UTAH
|
87-0345941
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
5300 South 360 West, Suite 250, Salt Lake City, Utah
|
84123
|
(Address of principal executive offices)
|
(Zip Code)
|
(801) 264-1060
(Registrant's telephone number, including area code)
|
Large accelerated filer [ ]
|
Accelerated filer [ ]
|
|
Non-accelerated filer [ ] (Do not check if a smaller reporting company)
|
Smaller reporting company [X]
|
Class A Common Stock, $2.00 par value
|
14,569,321
|
Title of Class
|
Number of Shares Outstanding as of May 15, 2018
|
Class C Common Stock, $2.00 par value
|
2,089,372
|
Title of Class
|
Number of Shares Outstanding as of May 15, 2018
|
Page No.
|
||
Part I - Financial Information
|
||
Item 1.
|
Financial Statements
|
|
Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017 (unaudited)
|
3-4
|
|
Condensed Consolidated Statements of Earnings for the Three Months Ended March 31, 2018 and 2017 (unaudited)
|
5
|
|
Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2018 and 2017 (unaudited)
|
6
|
|
Condensed Consolidated Statements of Stockholders' Equity as of March 31, 2018 and March 31, 2017 (unaudited)
|
7
|
|
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2018 and 2017 (unaudited)
|
8
|
|
Notes to Condensed Consolidated Financial Statements (unaudited)
|
10
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
46
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
50
|
Item 4.
|
Controls and Procedures
|
50
|
Part II - Other Information
|
||
Item 1.
|
Legal Proceedings
|
50
|
Item 1A.
|
Risk Factors
|
51
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
51
|
Item 3.
|
Defaults Upon Senior Securities
|
51
|
Item 4.
|
Mine Safety Disclosures
|
51
|
Item 5.
|
Other Information
|
51
|
Item 6.
|
Exhibits
|
51
|
Signature Page
|
53
|
Assets
|
March 31
2018 (Unaudited) |
December 31
2017 |
||||||
Investments:
|
||||||||
Fixed maturity securities, held to maturity, at amortized cost
|
$
|
231,474,083
|
$
|
228,397,623
|
||||
Equity securities at estimated fair value
|
5,889,151
|
6,037,855
|
||||||
Mortgage loans held for investment (net of allowances for loan losses of $1,696,371 and $1,768,796 for 2018 and 2017)
|
204,989,906
|
204,210,885
|
||||||
Real estate held for investment (net of accumulated depreciation of $15,540,213 and $18,788,869 for 2018 and 2017)
|
105,063,331
|
141,298,706
|
||||||
Other investments and policy loans (net of allowances for doubtful accounts of $931,029 and $846,641 for 2018 and 2017)
|
45,550,795
|
45,895,472
|
||||||
Accrued investment income
|
3,886,170
|
3,644,077
|
||||||
Total investments
|
596,853,436
|
629,484,618
|
||||||
Cash and cash equivalents
|
101,728,202
|
45,315,661
|
||||||
Loans held for sale at estimated fair value
|
124,866,313
|
133,414,188
|
||||||
Receivables (net of allowances for doubtful accounts of $1,569,422 and $1,544,518 for 2018 and 2017)
|
9,398,972
|
10,443,869
|
||||||
Restricted assets (including $800,510 and $809,958 for 2018 and 2017 at estimated fair value)
|
11,146,540
|
11,830,621
|
||||||
Cemetery perpetual care trust investments (including $648,381 and $682,315 for 2018 and 2017 at estimated fair value)
|
3,806,645
|
4,623,563
|
||||||
Receivable from reinsurers
|
13,263,304
|
13,394,603
|
||||||
Cemetery land and improvements
|
9,920,554
|
9,942,933
|
||||||
Deferred policy and pre-need contract acquisition costs
|
82,496,322
|
80,625,304
|
||||||
Mortgage servicing rights, net
|
21,554,050
|
21,376,937
|
||||||
Property and equipment, net
|
7,713,599
|
8,069,380
|
||||||
Value of business acquired
|
6,389,260
|
6,588,759
|
||||||
Goodwill
|
2,765,570
|
2,765,570
|
||||||
Other
|
6,069,569
|
4,297,048
|
||||||
Total Assets
|
$
|
997,972,336
|
$
|
982,173,054
|
March 31
2018 (Unaudited) |
December 31
2017 |
|||||||
Liabilities and Stockholders' Equity
|
||||||||
Liabilities
|
||||||||
Future policy benefits and unpaid claims
|
$
|
605,543,124
|
$
|
604,746,951
|
||||
Unearned premium reserve
|
4,123,289
|
4,222,410
|
||||||
Bank and other loans payable
|
151,451,152
|
157,450,925
|
||||||
Deferred pre-need cemetery and mortuary contract revenues
|
12,150,924
|
12,873,068
|
||||||
Cemetery perpetual care obligation
|
3,729,150
|
3,710,740
|
||||||
Accounts payable
|
3,411,619
|
3,613,100
|
||||||
Other liabilities and accrued expenses
|
30,063,978
|
29,655,087
|
||||||
Income taxes
|
21,593,873
|
17,332,783
|
||||||
Total liabilities
|
832,067,109
|
833,605,064
|
||||||
Stockholders' Equity
|
||||||||
Preferred Stock - non-voting - $1.00 par value; 5,000,000 shares authorized; none issued or outstanding
|
-
|
-
|
||||||
Class A: common stock - $2.00 par value; 20,000,000 shares authorized; issued 14,569,321 shares in 2018 and 14,535,577 shares in 2017
|
29,138,642
|
29,071,154
|
||||||
Class B: non-voting common stock - $1.00 par value; 5,000,000 shares authorized; none issued or outstanding
|
-
|
-
|
||||||
Class C: convertible common stock - $2.00 par value; 3,000,000 shares authorized; issued 2,089,372 shares in 2018 and 2,089,374 shares in 2017
|
4,178,744
|
4,178,748
|
||||||
Additional paid-in capital
|
38,255,340
|
38,125,042
|
||||||
Accumulated other comprehensive income, net of taxes
|
-
|
603,170
|
||||||
Retained earnings
|
95,041,166
|
77,520,951
|
||||||
Treasury stock at cost - 468,770 Class A shares in 2018 and 537,203 Class A shares in 2017
|
(708,665
|
)
|
(931,075
|
)
|
||||
Total stockholders' equity
|
165,905,227
|
148,567,990
|
||||||
