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Interest Rate Swap Agreements
 12 Months Ended
Mar. 31, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Interest Rate Swap Agreements

6. Interest Rate Swap Agreements

The Company utilizes interest rate swap agreements to manage exposure to variability in expected cash flows attributable to interest rate risk. The interest rate swap agreements convert a portion of the Company’s floating rate debt to a fixed rate, more closely matching the interest rate characteristics of the Company’s finance receivables. The following table summarizes the activity in the Company’s notional amounts of interest rate swap agreements for fiscal years ended March 31:

 

     2014      2013  

Notional amounts at beginning of year

    $ 50,000,000      $ —     

New contracts

      —           50,000,000   

Matured contracts

      —           —     
  

 

 

     

 

 

  

Notional amounts at end of year

    $ 50,000,000       $ 50,000,000   
  

 

 

     

 

 

  

The Company currently has two interest rate swap agreements. A June 4, 2012 interest rate swap agreement provides for a five-year interest rate swap in which the Company pays a fixed rate of 1% and receives payments from the counterparty on the 1-month LIBOR rate. This interest rate swap agreement has an effective date of June 13, 2012 and a notional amount of $25,000,000. A July 30, 2012 agreement provides for a five-year interest rate swap in which the Company pays a fixed rate of 0.87% and receives payments from the counterparty on the 1-month LIBOR rate. This interest rate swap agreement has an effective date of August 13, 2012 and a notional amount of $25,000,000.

The locations and amounts of gains (losses) recognized in income are detailed as follows for the fiscal years ended March 31:

 

     2014     2013  

Periodic change in fair value of interest rate swap agreements

    $ 688,455      $ (504,852 ) 

Periodic settlement differentials included in interest expense

      (383,028 )      (277,364 ) 
  

 

 

    

 

 

  

Loss recognized in income

    $ 305,427      $ (782,216 ) 
  

 

 

    

 

 

  

Net realized gains and losses from the interest rate swap agreements were recorded in the interest expense line item of the consolidated statements of income.

The following table summarizes the average variable rates received and average fixed rates paid under the swap agreements as of March 31:

 

     2014     2013  

Average variable rate received

      0.18 %      0.22 % 

Average fixed rate paid

      0.94 %      0.94 %