Item 15. Exhibits and Financial Statement Schedules.

The following documents are filed as part of this report:

1. Financial Statements

NVR, Inc. - Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

Consolidated Statements of Income

Consolidated Statements of Shareholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

2. Exhibits

												Incorporated by Reference
Exhibit Number						Exhibit Description						Form						File Number						Exhibit Number						Filing Date
3.1						Restated Articles of Incorporation of NVR, Inc.						10-K												3.1						2/25/2011
3.2						Bylaws, as amended, of NVR, Inc.						8-K												3.1						3/17/2016
4.1						Indenture dated as of April 14, 1998 between NVR, Inc., as issuer and the Bank of New York as trustee.						8-K												4.3						4/23/1998
4.2						Form of Note (included in Indenture).						8-K												4.5						4/23/1998
4.3						Fifth Supplemental Indenture dated September 10, 2012 among NVR, Inc. and U.S. Bank Trust National Association.						8-K												4.1						9/10/2012
4.4						Sixth Supplemental Indenture dated as of May 4, 2020 among NVR, Inc. and U.S. Bank Trust National Association.						8-K												4.1						5/4/2020
4.5						Seventh Supplemental Indenture dated September 9, 2020 between NVR, Inc. and U.S. Bank Trust National Association.						8-K												4.1						9/9/2020
4.6						Eighth Supplemental Indenture dated September 17, 2020 between NVR, Inc. and U.S. Bank Trust National Association.						8-K												4.2						9/17/2020
4.7						Form of Global Note.						8-K												4.2						9/10/2012
4.8						Description of Securities of NVR, Inc.						10-K												4.5						2/19/2020
10.1*						Amended and Restated Employment Agreement between NVR, Inc. and Paul C. Saville dated November 4, 2015.						10-Q												10.1						11/6/2015
10.2*						Amended and Restated Employment Agreement between NVR, Inc. and Daniel D. Malzahn dated November 4, 2015.						10-Q												10.2						11/6/2015
10.3*						Amended and Restated Employment Agreement between NVR, Inc. and Eugene J. Bredow dated November 4, 2015.						10-Q												10.4						11/6/2015
10.4*						Amendment No. 1 to Employment Agreement between NVR, Inc. and Eugene J. Bredow dated March 1, 2018.						10-Q												10.1						5/1/2018
10.5*						Amendment No. 2 to Employment Agreement between NVR, Inc. and Eugene J. Bredow dated April 1, 2019.						10-Q												10.2						5/1/2019
10.6*						Employment Agreement between NVR, Inc. and Paul W. Praylo dated January 28, 2019.						10-K												10.8						2/13/2019
10.7*						Extension of Employment Agreement between NVR, Inc. and Paul C. Saville date November 4, 2020.						10-Q												10.1						11/4/2020

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												Incorporated by Reference
Exhibit Number						Exhibit Description						Form						File Number						Exhibit Number						Filing Date
10.8*						Extension of Employment Agreement between NVR, Inc. and Daniel D. Malzahn date November 4, 2020.						10-Q												10.2						11/4/2020
10.9*						Extension of Employment Agreement between NVR, Inc. and Paul W. Praylo date November 4, 2020.						10-Q												10.3						11/4/2020
10.10*						Extension of Employment Agreement between NVR, Inc. and Eugene J. Bredow date November 4, 2020.						10-Q												10.4						11/4/2020
10.11*						Profit Sharing Plan of NVR, Inc. and Affiliated Companies.						S-8						333-29241						4.1						6/13/1997
10.12*						Employee Stock Ownership Plan of NVR, Inc.						10-K/A																		12/31/1994
10.13*						Amended and Restated NVR, Inc. Nonqualified Deferred Compensation Plan.						10-Q												10.5						11/6/2015
10.14*						First Amendment to NVR, Inc. Nonqualified Deferred Compensation Plan.						10-K												10.36						2/15/2017
10.15*						Description of the Board of Directors’ compensation arrangement.						10-K												10.15						2/13/2019
10.16*						NVR, Inc. 2018 Equity Incentive Plan						S-8						333-224629						10.1						5/3/2018
10.17*						The Form of Non-Qualified Stock Option Agreement (Management time-based grants) under the NVR, Inc. 2018 Equity Incentive Plan.						8-K												10.1						5/14/2018
10.18*						The Form of Non-Qualified Stock Option Agreement (Director time-based grants) under the NVR, Inc. 2018 Equity Incentive Plan.						8-K												10.2						5/14/2018
10.19*						The Form of Non-Qualified Stock Option Agreement (Management performance-based grants) under the NVR, Inc. 2018 Equity Incentive Plan.						8-K												10.3						5/14/2018
10.20*						The Form of Non-Qualified Stock Option Agreement (Director performance-based grants) under the NVR, Inc. 2018 Equity Incentive Plan.						8-K												10.4						5/14/2018
10.21*						The Form of Restricted Share Units Agreement (Management grants) under the NVR, Inc. 2018 Equity Incentive Plan.						8-K												10.5						5/14/2018
10.22*						The Form of Restricted Share Units Agreement (Director grants) under the NVR, Inc. 2018 Equity Incentive Plan.						8-K												10.6						5/14/2018
10.23*						NVR, Inc. 2014 Equity Incentive Plan.						S-8						333-195756						10.1						5/7/2014
10.24*						The Form of Non-Qualified Stock Option Agreement (Management time-based grants) under the NVR, Inc. 2014 Equity Incentive Plan.						10-K												10.2						2/14/2018
10.25*						The Form of Non-Qualified Stock Option Agreement (Director time-based grants) under the NVR, Inc. 2014 Equity Incentive Plan.						8-K												10.2						5/7/2014
10.26*						The Form of Non-Qualified Stock Option Agreement (Management performance-based grants) under the NVR, Inc. 2014 Equity Incentive Plan.						10-K												10.17						2/14/2018
10.27*						The Form of Non-Qualified Stock Option Agreement (Director performance-based grants) under the NVR, Inc. 2014 Equity Incentive Plan.						8-K												10.4						5/7/2014
10.28*						NVR, Inc. 2010 Equity Incentive Plan.						S-8						333-166512						10.1						5/4/2010
10.29*						The Amended Form of Non-Qualified Stock Option Agreement (Management grants) under the NVR, Inc. 2010 Equity Incentive Plan.						10-K												10.29						2/13/2019

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												Incorporated by Reference
Exhibit Number						Exhibit Description						Form						File Number						Exhibit Number						Filing Date
10.30*						The Form of Non-Qualified Stock Option Agreement (Management performance-based grants) under the NVR, Inc. 2010 Equity Incentive Plan.						10-K												10.30						2/13/2019
10.31*						The Form of Non-Qualified Stock Option Agreement (Director grants) under the NVR, Inc. 2010 Equity Incentive Plan.						8-K												10.2						5/6/2010
10.32*						The Form of Restricted Share Units Agreement (Management grants) under the NVR, Inc. 2010 Equity Incentive Plan.						10-Q												10.2						7/30/2013
10.33*						The Form of Restricted Share Units Agreement (Director grants) under the NVR, Inc. 2010 Equity Incentive Plan.						8-K												10.4						5/6/2010
10.34						Amended and Restated Master Repurchase Agreement dated as of August 2, 2011, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.						8-K												10.1						1/21/2016
10.35						First Amendment to Amended and Restated Master Repurchase Agreement dated as of August 1, 2012, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.						8-K												10.2						1/21/2016
10.36						Second Amendment to Amended and Restated Master Repurchase Agreement dated as of November 13, 2012, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.						8-K												10.3						1/21/2016
10.37						Third Amendment to Amended and Restated Master Repurchase Agreement dated as of November 29, 2012, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.						8-K												10.4						1/21/2016
10.38						Fourth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 31, 2013, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.						8-K												10.5						1/21/2016
10.39						Fifth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 30, 2014, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.						8-K												10.6						1/21/2016
10.40						Sixth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 29, 2015, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.						8-K												10.7						1/21/2016
10.41						Seventh Amendment to Amended and Restated Master Repurchase Agreement dated as of January 18, 2016, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.						8-K												10.8						1/21/2016
10.42						Eighth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 27, 2016, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.						10-Q												10.2						7/28/2016
10.43						Ninth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 26, 2017, between NVR Mortgage Finance, Inc. and U.S. Bank National Association.						10-Q												10.1						7/28/2017
10.44						Tenth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 25, 2018 between NVR Mortgage Finance, Inc. and U.S. Bank National Association.						10-Q												10.1						7/30/2018

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												Incorporated by Reference
Exhibit Number						Exhibit Description						Form						File Number						Exhibit Number						Filing Date
10.45						Eleventh Amendment to Amended and Restated Master Repurchase Agreement dated as of July 24, 2019 between NVR Mortgage Finance, Inc. and U.S. Bank National Association.						10-Q												10.1						7/31/2019
10.46						Twelfth Amendment to Amended and Restated Master Repurchase Agreement dated as of July 8, 2020 between NVR Mortgage Finance, Inc. and U.S. Bank National Association.						10-Q												10.1						8/3/2020
10.47						Credit Agreement dated as of July 15, 2016 among NVR, Inc. and the lenders party hereto, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, and Merrill Lynch, Pierce, Fenner & Smith Incorporated as Sole Lead Arranger and Sole Book Runner.						8-K												10.1						7/18/2016
10.48						Amended and Restated Credit Agreement dated as of February 12, 2021 among NVR, Inc. and the lenders party hereto, Bank of America, N.A., as Administrative Agent and BofA Securities, Inc. as Sole Lead Arranger and Sole Book Runner. Filed herewith.
10.49						Summary of 2021 Executive Officer Incentive Compensation plan. Filed herewith.
21						NVR, Inc. Subsidiaries. Filed herewith.
23						Consent of KPMG LLP (Independent Registered Public Accounting Firm). Filed herewith.
31.1						Certification of NVR’s Chief Executive Officer pursuant to Rule 13a-14(a). Filed herewith.
31.2						Certification of NVR’s Chief Financial Officer pursuant to Rule 13a-14(a). Filed herewith.
32						Certification of NVR’s Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because XBRL tags are embedded within the Inline XBRL document.
101.SCH						XBRL Taxonomy Extension Schema Document
101.CAL						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB						XBRL Taxonomy Extension Label Linkbase Document
101.PRE						XBRL Taxonomy Extension Presentation Linkbase Document
104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
						* Exhibit is a management contract or compensatory plan or arrangement.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

NVR, Inc.
By:			/s/ Paul C. Saville
			Paul C. Saville
			President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature						Title						Date
/s/ Dwight C. Schar						Chairman						February 12, 2021
Dwight C. Schar
/s/ C. E. Andrews						Director						February 12, 2021
C. E. Andrews
/s/ Sallie B. Bailey						Director						February 12, 2021
Sallie B. Bailey
/s/ Thomas D. Eckert						Director						February 12, 2021
Thomas D. Eckert
/s/ Alfred E. Festa						Director						February 12, 2021
Alfred E. Festa
/s/ Manuel H. Johnson						Director						February 12, 2021
Manuel H. Johnson
/s/ Alexandra A. Jung						Director						February 12, 2021
Alexandra A. Jung
/s/ Mel Martinez						Director						February 12, 2021
Mel Martinez
/s/ William A. Moran						Director						February 12, 2021
William A. Moran
/s/ David A. Preiser						Director						February 12, 2021
David A. Preiser
/s/ W. Grade Rosier						Director						February 12, 2021
W. Grady Rosier
/s/ Susan Williamson Ross						Director						February 12, 2021
Susan Williamson Ross
/s/ Paul C. Saville						Principal Executive Officer						February 12, 2021
Paul C. Saville
/s/ Daniel D. Malzahn						Principal Financial Officer						February 12, 2021
Daniel D. Malzahn
/s/ Matthew B. Kelpy						Principal Accounting Officer						February 12, 2021
Matthew B. Kelpy

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

NVR, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of NVR, Inc. and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United Sates) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 12, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842).

