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3) Investments

6 Months Ended

Jun. 30, 2016

Notes

3) Investments

3) Investments

The Company’s investments in fixed maturity securities held to maturity and equity securities available for sale as of June 30, 2016 are summarized as follows:

		Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
June 30, 2016
Fixed maturity securities held to maturity carried at amortized cost:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies		$ 3,555,727		$ 415,240		$ -		$ 3,970,967
Obligations of states and political subdivisions		1,801,138		198,790		-		1,999,928
Corporate securities including public utilities		130,240,984		14,123,337		(3,733,209)		140,631,112
Mortgage-backed securities		7,838,652		354,028		(134,865)		8,057,815
Redeemable preferred stock		623,635		52,552		-		676,187
Total fixed maturity securities held to maturity		$ 144,060,136		$ 15,143,947		$ (3,868,074)		$ 155,336,009



Equity securities available for sale at estimated fair value:

Common stock:

Industrial, miscellaneous and all other		$ 10,188,627		$ 264,176		$ (1,349,527)		$ 9,103,276

Total equity securities available for sale at estimated fair value		$ 10,188,627		$ 264,176		$ (1,349,527)		$ 9,103,276

Mortgage loans on real estate and construction loans held for investment at amortized cost:
Residential		$ 52,719,167
Residential construction		44,834,079
Commercial		36,034,037
Less: Allowance for loan losses		(2,204,536)
Total mortgage loans on real estate and construction loans held for investment		$ 131,382,747

Real estate held for investment - net of depreciation		$ 116,234,204

Policy loans and other investments are shown at amortized cost except for other investments that are shown at estimated fair value:
Policy loans		$ 6,753,769
Insurance assignments		30,251,617
Promissory notes		48,797
Other investments at estimated fair value		1,522,188
Less: Allowance for doubtful accounts		(1,088,476)

Total policy loans and other investments		$ 37,487,895

Short-term investments at amortized cost		$ 20,775,666

The Company’s investments in fixed maturity securities held to maturity and equity securities available for sale as of December 31, 2015 are summarized as follows:

		Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
December 31, 2015:

Fixed maturity securities held to maturity carried at amortized cost:
Bonds:
U.S. Treasury securities and obligations of U.S. Government agencies		$ 3,560,579		$ 292,869		$ (4,743)		$ 3,848,705
Obligations of states and political subdivisions		1,805,828		182,073		(1,040)		1,986,861
Corporate securities including public utilities		134,488,108		9,836,355		(5,501,743)		138,822,720
Mortgage-backed securities		5,091,887		190,867		(75,580)		5,207,174
Redeemable preferred stock		612,023		29,675		-		641,698
Total fixed maturity securities held to maturity		$ 145,558,425		$ 10,531,839		$ (5,583,106)		$ 150,507,158



Equity securities available for sale at estimated fair value:

Common stock:

Industrial, miscellaneous and all other		$ 9,891,500		$ 213,683		$ (1,674,093)		$ 8,431,090

Total securities available for sale carried at estimated fair value		$ 9,891,500		$ 213,683		$ (1,674,093)		$ 8,431,090

Mortgage loans on real estate and construction loans held for investment at amortized cost:
Residential		$ 46,020,490
Residential construction		34,851,557
Commercial		33,522,978
Less: Allowance for loan losses		(1,848,120)

Total mortgage loans on real estate and construction loans held for investment		$ 112,546,905

Real estate held for investment - net of depreciation		$ 114,852,432

Policy loans and other investments are shown at amortized cost except for other investments that are shown at estimated fair value:
Policy loans		$ 6,896,457
Insurance assignments		32,369,014
Promissory notes		48,797
Other investments at estimated fair value		1,174,769
Less: Allowance for doubtful accounts		(906,616)