Total Liabilities and Stockholders' Equity
|
$
|
997,972,336
|
$
|
982,173,054
|
Three Months Ended
March 31
|
||||||||
2018
|
2017
|
|||||||
Revenues:
|
||||||||
Insurance premiums and other considerations
|
$
|
18,810,358
|
$
|
17,357,124
|
||||
Net investment income
|
10,074,431
|
9,016,376
|
||||||
Net mortuary and cemetery sales
|
3,232,729
|
3,358,973
|
||||||
Gains on investments and other assets
|
22,020,939
|
145,330
|
||||||
Other than temporary impairments on investments
|
-
|
(52,139
|
)
|
|||||
Mortgage fee income
|
25,460,160
|
38,974,760
|
||||||
Other
|
2,477,492
|
2,028,873
|
||||||
Total revenues
|
82,076,109
|
70,829,297
|
||||||
Benefits and expenses:
|
||||||||
Death benefits
|
9,608,098
|
8,794,598
|
||||||
Surrenders and other policy benefits
|
810,128
|
857,531
|
||||||
Increase in future policy benefits
|
5,584,936
|
5,568,042
|
||||||
Amortization of deferred policy and pre-need acquisition costs and value of business acquired
|
3,109,933
|
2,264,039
|
||||||
Selling, general and administrative expenses:
|
||||||||
Commissions
|
11,282,401
|
16,355,048
|
||||||
Personnel
|
16,566,688
|
18,589,687
|
||||||
Advertising
|
1,029,591
|
1,310,674
|
||||||
Rent and rent related
|
1,963,350
|
2,223,996
|
||||||
Depreciation on property and equipment
|
477,031
|
625,812
|
||||||
Costs related to funding mortgage loans
|
1,369,281
|
2,219,649
|
||||||
Other
|
6,810,324
|
7,346,493
|
||||||
Interest expense
|
1,761,677
|
1,254,039
|
||||||
Cost of goods and services sold-mortuaries and cemeteries
|
515,490
|
521,919
|
||||||
Total benefits and expenses
|
60,888,928
|
67,931,527
|
||||||
Earnings before income taxes
|
21,187,181
|
2,897,770
|
||||||
Income tax expense
|
(4,261,258
|
)
|
(1,037,770
|
)
|
||||
Net earnings
|
$
|
16,925,923
|
$
|
1,860,000
|
||||
Net earnings per Class A Equivalent common share (1)
|
$
|
1.05
|
$
|
0.12
|
||||
Net earnings per Class A Equivalent common share-assuming dilution (1)
|
$
|
1.04
|
$
|
0.11
|
||||
Weighted-average Class A equivalent common share outstanding (1)
|
16,171,412
|
15,827,495
|
||||||
Weighted-average Class A equivalent common shares outstanding-assuming dilution (1)
|
16,347,777
|
16,320,830
|
Three Months Ended
March 31
|
||||||||
2018
|
2017
|
|||||||
Net earnings
|
$
|
16,925,923
|
$
|
1,860,000
|
||||
Other comprehensive income:
|
||||||||
Unrealized gains on equity securities
|
-
|
29,871
|
||||||
Unrealized gains on derivative instruments
|
-
|
1,595
|
||||||
Other comprehensive income, before income tax
|
-
|
31,466
|
||||||
Income tax expense
|
-
|
(10,174
|
)
|
|||||
Other comprehensive income, net of income tax
|
-
|
21,292
|
||||||
Comprehensive income
|
$
|
16,925,923
|
$
|
1,881,292
|
Class A
Common Stock
|
Class C
Common Stock
|
Additional
Paid-in
Capital
|
Accumulated
Other
Comprehensive
Income
|
Retained
Earnings
|
Treasury
Stock
|
Total
|
||||||||||||||||||||||
Balance at December 31, 2016
|
$
|
27,638,012
|
$
|
3,804,458
|
$
|
34,813,246
|
$
|
264,822
|
$
|
67,409,204
|
$
|
(1,370,611
|
)
|
$
|
132,559,131
|
|||||||||||||
Net earnings
|
-
|
-
|
-
|
-
|
1,860,000
|
-
|
1,860,000
|
|||||||||||||||||||||
Other comprehensive income
|
-
|
-
|
-
|
21,292
|
-
|
-
|
21,292
|
|||||||||||||||||||||
Grant of stock options
|
-
|
-
|
101,996
|
-
|
-
|
-
|
101,996
|
|||||||||||||||||||||
Sale of treasury stock
|
-
|
-
|
178,002
|
-
|
-
|
146,065
|
324,067
|
|||||||||||||||||||||
Purchase of treasury stock
|
-
|
-
|
-
|
-
|
-
|
(185,470
|
)
|
(185,470
|
)
|
|||||||||||||||||||
Stock dividends
|
930
|
4
|
2,350
|
-
|
(3,284
|
)
|
-
|
-
|
||||||||||||||||||||
Conversion Class C to Class A
|
1,214
|
(1,214
|
)
|
-
|
-
|
-
|
-
|
-
|
||||||||||||||||||||
Balance at March 31, 2017
|
$
|
27,640,156
|
$
|
3,803,248
|
$
|
35,095,594
|
$
|
286,114
|
$
|
69,265,920
|
$
|
(1,410,016
|
)
|
$
|
134,681,016
|
|||||||||||||
Balance at December 31, 2017
|
$
|
29,071,154
|
$
|
4,178,748
|
$
|
38,125,042
|
$
|
603,170
|
$
|
77,520,951
|
$
|
(931,075
|
)
|
$
|
148,567,990
|
|||||||||||||
Cumulative effect adjustment upon adoption of new accounting standard (ASU 2016-01)
|
-
|
-
|
-
|
(603,170
|
)
|
603,170
|
-
|
-
|
||||||||||||||||||||
Net earnings
|
-
|
-
|
-
|
-
|
16,925,923
|
-
|
16,925,923
|
|||||||||||||||||||||
Grant of stock options
|
-
|
-
|
58,087
|
-
|
-
|
-
|
58,087
|
|||||||||||||||||||||
Exercise of stock options
|
63,968
|
-
|
(22,115
|
)
|
-
|
-
|
-
|
41,853
|
||||||||||||||||||||
Sale of treasury stock
|
-
|
-
|
88,964
|
-
|
-
|
222,410
|
311,374
|
|||||||||||||||||||||
Stock dividends
|
3,520
|
(4
|
)
|
5,362
|
-
|
(8,878
|
)
|
-
|
-
|
|||||||||||||||||||
Balance at March 31, 2018
|
$
|
29,138,642
|
$
|
4,178,744
|
$
|
38,255,340
|
$
|
-
|
$
|
95,041,166
|
$
|
(708,665
|
)
|
$
|
165,905,227
|
Three Months Ended
March 31
|
||||||||
2018
|
2017
|
|||||||
Cash flows from operating activities:
|
||||||||
Net cash provided by operating activities
|
$
|
8,712,560
|
$
|
30,431,376
|
||||
Cash flows from investing activities:
|
||||||||
Purchases of fixed maturity securities
|
(7,155,114
|
)
|
(2,575,997
|
)
|
||||
Calls and maturities of fixed maturity securities
|
3,604,516
|
830,595
|
||||||
Purchases of equity securities
|
(1,084,398
|
)
|
(4,190,458
|
)
|
||||
Sales of equity securities
|
922,402
|
4,092,734
|
||||||
Purchases of short-term investments
|
-
|
(3,053,797
|
)
|
|||||
Sales of short-term investments
|
-
|
2,266,915
|
||||||
Net changes in restricted assets
|
(48,832
|
)
|
(77,151
|
)
|
||||
Net changes in perpetual care trusts
