Note 6: Bank and Other Loans Payable

12 Months Ended

Dec. 31, 2012

Notes

Note 6: Bank and Other Loans Payable

6)   Bank and Other Loans Payable

Bank loans payable are summarized as follows:

		December 31
		2012		2011
6.34% note payable in monthly installments of $13,556    including principal and interest, collateralized by real    property with a book value of approximately $498,000,    due November 2017.		748,612		877,707
5.75% note payable in monthly installments of $28,271 including    principal and interest, collateralized by real property with a book    value of approximately $6,450,000 due December 2014.		3,643,192		3,769,012
Bank prime rate less .75% (2.50% at December 31, 2012) note payable in    quarterly installments of $75,000 plus interest collateralized by shares    of Security National Life Insurance Company Stock, due September 2013.		225,000		525,000
Mark to market of interest rate swaps (discussed below) adjustment		93,572		117,812
3.85% note payable in monthly installments of $79,468 including     principal and interest, collateralized by shares of Security National     Life Insurance Company Stock, due June 2015.		2,258,968		3,105,965
Revolving line-of-credit, interest payable at the variable overnight    Libor rate plus 2% (2.1875% as of December 31, 2012),    secured by bond investments of the Company,  matures June 2013.		-		15,000,000
Revolving line-of-credit, interest payable at the prime rate minus .75%     (2.5% as of December 31, 2012) secured by shares of Security    National Life Insurance Company Stock, matures June 2013.		4,608,204		1,400,000
Other collateralized bank loans payable		331,834		222,662
Other notes payable		961		961
Total bank and other loans		11,910,343		25,019,119
Less current installments		6,266,765		18,018,145
Bank and other loans, excluding current installments	$	5,643,578	$	7,000,974

During 2001, the Company entered into a $2,000,000 note payable to a bank with interest due at a variable interest rate of the Libor rate plus 1.65%. During 2001, the Company also entered into an interest rate swap instrument that effectively fixed the interest rate on the note payable at 6.34% per annum. Management considers the interest rate swap instrument an effective cash flow hedge against the variable interest rate on the bank note since the interest rate swap mirrors the term of the note payable and expires on the maturity date of the bank loan it hedges. The interest rate swap is a derivative financial instrument carried at its fair value.

In the event the swap is terminated, any resulting gain or loss would be deferred and amortized to interest expense over the remaining life of the bank loan it hedged. In the event of early extinguishment of the hedged bank loan, any realized or unrealized gain or loss from the hedging swap would be recognized in income coincident with the extinguishment.

At December 31, 2012, the fair value of the interest rate swap was an unrealized loss of $93,572 and was computed based on the underlying variable Libor rate plus 1.65%, or 2.65% per annum. The unrealized loss resulted in a derivative liability of $93,572 and has been reflected in accumulated other comprehensive income. The change in accumulated other comprehensive income from the interest rate swap in 2012 was $24,240. The fair value of the interest rate swap was derived from a proprietary model of the bank from whom the interest rate swap was purchased and to whom the note is payable.

At December 31, 2011, the fair value of the interest rate swap was an unrealized loss of $117,812 and was computed based on the underlying variable Libor rate plus 1.65%, or 2.65% per annum. The unrealized loss resulted in a derivative liability of $117,812 and has been reflected in accumulated other comprehensive income. The change in accumulated other comprehensive income from the interest rate swap in 2011 was $1,279. The fair value of the interest rate swap was derived from a proprietary model of the bank from whom the interest rate swap was purchased and to whom the note is payable.

The Company has a $6,000,000 revolving line-of-credit with a bank with interest payable at the prime rate minus .75% (2.50% at December 31, 2012), secured by the capital stock of Security National Life and maturing June 15, 2013, renewable annually. As of December 31, 2012, there was $4,608,204 outstanding under the revolving line-of-credit. As of December 31, 2012, $652,572 was available and $514,224 was reserved for two outstanding letters of credit. $1,500,000 was carved out for a loan in September 2008 that as of December 31, 2012 has a balance of $225,000. As the principal payments on the loan are made the line of credit amount increases in availability.

The Company has a $15,000,000 revolving line-of-credit with a bank with interest payable at the variable overnight Libor rate plus 2% (2.1875% at December 31, 2012), secured by bond investments of the Company and maturing June 30, 2013. As of December 31, 2012 there was $15,000,000 available under the revolving line-of-credit.

The Company has a $2,000,000 revolving line-of-credit with a bank with interest payable at the prime rate plus 1.25% (4.5% at December 31, 2012), secured by the capital stock of Security National Life and maturing June 30, 2013. As of December 31, 2012 $1,250,000 was reserved for an outstanding letter of credit. As of December 31, 2012 there were no amounts outstanding under the revolving line-of-credit.

The following tabulation shows the combined maturities of bank loans payable, lines of credit and notes and contracts payable:

2013	$	6,266,765
2014		4,636,015
2015		598,975
2016		200,949
2017		161,704
Thereafter		45,935
Total	$	11,910,343

Interest paid approximated interest expense in 2012, 2011 and 2010 which was $3,744,293, $1,961,249 and $2,778,920 respectively.