Total policy loans and other investments		$ 39,582,421

Short-term investments at amortized cost		$ 16,915,808

Fixed Maturity Securities

The following tables summarize unrealized losses on fixed maturity securities, which are carried at amortized cost, at June 30, 2016 and December 31, 2015. The unrealized losses were primarily related to interest rate fluctuations. The tables set forth unrealized losses by duration and number of investment positions, together with the fair value of the related fixed maturity securities:

		Unrealized Losses for Less than Twelve Months		No. of Investment Positions		Unrealized Losses for More than Twelve Months		No. of Investment Positions		Total Unrealized Loss
At June 30, 2016
U.S. Treasury Securities and Obligations of U.S. Government Agencies		$ -		0		$ -		0		$ -
Obligations of states and political subdivisions		-		0		-		0		-
Corporate securities including public utilities		962,234		27		2,770,974		34		3,733,208
Mortgage-backed securities		134,865		5		-		0		134,865
Total unrealized losses		$ 1,097,099		32		$ 2,770,974		34		$ 3,868,073
Fair Value		$ 11,502,761				$ 9,977,552				$ 21,480,313

At December 31, 2015
U.S. Treasury Securities and Obligations of U.S. Government Agencies		$ 4,743		2		$ -		0		$ 4,743
Obligations of states and political subdivisions		-		0		1,040		1		1,040
Corporate securities including public utilities		3,701,572		98		1,800,171		18		5,501,743
Mortgage-backed securities		75,580		4		-		0		75,580
Total unrealized losses		$ 3,781,895		104		$ 1,801,211		19		$ 5,583,106
Fair Value		$ 34,076,401				$ 3,809,957				$ 37,886,358

The average market value of the related fixed maturities was 84.7% and 87.2% of amortized cost as of June 30, 2016 and December 31, 2015, respectively. During the three months ended June 30, 2016 and 2015 an other than temporary decline in fair value resulted in the recognition of credit losses on fixed maturity securities of $30,000 for each reporting period, and for the six months ended June 30, 2016 and 2015 an other than temporary decline in fair value resulted in the recognition of credit losses on fixed maturity securities of $60,000 for each reporting period.

On a quarterly basis, the Company reviews its available for sale and held to maturity fixed investment securities related to corporate securities and other public utilities, consisting of bonds and preferred stocks that are in a loss position. The review involves an analysis of the securities in relation to historical values, and projected earnings and revenue growth rates. Based on the analysis, a determination is made whether a security will likely recover from the loss position within a reasonable period of time. If it is unlikely that the investment will recover from the loss position, the loss is considered to be other than temporary, the security is written down to the impaired value and an impairment loss is recognized.

Equity Securities

The following tables summarize unrealized losses on equity securities that were carried at estimated fair value based on quoted trading prices at June 30, 2016 and December 31, 2015. The unrealized losses were primarily the result of decreases in fair value due to overall equity market declines. The tables set forth unrealized losses by duration and number of investment positions, together with the fair value of the related equity securities available for sale in a loss position:

		Unrealized Losses for Less than Twelve Months		No. of Investment Positions		Unrealized Losses for More than Twelve Months		No. of Investment Positions		Total Unrealized Losses
At June 30, 2016
Industrial, miscellaneous and all other		$ 577,290		145		$ 772,237		103		$ 1,349,527
Total unrealized losses		$ 577,290		145		$ 772,237		103		$ 1,349,527
Fair Value		$ 2,514,410				$ 1,916,072				$ 4,430,482

At December 31, 2015
Industrial, miscellaneous and all other		$ 997,862		222		$ 676,232		74		$ 1,674,093
Total unrealized losses		$ 997,862		222		$ 676,232		74		$ 1,674,093
Fair Value		$ 4,177,709				$ 760,860				$ 4,938,569

The average market value of the equity securities available for sale was 76.7% and 74.7% of the original investment as of June 30, 2016 and December 31, 2015, respectively. The intent of the Company is to retain equity securities for a period of time sufficient to allow for the recovery in fair value. However, the Company may sell equity securities during a period in which the fair value has declined below the amount of the original investment. In certain situations, new factors, including changes in the business environment, can change the Company’s previous intent to continue holding a security. During the three months ended June 30, 2016 and 2015, an other than temporary decline in the fair value resulted in the recognition of an impairment loss on equity securities of $-0- and $25,311, respectively, and for the six months ended June 30, 2016 and 2015, an other than temporary decline in the fair value resulted in the recognition of an impairment loss on equity securities of $43,630 and $51,207, respectively.