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of the allowance for losses on contract land deposits

As discussed in Notes 1 and 3 to the consolidated financial statements, the Company’s allowance for losses on contract land deposits (“lot deposit reserve”) was $52,502,000 recorded against total contract land deposit assets of $439,833,000 as of December 31, 2020. The Company estimated the lot deposit reserve using a loss contingency analysis that assesses a combination of quantitative and qualitative information for each individual deposit associated with a community. As the Company does not own the lots on which they have placed a deposit, the loss contingency analysis assesses contracts on a community-by-community basis, and records an estimated lot deposit reserve for communities which may result in forfeiture of the lot deposit. In estimating this reserve, the Company evaluates whether it can sell houses at an acceptable profit margin and sales pace, and considers market and economic conditions.

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We identified the assessment of the lot deposit reserve as a critical audit matter. Such assessment involved measurement uncertainty that required subjective auditor judgment. Specifically, the assessment encompassed the evaluation of the loss contingency analysis, inclusive of (1) the method used to estimate the reserve assigned to a lot deposit, (2) the quantitative data metrics, as applicable, of profit margin and sales volumes, and (3) the qualitative factors, as applicable, of developer performance and community specific factors. In addition, it was challenging to obtain objective audit evidence, and evaluate the sufficiency of that audit evidence.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over (1) the development and approval of the loss contingency analysis, (2) the determination of the quantitative data metrics and qualitative factors used in the analysis, and (3) the preparation and measurement of the lot deposit reserve estimate. We evaluated the process to develop the quantitative and qualitative information used to assess the lot deposit reserve rates. Specifically, we assessed the consistency of data used in the process with its source, evaluated the reliability of data sources, and considered if all relevant data points were used in the analysis. We tested the reserve balance by:

• assessing the recoverability of a sample of individual lot deposits and comparing our results to those of the Company

• analyzing the timing of changes for a sample of lot deposits for consistency with changes in quantitative or qualitative data

• evaluating the consistency of the loss contingency analysis by comparing the reserve treatment of similar lot deposits and community positions between the current and prior years

• comparing prior reserve estimates to subsequent lot deposit forfeiture activity

We also evaluated the collective results of the procedures performed to assess the sufficiency of the audit evidence obtained related to the Company’s lot deposit reserve.

KPMG LLP

We have served as the Company's auditor since 1987.

McLean, Virginia

February 12, 2021

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Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

NVR, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited NVR, Inc.’s and subsidiaries*’* (the Company) internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of income, shareholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements), and our report dated February 12, 2021 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

KPMG LLP

McLean, Virginia

February 12, 2021

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NVR, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

			December 31, 2020						December 31, 2019
ASSETS
Homebuilding:
Cash and cash equivalents			$	2,714,720					$	1,110,892
Restricted cash			28,912						17,943
Receivables			18,299						18,278
Inventory:
Lots and housing units, covered under sales agreements with customers			1,484,936						1,075,420
Unsold lots and housing units			123,197						184,352
Land under development			62,790						69,196
Building materials and other			38,159						18,320
			1,709,082						1,347,288
Contract land deposits, net			387,628						413,851
Property, plant and equipment, net			57,786						52,260
Operating lease right-of-use assets			53,110						63,825
Reorganization value in excess of amounts allocable to identifiable assets, net			41,580						41,580
Deferred tax assets, net			132,980						115,731
Other assets			70,419						60,413
			5,214,516						3,242,061
Mortgage Banking:
Cash and cash equivalents			63,547						29,412
Restricted cash			2,334						2,276
Mortgage loans held for sale, net			449,760						492,125
Property and equipment, net			4,544						5,828
Operating lease right-of-use assets			12,439						13,345
Reorganization value in excess of amounts allocable to identifiable assets, net			7,347						7,347
Other assets			22,654						17,421
			562,625						567,754
Total assets			$	5,777,141					$	3,809,815

See notes to consolidated financial statements.

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NVR, Inc.

Consolidated Balance Sheets (Continued)

(in thousands, except share and per share data)

			December 31, 2020						December 31, 2019
LIABILITIES AND SHAREHOLDERS' EQUITY
Homebuilding:
Accounts payable			$	339,867					$	262,987
Accrued expenses and other liabilities			440,671						346,035
Customer deposits			240,758						131,886
Operating lease liabilities			59,357						71,095
Senior notes			1,517,395						598,301
			2,598,048						1,410,304
Mortgage Banking:
Accounts payable and other liabilities			62,720						43,985
Operating lease liabilities			13,299						14,282
			76,019						58,267
Total liabilities			2,674,067						1,468,571
Commitments and contingencies
Shareholders' equity:
Common stock, $0.01 par value; 60,000,000 shares authorized; 20,555,330 shares issued as of both December 31, 2020 and December 31, 2019			206						206
Additional paid-in capital			2,214,426						2,055,407
Deferred compensation trust – 106,697 and 107,295 shares of NVR, Inc. common stock as of December 31, 2020 and December 31, 2019, respectively			(16,710)						(16,912)
Deferred compensation liability			16,710						16,912
Retained earnings			8,811,120						7,909,872
Less treasury stock at cost – 16,859,753 and 16,922,558 shares as of December 31, 2020 and December 31, 2019, respectively			(7,922,678)						(7,624,241)
Total shareholders' equity			3,103,074						2,341,244
Total liabilities and shareholders' equity			$	5,777,141					$	3,809,815

See notes to consolidated financial statements.

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NVR, Inc.

Consolidated Statements of Income

(in thousands, except per share data)

			Year Ended December 31,
			2020						2019						2018
Homebuilding:
Revenues			$	7,328,889					$	7,220,844					$	7,004,304
Other income			16,938						24,779						11,839
Cost of sales			(5,937,401)						(5,849,862)						(5,692,127)
Selling, general and administrative			(431,008)						(447,547)						(428,874)
Operating income			977,418						948,214						895,142
Interest expense			(39,458)						(24,335)						(24,036)
Homebuilding income			937,960						923,879						871,106
Mortgage Banking:
Mortgage banking fees			208,034						167,820						159,370
Interest income			8,930						12,142						11,593
Other income			3,249						2,857						2,546
General and administrative			(78,726)						(79,858)						(83,838)
Interest expense			(1,414)						(1,045)						(1,045)
Mortgage banking income			140,073						101,916						88,626
Income before taxes			1,078,033						1,025,795						959,732
Income tax expense			(176,785)						(147,256)						(162,535)
Net income			$	901,248					$	878,539					$	797,197
Basic earnings per share			$	244.11					$	241.31					$	219.58
Diluted earnings per share			$	230.11					$	221.13					$	194.80
Basic weighted average shares outstanding			3,692						3,641						3,631
Diluted weighted average shares outstanding			3,917						3,973						4,092

See notes to consolidated financial statements.

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NVR, Inc.

Consolidated Statements of Shareholders’ Equity

(in thousands)

			Common Stock						Additional Paid-In Capital						Retained Earnings						Treasury Stock						Deferred Compensation Trust						Deferred Compensation Liability						Total
Balance, December 31, 2017			$	206					$	1,644,197					$	6,231,940					$	(6,270,851)					$	(17,383)					$	17,383					$	1,605,492
Cumulative-effect adjustment from adoption of ASU 2014-09, net of tax			—						—						2,196						—						—						—						2,196
Net income			—						—						797,197						—						—						—						797,197
Deferred compensation activity, net			—						—						—						—						446						(446)						—
Purchase of common stock for treasury			—						—						—						(846,134)						—						—						(846,134)
Equity-based compensation			—						75,701						—						—						—						—						75,701
Proceeds from stock options exercised			—						174,110						—						—						—						—						174,110
Treasury stock issued upon option exercise and restricted share vesting			—						(73,785)						—						73,785						—						—						—
Balance, December 31, 2018			206						1,820,223						7,031,333						(7,043,200)						(16,937)						16,937						1,808,562
Net income			—						—						878,539						—						—						—						878,539
Deferred compensation activity, net			—						—						—						—						25						(25)						—
Purchase of common stock for treasury			—						—						—						(698,417)						—						—						(698,417)
Equity-based compensation			—						78,532						—						—						—						—						78,532
Proceeds from stock options exercised			—						274,028						—						—						—						—						274,028
Treasury stock issued upon option exercise and restricted share vesting			—						(117,376)						—						117,376						—						—						—
Balance, December 31, 2019			206						2,055,407						7,909,872						(7,624,241)						(16,912)						16,912						2,341,244
Net income			—						—						901,248						—						—						—						901,248
Deferred compensation activity, net			—						—						—						—						202						(202)						—
Purchase of common stock for treasury			—						—						—						(371,078)						—						—						(371,078)
Equity-based compensation			—						50,794						—						—						—						—						50,794
Proceeds from stock options exercised			—						180,866						—						—						—						—						180,866
Treasury stock issued upon option exercise and restricted share vesting			—						(72,641)						—						72,641						—						—						—
Balance, December 31, 2020			$	206					$	2,214,426					$	8,811,120					$	(7,922,678)					$	(16,710)					$	16,710					$	3,103,074

See notes to consolidated financial statements.

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NVR, Inc.

Consolidated Statements of Cash Flows

(in thousands)

			Year Ended December 31,
			2020						2019						2018
Cash flows from operating activities:
Net income			$	901,248					$	878,539					$	797,197
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			21,992						20,818						20,168
Equity-based compensation expense			50,794						78,532						75,701
Contract land deposit impairments (recoveries), net			28,079						(680)						11,760
Gain on sale of loans, net			(168,720)						(128,642)						(122,755)
Deferred tax (benefit) expense			(17,565)						(4,070)						914
Mortgage loans closed			(5,323,932)						(5,169,422)						(4,828,615)
Mortgage loans sold and principal payments on mortgage loans held for sale			5,536,568						5,260,600						4,845,999
Distribution of earnings from unconsolidated joint ventures			1,432						3,476						4,596
Net change in assets and liabilities:
Increase in inventory			(362,384)						(94,178)						(6,911)
Decrease (increase) in contract land deposits			519						(16,994)						(30,863)
(Increase) decrease in receivables			(1,675)						2,754						(1,008)
Increase (decrease) in accounts payable and accrued expenses			168,667						33,926						(30,713)
Increase (decrease) in customer deposits			108,872						(6,360)						(11,787)
Other, net			(18,626)						8,236						(557)
Net cash provided by operating activities			925,269						866,535						723,126
Cash flows from investing activities:
Investments in and advances to unconsolidated joint ventures			(435)						(702)						(284)
Distribution of capital from unconsolidated joint ventures			11,625						8,247						10,515
Purchase of property, plant and equipment			(16,119)						(22,699)						(19,665)
Proceeds from the sale of property, plant and equipment			996						1,870						1,257
Net cash used in investing activities			(3,933)						(13,284)						(8,177)
Cash flows from financing activities:
Purchase of treasury stock			(371,078)						(698,417)						(846,134)
Proceeds from the issuance of senior notes			923,905						—						—
Debt issuance costs			(5,062)						—						—
Principal payments on finance lease liabilities			(989)						(306)						—
Distributions to partner in consolidated variable interest entity			—						—						(234)
Proceeds from the exercise of stock options			180,866						274,028						174,110
Net cash provided by (used in) financing activities			727,642						(424,695)						(672,258)
Net increase in cash, restricted cash, and cash equivalents			1,648,978						428,556						42,691
Cash, restricted cash, and cash equivalents, beginning of the year			1,160,804						732,248						689,557
Cash, restricted cash, and cash equivalents, end of the year			$	2,809,782					$	1,160,804					$	732,248
Supplemental disclosures of cash flow information:
Interest paid during the year, net of interest capitalized			$	36,805					$	24,453					$	24,178
Income taxes paid during the year, net of refunds			$	163,076					$	153,915					$	181,166

See notes to consolidated financial statements.

