Note 14: Business Segment Information

12 Months Ended

Dec. 31, 2016

Notes

Note 14: Business Segment Information

14)       Business Segment Information

Description of Products and Services by Segment

The Company has three reportable business segments: life insurance, cemetery and mortuary, and mortgage. The Company’s life insurance segment consists of life insurance premiums and operating expenses from the sale of insurance products sold by the Company’s independent agency force and net investment income derived from investing policyholder and segment surplus funds. The Company’s cemetery and mortuary segment consists of revenues and operating expenses from the sale of at-need cemetery and mortuary merchandise and services at its mortuaries and cemeteries, pre-need sales of cemetery spaces after collection of 10% or more of the purchase price and the net investment income from investing segment surplus funds. The Company’s mortgage segment consists of fee income and expenses from the originations of residential mortgage loans and interest earned and interest expenses from warehousing pre-sold loans before the funds are received from financial institutional investors.

Measurement of Segment Profit or Loss and Segment Assets

The accounting policies of the reportable segments are the same as those described in the Significant Accounting Principles. Intersegment revenues are recorded at cost plus an agreed upon intercompany profit, and are eliminated upon consolidation.

Factors Management Used to Identify the Enterprise’s Reportable Segments

The Company’s reportable segments are business units that are managed separately due to the different products provided and the need to report separately to the various regulatory jurisdictions. The Company regularly reviews the quantitative thresholds and other criteria to determine when other business segments may need to be reported.

	2016
	Life	Cemetery/		Intercompany
	Insurance	Mortuary	Mortgage	Eliminations	Consolidated
Revenues:
From external sources:
Revenue from customers	$       66,902,126	$       12,267,640	$     184,015,202	$                         -	$     263,184,968
Net investment income	28,618,485	312,494	8,651,465	-	37,582,444
Realized gains (losses) on
investments and other assets	(277,040)	211,429	(110,776)	-	(176,387)
Other than temporary impairments	(270,358)	-	-	-	(270,358)
Other revenues	632,260	88,676	6,166,813	-	6,887,749
Intersegment revenues:
Net investment income	7,119,692	691,876	327,778	(8,139,346)	-
Total revenues	102,725,165	13,572,115	199,050,482	(8,139,346)	307,208,416
Expenses:
Death and other policy benefits	33,387,380	-	-	-	33,387,380
Increase in future policy benefits	21,476,432	-	-	-	21,476,432
Amortization of deferred policy and preneed acquisition costs and
value of business acquired	7,647,097	356,078	-	-	8,003,175
Depreciation	596,827	390,362	1,195,535	-	2,182,724
General, administrative and
other costs:
Intersegment	-	148,025	219,974	(367,999)	-
Provision for loan losses	-	-	4,688,754	-	4,688,754
Costs related to funding mortgage
loans	-	-	8,756,791	-	8,756,791
Other	29,478,156	10,524,535	162,858,237	1	202,860,929
Interest expense:
Intersegment	781,078	651,046	6,339,224	(7,771,348)	-
Other	1,654,264	282,878	3,174,726	-	5,111,868
Total benefits and expenses	95,021,234	12,352,924	187,233,241	(8,139,346)	286,468,053
Earnings before income taxes	$         7,703,931	$         1,219,191	$       11,817,241	$                         -	$       20,740,363
Income tax expense	(1,953,167)	-	(4,507,692)	-	(6,460,859)
Net earnings	$         5,750,764	$         1,219,191	$         7,309,549	$                         -	$       14,279,504
Identifiable assets	$     821,097,220	$       99,611,263	$       74,170,647	$     (140,874,459)	$     854,004,671
Goodwill	$         2,765,570	$                        -	$                        -	$                         -	$         2,765,570
Expenditures for long-lived assets	$            532,958	$            723,445	$         2,310,108	$                         -	$         3,566,511