|
2,376,461
|
(23,039
|
)
|
|||||
Mortgage loans, other investmensts and policy loans made
|
(132,321,562
|
)
|
(108,649,435
|
)
|
||||
Payments received for mortgage loans, other investments and policy loans
|
131,816,474
|
127,506,014
|
||||||
Purchase of property and equipment
|
(169,564
|
)
|
(312,640
|
)
|
||||
Sale of property and equipment
|
48,314
|
-
|
||||||
Purchase of real estate
|
(768,942
|
)
|
(3,103,471
|
)
|
||||
Sale of real estate
|
58,476,379
|
2,891,887
|
||||||
Net cash provided by investing activities
|
55,696,134
|
15,602,157
|
||||||
Cash flows from financing activities:
|
||||||||
Investment contract receipts
|
2,867,412
|
3,051,883
|
||||||
Investment contract withdrawals
|
(4,410,074
|
)
|
(4,468,624
|
)
|
||||
Proceeds from stock options exercised
|
41,853
|
-
|
||||||
Purchase of treasury stock
|
-
|
(185,470
|
)
|
|||||
Repayment of bank loans
|
(27,369,431
|
)
|
(673,454
|
)
|
||||
Proceeds from borrowing on bank loans
|
421,042
|
7,255,187
|
||||||
Net change in warehouse line borrowings
|
(309,286
|
)
|
(6,376,739
|
)
|
||||
Net change in line of credit borrowings
|
21,250,000
|
1,250,000
|
||||||
Net cash used in financing activities
|
(7,508,484
|
)
|
(147,217
|
)
|
||||
Net change in cash, cash equivalents, restricted cash and restricted cash equivalents
|
56,900,210
|
45,886,316
|
||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period
|
54,501,923
|
46,942,293
|
||||||
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period
|
$
|
111,402,133
|
$
|
92,828,609
|
||||
Supplemental Disclosure of Cash Flow Information:
|
||||||||
Cash paid (received) during the year for:
|
||||||||
Interest (net of amount capitalized)
|
$
|
1,617,074
|
$
|
1,234,420
|
||||
Income taxes (net of refunds)
|
164
|
(3,215
|
)
|
|||||
Non Cash Operating, Investing and Financing Activities:
|
||||||||
Accrued real estate construction costs and retainage
|
$
|
26,769
|
$
|
6,794,065
|
||||
Transfer of loans held for sale to mortgage loans held for investment
|
139,464
|
5,032,147
|
||||||
Benefit plans funded with treasury stock
|
311,374
|
324,067
|
||||||
Mortgage loans foreclosed into real estate
|
225,166
|
204,839
|
Three Months Ended
March 31
|
||||||||
2018
|
2017
|
|||||||
Cash and cash equivalents
|
$
|
101,728,202
|
$
|
85,069,717
|
||||
Restricted assets
|
7,468,609
|
6,837,786
|
||||||
Cemetery perpetual care trust investments
|
2,205,322
|
921,106
|
||||||
Total cash, cash equivalents, restricted cash and restricted cash equivalents
|
$
|
111,402,133
|
$
|
92,828,609
|
Cost |
Gross
Unrealized Gains |
Gross
Unrealized Losses |
Estimated
Fair Value |
|||||||||||||
March 31, 2018
|
||||||||||||||||
Fixed maturity securities held to maturity carried at amortized cost:
|
||||||||||||||||
Bonds:
|
||||||||||||||||
U.S. Treasury securities and obligations of U.S. Government agencies
|
$
|
54,286,773
|
$
|
178,830
|
$
|
(960,777
|
)
|
$
|
53,504,826
|
|||||||
Obligations of states and political subdivisions
|
6,742,875
|
71,014
|
(145,551
|
)
|
6,668,338
|
|||||||||||
Corporate securities including public utilities
|
157,715,073
|
10,498,181
|
(1,305,125
|
)
|
166,908,129
|
|||||||||||
Mortgage-backed securities
|
12,105,727
|
268,842
|
(249,019
|
)
|
12,125,550
|
|||||||||||
Redeemable preferred stock
|
623,635
|
28,808
|
(344
|
)
|
652,099
|
|||||||||||
Total fixed maturity securities held to maturity
|
$
|
231,474,083
|
$
|
11,045,675
|
$
|
(2,660,816
|
)
|
$
|
239,858,942
|
|||||||
Equity securities at estimated fair value:
|
||||||||||||||||
Common stock:
|
||||||||||||||||
Industrial, miscellaneous and all other
|
$
|
6,230,113
|
$
|
498,655
|
$
|
(839,617
|
)
|
$
|
5,889,151
|
|||||||
Total equity securities at estimated fair value
|
$
|
6,230,113
|
$
|
498,655
|
$
|
(839,617
|
)
|
$
|
5,889,151
|
|||||||
Mortgage loans held for investment at amortized cost:
|
||||||||||||||||
Residential
|
$
|
101,665,364
|
||||||||||||||
Residential construction
|
54,254,054
|
|||||||||||||||
Commercial
|
52,384,376
|
|||||||||||||||
Less: Unamortized deferred loan fees, net
|
(1,617,517
|
)
|
||||||||||||||
Less: Allowance for loan losses
|
(1,696,371
|
)
|
||||||||||||||
Total mortgage loans held for investment
|
$
|
204,989,906
|
||||||||||||||
Real estate held for investment net of accumulated depreciation:
|
||||||||||||||||
Residential
|
$
|
31,874,263
|
||||||||||||||
Commercial
|
73,189,068
|
|||||||||||||||
Total real estate held for investment
|
$
|
105,063,331
|
||||||||||||||
Policy loans and other investments at amortized cost:
|
||||||||||||||||
Policy loans
|
$
|
6,403,888
|
||||||||||||||
Insurance assignments
|
35,088,585
|
|||||||||||||||
Federal Home Loan Bank stock
|
708,700
|
|||||||||||||||
Other investments
|
4,280,651
|
|||||||||||||||
Less: Allowance for doubtful accounts
|
(931,029
|
)
|
||||||||||||||
Total policy loans and other investments
|
$
|
45,550,795
|
||||||||||||||
Accrued investment income
|
$
|
3,886,170
|
||||||||||||||
Total investments
|
$
|
596,853,436
|
Cost
|
Gross
Unrealized
Gains
|
Gross
Unrealized
Losses
|
Estimated
Fair
Value
|
|||||||||||||
December 31, 2017:
|
||||||||||||||||
Fixed maturity securities held to maturity carried at amortized cost:
|
||||||||||||||||
Bonds:
|
||||||||||||||||
U.S. Treasury securities and obligations of U.S. Government agencies
|
$
|
54,077,069
|
$
|
211,824
|
$
|
(579,423
|
)
|
$
|
53,709,470
|
|||||||
Obligations of states and political subdivisions
|
5,843,176
|
112,372