On a quarterly basis, the Company reviews its investment in industrial, miscellaneous and all other equity securities that are in a loss position. The review involves an analysis of the securities in relation to historical values, price earnings ratios, projected earnings and revenue growth rates. Based on the analysis a determination is made whether a security will likely recover from the loss position within a reasonable period of time. If it is unlikely that the investment will recover from the loss position, the loss is considered to be other than temporary, the security is written down to the impaired value and an impairment loss is recognized.

The fair values of fixed maturity securities are based on quoted market prices, when available. For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing services, or in the case of private placements, are estimated by discounting expected future cash flows using a current market value applicable to the coupon rate, credit and maturity of the investments. The fair values for equity securities are based on quoted market prices.

The amortized cost and estimated fair value of fixed maturity securities at June 30, 2016, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

		Amortized Cost		Estimated Fair Value
Held to Maturity:
Due in 2016		$ 1,704,502		$ 1,725,710
Due in 2017 through 2020		33,046,936		35,300,069
Due in 2021 through 2025		34,845,314		37,550,347
Due after 2025		66,001,097		72,025,881
Mortgage-backed securities		7,838,652		8,057,815
Redeemable preferred stock		623,635		676,187
Total held to maturity		$ 144,060,136		$ 155,336,009

The cost and estimated fair value of available for sale securities at June 30, 2016, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Equities are valued using the specific identification method.

		Cost		Estimated Fair Value
Available for Sale:
Common stock		$ 10,188,627		$ 9,103,276
Total available for sale		$ 10,188,627		$ 9,103,276

The Company’s realized gains and losses and other than temporary impairments from investments and other assets, are summarized as follows:

		Three Months Ended June 30				Six Months Ended June 30
		2016		2015		2016		2015
Fixed maturity securities held to maturity:
Gross realized gains		$ 194,456		$ 273,061		$ 194,456		$ 359,057
Gross realized losses		-		(49,594)		(2,878)		(59,370)
Other than temporary impairments		(30,000)		(30,000)		(60,000)		(60,000)

Securities available for sale:
Gross realized gains		76,085		42,289		139,580		130,009
Gross realized losses		(8,724)		-		(32,602)		(1,016)
Other than temporary impairments		-		(25,311)		(43,630)		(51,207)

Other assets:
Gross realized gains		583,688		267,097		866,283		524,237
Gross realized losses		(724,962)		(32,077)		(946,374)		(32,077)
Total		$ 90,543		$ 445,465		$ 114,835		$ 809,633

The net carrying amount of held to maturity securities sold was $1,789,159 and $2,543,312 for the six months ended June 30, 2016 and 2015, respectively. The net realized gain related to these sales was $156,171 and $330,373 for the six months ended June 30, 2016 and 2015, respectively.

There were no investments, aggregated by issuer, in excess of 10% of shareholders’ equity (before net unrealized gains and losses on available for sale securities) at June 30, 2016, other than investments issued or guaranteed by the United States Government.