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

1. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of NVR, Inc. and its subsidiaries (“NVR”, the “Company”, "we", "us", or "our") and certain other entities in which the Company is deemed to be the primary beneficiary (see Notes 3 and 4 herein for additional information). All significant intercompany transactions have been eliminated in consolidation.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. Management continually evaluates the estimates used to prepare the consolidated financial statements and updates those estimates as necessary. In general, our estimates are based on historical experience, on information from third party professionals, and other various assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ materially from those estimates made by management.

Cash and Cash Equivalents

Cash and cash equivalents include short-term investments with maturities at acquisition of three months or less.

Restricted Cash

Homebuilding restricted cash was attributable to customer deposits for certain home sales. Mortgage banking restricted cash includes amounts collected from customers for loans in process and closed mortgage loans held for sale.

At December 31, 2020 and 2019, $269 and $281, respectively, of cash related to a consolidated variable interest entity is included in homebuilding “Other assets” on the accompanying consolidated balance sheet.

Homebuilding Inventory

The carrying value of inventory is stated at the lower of cost or market value. Cost of lots and completed and uncompleted housing units represent the accumulated actual cost of the units. Field construction supervisors’ salaries and related direct overhead expenses are included in inventory costs. Interest costs are not capitalized into inventory, with the exception of land under development and joint venture investments, as applicable (see below). Upon settlement, the cost of the unit is expensed on a specific identification basis. Cost of building materials is determined on a first-in, first-out basis.

Sold inventory is evaluated for impairment based on the contractual sales price compared to the total estimated cost to construct. Unsold inventory is evaluated for impairment by analyzing recent comparable sales prices within the applicable community compared to the costs incurred to date plus the expected costs to complete. Any calculated impairments are recorded immediately.

Contract Land Deposits

We purchase finished lots under fixed price lot purchase agreements (“LPAs”) that require deposits that may be forfeited if we fail to perform under the contract. The deposits are in the form of cash or letters of credit in varying amounts and represent a percentage of the aggregate purchase price of the finished lots.

We maintain an allowance for losses on contract land deposits that reflects our judgment of the present loss exposure in the existing contract land deposit portfolio at the end of the reporting period. To analyze contract land deposit impairments, we conduct a loss contingency analysis each quarter. In addition to considering market and economic conditions, we assess contract land deposit impairments on a community-by-community basis pursuant to the purchase contract terms, analyzing quantitative and qualitative information including, as applicable, current sales absorption levels, recent sales’ profit margin, the dollar differential between the contractual purchase price and the current market price for lots, a developer’s performance, a developer’s financial ability or willingness to reduce lot prices to current market prices, if necessary, and the contract’s default status by either us or the developer along with an analysis of the expected outcome of any such default.

Our analysis is focused on whether we can sell houses at an acceptable margin and sales pace in a particular community in the current market with which we are faced. Because we do not own the finished lots on which we have placed a contract land deposit, if the above analysis leads to a determination that we cannot sell homes at an acceptable margin and sales pace at the current contractual lot price, we then determine whether we will elect to default under the contract, forfeit the deposit and terminate the contract, or whether we will attempt to restructure the LPA, which may require us to forfeit the deposit to obtain contract concessions from a developer. We also assess whether impairment is present due to collectibility issues resulting from a developer’s non-performance because of financial or other conditions.

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

For the year ended December 31, 2020 we incurred a net pre-tax charge of approximately $25,600 related to the impairment of contract land deposits. For the year ended December 31, 2019, we incurred a net pre-tax recovery of approximately $700 of contract land deposits previously determined to be unrecoverable. For the year ended December 31, 2018, we incurred a net pre-tax charge of approximately $5,100 related to the impairment of contract land deposits.The contract land deposit assets on the accompanying consolidated balance sheets are shown net of the allowance for losses of $52,205 and $27,572 at December 31, 2020 and 2019, respectively.

Land Under Development

On a limited basis, we directly acquire raw parcels of land already zoned for its intended use to develop into finished lots. Land under development includes the land acquisition costs, direct improvement costs, capitalized interest, where applicable, and real estate taxes.

Land under development, including the land under development held by our unconsolidated joint ventures and the related joint venture investments, is reviewed for potential write-downs when impairment indicators are present. In addition to considering market and economic conditions, we assess land under development impairments on a community-by-community basis, analyzing, as applicable, current sales absorption levels, recent sales’ profit margin, and the dollar differential between the projected fully-developed cost of the lots and the current market price for lots. If indicators of impairment are present for a community, we perform an analysis to determine if the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts, and if so, impairment charges are required to be recorded in an amount by which the carrying amount of the assets exceeds the fair value of such assets. Our determination of fair value is primarily based on discounting the estimated future cash flows at a rate commensurate with the inherent risks associated with the assets and related estimated cash flow streams. See Notes 4 and 5 for further discussion of joint venture investments and land under development, respectively.

Property, Plant, and Equipment

Property, plant, and equipment are carried at cost less accumulated depreciation and amortization. Depreciation is based on the estimated useful lives of the assets using the straight-line method. Model home furniture and fixtures are generally depreciated over a 2-year period, office facilities and other equipment are depreciated over a period of 3 to 10 years and production facilities are depreciated over periods of 5 to 40 years.

Leases

We determine if an arrangement is a lease, or contains a lease, at the inception of the arrangement. Once determined that an arrangement is a lease, we then determine if the lease is an operating lease or a finance lease. Both operating and finance leases result in us recording a right-of-use ("ROU") asset and lease liability on our balance sheet. The ROU assets and lease liabilities are recognized based on the present value of lease payments over the lease term, discounted using our incremental borrowing rate at the commencement date of the lease. We estimate our incremental borrowing rate based on available published borrowing rates commensurate with our debt rating and the leases term, adjusted to infer collateralization. Specific lease terms may include options to extend or terminate the lease when we believe it is reasonably certain that we will exercise that option.

We recognize operating lease expense on a straight-line basis over the lease term. We have elected to use the portfolio approach for certain equipment leases which have similar lease terms and payment schedules. Additionally, for certain equipment we account for the lease and non-lease components as a single lease component. Our sublease income is de minimis. We have certain leases, primarily the leases of model homes, which have initial lease terms of twelve months or less ("Short-term leases"). As is allowed under GAAP, we have elected to exclude Short-term leases from the recognition requirements and they are not included in our recognized ROU assets and lease liabilities. Operating leases are reported in "Operating lease right-of-use assets" and "Operating lease liabilities" and finance leases are recorded in homebuilding "Property, plant and equipment, net" and "Accrued expenses and other liabilities" on the accompanying consolidated balance sheets. See Note 13 herein for further information.

Warranty/Product Liability Reserves

We establish warranty and product liability reserves ("Warranty Reserve") to provide for estimated future expenses as a result of construction and product defects, product recalls and litigation incidental to our homebuilding business. Liability estimates are determined based on management’s judgment considering such factors as historical experience, the likely current cost of corrective action, manufacturers’ and subcontractors’ participation in sharing the cost of corrective action, consultations with third party experts such as engineers, and discussions with our general counsel and outside counsel retained to handle specific product liability cases.

Mortgage Repurchase Reserve, Mortgage Loans Held for Sale and Derivatives and Hedging Activities

We originate several different loan products to our customers to finance the purchase of a home through our wholly-owned mortgage subsidiary, NVR Mortgage Finance, Inc. (“NVRM”). NVRM sells all of the loans it originates into the secondary market on

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

a servicing released basis, typically within 30 days from closing. All of the loans that NVRM originates are underwritten to the standards and specifications of the ultimate investor. Those underwriting standards are typically equal to or more stringent than the underwriting standards required by Fannie Mae (“FNMA”), Ginnie Mae (“GNMA”), Freddie Mac ("FHLMC"), the Department of Veterans Affairs (“VA”) and the Federal Housing Administration (“FHA”). Insofar as NVRM underwrites its originated loans to those standards, NVRM bears no increased concentration of credit risk from the issuance of loans, except in certain limited instances where repurchases or early payment default occur. NVRM employs a quality control department to ensure that its underwriting controls are effectively operating, and further assesses the underwriting function as part of its assessment of internal controls over financial reporting. NVRM maintains a reserve for losses on mortgage loans originated that reflects our judgment of the present loss exposure in the loans that NVRM has originated and sold. The reserve is calculated based on an analysis of historical experience and exposure (see Note 16 herein for further information).

Mortgage loans held for sale are recorded at fair value when closed, and thereafter are carried at the lower of cost or fair value, net of deferred origination costs, until sold.

In the normal course of business, NVRM enters into contractual commitments to extend credit to buyers of single-family homes with fixed expiration dates. The commitments become effective when the borrowers “lock-in” a specified interest rate within time frames established by NVRM. All borrowers are evaluated for credit worthiness prior to the extension of the commitment. Market risk arises if interest rates move adversely between the time of the “lock-in” of rates by the borrower and the sale date of the loan to an investor. To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, NVRM enters into optional or mandatory delivery forward sale contracts to sell whole loans and mortgage-backed securities to investors. The forward sale contracts lock-in a range of interest rates and prices for the sale of loans similar to the specific rate lock commitments. NVRM does not engage in speculative or trading derivative activities. Both the rate lock commitments to borrowers and the forward sale contracts to investors are undesignated derivatives, and, accordingly, are marked to fair value through earnings. At December 31, 2020, there were contractual commitments to extend credit to borrowers aggregating $617,308, and open forward delivery sale contracts aggregating $916,588, which hedge both the rate lock loan commitments and closed loans held for sale (see Note 15 herein for a description of the Company’s fair value accounting).