|
(71,013
|
)
|
5,884,535
|
|||||||||||
Corporate securities including public utilities
|
158,350,727
|
14,336,452
|
(1,007,504
|
)
|
171,679,675
|
|||||||||||
Mortgage-backed securities
|
9,503,016
|
210,652
|
(162,131
|
)
|
9,551,537
|
|||||||||||
Redeemable preferred stock
|
623,635
|
49,748
|
(191
|
)
|
673,192
|
|||||||||||
Total fixed maturity securities held to maturity
|
$
|
228,397,623
|
$
|
14,921,048
|
$
|
(1,820,262
|
)
|
$
|
241,498,409
|
|||||||
Equity securities at estimated fair value:
|
||||||||||||||||
Common stock:
|
||||||||||||||||
Industrial, miscellaneous and all other
|
$
|
6,002,931
|
$
|
667,593
|
$
|
(632,669
|
)
|
$
|
6,037,855
|
|||||||
Total equity securities at estimated fair value
|
$
|
6,002,931
|
$
|
667,593
|
$
|
(632,669
|
)
|
$
|
6,037,855
|
|||||||
Mortgage loans held for investment at amortized cost:
|
||||||||||||||||
Residential
|
$
|
102,527,111
|
||||||||||||||
Residential construction
|
50,157,533
|
|||||||||||||||
Commercial
|
54,954,865
|
|||||||||||||||
Less: Unamortized deferred loan fees, net
|
(1,659,828
|
)
|
||||||||||||||
Less: Allowance for loan losses
|
(1,768,796
|
)
|
||||||||||||||
Total mortgage loans held for investment
|
$
|
204,210,885
|
||||||||||||||
Real estate held for investment net of accumlated depreciation:
|
||||||||||||||||
Residential
|
$
|
68,329,917
|
||||||||||||||
Commercial
|
72,968,789
|
|||||||||||||||
Total real estate held for investment
|
$
|
141,298,706
|
||||||||||||||
Policy loans and other investments at amortized cost:
|
||||||||||||||||
Policy loans
|
$
|
6,531,352
|
||||||||||||||
Insurance assignments
|
36,301,739
|
|||||||||||||||
Federal Home Loan Bank stock
|
689,400
|
|||||||||||||||
Other investments
|
3,219,622
|
|||||||||||||||
Less: Allowance for doubtful accounts
|
(846,641
|
)
|
||||||||||||||
Total policy loans and other investments
|
$
|
45,895,472
|
||||||||||||||
Accrued investment income
|
$
|
3,644,077
|
||||||||||||||
Total investments
|
$
|
629,484,618
|
Unrealized
Losses for
Less than
Twelve Months
|
Fair Value
|
Unrealized
Losses for
More than
Twelve Months
|
Fair Value
|
Total
Unrealized
Loss
|
Fair Value
|
|||||||||||||||||||
At March 31, 2018
|
||||||||||||||||||||||||
U.S. Treasury Securities and Obligations of U.S. Government Agencies
|
$
|
897,420
|
$
|
51,456,932
|
$
|
63,356
|
$
|
623,360
|
$
|
960,776
|
$
|
52,080,292
|
||||||||||||
Obligations of states and political subdivisions
|
17,903
|
1,419,010
|
127,648
|
2,690,329
|
145,551
|
4,109,339
|
||||||||||||||||||
Corporate securities
|
620,598
|
33,678,083
|
684,528
|
11,365,056
|
1,305,126
|
45,043,139
|
||||||||||||||||||
Mortgage and other asset-backed securities
|
107,265
|
2,102,664
|
141,754
|
1,658,340
|
249,019
|
3,761,004
|
||||||||||||||||||
Redeemable preferred stock
|
344
|
11,268
|
-
|
-
|
344
|
11,268
|
||||||||||||||||||
Total unrealized losses
|
$
|
1,643,530
|
$
|
88,667,957
|
$
|
1,017,286
|
$
|
16,337,085
|
$
|
2,660,816
|
$
|
105,005,042
|
||||||||||||
At December 31, 2017
|
||||||||||||||||||||||||
U.S. Treasury Securities and Obligations of U.S. Government Agencies
|
$
|
532,010
|
$
|
51,606,699
|
$
|
47,413
|
$
|
643,380
|
$
|
579,423
|
$
|
52,250,079
|
||||||||||||
Obligations of states and political subdivisions
|
296
|
214,882
|
70,717
|
2,225,021
|
71,013
|
2,439,903
|
||||||||||||||||||
Corporate securities
|
167,786
|
11,551,865
|
839,718
|
13,193,258
|
1,007,504
|
24,745,123
|
||||||||||||||||||
Mortgage and other asset-backed securities
|
56,756
|
2,516,660
|
105,375
|
1,676,494
|
162,131
|
4,193,154
|
||||||||||||||||||
Redeemable preferred stock
|
191
|
11,421
|
-
|
-
|
191
|
11,421
|
||||||||||||||||||
Total unrealized losses
|
$
|
757,039
|
$
|
65,901,527
|
$
|
1,063,223
|
$
|
17,738,153
|
$
|
1,820,262
|
$
|
83,639,680
|
Amortized
Cost |
Estimated Fair
Value |
|||||||
Held to Maturity:
|
||||||||
Due in 1 year
|
$
|
17,978,827
|
$
|
18,098,867
|
||||
Due in 2-5 years
|
67,126,658
|
67,514,026
|
||||||
Due in 5-10 years
|
53,791,068
|
55,097,433
|
||||||
Due in more than 10 years
|
79,848,168
|
86,370,967
|
||||||
Mortgage-backed securities
|
12,105,727
|
12,125,550
|
||||||
Redeemable preferred stock
|
623,635
|
652,099
|
||||||
Total held to maturity
|
$
|
231,474,083
|
$
|
239,858,942
|
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 December 31, 2017
|
||||||||||||||||||||
Industrial, miscellaneous and all other
|
$
|
213,097
|
98
|
$
|
419,572
|
81
|
$
|
632,669
|
||||||||||||
Total unrealized losses
|
$
|
213,097
|
98
|
$
|
419,572
|
81
|
$
|
632,669
|
||||||||||||
Fair Value
|
$
|
847,718
|
$
|
1,329,213
|
$
|
2,176,931
|
Three Months Ended
March 31
|
||||||||
2018
|
2017
|
|||||||
Fixed maturity securities held to maturity:
|
||||||||
Gross realized gains
|
$
|
28,133
|
$
|
2,434
|
||||
Gross realized losses
|
(308,931
|
)
|
-
|
|||||
Other than temporary impairments
|
-
|
(52,139
|
)
|
|||||
Equity securities:
|
||||||||
Gross realized gains
|
-
|
60,978
|
||||||
Gross realized losses
|
-
|
(4,556
|
)
|
|||||
Gains and losses during 2018 on securities sold in 2018
|
14,650
|
-
|
||||||
Unrealized gains and losses on securities held at the end of the period
|
(372,042
|
)
|
-
|
|||||
Other assets:
|
||||||||
Gross realized gains
|
22,951,723
|
456,275
|
||||||
Gross realized losses
|
(292,594
|
)
|
(369,801
|
)
|
||||
Total
|
$
|
22,020,939
|
$
|
93,191
|
||||
(1) Includes a one-time gain of $22,252,000 from the sale of Dry Creek at East Village apartments.