	2015
	Life	Cemetery/		Intercompany
	Insurance	Mortuary	Mortgage	Eliminations	Consolidated
Revenues:
From external sources:
Revenue from customers	$       58,883,721	$       11,502,045	$     173,252,834	$                         -	$     243,638,600
Net investment income	25,297,486	450,854	8,259,564	-	34,007,904
Realized gains (losses) on
investments and other assets	2,332,456	387,316	(318,413)	-	2,401,359
Other than temporary impairments	(413,714)	-	(191,716)	-	(605,430)
Other revenues	824,759	146,831	4,150,217	-	5,121,807
Intersegment revenues:
Net investment income	7,615,338	1,155,180	326,822	(9,097,340)	-
Total revenues	94,540,046	13,642,226	185,479,308	(9,097,340)	284,564,240
Expenses:
Death and other policy benefits	33,549,893	-	-	-	33,549,893
Increase in future policy benefits	17,212,001	-	-	-	17,212,001
Amortization of deferred policy and preneed acquisition costs and
value of business acquired	5,306,781	334,512	-	-	5,641,293
Depreciation	710,733	403,066	1,069,697	-	2,183,496
General, administrative and
other costs:
Intersegment	-	156,777	199,244	(356,021)	-
Provision for loan losses	-	-	6,295,043	-	6,295,043
Costs related to funding mortgage
loans	-	-	8,864,404	-	8,864,404
Other	27,416,860	10,117,012	147,600,822	(1)	185,134,693
Interest expense:
Intersegment	726,919	1,379,668	6,634,731	(8,741,318)	-
Other	1,151,860	337,632	2,969,120	-	4,458,612
Total benefits and expenses	86,075,047	12,728,667	173,633,061	(9,097,340)	263,339,435
Earnings before income taxes	$         8,464,999	$            913,559	$       11,846,247	$                         -	$       21,224,805
Income tax expense	(3,138,929)	-	(4,607,019)	-	(7,745,948)
Net earnings	$         5,326,070	$            913,559	$         7,239,228	$                         -	$       13,478,857
Identifiable assets	$     721,362,741	$     101,935,898	$       66,743,342	$     (140,108,664)	$     749,933,317
Goodwill	$         2,765,570	$                        -	$                        -	$                         -	$         2,765,570
Expenditures for long-lived assets	$         3,024,223	$            154,226	$            454,241	$                         -	$         3,632,690

	2014
	Life	Cemetery/		Intercompany
	Insurance	Mortuary	Mortgage	Eliminations	Consolidated
Revenues:
From external sources:
Revenue from customers	$       57,037,623	$       11,426,308	$     125,109,997	$                         -	$     193,573,928
Net investment income	23,008,489	275,324	5,019,927	-	28,303,740
Realized gains (losses) on
investments and other assets	1,208,391	585,543	124,242	-	1,918,176
Other than temporary impairments	(164,240)	-	-	-	(164,240)
Other revenues	682,682	169,464	2,894,867	-	3,747,013
Intersegment revenues:
Net investment income	6,128,389	1,288,856	642,880	(8,060,125)	-
Total revenues	87,901,334	13,745,495	133,791,913	(8,060,125)	227,378,617
Expenses:
Death and other policy benefits	29,789,964	-	-	-	29,789,964
Increase in future policy benefits	18,060,151	-	-	-	18,060,151
Amortization of deferred policy and preneed acquisition costs and
value of business acquired	6,561,589	331,389	-	-	6,892,978
Depreciation	644,510	436,390	1,096,265	-	2,177,165
General, administrative and
other costs:
Intersegment	24,000	166,079	208,513	(398,592)	-
Provision for loan losses	-	-	3,053,403	-	3,053,403
Costs related to funding mortgage
loans	-	-	6,877,069	-	6,877,069
Other	23,045,928	10,245,144	111,319,492	(2)	144,610,562
Interest expense:
Intersegment	725,354	1,481,317	5,454,860	(7,661,531)	-
Other	578,083	421,920	1,994,426	-	2,994,429
Total benefits and expenses	79,429,579	13,082,239	130,004,028	(8,060,125)	214,455,721
Earnings before income taxes	$         8,471,755	$            663,256	$         3,787,885	$                         -	$       12,922,896
Income tax expense	(3,427,254)	-	(1,471,409)	-	(4,898,663)
Net earnings	$         5,044,501	$            663,256	$         2,316,476	$                         -	$         8,024,233
Identifiable assets	$     652,348,803	$     109,114,226	$       52,349,204	$     (142,742,671)	$     671,069,562
Goodwill	$         2,765,570	$                        -	$                        -	$                         -	$         2,765,570
Expenditures for long-lived assets	$            660,830	$            121,677	$            737,936	$                         -	$         1,520,443