Major categories of net investment income are as follows:

	Three Months Ended June 30				Six Months Ended June 30
	2016		2015		2016		2015
Fixed maturity securities	$ 2,011,637		$ 2,144,989		$ 4,062,206		$ 4,125,684
Equity securities	59,252		55,298		130,293		114,716
Mortgage loans on real estate	2,295,531		1,790,538		4,306,506		3,641,164
Real estate	2,587,789		2,233,781		5,426,272		4,354,352
Policy loans	171,035		188,639		353,241		377,185
Insurance assignments	2,946,375		2,505,252		5,963,484		5,196,411
Other investments	13,962		-		13,962		-
Short-term investments, principally interest on sale of mortgage loans and other	2,001,301		2,233,355		3,879,983		3,767,981
Gross investment income	12,086,882		11,151,852		24,135,947		21,577,493
Investment expenses	(2,951,062)		(2,561,179)		(6,007,936)		(5,163,976)
Net investment income	$ 9,135,820		$ 8,590,673		$ 18,128,011		$ 16,413,517

Net investment income includes income earned by the restricted assets of the cemeteries and mortuaries of $74,365 and $93,564 for the three months ended June 30, 2016 and 2015, respectively, and $162,341 and $186,486 for the six months ended June 30, 2016 and 2015, respectively.

Net investment income on real estate consists primarily of rental revenue.

Investment expenses consist primarily of depreciation, property taxes, operating expenses of real estate and an estimated portion of administrative expenses relating to investment activities.

Securities on deposit for regulatory authorities as required by law amounted to $9,062,795 at June 30, 2016 and $8,815,542 at December 31, 2015. The restricted securities are included in various assets under investments on the accompanying condensed consolidated balance sheets.

Real Estate

The Company continues to strategically deploy resources into real estate to match the income and yield durations of its primary obligations. The sources for these real estate assets come through its various business units in the form of acquisition, development and foreclosures on delinquent mortgage loans.

Commercial Real Estate Held for Investment

The Company owns and manages commercial real estate assets as a means of generating investment income. These assets are acquired in accordance with the Company’s goals and objectives for risk-adjusted returns. Due diligence is conducted on each asset using internal and third party reports. Geographic locations and asset classes of the investment activity is determined by senior management under the direction of the Board of Directors.

The Company employs full-time employees to attend to the day-to-day operations of those assets within the greater Salt Lake area and close surrounding markets. The Company utilizes third party property managers when the geographic boundary does not warrant full-time staff or through strategic lease-up periods. The Company generally looks to acquire assets in regions that are high growth regions for employment and population and in assets that provide operational efficiencies.

The Company currently owns and operates 10 commercial properties in 6 states. These properties include industrial warehouses, office building and retail centers. The assets are primarily held without debt; however, the Company does use debt in strategic cases to leverage established yields or to acquire higher quality, or class, of asset.

The following is a summary of the Company’s investment in commercial real estate for the periods presented:

		Net Ending Balance				Total Square Footage
		June 30		December 31		June 30		December 31
		2016		2015		2016		2015
Arizona		$ 457,156	(1)	$ 463,774	(1)	16,270		16,270
Arkansas		102,474		-		3,200		-
Kansas		12,683,027		11,537,335		222,679		222,679
Mississippi		3,134,773		-		21,521		-
New Mexico		7,000	(1)	7,000	(1)	-		-
Texas		3,760,005		3,768,542		23,470		23,470
Utah		17,090,224		17,403,746		233,244		253,244

		$ 37,234,659		$ 33,180,397		520,384		515,663

(1) Includes undeveloped land

Residential Real Estate Held for Investment

The Company owns a portfolio of residential homes primarily as a result of loan foreclosures. The strategy has been to lease these homes to produce cash flow, and allow time for the economic fundamentals to return to the various markets. Once the market for these homes return, the Company engages in the disposition of these assets at prices above the book value or at a discount far less than what would have been realized at the time of foreclosure.

The Company established Security National Real Estate Services (“SNRE”) in 2013 to manage the residential portfolio. SNRE cultivates and maintains the preferred vendor relationships necessary to manage costs and quality of work performed on the portfolio of homes across the country.

As of June 30, 2016, SNRE manages 135 residential properties in 10 states across the United States which includes a newly constructed apartment complex, Dry Creek at East Village, in Sandy Utah with a net ending balance of $36,425,493.