|
Three Months Ended
March 31
|
||||||||
2018
|
2017
|
|||||||
Fixed maturity securities held to maturity
|
$
|
2,529,841
|
$
|
2,424,805
|
||||
Equity securities
|
58,292
|
54,786
|
||||||
Mortgage loans held for investment
|
4,531,927
|
3,410,761
|
||||||
Real estate held for investment
|
2,670,440
|
2,894,331
|
||||||
Policy loans
|
102,866
|
116,845
|
||||||
Insurance assignments
|
3,860,937
|
3,364,642
|
||||||
Other investments
|
53,673
|
7,543
|
||||||
Cash and cash equivalents
|
137,368
|
91,012
|
||||||
Gross investment income
|
13,945,344
|
12,364,725
|
||||||
Investment expenses
|
(3,870,913
|
)
|
(3,348,349
|
)
|
||||
Net investment income
|
$
|
10,074,431
|
$
|
9,016,376
|
Net Ending Balance
|
Total Square Footage
|
|||||||||||||||||
March 31
|
December 31
|
March 31
|
December 31
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||||
Arizona
|
$
|
4,000
|
(1) |
$
|
4,000
|
(1) |
|
-
|
-
|
|||||||||
Arkansas
|
95,118
|
96,169
|
3,200
|
3,200
|
||||||||||||||
Kansas
|
7,264,086
|
7,200,000
|
222,679
|
222,679
|
||||||||||||||
Louisiana
|
486,821
|
493,197
|
7,063
|
7,063
|
||||||||||||||
Mississippi
|
3,701,754
|
3,725,039
|
33,821
|
33,821
|
||||||||||||||
New Mexico
|
7,000
|
(1) |
7,000
|
(1) |
|
-
|
-
|
|||||||||||
Texas
|
335,000
|
(1) |
335,000
|
(1) |
|
-
|
23,470
|
|||||||||||
Utah
|
61,295,289
|
(1) |
61,108,384
|
(2) |
|
433,244
|
433,244
|
|||||||||||
$
|
73,189,068
|
$
|
72,968,789
|
700,007
|
723,477
|
|||||||||||||
(1) Includes undeveloped land
|
||||||||||||||||||
(2) Includes Center53 completed in July 2017. The Company is currently in the process of leasing the building.
|
Net Ending Balance
|
||||||||
March 31
|
December 31
|
|||||||
2018
|
2017
|
|||||||
Arizona
|
$
|
-
|
$
|
217,105
|
||||
California
|
5,407,203
|
5,463,878
|
||||||
Florida
|
6,839,021
|
7,000,684
|
||||||
Hawaii
|
712,286
|
712,286
|
||||||
Ohio
|
10,000
|
10,000
|
||||||
Oklahoma
|
-
|
17,500
|
||||||
Texas
|
554,486
|
509,011
|
||||||
Utah
|
18,065,086
|
54,113,272
|
||||||
Washington
|
286,181
|
286,181
|
||||||
$
|
31,874,263
|
$
|
68,329,917
|
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
|
%
|
|||||
1044 River Oaks Dr., Flowood, MS
|
Life Insurance Operations
|
21,521
|
27
|
%
|
|||||
121 West Election Road, Draper, UT
|
Mortgage Sales
|
78,978
|
19
|
%
|
|||||
(1) This asset is included in property and equipment on the condensed consolidated balance sheets
|
Allowance for Credit Losses and Recorded Investment in Mortgage Loans
|
||||||||||||||||
Commercial
|
Residential
|
Residential Construction
|
Total
|
|||||||||||||
March 31, 2018
|
||||||||||||||||
Allowance for credit losses:
|
||||||||||||||||
Beginning balance - January 1, 2018
|
$
|
187,129
|
$
|
1,546,447
|
$
|
35,220
|
$
|
1,768,796
|
||||||||
Charge-offs
|
-
|
-
|
-
|
-
|
||||||||||||
Provision
|
-
|
(72,425
|
)
|
-
|
(72,425
|
)
|
||||||||||
Ending balance - March 31, 2018
|
$
|
187,129
|
$
|
1,474,022
|
$
|
35,220
|
$
|
1,696,371
|
||||||||
Ending balance: individually evaluated for impairment
|
$
|
-
|
$
|
292,220
|
$
|
-
|
$
|
292,220
|
||||||||
Ending balance: collectively evaluated for impairment
|
$
|
187,129
|
$
|
1,181,802
|
$
|
35,220
|
$
|
1,404,151
|
||||||||
Mortgage loans:
|
||||||||||||||||
Ending balance
|
$
|
52,384,376
|
$
|
101,665,364
|
$
|
54,254,054
|
$
|
208,303,794
|
||||||||