Earnings per Share

The following weighted average shares and share equivalents were used to calculate basic and diluted earnings per share for the years ended December 31, 2020, 2019 and 2018:

						Year Ended December 31,
						2020						2019						2018
Weighted average number of shares outstanding used to calculate basic EPS						3,692						3,641						3,631
Dilutive securities:
Stock options and restricted share units						225						332						461
Weighted average number of shares and share equivalents outstanding used to calculate diluted EPS						3,917						3,973						4,092

The assumed proceeds used in the treasury method for calculating our diluted earnings per share includes the amount the employee must pay upon exercise and the amount of compensation cost attributed to future services not yet recognized.

The following stock options issued under equity incentive plans were outstanding during the years ended December 31, 2020, 2019 and 2018, but were not included in the computation of diluted earnings per share because the effect would have been anti-dilutive.

						Year Ended December 31,
						2020						2019						2018
Anti-dilutive securities						31						319						370

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

Revenues – Homebuilding Operations

We build single-family detached homes, townhomes and condominium buildings, which generally are constructed on a pre-sold basis. Revenue is recognized on the settlement date at the contract sales price, when control is transferred to our customers. Our contract liabilities, consisting of deposits received from customers (“Handmoney”) on homes not settled, were $240,758 and $131,886 as of December 31, 2020 and 2019, respectively. Substantially all Handmoney is recognized in revenue within twelve months of being received from customers. Our contract assets, consisting of prepaid sales compensation, totaled approximately $22,500 and $14,600, as of December 31, 2020 and 2019, respectively. These amounts are included in homebuilding “Other assets” on the accompanying consolidated balance sheets.

Mortgage Banking Fees

Mortgage banking fees include income earned by NVRM for originating mortgage loans, servicing mortgage loans held on an interim basis, title fees, gains and losses on the sale of mortgage loans and mortgage servicing and other activities incidental to mortgage banking. Mortgage banking fees are generally recognized after the loan has been sold to an unaffiliated, third party investor.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. See Note 11 herein for discussion of the impact on the Company's deferred tax asset resulting from the enactment of the Tax Cuts and Jobs Act in December 2017.

ASC 740-10, Income Taxes, provides that a tax benefit from an uncertain tax position may be recognized when it is more-likely-than-not (defined as a likelihood of more than 50%) that the position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits. If a tax position does not meet the more-likely-than-not recognition threshold, despite our belief that its filing position is supportable, the benefit of that tax position is not recognized in the statements of income. We recognize interest related to unrecognized tax benefits as a component of income tax expense. Based on our historical experience in dealing with various taxing authorities, we have found that it is the administrative practice of the taxing authorities to not seek penalties from us for the tax positions we have taken on our returns related to our unrecognized tax benefits. Therefore, we do not accrue penalties for the positions in which we have an unrecognized tax benefit. We recognize unrecognized tax benefits in the period that the uncertainty is eliminated by either affirmative agreement of the uncertain tax position by the applicable taxing authority, by expiration of the applicable statute of limitation, or by determination in accordance with certain states’ administrative practices that the uncertain tax position has been effectively settled (see Note 11 herein for further information).

Financial Instruments

Except as otherwise noted herein, we believe that the carrying value approximates the fair value of our financial instruments (see Note 15 herein for further information).

Equity-Based Compensation

We recognize equity-based compensation expense within the income statement for all share-based payment arrangements, which includes non-qualified stock options to purchase shares of NVR common stock ("Options") and restricted share units ("RSUs"). Compensation expense is based on grant-date fair value and is recognized on a straight-line basis over the requisite service period for the entire award (from the date of grant through the period of the last separately vesting portion of the grant). Options and RSUs which are subject to a performance condition are treated as a separate award from the “service-only” Options and RSUs, and compensation expense is recognized when it becomes probable that the stated performance target will be achieved. We calculate the fair value of our Options, which are non-publicly traded, using the Black-Scholes option-pricing model. The grant date fair value of the RSUs is the closing price of our common stock on the day immediately preceding the date of grant. The reversal of compensation expense previously recognized for grants forfeited is recorded in the period in which the forfeiture occurs. Our equity-based compensation plans are accounted for as equity-classified awards (see Note 12 herein for further discussion of equity-based compensation plans).

Comprehensive Income

For the years ended December 31, 2020, 2019 and 2018, comprehensive income equaled net income; therefore, a separate statement of comprehensive income is not included in the accompanying consolidated financial statements.

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Effective January 1, 2020, we adopted Accounting Standards Update ("ASU") 2016-13, Financial Instruments - Credit Losses (Topic 326), which changed the impairment recognition of financial assets from an as incurred recognition methodology to requiring immediate recognition of estimated credit losses expected to occur over the remaining life of many financial assets. Our adoption of this standard did not have a material effect on our consolidated financial statements and related disclosures.

Effective January 1, 2020, we adopted ASU 2017-04, Intangibles – Goodwill and Other (Topic 350), Simplifying the Test for Goodwill Impairment. Under the standard, an impairment charge to goodwill is recorded in the amount that the carrying amount of a reporting unit's goodwill exceeds its fair value, not to exceed the amount of goodwill allocated to that reporting unit. Our adoption of this standard had no impact on our consolidated financial statements and related disclosures.

2. Segment Information, Nature of Operations, and Certain Concentrations

Our homebuilding operations primarily construct and sell single-family detached homes, townhomes and condominium buildings under three trade names: Ryan Homes, NVHomes and Heartland Homes. The Ryan Homes product is marketed primarily to first-time and first-time move-up buyers. Ryan Homes operates in thirty-three metropolitan areas located in Maryland, Virginia, Washington, D.C., West Virginia, Pennsylvania, New York, North Carolina, South Carolina, Florida, Ohio, New Jersey, Delaware, Indiana, Illinois and Tennessee. The NVHomes and Heartland Homes products are marketed primarily to move-up and luxury buyers. NVHomes operates in Delaware and the Washington, D.C., Baltimore, MD and Philadelphia, PA metropolitan areas. Heartland Homes operates in the Pittsburgh, PA metropolitan area. We derived approximately 24% and 10% of our 2020 homebuilding revenues from the Washington, D.C. and Baltimore, MD metropolitan areas, respectively.

Our mortgage banking segment is a regional mortgage banking operation. Substantially all of our loan closing activity is for our homebuilding customers. Our mortgage banking business generates revenues primarily from origination fees, gains on sales of loans, and title fees. A substantial portion of our mortgage operations is conducted in the Washington, D.C. and Baltimore, MD metropolitan areas.

The following disclosure includes four homebuilding reportable segments that aggregate geographically our homebuilding operating segments, and the mortgage banking operations presented as a single reportable segment. The homebuilding reportable segments are comprised of operating divisions in the following geographic areas:

Mid Atlantic:						Maryland, Virginia, West Virginia, Delaware and Washington, D.C.
North East:						New Jersey and Eastern Pennsylvania
Mid East:						New York, Ohio, Western Pennsylvania, Indiana and Illinois
South East:						North Carolina, South Carolina, Florida and Tennessee

Homebuilding profit before tax includes all revenues and income generated from the sale of homes, less the cost of homes sold, selling, general and administrative expenses, and a corporate capital allocation charge. The corporate capital allocation charge is eliminated in consolidation and is based on the segment’s average net assets employed. The corporate capital allocation charged to the operating segment allows the Chief Operating Decision Maker (“CODM”) to determine whether the operating segment’s results are providing the desired rate of return after covering our cost of capital.

Assets not allocated to the operating segments are not included in either the operating segment's corporate capital allocation charge or the CODM's evaluation of the operating segment's performance. We record charges on contract land deposits when it is determined that it is probable that recovery of the deposit is impaired. For segment reporting purposes, impairments on contract land deposits are charged to the operating segment upon the termination of an LPA with the developer, or the restructuring of an LPA resulting in the forfeiture of the deposit.

Mortgage banking profit before tax consists of revenues generated from mortgage financing, title insurance and closing services, less the costs of such services and general and administrative costs. Mortgage banking operations are not charged a corporate capital allocation charge.

In addition to the corporate capital allocation and contract land deposit impairments discussed above, the other reconciling items between segment profit and consolidated profit before tax include unallocated corporate overhead (including all management incentive compensation), equity-based compensation expense, consolidation adjustments and external corporate interest expense. Our overhead functions, such as accounting, treasury and human resources are centrally performed and the costs are not allocated to our operating segments. Consolidation adjustments consist of such items necessary to convert the reportable segments’ results, which are

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

predominately maintained on a cash basis, to a full accrual basis for external financial statement presentation purposes, and are not allocated to our operating segments. External corporate interest expense primarily consists of interest charges on our 3.95% Senior Notes due 2022 and 3.00% Senior Notes due 2030 (the “Senior Notes”), which are not charged to the operating segments because the charges are included in the corporate capital allocation discussed above.

The following tables present certain segment financial data, with reconciliations to the amounts reported for the consolidated company, where applicable:

						Year Ended December 31,
						2020						2019						2018
Revenues:
Homebuilding Mid Atlantic						$	3,668,542					$	3,901,573					$	3,893,358
Homebuilding North East						538,772						514,804						580,726
Homebuilding Mid East						1,524,667						1,501,139						1,455,834
Homebuilding South East						1,596,908						1,303,328						1,074,386
Mortgage Banking						208,034						167,820						159,370
Consolidated revenues						$	7,536,923					$	7,388,664					$	7,163,674

						Year Ended December 31,
						2020						2019						2018
Profit before taxes:
Homebuilding Mid Atlantic						$	437,849					$	478,537					$	462,178
Homebuilding North East						50,677						51,728						69,789
Homebuilding Mid East						168,605						173,374						175,134
Homebuilding South East						205,029						155,144						118,296
Mortgage Banking						143,319						105,292						93,462
Total segment profit						1,005,479						964,075						918,859
Reconciling items:
Contract land deposit reserve adjustment (1)						(24,633)						1,644						783
Equity-based compensation expense (2)						(50,794)						(78,532)						(75,701)
Corporate capital allocation (4)						239,233						224,468						213,903
Unallocated corporate overhead						(114,921)						(105,125)						(89,973)
Consolidation adjustments and other (3)						63,025						43,486						15,829
Corporate interest expense						(39,356)						(24,221)						(23,968)
Reconciling items sub-total						72,554						61,720						40,873
Consolidated profit before taxes						$	1,078,033					$	1,025,795					$	959,732

(1)This item represents changes to the contract land deposit impairment reserve, which are not allocated to the reportable segments. See further discussion of contract land deposit impairment charges in Note 3.

(2)The decrease in equity-based compensation expense in 2020 was primarily attributable to stock options issued in 2014 under the 2014 Equity Incentive Plan becoming fully vested in 2019. In addition, there were higher stock option forfeitures in 2020 compared to 2019.

(3)The increase in 2020 relates primarily to the significant increase in lumber prices during the second half of 2020. Our reportable segments' results include intercompany profits of our production facilities, which were negatively impacted by the increase in lumber costs. The increase in lumber costs related to homes not yet settled is eliminated through the consolidation adjustment. As these homes currently in inventory are settled in subsequent quarters, our consolidated homebuilding margins will be negatively impacted by the higher lumber costs.