The following is a summary of the Company’s investment in residential real estate for the periods presented:

		Net Ending Balance
		June 30			December 31
		2016			2015
Arizona		$ 749,067			$ 944,614
California		5,705,414			6,158,253
Colorado		454,996			553,230
Florida		8,565,629			9,203,624
Illinois		-			165,800
Oklahoma		98,667			99,862
Ohio		46,658			-
Oregon		-			120,000
South Carolina		672,049			823,872
Texas		1,272,794			1,198,860
Utah		61,148,091			62,117,738
Washington		286,181			286,182
		$ 78,999,546			$ 81,672,035

Real Estate Owned and Occupied by the Company

The primary business units of the Company occupy a portion of the real estate owned by the Company. Currently, the Company occupies nearly 70,000 square feet, or 13% of the overall commercial real estate holdings.

As of June 30, 2016, real estate owned and occupied by the company is summarized as follows:

Location		Business Segment		Approximate Square Footage		Square Footage Occupied by the Company
5300 South 360 West, Salt Lake City, UT (1)		Corporate Offices, Life Insurance and Cemetery/Mortuary Operations		36,000		100%
5201 Green Street, Salt Lake City, UT		Mortgage Operations		36,899		34%
3935 I-55 South Frontage Road, Jackson, MS (1)		Life Insurance Operations		12,300		100%

Mortgage Loans

Mortgage loans consist of first and second mortgages. The mortgage loans bear interest at rates ranging from 2.0% to 10.5%, maturity dates range from three months to 30 years and are secured by real estate. Concentrations of credit risk arise when a number of mortgage loan debtors have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Although the Company has a diversified mortgage loan portfolio consisting of residential mortgages, commercial loans and residential construction loans and requires collateral on all real estate exposures, a substantial portion of its debtors’ ability to honor obligations is reliant on the economic stability of the geographic region in which the debtors do business. At June 30, 2016, the Company had 52%, 14%, 9%, 7%, and 5% of its mortgage loans from borrowers located in the states of Utah, California, Texas, Florida, and Oregon, respectively. The mortgage loans on real estate balances on the consolidated balance sheet are reflected net of an allowance for loan losses of $2,204,536 and $1,848,120 at June 30, 2016 and December 31, 2015, respectively.

The Company establishes a valuation allowance for credit losses in its portfolio. The following is a summary of the allowance for loan losses as a contra-asset account for the periods presented:

Allowance for Credit Losses and Recorded Investment in Mortgage Loans

	Commercial		Residential		Residential Construction		Total
June 30, 2016
Allowance for credit losses:
Beginning balance - January 1, 2016	$ 187,129		$ 1,560,877		$ 100,114		$ 1,848,120
Charge-offs	-		(60,628)		-		(60,628)
Provision	-		417,044		-		417,044
Ending balance -June 30, 2016	$ 187,129		$ 1,917,293		$ 100,114		$ 2,204,536

Ending balance: individually evaluated for impairment	$ -		$ 456,262		$ -		$ 456,262

Ending balance: collectively evaluated for impairment	$ 187,129		$ 1,461,031		$ 100,114		$ 1,748,274

Ending balance: loans acquired with deteriorated credit quality	$ -		$ -		$ -		$ -

Mortgage loans:
Ending balance	$ 36,034,037		$ 52,719,167		$ 44,834,079		$ 133,587,283

Ending balance: individually evaluated for impairment	$ -		$ 4,321,276		$ -		$ 4,321,276

Ending balance: collectively evaluated for impairment	$ 36,034,037		$ 48,397,891		$ 44,834,079		$ 129,266,007

Ending balance: loans acquired with deteriorated credit quality	$ -		$ -		$ -		$ -