Ending balance: individually evaluated for impairment
|
$
|
-
|
$
|
5,362,963
|
$
|
-
|
$
|
5,362,963
|
||||||||
Ending balance: collectively evaluated for impairment
|
$
|
52,384,376
|
$
|
96,302,401
|
$
|
54,254,054
|
$
|
202,940,831
|
||||||||
December 31, 2017
|
||||||||||||||||
Allowance for credit losses:
|
||||||||||||||||
Beginning balance - January 1, 2017
|
$
|
187,129
|
$
|
1,461,540
|
$
|
100,114
|
$
|
1,748,783
|
||||||||
Charge-offs
|
-
|
(351,357
|
)
|
(64,894
|
)
|
(416,251
|
)
|
|||||||||
Provision
|
-
|
436,264
|
-
|
436,264
|
||||||||||||
Ending balance - December 31, 2017
|
$
|
187,129
|
$
|
1,546,447
|
$
|
35,220
|
$
|
1,768,796
|
||||||||
Ending balance: individually evaluated for impairment
|
$
|
-
|
$
|
237,560
|
$
|
-
|
$
|
237,560
|
||||||||
Ending balance: collectively evaluated for impairment
|
$
|
187,129
|
$
|
1,308,887
|
$
|
35,220
|
$
|
1,531,236
|
||||||||
Mortgage loans:
|
||||||||||||||||
Ending balance
|
$
|
54,954,865
|
$
|
102,527,111
|
$
|
50,157,533
|
$
|
207,639,509
|
||||||||
Ending balance: individually evaluated for impairment
|
$
|
-
|
$
|
4,923,552
|
$
|
461,834
|
$
|
5,385,386
|
||||||||
Ending balance: collectively evaluated for impairment
|
$
|
54,954,865
|
$
|
97,603,559
|
$
|
49,695,699
|
$
|
202,254,123
|
Age Analysis of Mortgage Loans Held for Investment
|
||||||||||||||||||||||||||||||||||||||||
30-59 Days
Past Due |
60-89 Days
Past Due |
Greater Than
90 Days (1) |
In Process of Foreclosure (1)
|
Total
Past Due |
Current
|
Total
Mortgage Loans |
Allowance for
Loan Losses |
Unamortized deferred loan fees, net
|
Net Mortgage
Loans |
|||||||||||||||||||||||||||||||
March 31, 2018
|
||||||||||||||||||||||||||||||||||||||||
Commercial
|
$
|
5,211,276
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
5,211,276
|
$
|
47,173,100
|
$
|
52,384,376
|
$
|
(187,129
|
)
|
$
|
(67,717
|
)
|
$
|
52,129,530
|
||||||||||||||||||
Residential
|
7,223,352
|
1,150,067
|
2,800,231
|
2,562,732
|
13,736,382
|
87,928,982
|
101,665,364
|
(1,474,022
|
)
|
(1,125,974
|
)
|
99,065,368
|
||||||||||||||||||||||||||||
Residential Construction
|
441,310
|
-
|
-
|
-
|
441,310
|
53,812,744
|
54,254,054
|
(35,220
|
)
|
(423,826
|
)
|
53,795,008
|
||||||||||||||||||||||||||||
Total
|
$
|
12,875,938
|
$
|
1,150,067
|
$
|
2,800,231
|
$
|
2,562,732
|
$
|
19,388,968
|
$
|
188,914,826
|
$
|
208,303,794
|
$
|
(1,696,371
|
)
|
$
|
(1,617,517
|
)
|
$
|
204,989,906
|
||||||||||||||||||
December 31, 2017
|
||||||||||||||||||||||||||||||||||||||||
Commercial
|
$
|
1,943,495
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
1,943,495
|
$
|
53,011,370
|
$
|
54,954,865
|
$
|
(187,129
|
)
|
$
|
(67,411
|
)
|
$
|
54,700,325
|
||||||||||||||||||
Residential
|
6,613,479
|
495,347
|
3,591,333
|
1,332,219
|
12,032,378
|
90,494,733
|
102,527,111
|
(1,546,447
|
)
|
(1,164,130
|
)
|
99,816,534
|
||||||||||||||||||||||||||||
Residential Construction
|
-
|
-
|
461,834
|
-
|
461,834
|
49,695,699
|
50,157,533
|
(35,220
|
)
|
(428,287
|
)
|
49,694,026
|
||||||||||||||||||||||||||||
Total
|
$
|
8,556,974
|
$
|
495,347
|
$
|
4,053,167
|
$
|
1,332,219
|
$
|
14,437,707
|
$
|
193,201,802
|
$
|
207,639,509
|
$
|
(1,768,796
|
)
|
$
|
(1,659,828
|
)
|
$
|
204,210,885
|
||||||||||||||||||
(1) Interest income is not recognized on loans past due greater than 90 days or in foreclosure.