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

(4)This item represents the elimination of the corporate capital allocation charge included in the respective homebuilding reportable segments. The corporate capital allocation charge is based on the segment’s monthly average asset balance, and was as follows for the years presented:

						Year Ended December 31,
						2020						2019						2018
Corporate capital allocation charge:
Homebuilding Mid Atlantic						$	124,426					$	123,130					$	123,855
Homebuilding North East						22,850						19,755						17,893
Homebuilding Mid East						40,256						37,263						35,803
Homebuilding South East						51,701						44,320						36,352
Total corporate capital allocation charge						$	239,233					$	224,468					$	213,903

						As of December 31,
						2020						2019
Assets:
Homebuilding Mid Atlantic						$	1,140,910					$	1,024,996
Homebuilding North East						202,591						166,860
Homebuilding Mid East						377,448						293,773
Homebuilding South East						494,295						400,979
Mortgage Banking						555,278						560,407
Total segment assets						2,770,522						2,447,015
Reconciling items:
Cash and cash equivalents						2,714,720						1,110,892
Deferred taxes						132,980						115,731
Intangible assets and goodwill						49,678						49,834
Operating lease right-of-use assets						53,110						63,825
Finance lease right-of-use assets						15,772						7,052
Contract land deposit reserve						(52,205)						(27,572)
Consolidation adjustments and other						92,564						43,038
Reconciling items sub-total						3,006,619						1,362,800
Consolidated assets						$	5,777,141					$	3,809,815

						Year Ended December 31,
						2020						2019						2018
Interest income:
Mortgage Banking						$	8,930					$	12,142					$	11,593
Total segment interest income						8,930						12,142						11,593
Other unallocated interest income						8,549						20,635						8,588
Consolidated interest income						$	17,479					$	32,777					$	20,181

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

						Year Ended December 31,
						2020						2019						2018
Interest expense:
Homebuilding Mid Atlantic						$	124,486					$	123,178					$	123,908
Homebuilding North East						22,859						19,804						17,897
Homebuilding Mid East						40,261						37,266						35,804
Homebuilding South East						51,729						44,334						36,362
Mortgage Banking						1,414						1,045						1,045
Total segment interest expense						240,749						225,627						215,016
Corporate capital allocation (4)						(239,233)						(224,468)						(213,903)
Senior Notes and other interest						39,356						24,221						23,968
Consolidated interest expense						$	40,872					$	25,380					$	25,081

						Year Ended December 31,
						2020						2019						2018
Depreciation and amortization:
Homebuilding Mid Atlantic						$	6,806					$	7,069					$	7,753
Homebuilding North East						1,800						1,411						1,600
Homebuilding Mid East						4,969						4,348						3,481
Homebuilding South East						3,636						3,086						2,523
Mortgage Banking						1,534						1,581						1,489
Total segment depreciation and amortization						18,745						17,495						16,846
Unallocated corporate						3,247						3,323						3,322
Consolidated depreciation and amortization						$	21,992					$	20,818					$	20,168

						Year Ended December 31,
						2020						2019						2018
Expenditures for property and equipment:
Homebuilding Mid Atlantic						$	5,712					$	9,218					$	6,657
Homebuilding North East						1,083						2,000						1,074
Homebuilding Mid East						5,041						5,221						4,302
Homebuilding South East						3,818						3,944						2,732
Mortgage Banking						265						899						1,677
Total segment expenditures for property and equipment						15,919						21,282						16,442
Unallocated corporate						200						1,417						3,223
Consolidated expenditures for property and equipment						$	16,119					$	22,699					$	19,665

3. Variable Interest Entities

Lot Purchase Agreements

We generally do not engage in land development. Instead, we typically acquire finished building lots from various third party land developers under LPAs. The LPAs require deposits that may be forfeited if we fail to perform under the LPAs. The deposits required under the LPAs are in the form of cash or letters of credit in varying amounts, and typically range up to 10% of the aggregate purchase price of the finished lots.

We believe this lot acquisition strategy reduces the financial risks associated with direct land ownership and land development. We may, at our option, choose for any reason and at any time not to perform under these LPAs by delivering notice of our intent not to acquire the finished lots under contract. Our sole legal obligation and economic loss for failure to perform under these LPAs is limited to the amount of the deposit pursuant to the liquidated damage provisions contained within the LPAs. None of the creditors of any of the development entities with which we enter LPAs have recourse to our general credit. We generally do not have any specific

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

performance obligations to purchase a certain number or any of the lots, nor do we guarantee completion of the development by the developer or guarantee any of the developers’ financial or other liabilities.

We are not involved in the design or creation of the development entities from which we purchase lots under LPAs. The developer’s equity holders have the power to direct 100% of the operating activities of the development entity. We have no voting rights in any of the development entities. The sole purpose of the development entity’s activities is to generate positive cash flow returns for the equity holders. Further, we do not share in any of the profit or loss generated by the project’s development. The profits and losses are passed directly to the developer’s equity holders.

The deposit placed by us pursuant to the LPA is deemed to be a variable interest in the respective development entities. Those development entities are deemed to be variable interest entities (“VIE”). Therefore, the development entities with which we enter into LPAs, including the joint venture limited liability corporations, discussed below, are evaluated for possible consolidation by us. An enterprise must consolidate a VIE when that enterprise has a controlling financial interest in the VIE. An enterprise is deemed to have a controlling financial interest if it has i) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance, and ii) the obligation to absorb losses of the VIE that could be significant to the VIE or the rights to receive benefits from the VIE that could be significant to the VIE.

We believe the activities that most significantly impact a development entity’s economic performance are the operating activities of the entity. Unless and until a development entity completes finished building lots through the development process to be able to sell, the process of which the development entity’s equity investors bear the full risk, the entity does not earn any revenues. The operating development activities are managed solely by the development entity’s equity investors.

The development entities with which we contract to buy finished lots typically select the respective projects, obtain the necessary zoning approvals, obtain the financing required with no support or guarantees from us, select who will purchase the finished lots and at what price, and manage the completion of the infrastructure improvements, all for the purpose of generating a cash flow return to the development entity’s equity holders and all independent of us. We possess no more than limited protective legal rights through the LPA in the specific finished lots that we are purchasing, and we possess no participative rights in the development entities. Accordingly, we do not have the power to direct the activities of a developer that most significantly impact the developer’s economic performance. For this reason, we concluded that we are not the primary beneficiary of the development entities with which we enter into LPAs, and therefore we do not consolidate any of these VIEs.

As of December 31, 2020, we controlled approximately 103,000 lots under LPAs with third parties through deposits in cash and letters of credit totaling approximately $438,500 and $8,100, respectively. As noted above, our sole legal obligation and economic loss for failure to perform under these LPAs is limited to the amount of the deposit pursuant to the liquidated damage provisions contained in the LPAs and, in very limited circumstances, specific performance obligations. During 2020, we incurred net pre-tax charges of approximately $25,600 related to the impairment of deposits under LPAs ("lot deposits") due primarily to deteriorating market conditions in the first quarter of 2020 in certain of our markets related to the COVID-19 pandemic. Impairment charges, net of impairment reversals are recorded in cost of sales on the accompanying consolidated statements of income. Our contract land deposit asset is shown net of a $52,205 and $27,572 impairment reserve at December 31, 2020 and December 31, 2019, respectively.

In addition, we have certain properties under contract with land owners that are expected to yield approximately 6,100 lots, which are not included in the number of total lots controlled. Some of these properties may require rezoning or other approvals to achieve the expected yield. These properties are controlled with deposits in cash and letters of credit totaling approximately $1,300 and $100, respectively, as of December 31, 2020, of which approximately $1,000 is refundable if we do not perform under the contract. We generally expect to assign the raw land contracts to a land developer and simultaneously enter into an LPA with the assignee if the project is determined to be feasible.

Our total risk of loss related to contract land deposits as of December 31, 2020 and 2019 was as follows:

						December 31,
						2020						2019
Contract land deposits						$	439,833					$	441,423
Loss reserve on contract land deposits						(52,205)						(27,572)
Contract land deposits, net						387,628						413,851
Contingent obligations in the form of letters of credit						8,249						5,606
Total risk of loss						$	395,877					$	419,457

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

4. Joint Ventures

On a limited basis, we obtain finished lots using joint venture limited liability corporations (“JVs”). The JVs are typically structured such that we are a non-controlling member and at risk only for the amount we have invested, or committed to invest, in addition to any deposits placed under LPAs with the joint venture. We are not a borrower, guarantor or obligor on any debt of the JVs, as applicable. We enter into a standard LPA to purchase lots from these JVs, and as a result have a variable interest in these JVs.

At December 31, 2020, we had an aggregate investment totaling approximately $23,600 in four JVs that are expected to produce approximately 5,200 finished lots, of which approximately 2,200 lots were controlled by us and the remaining approximately 3,000 lots were either under contract with unrelated parties or not currently under contract. We had additional funding commitments totaling approximately $3,100 in one of the JVs at December 31, 2020. During the fourth quarter of 2020, one of the JVs sold a portion of its owned land. As a result of the sale, we received a distribution from the JV of approximately $13,100 and recognized a net gain on the sale of approximately $5,000.

We determined that we are not the primary beneficiary in three of the JVs because we and the other JV partner either share power or the other JV partner has the controlling financial interest. The aggregate investment in unconsolidated JVs was approximately $23,600 and $26,700 at December 31, 2020 and December 31, 2019, respectively, and is reported in the “Other assets” line item on the accompanying consolidated balance sheets. For the remaining JV, we concluded that we are the primary beneficiary because we have the controlling financial interest in the JV. As of December 31, 2019, all activities under the consolidated JV had been completed. As of December 31, 2020, we had no remaining investment in the JV and the JV had remaining balances of $269 in cash and $244 in accrued expenses, which are included in homebuilding "Other assets" and "Accrued expenses and other liabilities," respectively, in the accompanying consolidated balance sheets.

At December 31, 2019, we had an aggregate investment totaling approximately $26,700 in five JVs that were expected to produce approximately 6,300 finished lots, of which approximately 2,950 lots were controlled by us and the remaining approximately 3,350 lots were either under contract with unrelated parties or not currently under contract. In addition, at December 31, 2019, we had additional funding commitments in the aggregate totaling $4,300 to two of the JVs.

5. Land Under Development

As of December 31, 2020, we directly owned three separate raw parcels of land with a carrying value of $62,790 that we intend to develop into approximately 500 finished lots primarily for use in our homebuilding operations. We also have additional funding commitments of approximately $5,100 under a joint development agreement related to one parcel, a portion of which we expect will be offset by development credits of approximately $2,600. None of the raw parcels had any indicators of impairment as of December 31, 2020.

As of December 31, 2019, we directly owned five separate raw parcels of land with a carrying value of $69,196, which were expected to produce approximately 650 finished lots.

6. Capitalized Interest

We capitalize interest costs to land under development during the active development of finished lots. In addition, we capitalize interest costs to our joint venture investments while the investments are considered qualified assets pursuant to ASC 835-20, Interest. Capitalized interest is transferred to inventory as the development of finished lots is completed, then charged to cost of sales upon our settlement of homes and the respective lots. Interest incurred in excess of the interest capitalizable based on the level of qualified assets is expensed in the period incurred.