December 31, 2015
Allowance for credit losses:
Beginning balance - January 1, 2015	$ 187,129		$ 1,715,812		$ 100,114		$ 2,003,055
Charge-offs	-		(123,942)		-		(123,942)
Provision	-		(30,993)		-		(30,993)
Ending balance - December 31, 2015	$ 187,129		$ 1,560,877		$ 100,114		$ 1,848,120

Ending balance: individually evaluated for impairment	$ -		$ 305,962		$ -		$ 305,962

Ending balance: collectively evaluated for impairment	$ 187,129		$ 1,254,915		$ 100,114		$ 1,542,158

Ending balance: loans acquired with deteriorated credit quality	$ -		$ -		$ -		$ -

Mortgage loans:
Ending balance	$ 33,522,978		$ 46,020,490		$ 34,851,557		$ 114,395,025

Ending balance: individually evaluated for impairment	$ -		$ 3,087,161		$ 93,269		$ 3,180,430

Ending balance: collectively evaluated for impairment	$ 33,522,978		$ 42,933,329		$ 34,758,287		$ 111,214,594

Ending balance: loans acquired with deteriorated credit quality	$ -		$ -		$ -		$ -

The following is a summary of the aging of mortgage loans for the periods presented:

Age Analysis of Past Due Mortgage Loans

	30-59 Days Past Due	60-89 Days Past Due	Greater Than 90 Days (1)	In Foreclosure (1)	Total Past Due	Current	Total Mortgage Loans	Allowance for Loan Losses	Net Mortgage Loans
June 30, 2016

Commercial	$ -	$ -	$ -	$ -	$ -	$ 36,034,037	$ 36,034,037	$ (187,129)	$ 35,846,908
Residential	2,232,999	535,471	1,250,122	4,321,276	8,339,869	44,379,298	52,719,167	(1,917,293)	50,801,874
Residential Construction	-	186,586	64,895	-	251,481	44,582,598	44,834,079	(100,114)	44,733,965

Total	$ 2,232,999	$ 722,057	$ 1,315,017	$ 4,321,276	$ 8,591,350	$ 124,995,933	$ 133,587,283	$ (2,204,536)	$ 131,382,747

December 31, 2015
Commercial	$ -	$ -	$ -	$ -	$ -	$ 33,522,978	$ 33,522,978	$ (187,129)	$ 33,335,849
Residential	1,162,102	884,143	2,212,993	3,087,161	7,346,399	38,674,091	46,020,490	(1,560,877)	44,459,613
Residential Construction	-	-	64,895	93,269	158,164	34,693,393	34,851,557	(100,114)	34,751,443

Total	$ 1,162,102	$ 884,143	$ 2,277,888	$ 3,180,430	$ 7,504,563	$ 106,890,462	$ 114,395,025	$ (1,848,120)	$ 112,546,905

Impaired Mortgage Loans

Impaired mortgage loans include loans with a related specific valuation allowance or loans whose carrying amount has been reduced to the expected collectible amount because the impairment has been considered other than temporary. The recorded investment in and unpaid principal balance of impaired loans along with the related loan specific allowance for losses, if any, for each reporting period and the average recorded investment and interest income recognized during the time the loans were impaired were as follows:

Impaired Loans

	Recorded Investment		Unpaid Principal Balance		Related Allowance		Average Recorded Investment		Interest Income Recognized
June 30, 2016
With no related allowance recorded:
Commercial	$ -		$ -		$ -		$ -		$ -
Residential	-		-		-		-		-
Residential construction	-		-		-		-		-

With an allowance recorded:
Commercial	$ -		$ -		$ -		$ -		$ -
Residential	4,321,276		4,321,276		456,262		4,321,276		-
Residential construction	-		-		-		-		-

Total:
Commercial	$ -		$ -		$ -		$ -		$ -
Residential	4,321,276		4,321,276		456,262		4,321,276		-
Residential construction	-		-		-		-		-

