CAVCO INDUSTRIES, INC.CVCO
CAVCO INDUSTRIES, INC. Fair Value Disclosure
Fair Value Measurements
The book value and estimated fair value of certain financial instruments were as follows (in thousands):
| March 28, 2026 | March 29, 2025 | ||||||||||||||||||||||
| Book Value | Estimated Fair Value | Book Value | Estimated Fair Value | ||||||||||||||||||||
Available-for-sale debt securities (1) | $ | 34,141 | $ | 34,141 | $ | 21,415 | $ | 21,415 | |||||||||||||||
Marketable equity securities (2) | 14,634 | 14,634 | 11,425 | 11,425 | |||||||||||||||||||
Non-marketable equity investments (3) | 5,609 | 5,609 | 5,069 | 5,069 | |||||||||||||||||||
Consumer loans receivable (4) (5) | 38,181 | 43,264 | 56,537 | 59,365 | |||||||||||||||||||
Commercial loans receivable (5) | 115,997 | 96,598 | 99,746 | 89,216 | |||||||||||||||||||
Other secured financing (6) | (1,388) | (1,376) | (1,594) | (1,569) | |||||||||||||||||||
(1) Level 2: The fair value is based on observable market prices for identical securities. When observable market prices for identical securities are not available, we price our 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.
(2) Level 1: The fair value is based on quoted market prices.
(3) Level 3: The fair value approximates book value based on the non-marketable nature of the investments.
(4) Level 3: Includes consumer loans receivable held for investment, held for sale and construction advances.
(5) Level 3: The fair value is estimated using market interest rates of comparable loans.
(6) Level 2: The fair value is based on the discounted value of the expected remaining principal and interest cash flows.
Consumer loans held for investment are measured using Level 3 inputs that are calculated using estimated discounted future cash flows from the evaluation of loan credit quality and performance history to determine expected prepayments and defaults on the portfolio, discounted with rates considered to reflect current market conditions. For consumer loans, the discount rate used is 7.73%. This is based on SOFR (Level 1) plus a spread we expect market participants would require (Level 3). A 1% increase to the discount rate would reduce the fair value of consumer loans by $0.5 million.
Commercial loans are measured using Level 3 inputs that are calculated using estimated discounted future cash flows from the evaluation of loan performance history to determine expected prepayments and defaults on the portfolio, discounted with rates considered to reflect current market conditions. The discount rate used to calculate the fair value of commercial loans is 5.50%. This is based on the Prime Rate (Level 1) plus a spread seen in similar transactions (Level 2). A 1% increase to the discount rate would reduce the fair value of commercial loans by $1.0 million.
Loans held for sale are measured at the lower of cost or fair value, less costs to sell, using inputs that consist of quoted market prices for mortgage-backed securities or investor purchase commitments for similar types of loan commitments on hand from investors. The cost of loans held for sale was lower than the fair value as of March 28, 2026.
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 recorded at fair value in Prepaid expenses and other current assets in the Consolidated Balance Sheets based on the present value of the expected future cash flows related to servicing these loans.
| March 28, 2026 | March 29, 2025 | ||||||||||
Number of loans serviced with MSRs | 3,487 | 3,647 | |||||||||
Weighted average servicing fee (basis points) | 33.83 | 34.74 | |||||||||
Capitalized servicing multiple | 176.44 | % | 179.97 | % | |||||||
Capitalized servicing rate (basis points) | 59.69 | 62.52 | |||||||||
Serviced portfolio with MSRs (in thousands) | $ | 432,632 | $ | 451,080 | |||||||
| MSRs (in thousands) | $ | 2,583 | $ | 2,820 | |||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 22, 2026 | Showing above |
| 2025 | May 23, 2025 | |
| 2024 | May 24, 2024 | |
| 2023 | May 19, 2023 | |
| 2022 | May 31, 2022 | |
| 2021 | May 28, 2021 | |
| 2020 | May 27, 2020 | |
| 2019 | May 29, 2019 | |
| 2017 | Jun 13, 2017 | |
| 2016 | Jun 21, 2016 | |
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.