Fair Value Disclosures

3 Months Ended

Jan. 31, 2012

Fair Value Disclosures [Abstract]

Fair Value Disclosures

14. Fair Value Disclosures

The table below provides, as of the date indicated, a summary of assets (liabilities) related to the Company’s financial instruments, measured at fair value on a recurring basis (amounts in thousands).

	September 30,		September 30,			September 30,
		Fair value
Financial Instrument	Fair value hierarchy	January 31, 2012			October 31, 2011
Corporate Securities	Level 1	$	143,729		$	233,572
Residential Mortgage Loans Held for Sale	Level 2	$	36,911		$	63,175
Forward Loan Commitments—Residential Mortgage Loans Held for Sale	Level 2	$	(96	)	$	218
Interest Rate Lock Commitments (“IRLCs”)	Level 2	$	85		$	(147	)
Forward Loan Commitments—IRLCs	Level 2	$	(85	)	$	147

At January 31, 2012 and October 31, 2011, the carrying value of cash and cash equivalents and restricted cash approximated fair value.

At the end of the reporting period, the Company determines the fair value of its mortgage loans held for sale and the forward loan commitments it has entered into as a hedge against the interest rate risk of its mortgage loans using the market approach to determine fair value. The evaluation is based on the current market pricing of mortgage loans with similar terms and values as of the reporting date and by applying such pricing to the mortgage loan portfolio. The Company recognizes the difference between the fair value and the unpaid principal balance of mortgage loans held for sale as a gain or loss. In addition, the Company recognizes the fair value of its forward loan commitments as a gain or loss. These gains and losses are included in interest and other income. Interest income on mortgage loans held for sale is calculated based upon the stated interest rate of each loan and is included in “interest and other income”.

The table below provides, as of the date indicated, the aggregate unpaid principal and fair value of mortgage loans held for sale as of the date indicated (amounts in thousands).

		September 30,		September 30,		September 30,
	Aggregate unpaid principal balance		Fair value		Excess
At January 31, 2012	$	36,532	$	36,911	$	379
At October 31, 2011	$	62,765	$	63,175	$	410

IRLCs represent individual borrower agreements that commit the Company to lend at a specified price for a specified period as long as there is no violation of any condition established in the commitment contract. These commitments have varying degrees of interest rate risk. The Company utilizes best-efforts forward loan commitments (“Forward Commitments”) to hedge the interest rate risk of the IRLCs and residential mortgage loans held for sale. Forward Commitments represent contracts with third-party investors for the future delivery of loans whereby the Company agrees to make delivery at a specified future date at a specified price. The IRLCs and Forward Commitments are considered derivative financial instruments under ASC 815, “Derivatives and Hedging”, which requires derivative financial instruments to be recorded at fair value. The Company estimates the fair value of such commitments based on the estimated fair value of the underlying mortgage loan and, in the case of IRLCs, the probability that the mortgage loan will fund within the terms of the IRLC. To manage the risk of non-performance of investors regarding the Forward Commitments, the Company assesses the credit worthiness of the investors on a periodic basis.

The table below provides, as of the date indicated, the amortized cost, gross unrealized holding gains, gross unrealized holding losses and fair value of marketable securities (amounts in thousands).

		September 30,			September 30,
	January 31, 2012			October 31, 2011
Amortized cost	$	143,766		$	233,852
Gross unrealized holding gains		46			28
Gross unrealized holding losses		(83	)		(308	)
Fair value	$	143,729		$	233,572

The remaining contractual maturities of marketable securities as of January 31, 2012 ranged from less than one month to nine months.

The Company recognizes inventory impairment charges based on the difference in the carrying value of the inventory and its fair value at the time of the evaluation. The fair value of the aforementioned inventory was determined using Level 3 criteria. See Note 1, “Significant Accounting Policies, Inventory” for additional information regarding the Company’s methodology on determining fair value. The table below provides, for the periods indicated, the fair value of inventory whose carrying value was adjusted and the amount of impairment charges recognized (amounts in thousands).

		September 30,		September 30,
	Fair value of inventory, net of impairment		Impairment charges recognized
Three months ended:
January 31, 2012	$	49,758	$	6,425
January 31, 2011	$	56,105	$	5,475

Gibraltar’s portfolio of non-performing loans was recorded at fair value at inception based on the acquisition price as determined by Level 3 inputs. The estimated fair value was determined using Level 3 inputs and was based on discounted future cash flows generated by the loans discounted at the rates used to value the portfolios at the acquisition dates. The table below provides, as of the date indicated, the carrying amount and estimated fair value of the non-performing loan portfolios (amounts in thousands).

		September 30,		September 30,
	January 31, 2012		October 31, 2011
Carrying amount	$	90,334	$	63,234
Estimated fair value	$	91,667	$	64,539

The table below provides, as of the date indicated, the book value and estimated fair value of the Company’s debt (amounts in thousands).

		September 30,		September 30,		September 30,		September 30,
	January 31, 2012				October 31, 2011
	Book value		Estimated fair value		Book value		Estimated fair value
Loans payable (a)	$	93,279	$	88,137	$	106,556	$	98,950
Senior notes (b)		1,499,371		1,634,469		1,499,371		1,614,010
Mortgage company warehouse loan (c)		31,864		31,864		57,409		57,409
	$	1,624,514	$	1,754,470	$	1,663,336	$	1,770,369

(a) The estimated fair value of loans payable was based upon their indicated market prices or the interest rates that the Company believed were available to it for loans with similar terms and remaining maturities as of the applicable valuation date.

(b) The estimated fair value of the Company’s senior notes is based upon their indicated market prices.

(c) The Company believes that the carrying value of its mortgage company loan borrowings approximates their fair value.