|
Impaired Loans
|
||||||||||||||||||||
Recorded
Investment
|
Unpaid
Principal
Balance
|
Related
Allowance
|
Average
Recorded
Investment
|
Interest
Income
Recognized
|
||||||||||||||||
March 31, 2018
|
||||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Residential
|
3,653,126
|
3,653,126
|
-
|
3,653,126
|
-
|
|||||||||||||||
Residential construction
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Residential
|
1,709,837
|
1,709,837
|
292,220
|
1,709,837
|
-
|
|||||||||||||||
Residential construction
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total:
|
||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Residential
|
5,362,963
|
5,362,963
|
292,220
|
5,362,963
|
-
|
|||||||||||||||
Residential construction
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
December 31, 2017
|
||||||||||||||||||||
With no related allowance recorded:
|
||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
365,220
|
$
|
-
|
||||||||||
Residential
|
3,322,552
|
3,322,552
|
-
|
3,290,094
|
-
|
|||||||||||||||
Residential construction
|
461,834
|
461,834
|
-
|
277,232
|
-
|
|||||||||||||||
With an allowance recorded:
|
||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
||||||||||
Residential
|
1,601,000
|
1,601,000
|
237,560
|
1,350,115
|
-
|
|||||||||||||||
Residential construction
|
-
|
-
|
-
|
-
|
-
|
|||||||||||||||
Total:
|
||||||||||||||||||||
Commercial
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
365,220
|
$
|
-
|
||||||||||
Residential
|
4,923,552
|
4,923,552
|
237,560
|
4,640,209
|
-
|
|||||||||||||||
Residential construction
|
461,834
|
461,834
|
-
|
277,232
|
-
|
Mortgage Loans Held for Investment Credit Exposure
|
||||||||||||||||||||||||||||||||
Credit Risk Profile Based on Payment Activity
|
||||||||||||||||||||||||||||||||
Commercial
|
Residential
|
Residential Construction
|
Total
|
|||||||||||||||||||||||||||||
March 31,
2018
|
December 31,
2017
|
March 31,
2018
|
December 31,
2017
|
March 31,
2018
|
December 31,
2017
|
March 31,
2018
|
December 31,
2017
|
|||||||||||||||||||||||||
Performing
|
$
|
52,384,376
|
$
|
54,954,865
|
$
|
96,302,401
|
$
|
97,603,559
|
$
|
54,254,054
|
$
|
49,695,699
|
$
|
202,940,831
|
$
|
202,254,123
|
||||||||||||||||
Non-performing
|
-
|
-
|
5,362,963
|
4,923,552
|
-
|
461,834
|
5,362,963
|
5,385,386
|
||||||||||||||||||||||||
Total
|
$
|
52,384,376
|
$
|
54,954,865
|
$
|
101,665,364
|
$
|
102,527,111
|
$
|
54,254,054
|
$
|
50,157,533
|
$
|
208,303,794
|
$
|
207,639,509
|
Mortgage Loans on
Non-Accrual Status
|
||||||||
As of March 31
2018 |
As of December 31
2017 |
|||||||
Residential
|
$
|
5,362,963
|
$
|
4,923,552
|
||||
Residential construction
|
-
|
461,834
|
||||||
Total
|
$
|
5,362,963
|
$
|
5,385,386
|
As of
March 31
2018
|
||||
Aggregate fair value
|
$
|
124,866,313
|
||
Unpaid principal balance
|
121,111,768
|
|||
Unrealized gain
|
3,754,545
|
Three Months Ended
March 31
|
|||||||||
2018
|
2017
|
||||||||
Loan fees
|
$
|
5,745,309
|
$
|
9,304,925
|
|||||
Interest income
|
1,116,454
|
1,734,527
|
|||||||
Secondary gains
|
15,578,495
|
26,194,350
|
|||||||
Change in fair value of loan commitments
|
440,958
|
2,167,593
|
|||||||
Change in fair value of loans held for sale
|
2,929,996
|
(1) |
-
|
||||||
Provision for loan loss reserve
|
(351,051
|
)
|
(426,634
|
)
|
|||||
Mortgage fee income
|
$
|
25,460,160
|
$
|
38,974,760
|
|||||
(1) See Fair Value Option Election
|
As of
March 31
2018 |
As of
December 31
2017 |
|||||||
Balance, beginning of period
|
$
|
2,571,524
|
$
|
627,733
|
||||
Provision on current loan originations (1)
|
351,051
|
1,851,187
|
||||||
Charge-offs, net of recaptured amounts
|
(10,420
|
)
|
92,604
|
|||||
Balance, end of period
|
$
|
2,912,155
|
$
|
2,571,524
|
||||
(1) Included in Mortgage fee income
|
Number of
Class A Shares |
Weighted Average Exercise Price
|
Number of
Class C Shares |
Weighted Average Exercise Price
|
|||||||||||||
Outstanding at December 31, 2017
|
880,426
|
$
|
4.35
|
523,603
|
$
|
5.24
|
||||||||||
Granted
|
-
|
-
|
||||||||||||||
Exercised
|
(31,984
|
)
|
-
|
|||||||||||||
Cancelled
|
(5,704
|
)
|
-
|
|||||||||||||
Outstanding at March 31, 2018
|
842,738
|
$
|
4.48
|
523,603
|
$
|
5.24
|
||||||||||
As of March 31, 2018:
|
||||||||||||||||
Options exercisable
|
744,686
|
$
|
4.40
|
468,477
|
$
|
5.29
|
||||||||||
As of March 31, 2018:
|
||||||||||||||||
Available options for future grant
|
421,241
|
165,638
|
||||||||||||||
Weighted average contractual term of options outstanding at March 31, 2018
|
6.55 years
|
3.19 years
|
||||||||||||||
Weighted average contractual term of options exercisable at March 31, 2018
|
6.53 years
|
2.43 years
|
||||||||||||||
Aggregated intrinsic value of options outstanding at March 31, 2018 (1)
|
$
|
850,528
|
$
|
251,961
|
||||||||||||
Aggregated intrinsic value of options exercisable at March 31, 2018 (1)
|
$
|
836,882
|
$
|
232,667
|
||||||||||||
(1) The Company used a stock price of $5.15 as of March 31, 2018 to derive intrinsic value.
|
Number of
Class A Shares |
Weighted Average Exercise Price
|
Number of
Class C Shares |
Weighted Average Exercise Price
|
|||||||||||||
Outstanding at December 31, 2016
|
741,973
|
$
|
4.33
|
556,298
|
$
|
4.61
|
||||||||||
Granted
|
-
|
-
|
||||||||||||||
Exercised
|
-
|
-
|
||||||||||||||
Cancelled
|
-
|
-
|
||||||||||||||
Outstanding at March 31, 2017
|
741,973
|
$
|
4.33
|
556,298
|
$
|
4.61
|
||||||||||
As of March 31, 2017:
|
||||||||||||||||
Options exercisable
|
636,764
|
$
|
3.94
|
493,298
|
$
|
4.26
|
||||||||||
As of March 31, 2017:
|
||||||||||||||||
Available options for future grant
|
253,432
|
-
|
||||||||||||||
Weighted average contractual term of options outstanding at March 31, 2017
|
7.12 years
|
2.42 years
|
||||||||||||||
Weighted average contractual term of options exercisable at March 31, 2017
|
6.70 years
|
2.13 years
|
||||||||||||||
Aggregated intrinsic value of options outstanding at March 31, 2017 (1)
|
$
|
1,837,828
|
$
|
1,264,540
|
||||||||||||
Aggregated intrinsic value of options exercisable at March 31, 2017 (1)
|
$
|
1,824,086
|
$
|
1,264,540
|
||||||||||||
(1) The Company used a stock price of $6.80 as of March 31, 2017 to derive intrinsic value.