Our interest costs incurred, capitalized, expensed and charged to cost of sales during the years ended December 31, 2020, 2019 and 2018 was as follows:

						December 31,
						2020						2019						2018
Interest capitalized, beginning of year						$	3,499					$	4,154					$	5,583
Interest incurred						41,327						26,463						26,277
Interest charged to interest expense						(40,872)						(25,380)						(25,081)
Interest charged to cost of sales						(2,929)						(1,738)						(2,625)
Interest capitalized, end of year						$	1,025					$	3,499					$	4,154

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

7. Related Party Transactions

During the year ended December 31, 2020, we entered into LPAs to purchase finished building lots for a total purchase price of approximately $138,100 with Elm Street Development, Inc. (“Elm Street”), which is controlled by one of our directors, William Moran. The independent members of our Board of Directors approved these transactions. During 2020, 2019 and 2018, we purchased developed lots at market prices from Elm Street for approximately $60,200, $44,600 and $36,100, respectively.

We also continue to control a parcel of raw land expected to yield approximately 1,900 finished lots through a JV entered into with Elm Street during 2009. We did not make any investments in the JV in 2020, 2019 or 2018.

8. Property, Plant and Equipment (“PP&E”)

						December 31,
						2020						2019
Homebuilding:
Office facilities and other						$	39,647					$	39,218
Model home furniture and fixtures						32,686						31,352
Production facilities						77,420						71,295
Finance lease right-of-use assets						15,772						7,051
Gross Homebuilding PP&E						165,525						148,916
Less: accumulated depreciation						(107,739)						(96,656)
Net Homebuilding PP&E						$	57,786					$	52,260
Mortgage Banking:
Office facilities and other						$	14,716					$	14,617
Less: accumulated depreciation						(10,172)						(8,789)
Net Mortgage Banking PP&E						$	4,544					$	5,828

9. Debt

As of December 31, 2020, we had the following debt instruments outstanding:

3.95% Senior Notes due 2022 ("2022 Senior Notes")

On September 10, 2012, we issued $600,000 of the 2022 Senior Notes. The 2022 Senior Notes were issued at a discount to yield 3.97% and have been reflected net of the unamortized discount and unamortized debt issuance costs in the accompanying consolidated balance sheets. The offering of the 2022 Senior Notes resulted in aggregate net proceeds of approximately $593,900, after deducting underwriting discounts and other offering expenses. The 2022 Senior Notes mature on September 15, 2022 and bear interest at 3.95%, payable semi-annually in arrears on March 15 and September 15. As of December 31, 2020 and 2019, the unamortized discount was $207 and $322, respectively, and unamortized debt issuance costs were $868 and $1,377, respectively.

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Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

3.00% Senior Notes due 2030 ("2030 Senior Notes")

On May 4, 2020, we issued $600,000 of the 2030 Senior Notes. The 2030 Senior Notes were issued at a discount to yield 3.02% and have been reflected net of the unamortized discount and unamortized debt issuance costs in the accompanying consolidated balance sheet. The offering of the 2030 Senior Notes resulted in aggregate net proceeds of approximately $595,200, after deducting underwriting discount and offering expenses. The 2030 Senior Notes mature on May 15, 2030 and bear interest at 3.00%, payable semi-annually in arrears on May 15 and November 15. As of December 31, 2020 the amortized discount was $1,075 and unamortized debt issuance costs were $3,387 as of December 31, 2020.

On September 9 and September 17, 2020, we issued an additional $250,000 and $50,000, respectively, of the 2030 Senior Notes (the "2030 Additional Notes" and together with the 2030 Senior Notes and the 2022 Senior Notes, the "Senior Notes"). The 2030 Additional Notes were issued at a premium to yield 2.00% and have been reflected net of the unamortized premium and unamortized debt issuance costs in the accompanying consolidated balance sheet. The offering of the 2030 Additional Notes resulted in aggregate net proceeds of approximately $323,600, including the underwriting premium, less offering expenses. As of December 31, 2020, the 2030 Additional Notes unamortized premium was $24,324 and unamortized debt issuance costs were $1,392.

The Senior Notes are senior unsecured obligations and rank equally in right of payment with any of our existing and future unsecured senior indebtedness, will rank senior in right of payment to any of our future indebtedness that is by its terms expressly subordinated to the Senior Notes and will be effectively subordinated to any of our existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness. The indenture governing the Senior Notes has, among other items, and subject to certain exceptions, covenants that restrict our ability to create, incur, assume or guarantee secured debt, enter into sale and leaseback transactions and conditions related to mergers and/or the sale of assets. We were in compliance with all covenants under the Senior Notes at December 31, 2020.

Credit Agreement

On July 15, 2016, we entered into an unsecured Credit Agreement (the “Credit Agreement”) with Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Merrill Lynch, Pierce, Fenner & Smith Incorporated as Sole Lead Arranger and Sole Book Runner, and the other lenders party thereto, which provides for aggregate revolving loan commitments of $200,000 (the “Facility”). Proceeds of the borrowings under the Facility will be used for working capital and general corporate purposes. Under the Credit Agreement, we may request increases of up to $300,000 to the Facility in the form of revolving loan commitments or term loans to the extent that new or existing lenders agree to provide additional revolving loan or term loan commitments. The Credit Agreement provides for a $100,000 sublimit for the issuance of letters of credit of which approximately $12,800 was outstanding at December 31, 2020, and a $25,000 sublimit for a swing line commitment. Borrowings under the Credit Agreement generally bear interest for Base Rate Loans at a Base Rate equal to the highest of (i) a Federal Funds Rate plus one-half of one percent, (ii) Bank of America’s publicly announced “prime rate,” and (iii) the Eurodollar Rate plus one percent, plus the Applicable Rate which is based on our debt rating, or for Eurodollar Rate Loans, at the Eurodollar Rate equal to LIBOR plus the Applicable Rate.

The Credit Agreement contains various representations and affirmative and negative covenants that are generally customary for credit facilities of this type. Such covenants include, among others, the following financial maintenance covenants: (i) minimum consolidated tangible net worth; (ii) minimum interest coverage ratio or minimum liquidity and (iii) a maximum leverage ratio. The negative covenants include, among others, certain limitations on liens, investments and fundamental changes. The Credit Agreement termination date is July 15, 2021. We were in compliance with all covenants under the Credit Agreement at December 31, 2020. There was no debt outstanding under the Facility at December 31, 2020.

On February 12, 2021, we entered into The Amended and Restated Credit Agreement with Bank of America, N.A., as Administrative Agent, BOFA Securities, Inc. as Sole Lead Arranger and Sole Bookrunner, and other lenders party thereto (the "Amended Credit Agreement"). The Amended Credit Agreement amends and restates the Credit Agreement, discussed above, which was scheduled to expire on July 15, 2021. The Amended Credit Agreement provides for aggregate revolving loan commitments of $300,000 (the "New Facility") and terminates on February 12, 2026. Under the Amended Credit Agreement, we may request increases of up to $300,000 to the New Facility in the form of revolving loan commitments or term loans to the extent that new or existing lenders agree to provide additional revolving loan or term loan commitments. In addition, the Amended Credit Agreement provides for a $100,000 sublimit for the issuance of letters of credit. All other terms of the Amended Credit Agreement, including interest on borrowings and affirmative and negative covenants, are materially consistent with the Credit Agreement it replaces. The Amended Credit Agreement is filed as Exhibit 10.48 in this Form 10-K. The above summary of the material terms of the Amended Credit Agreement is qualified in its entirety by reference to Exhibit 10.48.

Repurchase Agreement

In July 2020, NVRM entered into the Twelfth Amendment (the “Amendment”) to its Amended and Restated Master Repurchase Agreement dated August 2, 2011 with U.S. Bank National Association (as amended by the Amendment and ten earlier

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Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

amendments, the “Repurchase Agreement”). The purpose of the Repurchase Agreement is to finance the origination of mortgage loans by NVRM. The Repurchase Agreement provides for loan purchases up to $150,000, subject to certain sub limits.

Advances under the Repurchase Agreement carry a Pricing Rate based on the LIBOR Rate plus the LIBOR Margin, as determined under the Repurchase Agreement, provided that the Pricing Rate shall not be less than 1.75%. The Pricing Rate at December 31, 2020 was 1.94%. There are several restrictions on purchased loans, including that they cannot be sold to others, they cannot be pledged to anyone other than the agent, and they cannot support any other borrowing or repurchase agreement. Amounts outstanding under the Repurchase Agreement are collateralized by our mortgage loans held for sale. At December 31, 2020, there were no borrowing base limitations reducing the amount available under the Repurchase Agreement. As of both December 31, 2020 and 2019, there was no debt outstanding under the Repurchase Agreement. The Repurchase Agreement expires on July 15, 2021.

The Repurchase Agreement contains various affirmative and negative covenants. The negative covenants include, among others, certain limitations on transactions involving acquisitions, mergers, the incurrence of debt, sale of assets and creation of liens upon any of its Mortgage Notes. Additional covenants include (i) a tangible net worth requirement, (ii) a minimum liquidity requirement, (iii) a minimum net income requirement, and (iv) a maximum leverage ratio requirement. NVRM was in compliance with all covenants under the Repurchase Agreement at December 31, 2020.

10. Common Stock

There were approximately 3,696 and 3,633 common shares outstanding at December 31, 2020 and 2019, respectively. We made the following share repurchases during the years indicated:

						Year Ended December 31,
						2020						2019						2018
Aggregate purchase price						$	371,078					$	698,417					$	846,134
Number of shares repurchased						96						221						301

We issue shares from the treasury account for all equity plan activity. We issued 159, 276 and 188 such shares during 2020, 2019 and 2018, respectively.

11. Income Taxes

The provision for income taxes consists of the following:

						Year Ended December 31,
						2020						2019						2018
Current:
Federal						$	151,532					$	115,610					$	126,358
State						42,769						34,586						37,038
Deferred:
Federal						(13,289)						(2,195)						138
State						(4,227)						(745)						(999)
Income tax expense						$	176,785					$	147,256					$	162,535

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Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

Deferred income taxes on our consolidated balance sheets were comprised of the following:

						December 31,
						2020						2019
Deferred tax assets:
Other accrued expenses and contract land deposit reserve						$	67,520					$	52,726
Deferred compensation						4,608						4,635
Equity-based compensation expense						41,839						42,043
Inventory						13,118						10,530
Unrecognized tax benefit						11,705						12,355
Other						8,639						8,289
Total deferred tax assets						147,429						130,578
Less: Deferred tax liabilities						7,184						7,902
Net deferred tax asset						$	140,245					$	122,676

Deferred tax assets arise principally as a result of various accruals required for financial reporting purposes and equity-based compensation expense, which are not currently deductible for tax return purposes.

Management believes that we will have sufficient future taxable income to make it more likely than not that the net deferred tax assets will be realized. Federal taxable income is estimated to be approximately $768,700 for the year ended December 31, 2020, and was $640,243 for the year ended December 31, 2019.

A reconciliation of income taxes computed at the federal statutory rate (21%) to income tax expense is as follows:

						Year Ended December 31,
						2020						2019						2018
Income taxes computed at the federal statutory rate						$	226,387					$	215,417					$	201,544
State income taxes, net of federal income tax benefit (1)						47,469						45,770						42,944
Excess tax benefits from equity-based compensation						(92,234)						(101,466)						(77,478)
Remeasurement of net deferred tax assets due to enactment of Tax Cut and Jobs Act						—						—						(497)
Other, net (2)						(4,837)						(12,465)						(3,978)
Income tax expense						$	176,785					$	147,256					$	162,535

(1)Excludes state excess tax benefits from equity-based compensation included in the line below.

