial services segment had a pipeline of loan applications in process of $570.5 million at January 31, 2025. Loans in process for which interest rates were committed to the borrowers totaled $52.2 million as of January 31, 2025. Substantially all of these commitments were for periods of 60 days or less. Since a portion of these commitments are expected to expire without being exercised by the borrowers, the total commitments do not necessarily represent future cash requirements.


In addition, the financial services segment uses investor commitments and forward sales of mandatory MBS to hedge its mortgage-related interest rate exposure. These instruments involve, to varying degrees, elements of credit and interest rate risk. Credit risk is managed by entering into MBS forward commitments, option contracts with investment banks, federally regulated bank affiliates and loan sales transactions with permanent investors meeting the segment’s credit standards. Our risk, in the event of default by the purchaser, is the difference between the contract price and fair value of the MBS forward commitments and option contracts. At January 31, 2025, we had no open mandatory investor commitments to sell MBS.


Changes in fair value that are included in income are shown, by financial instrument and financial statement line item, below:


Three Months Ended January 31, 2025

Mortgage

Interest Rate

Loans Held

Lock

Forward

(In thousands)

For Sale

Commitments

Contracts

Change in fair value included in financial services revenue

$ (735 ) $ - $ -


Three Months Ended January 31, 2024

Mortgage

Interest Rate

Loans Held

Lock

Forward

(In thousands)

For Sale

Commitments

Contracts

Change in fair value included in financial services revenue

$ 802 $ - $ -


We did not have any assets measured at fair value on a nonrecurring basis during the three months ended January 31, 2025 and 2024, respectively.


The fair value of our cash equivalents, restricted cash and cash equivalents and customers' deposits approximates their carrying amount, based on Level 1 inputs.


The fair value of each series of our Notes and Credit Facilities are listed below. Level 2 measurements are estimated based on recent trades or quoted market prices for the same issues or based on recent trades or quoted market prices for our debt of similar security and maturity to achieve comparable yields. Level 3 measurements are estimated based on third-party broker quotes or management’s estimate of the fair value based on available trades for similar debt instruments. As shown in the table below, our 8.0% Senior Secured 1.125 Lien Notes due 2028 and 11.75% Senior Secured 1.25 Lien Notes due 2029 were a Level 2 measurement at January 31, 2025 due to recent trades for the same notes.


Fair Value as of January 31, 2025

(In thousands)

Level 1

Level 2

Level 3

Total

Senior Secured Notes:

8.0% Senior Secured 1.125 Lien Notes due September 30, 2028

$ - $ 228,724 $ - $ 228,724

11.75% Senior Secured 1.25 Lien Notes due September 30, 2029

- 468,524 - 468,524

Senior Notes:

13.5% Senior Notes due February 1, 2026

- - 27,162 27,162

5.0% Senior Notes due February 1, 2040

- - 15,313 15,313

Senior Credit Facilities:

Senior Secured 1.75 Lien Term Loan Credit Facility due January 31, 2028

- - 187,275 187,275

Total fair value

$ - $ 697,248 $ 229,750 $ 926,998


Fair Value as of October 31, 2024

(In thousands)

Level 1

Level 2

Level 3

Total

Senior Secured Notes:

8.0% Senior Secured 1.125 Lien Notes due September 30, 2028

- 231,068 - 231,068

11.75% Senior Secured 1.25 Lien Notes due September 30, 2029

- 474,561 - 474,561

Senior Notes:

13.5% Senior Notes due February 1, 2026

- - 27,020 27,020

5.0% Senior Notes due February 1, 2040

- 11,485 - 11,485

Senior Credit Facilities:

Senior Secured 1.75 Lien Term Loan Credit Facility due January 31, 2028

- - 190,041 190,041

Total fair value

$ - $ 717,114 $ 217,061 $ 934,175


The Senior Secured Revolving Credit Facility is not included in the above tables because there were no borrowings outstanding thereunder at January 31, 2025 and October 31, 2024.