December 31, 2015
With no related allowance recorded:
Commercial	$ -		$ -		$ -		$ -		$ -
Residential	-		-		-		-		-
Residential construction	93,269		93,269		-		93,269		-

With an allowance recorded:
Commercial	$ -		$ -		$ -		$ -		$ -
Residential	3,087,161		3,087,161		305,962		3,087,161		-
Residential construction	-		-		-		-		-

Total:
Commercial	$ -		$ -		$ -		$ -		$ -
Residential	3,087,161		3,087,161		305,962		3,087,161		-
Residential construction	93,269		93,269		-		93,269		-

Credit Risk Profile Based on Performance Status

The Company’s mortgage loan portfolio is monitored based on performance of the loans. Monitoring a mortgage loan increases when the loan is delinquent or earlier if there is an indication of impairment. The Company defines non-performing mortgage loans as loans 90 days or greater delinquent or on non-accrual status.

The Company’s performing and non-performing mortgage loans were as follows:

Mortgage Loan Credit Exposure
Credit Risk Profile Based on Payment Activity

	Commercial				Residential				Residential Construction				Total
	June 30, 2016		December 31, 2015		June 30, 2016		December 31, 2015		June 30, 2016		December 31, 2015		June 30, 2016		December 31, 2015

Performing	$ 36,034,037		$ 33,522,978		$ 47,147,768		$ 40,720,336		$ 44,769,184		$ 34,693,393		$ 127,950,989		$ 108,936,707
Nonperforming	-		-		5,571,399		5,300,154		64,895		158,164		5,636,294		5,458,318

Total	$ 36,034,037		$ 33,522,978		$ 52,719,167		$ 46,020,490		$ 44,834,079		$ 34,851,557		$ 133,587,283		$ 114,395,025

Non-Accrual Mortgage Loans

Once a loan is past due 90 days, it is the policy of the Company to end the accrual of interest income on the loan and write off any income that had been accrued. Interest not accrued on these loans totals $263,000 and $268,000 as of June 30, 2016 and December 31, 2015, respectively.

The following is a summary of mortgage loans on a nonaccrual status for the periods presented.

	Mortgage Loans on Nonaccrual Status

	As of June 30 2016		As of December 31 2015
Residential	$ 5,571,399		$ 5,300,154
Residential construction	64,895		158,164
Total	$ 5,636,294		$ 5,458,318

Loan Loss Reserve

When a repurchase demand is received from a third party investor, the relevant data is reviewed and captured so that an estimated future loss can be calculated. The key factors that are used in the estimated loss calculation are as follows: (i) lien position, (ii) payment status, (iii) claim type, (iv) unpaid principal balance, (v) interest rate, and (vi) validity of the demand. Other data is captured and is useful for management purposes; the actual estimated loss is generally based on these key factors. The Company conducts its own review upon the receipt of a repurchase demand. In many instances, the Company is able to resolve the issues relating to the repurchase demand by the third party investor without having to make any payments to the investor.

The following is a summary of the loan loss reserve that is included in other liabilities and accrued expenses:

	As of June 30 2016		As of December 31 2015
Balance, beginning of period	$ 2,805,900		$ 1,718,150
Provisions for losses	1,415,451		6,295,043
Charge-offs	(158,998)		(5,207,293)
Balance, end of period	$ 4,062,353		$ 2,805,900

The Company believes the loan loss reserve represents probable loan losses incurred as of the balance sheet date. Actual loan loss experience could change, in the near-term, from the established reserve based upon claims that could be asserted by third party investors. SecurityNational Mortgage believes there is potential to resolve any alleged claims by third party investors on acceptable terms. If SecurityNational Mortgage is unable to resolve such claims on acceptable terms, legal action may ensue. In the event of legal action by any third party investor, SecurityNational Mortgage believes it has significant defenses to any such action and intends to vigorously defend itself against such action.

- Definition

The entire disclosure for investments in certain debt and equity securities.

+ References + Details