(2) Primarily attributable to tax benefits from certain energy credits for the years ended December 31, 2020 and 2019.

Our effective tax rate in 2020, 2019 and 2018 was 16.40%, 14.36% and 16.94%, respectively.

We file a consolidated U.S. federal income tax return, as well as state and local tax returns in all jurisdictions where we maintain operations. With few exceptions, we are no longer subject to income tax examinations by tax authorities for years prior to 2017.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:

						Year Ended December 31,
						2020						2019
Balance at beginning of year						$	39,356					$	43,418
Additions based on tax positions related to the current year						3,155						2,941
Reductions for tax positions of prior years						(5,694)						(7,003)
Settlements						—						—
Balance at end of year						$	36,817					$	39,356

If recognized, the total amount of unrecognized tax benefits that would affect the effective tax rate (net of the federal tax benefit) is $29,085 as of December 31, 2020.

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Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

We recognize interest related to unrecognized tax benefits as a component of income tax expense. For the years ended December 31, 2020, 2019, and 2018, we recognized a net decrease in accrued interest on unrecognized tax benefits in the amount of $420, $1,467 and $1,384, respectively. As of December 31, 2020 and 2019, we had a total of $15,304 and $15,724, respectively, of accrued interest on unrecognized tax benefits which are included in “Accrued expenses and other liabilities” on the accompanying consolidated balance sheets.

We believe that within the next 12 months, it is reasonably possible that the unrecognized tax benefits as of December 31, 2020 will be reduced by approximately $7,700 due to statute expiration and effectively settled positions in various state jurisdictions.

12. Equity-Based Compensation, Profit Sharing and Deferred Compensation Plans

Equity-Based Compensation Plans

Our equity-based compensation plans provide for the granting of Options and RSUs to key management employees, including executive officers and members of our Board of Directors ("Directors"). The exercise price of Options granted is equal to the closing price of our common stock on the New York Stock Exchange (the “NYSE”) on the day prior to the date of grant. Options are granted for a 10-year term and typically vest in separate tranches over periods of 3 to 6 years. RSUs generally vest in separate tranches over periods of 2 to 6 years. Grants are generally divided such that vesting for 50% of the grant is contingent solely on continued employment or service as a Director, while vesting for the remaining 50% of the grant is contingent upon both continued employment or service as a Director and the achievement of a performance metric based on our return on capital performance relative to a peer group during a 3-year period specified on the date of grant.

The following table provides a summary of each of our equity-based compensation plans with grants outstanding at December 31, 2020. Each of the following plans was approved by our shareholders:

Equity-Based Compensation Plans						Shares Authorized						Options/RSUs Outstanding						Shares Available to Issue
2010 Equity Incentive Plan (1)						700						88						—
2014 Equity Incentive Plan (2)						950						404						126
2018 Equity Incentive Plan (3)						275						120						155

(1)The 2010 Equity Incentive Plan (the “2010 Plan”) authorizes us to issue Options and RSUs. There were 74 Options and 14 RSUs outstanding as of December 31, 2020. Shares can no longer be granted from this plan.

(2)The 2014 Equity Incentive Plan (the “2014 Plan”) authorizes us to issue Options only.

(3)The 2018 Equity Incentive Plan (the "2018 Plan") authorizes us to issue Options and RSUs. Of the 275 aggregate shares authorized to issue, all may be granted in the form of Options and up to 40 may be granted in the form of RSUs. There were 116 Options and 4 RSUs outstanding as of December 31, 2020. Of the 155 shares available to issue, 36 may be granted in the form of RSUs.

During 2020, we issued 43 Options and 4 RSUs under the following equity-based compensation plans:

						2010 Plan						2014 Plan						2018 Plan
Options Granted
Options (4)						4						17						1
Performance-based Options (5)						4						17						—
Total Options Granted						8						34						1
RSUs Granted
RSUs (6)						—						—						2
Performance-based RSUs (7)						—						—						2
Total RSUs Granted						—						—						4

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Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

(4) Options granted vest over four years in 25% increments beginning on either December 31, 2022 or December 31, 2023, based on the date of grant. Vesting for the Options is contingent solely upon continued employment or continued service as a Director.

(5) Options granted vest over four years in 25% increments beginning on either December 31, 2022 or December 31, 2023, based on the date of grant. Vesting for the performance-based Options is contingent upon both continued employment or continued service as a Director and our return on capital performance during the three year periods beginning 2020 or 2021, based on the grant's vesting period.

(6) RSUs granted predominately vest over three years in 33% increments beginning on December 31, 2025. Vesting for the RSUs is contingent solely upon continued employment.

(7) RSUs granted predominately vest over three years in 33% increments beginning on December 31, 2025. Vesting for the RSUs is contingent upon continued employment and our return on capital performance during the three year period beginning 2020.

The following table provides additional information relative to our equity-based compensation plans for the year ended December 31, 2020:

						Shares						Weighted Avg. Per Share Exercise Price						Weighted Avg. Remaining Contract Life (years)						Aggregate Intrinsic Value
Stock Options
Outstanding at December 31, 2019						749						$	2,030.42
Granted						43						3,126.53
Exercised						(159)						1,136.44
Forfeited						(40)						2,830.82
Outstanding at December 31, 2020						593						$	2,295.11					6.1						$	1,059,114
Exercisable at December 31, 2020						303						$	1,696.32					4.6						$	722,610
RSUs
Outstanding at December 31, 2019						15
Granted						4
Vested						—
Forfeited						(1)
Outstanding at December 31, 2020						18																		$	71,797
Vested, but not issued at December 31, 2020						—																		$	—

To estimate the grant-date fair value of our Options, we use the Black-Scholes option-pricing model (the “Pricing Model”). The Pricing Model estimates the per share fair value of an option on its date of grant based on the following factors: the option’s exercise price; the price of the underlying stock on the date of grant; the estimated dividend yield; a risk-free interest rate; the estimated option term; and the expected volatility. For the risk-free interest rate, we use U.S. Treasury STRIPS which mature at approximately the same time as the option’s expected holding term. For expected volatility, we have concluded that our historical volatility over the option’s expected holding term provides the most reasonable basis for this estimate.

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

The fair value of the Options granted during 2020, 2019 and 2018 was estimated on the grant date using the Pricing Model, based on the following assumptions:

						2020						2019						2018
Estimated option life (years)						5.36						5.55						5.06
Risk free interest rate (range)						0.22%-1.94%						1.51%-2.73%						2.19%-3.13%
Expected volatility (range)						18.78%-32.48%						19.17%-22.01%						16.57%-20.05%
Expected dividend rate						—		%				—		%				—		%
Weighted average grant-date fair value per share of options granted						$	737.19					$	661.01					$	687.81

The weighted average grant date fair value per share of $2,584.37 for the RSUs was the closing price of our common stock on the day immediately preceding the date of grant.

Compensation cost for Options and RSUs is recognized on a straight-line basis over the requisite service period for the entire award (from the date of grant through the period of the last separately vesting portion of the grant). For the recognition of equity-based compensation, the Options and RSUs which are subject to a performance condition are treated as a separate award from the “service-only” Options and RSUs, and compensation cost is recognized when it becomes probable that the stated performance target will be achieved. We currently believe that it is probable that the stated performance condition will be satisfied at the target level for all of our Options and RSUs granted. Compensation cost is recognized within the income statement in the same expense line as the cash compensation paid to the respective employees.

We recognize forfeitures of equity-based awards as a reduction to compensation costs in the period in which they occur. In 2020, 2019 and 2018, we recognized $50,794, $78,532, and $75,701 in equity-based compensation costs, respectively, and approximately $10,500, $16,800, and $17,200 in tax benefit related to equity-based compensation costs, respectively.

As of December 31, 2020, the total unrecognized compensation cost for all outstanding Options and RSUs equaled approximately $169,500. The unrecognized compensation cost will be recognized over each grant’s applicable vesting period with the latest vesting date being December 31, 2027. The weighted-average period over which the unrecognized compensation cost will be recorded is equal to approximately 2.2 years.

We settle Option exercises and vesting of RSUs by issuing shares of treasury stock. Shares are relieved from the treasury account based on the weighted average cost of treasury shares acquired. During the years ended December 31, 2020, 2019 and 2018, we issued 159, 276 and 188 shares, respectively, from the treasury account for Option exercises and vesting of RSUs. Information with respect to the vested RSUs and exercised Options is as follows:

						Year Ended December 31,
						2020						2019						2018
Aggregate exercise proceeds						$	180,866					$	274,028					$	174,110
Aggregate intrinsic value on exercise dates						$	432,772					$	593,162					$	355,318

Profit Sharing Plans

We have a trustee-administered, profit sharing retirement plan (the “Profit Sharing Plan”) and an Employee Stock Ownership Plan (“ESOP”) covering substantially all employees. The Profit Sharing Plan and the ESOP provide for annual discretionary contributions in amounts as determined by our Directors. The combined plan contribution for the years ended December 31, 2020, 2019 and 2018 was approximately $22,500, $20,300 and $19,500, respectively. We purchased approximately 5 shares of our common stock in the open market for each of the 2020 and 2019 plan year contributions to the ESOP. As of December 31, 2020, all shares held by the ESOP had been allocated to participants’ accounts. The 2020 plan year contribution was funded and fully allocated to participants in February 2021.

Deferred Compensation Plans

We have two deferred compensation plans (“Deferred Comp Plans”). The specific purpose of the Deferred Comp Plans is to i) establish a vehicle whereby named executive officers may defer the receipt of salary and bonus that otherwise would be nondeductible for Company tax purposes into a period where we would realize a tax deduction for the amounts paid, and ii) to enable certain employees who are subject to our stock holding requirements to acquire shares of our common stock on a pre-tax basis in order to more quickly meet, and maintain compliance with those stock holding requirements. Amounts deferred into the Deferred Comp Plans are invested in our common stock, held in a rabbi trust account, and are paid out in a fixed number of shares upon expiration of the deferral period.

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

The rabbi trust account held 107 shares of NVR common stock as of both December 31, 2020 and 2019. Shares held by the Deferred Comp Plans are treated as outstanding shares in our earnings per share calculation for each of the years ended December 31, 2020, 2019 and 2018.

13. Leases

We have operating leases for our corporate and division offices, production facilities, model homes, and certain office and production equipment. Additionally, we have entered into finance leases for one of our production facilities and certain plant equipment. Our leases have remaining lease terms of up to 19.7 years, some of which include options to extend the leases for up to 10 years, and some of which include options to terminate the lease. See Note 1 herein for additional information regarding leases.

The components of lease expense were as follows:

						Year Ended December 31, 2020						Year Ended December 31, 2019
Lease expense
Operating lease expense						$	31,704					$	30,991
Finance lease expense:
Amortization of ROU assets						1,313						382
Interest on lease liabilities						281						76
Short-term lease expense						24,361						26,843
Total lease expense						$	57,659					$	58,292

For the year ended December 31, 2018, total rent expense incurred under operating leases was approximately $52,900.

Other information related to leases was as follows:

						Year Ended December 31, 2020						Year Ended December 31, 2019
Supplemental Cash Flows Information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases						$	27,953					$	25,272
Operating cash flows from finance leases						$	281					$	76
Financing cash flows from finance leases						$	989					$	306
ROU assets obtained in exchange for lease obligations:
Operating leases						$	10,159					$	17,078
Finance leases						$	10,034					$	7,434
Weighted-average remaining lease term (in years):
Operating leases						4.7						5.1
Finance leases						12.5						6.7
Weighted-average discount rate:
Operating leases						3.4		%				3.6		%
Finance leases						2.8		%				2.8		%

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

We are committed under multiple non-cancelable operating leases involving office space, model homes, production facilities, automobiles and equipment. Future lease payments under these operating leases as of December 31, 2020 are as follows:

Year Ending December 31,						Operating Leases						Finance Leases
2021						$	30,111					$	1,744
2022						19,500						1,749
2023						14,918						1,754
2024						8,825						1,759
2025						4,970						1,764
Thereafter						6,641						10,742
Total lease payments						84,965						19,512
Less:
Imputed interest						5,544						3,339
Short-term lease payments						6,765						—
Total lease liability						$	72,656					$	16,173

14. Commitments and Contingent Liabilities

Litigation

We are involved in various litigation arising in the ordinary course of business. In the opinion of management, and based on advice of legal counsel, this litigation is not expected to have a material adverse effect on our financial position, results of operations or cash flows. Legal costs incurred in connection with outstanding litigation are expensed as incurred.

Contract Land Deposits

We generally do not engage in land development. Instead, we typically acquire finished building lots from various third party land developers under LPAs. The LPAs require deposits that may be forfeited if we fail to perform under the agreement. The deposits required under the LPAs are in the form of cash or letters of credit in varying amounts, and typically range up to 10% of the aggregate purchase price of the finished lots. At December 31, 2020, assuming that contractual development milestones are met and we exercise our option,we expect to place additional forfeitable deposits with land developers under existing LPAs of approximately $215,000. Additionally, as of December 31, 2020, we had funding commitments totaling approximately $5,100 under a joint development agreement related to our land under development, a portion of which we expect will be offset by development credits of approximately $2,600.

Bonds and Letters of Credit

During the ordinary course of operating the homebuilding and mortgage banking businesses, we are required to enter into bond or letter of credit arrangements with local municipalities, government agencies, or land developers to collateralize our obligations under various contracts. We had approximately $40,600 of contingent obligations under such agreements, including approximately $12,800 for letters of credit issued under the Credit Agreement as of December 31, 2020. We believe we will fulfill our obligations under the related contracts and does not anticipate any material losses under these bonds or letters of credit.

Warranty Reserve

The following table reflects the changes in our warranty reserve (see Note 1 herein for further discussion of warranty/product liability reserves):

						Year Ended December 31,
						2020						2019						2018
Warranty reserve, beginning of year						$	108,053					$	103,700					$	94,513
Provision						75,288						69,065						62,553
Payments						(63,703)						(64,712)						(53,366)
Warranty reserve, end of year						$	119,638					$	108,053					$	103,700

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

15. Fair Value

GAAP assigns a fair value hierarchy to the inputs used to measure fair value. Level 1 inputs are quoted prices in active markets for identical assets and liabilities. Level 2 inputs are inputs other than quoted market prices that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs.

Financial Instruments

The following table presents the estimated fair values and carrying values of our Senior Notes as of December 31, 2020 and December 31, 2019. The estimated fair value is based on recent market prices of similar transactions, which is classified as Level 2 within the fair value hierarchy.

						December 31, 2020						December 31, 2019
Estimated Fair Values:
3.95% Senior Notes due 2022						$	630,000					$	626,520
3.00% Senior Notes due 2030						982,620						—
Total						$	1,612,620					$	626,520
Carrying Values:
3.95% Senior Notes due 2022						$	598,925					$	598,301
3.00% Senior Notes due 2030						918,470						—
Total						$	1,517,395					$	598,301

Except as otherwise noted below, we believe that insignificant differences exist between the carrying value and the fair value of our financial instruments, which consists primarily of cash equivalents, due to their short term nature.

Derivative Instruments and Mortgage Loans Held for Sale

In the normal course of business, NVRM enters into contractual commitments to extend credit to buyers of single-family homes with fixed expiration dates. The commitments become effective when the borrowers “lock-in” a specified interest rate within time frames established by NVRM. All borrowers are evaluated for credit worthiness prior to the extension of the commitment. Market risk arises if interest rates move adversely between the time of the “lock-in” of rates by the borrower and the sale date of the loan to an investor. To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, NVRM enters into optional or mandatory delivery forward sales contracts to sell whole loans and mortgage-backed securities to investors. The forward sales contracts lock-in a range of interest rates and prices for the sale of loans similar to the specific rate lock commitments. NVRM does not engage in speculative or trading derivative activities. Both the rate lock commitments to borrowers and the forward sale contracts to investors are undesignated derivatives and, accordingly, are marked to fair value through earnings. At December 31, 2020, there were contractual commitments to extend credit to borrowers aggregating $617,308 and open forward delivery contracts aggregating $916,588, which hedge both the rate lock loan commitments and closed loans held for sale.

The fair value of our rate lock commitments to borrowers and the related input levels includes, as applicable:

i)the assumed gain/loss of the expected resultant loan sale (Level 2);

ii)the effects of interest rate movements between the date of the rate lock and the balance sheet date (Level 2); and

iii)the value of the servicing rights associated with the loan (Level 2).

The assumed gain/loss considers the excess servicing to be received or buydown fees to be paid upon securitization of the loan. The excess servicing and buydown fees are calculated pursuant to contractual terms with investors. To calculate the effects of interest rate movements, NVRM utilizes applicable published mortgage-backed security prices, and multiplies the price movement between the rate lock date and the balance sheet date by the notional loan commitment amount. NVRM sells all of its loans on a servicing released basis, and receives a servicing released premium upon sale. Thus, the value of the servicing rights is included in the fair value measurement and is based upon contractual terms with investors and varies depending on the loan type. NVRM assumes a fallout rate when measuring the fair value of rate lock commitments. Fallout is defined as locked loan commitments for which NVRM does not close a mortgage loan and is based on historical experience.

The fair value of NVRM’s forward sales contracts to investors solely considers the market price movement of the same type of security between the trade date and the balance sheet date (Level 2). The market price changes are multiplied by the notional amount of the forward sales contracts to measure the fair value.

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

Mortgage loans held for sale are recorded at fair value when closed, and thereafter are carried at the lower of cost or fair value, net of deferred origination costs, until sold. Fair value is measured using Level 2 inputs. As of December 31, 2020, the fair value of loans held for sale of $449,760 included on the accompanying consolidated balance sheet were increased by $10,042 from the aggregate principal balance of $439,718. As of December 31, 2019, the fair value of loans held for sale of $492,125 were increased by $7,019 from the aggregate principal balance of $485,106.

The fair value measurement of NVRM's undesignated derivative instruments was as follows:

						As of December 31,
						2020						2019
Rate lock commitments:
Gross assets						$	10,844					$	8,132
Gross liabilities						87						497
Net rate lock commitments						$	10,757					$	7,635
Forward sales contracts:
Gross assets						$	1					$	377
Gross liabilities						5,217						920
Net forward sales contracts						$	(5,216)					$	(543)

As of December 31, 2020 and 2019, the net rate lock commitments are reported in mortgage banking "Other assets" and the net forward sales contracts are reported in mortgage banking "Accrued expenses and other liabilities" on the accompanying consolidated balance sheets.

The fair value measurement as of December 31, 2020 was as follows:

						Notional or Principal Amount						Assumed Gain/(Loss) From Loan Sale						Interest Rate Movement Effect						Servicing Rights Value						Security Price Change						Total Fair Value Measurement Gain/(Loss)
Rate lock commitments						$	617,308					$	3,227					$	3,263					$	4,267					$	—					$	10,757
Forward sales contracts						$	916,588					—						—						—						(5,216)						(5,216)
Mortgages held for sale						$	439,718					3,359						2,817						3,866						—						10,042
Total fair value measurement												$	6,586					$	6,080					$	8,133					$	(5,216)					$	15,583

The total fair value measurement as of December 31, 2019 was $14,111. NVRM recorded a fair value adjustment to income of $1,472 for the year ended December 31, 2020, a fair value adjustment to expense of $198 for the year ended December 31, 2019, and a fair value adjustment to income of $8,485 for the year ended December 31, 2018. Unrealized gains/losses from the change in the fair value measurements are included in earnings as a component of mortgage banking fees in the accompanying consolidated statements of income. The fair value measurement will be impacted in the future by the change in the value of the servicing rights, interest rate movements, security price fluctuations, and the volume and product mix of NVRM’s closed loans and locked loan commitments.

16. Mortgage Repurchase Reserve

During the years ended December 31, 2020, 2019 and 2018, we recognized pre-tax charges for loan losses related to mortgage loans sold of approximately $3,200, $4,200 and $3,200, respectively. Included in the Mortgage Banking segment’s “Accounts payable and other liabilities” line item on the accompanying consolidated balance sheets is a mortgage repurchase reserve equal to approximately $20,500 and $18,500 at December 31, 2020 and 2019, respectively.

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NVR, Inc.

Notes to Consolidated Financial Statements

(dollars and shares in thousands, except per share data)

17. Quarterly Results (unaudited)

The following table sets forth unaudited selected financial data and operating information on a quarterly basis for the years ended December 31, 2020 and 2019.

						Year Ended December 31, 2020
						4th Quarter						3rd Quarter						2nd Quarter						1st Quarter
Homebuilding data:
Revenues						$	2,263,673					$	1,920,751					$	1,588,758					$	1,555,707
Gross profit						$	441,552					$	384,707					$	304,265					$	260,964
Mortgage Banking data:
Mortgage banking fees						$	80,342					$	69,261					$	31,610					$	26,821
Loans closed						$	1,659,219					$	1,382,060					$	1,144,428					$	1,132,104
Consolidated data:
Net income						$	305,004					$	256,466					$	164,075					$	175,703
Diluted earnings per share						$	76.93					$	65.11					$	42.50					$	44.96
Operating data:
New orders (units)						5,485						6,681						5,901						5,015
Settlements (units)						6,060						5,180						4,296						4,230
Backlog (units)						11,549						12,124						10,623						9,018

						Year Ended December 31, 2019
						4th Quarter						3rd Quarter						2nd Quarter						1st Quarter
Homebuilding data:
Revenues						$	1,946,859					$	1,873,331					$	1,757,448					$	1,643,206
Gross profit						$	379,467					$	355,055					$	332,060					$	304,400
Mortgage Banking data:
Mortgage banking fees						$	43,336					$	37,933					$	42,746					$	43,805
Loans closed						$	1,418,742					$	1,373,946					$	1,231,039					$	1,140,999
Consolidated data:
Net income						$	256,137					$	223,787					$	210,209					$	188,406
Diluted earnings per share						$	64.41					$	56.11					$	53.09					$	47.64
Operating data:
New orders (units)						4,392						4,766						5,239						5,139
Settlements (units)						5,331						5,124						4,720						4,493
Backlog (units)						8,233						9,172						9,530						9,011