|
Three Months Ended
March 31 |
||||||||
2018
|
2017
|
|||||||
Net earnings
|
$
|
16,925,923
|
$
|
1,860,000
|
||||
Basic weighted-average shares outstanding
|
16,171,412
|
15,827,495
|
||||||
Employee stock options
|
176,365
|
493,335
|
||||||
Diluted weighted-average shares outstanding
|
16,347,777
|
16,320,830
|
||||||
Basic net earnings per share |
$
|
1.05
|
$
|
0.12
|
||||
Diluted net earnings per share |
$
|
1.04
|
$
|
0.11
|
Life Insurance
|
Cemetery/
Mortuary |
Mortgage
|
Intercompany
Eliminations
|
Consolidated
|
||||||||||||||||
For the Three Months Ended
|
||||||||||||||||||||
March 31, 2018
|
||||||||||||||||||||
Revenues from external customers
|
$
|
50,860,529
|
$
|
3,775,745
|
$
|
27,439,835
|
$
|
-
|
$
|
82,076,109
|
||||||||||
Intersegment revenues
|
2,408,163
|
117,117
|
133,597
|
(2,658,877
|
)
|
-
|
||||||||||||||
Segment profit before income taxes
|
23,711,810
|
860,763
|
(3,385,391
|
)
|
-
|
21,187,182
|
||||||||||||||
-
|
||||||||||||||||||||
Identifiable Assets
|
873,263,596
|
92,747,811
|
163,896,491
|
(134,701,132
|
)
|
995,206,766
|
||||||||||||||
Goodwill
|
2,765,570
|
-
|
-
|
-
|
2,765,570
|
|||||||||||||||
Total Assets
|
876,029,166
|
92,747,811
|
163,896,491
|
(134,701,132
|
)
|
997,972,336
|
||||||||||||||
For the Three Months Ended
|
||||||||||||||||||||
March 31, 2017
|
||||||||||||||||||||
Revenues from external customers
|
$
|
26,158,701
|
$
|
3,604,897
|
$
|
41,065,699
|
$
|
-
|
$
|
70,829,297
|
||||||||||
Intersegment revenues
|
2,988,651
|
109,351
|
95,770
|
(3,193,772
|
)
|
-
|
||||||||||||||
Segment profit before income taxes
|
1,483,480
|
758,911
|
655,379
|
-
|
2,897,770
|
|||||||||||||||
Identifiable Assets
|
831,233,557
|
99,554,821
|
164,990,647
|
(139,027,232
|
)
|
956,751,793
|
||||||||||||||
Goodwill
|
2,765,570
|
-
|
-
|
-
|
2,765,570
|
|||||||||||||||
Total Assets
|
833,999,127
|
99,554,821
|
164,990,647
|
(139,027,232
|
)
|
959,517,363
|
a)
|
Quoted prices for similar assets or liabilities in active markets;
|
b)
|
Quoted prices for identical or similar assets or liabilities in non-active markets; or
|
c)
|
Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.
|
Total
|
Quoted
Prices in
Active Markets for
Identical Assets (Level 1) |
Significant
Observable
Inputs
(Level 2) |
Significant Unobservable
Inputs
(Level 3) |
|||||||||||||
Assets accounted for at fair value on a recurring basis
|
||||||||||||||||
Common stock
|
$
|
5,889,151
|
$
|
5,889,151
|
$
|
-
|
$
|
-
|
||||||||
Total equity securities
|
$
|
5,889,151
|
$
|
5,889,151
|
$
|
-
|
$
|
-
|
||||||||
Loans held for sale
|
$
|
124,866,313
|
$
|
-
|
$
|
-
|
$
|
124,866,313
|
||||||||
Restricted assets (1)
|
800,510
|
800,510
|
-
|
-
|
||||||||||||
Cemetery perpetual care trust investments (1)
|
648,381
|
648,381
|
-
|
-
|
||||||||||||
Derivatives - loan commitments (2)
|
2,786,371
|
-
|
-
|
2,786,371
|
||||||||||||
Total assets accounted for at fair value on a recurring basis
|
$
|
134,990,726
|
$
|
7,338,042
|
$
|
-
|
$
|
127,652,684
|
||||||||
Liabilities accounted for at fair value on a recurring basis
|
||||||||||||||||
Derivatives - call options (3)
|
$
|
(13,277
|
)
|
$
|
(13,277
|
)
|
$
|
-
|
$
|
-
|
||||||
Derivatives - put options (3)
|
(128,598
|
)
|
(128,598
|
)
|
-
|
-
|
||||||||||
Derivatives - loan commitments (3)
|
(348,824
|
)
|
-
|
-
|
(348,824
|
)
|
||||||||||
Total liabilities accounted for at fair value on a recurring basis
|
$
|
(490,699
|
)
|
$
|
(141,875
|
)
|
$
|
-
|
$
|
(348,824
|
)
|
|||||
(1) Mutual funds and equity securities
|
||||||||||||||||
(2) Included in other assets on the condensed consolidated balance sheets
|
||||||||||||||||
(3) Included in other liabilities and accrued expenses on the condensed consolidated balance sheets
|
Net Loan Commitments
|
Loans
Held for
Sale
|
|||||||
Balance - December 31, 2017
|
$
|
1,996,589
|
$
|
133,414,188
|
||||
Originations
|
479,953,484
|
|||||||
Sales
|
(505,586,040
|
)
|
||||||
Transfer to mortgage loans held for investment
|
(139,464
|
)
|
||||||
Total gains (losses):
|
||||||||
Included in earnings (1)
|
440,958
|
17,224,145
|
||||||
Balance - March 31, 2018
|
$
|
2,437,547
|
$
|
124,866,313
|
||||
(1) As a component of Mortgage fee income on the condensed consolidated statements of earnings
|
Quoted Prices
|
||||||||||||||||
in Active
|
Significant
|
Significant
|
||||||||||||||
Markets for
|
Observable
|
Unobservable
|
||||||||||||||
Identical Assets
|
Inputs
|
Inputs
|
||||||||||||||
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Assets accounted for at fair value on a nonrecurring basis
|
||||||||||||||||
Impaired mortgage loans held for investment
|
$
|
1,417,617
|
$
|
-
|
$
|
-
|
$
|
1,417,617
|
||||||||
Impaired real estate held for investment
|
1,005,866
|
-
|
-
|
1,005,866
|
||||||||||||
Mortgage servicing rights additions
|
997,497
|
-
|
-
|
997,497
|
||||||||||||
Total assets accounted for at fair value on a nonrecurring basis
|
$
|
3,420,980
|
$
|
-
|
$
|
-
|
$
|
3,420,980
|
Total
|
Quoted Prices
in Active
Markets for
Identical Assets
(Level 1) |
Significant
Observable
Inputs
(Level 2) |
Significant Unobservable
Inputs
(Level 3) |
|||||||||||||
Assets accounted for at fair value on a recurring basis
|
||||||||||||||||
Common stock
|
$
|
6,037,855
|
$
|
6,037,855
|
$
|
-
|
$
|
-
|
||||||||
Total equity securities
|
$
|
6,037,855
|
$
|
6,037,855
|
$
|
-
|
$
|
-
|
||||||||
Loans held for sale
|
$
|
133,414,188
|
$
|
-
|
$
|
-
|
$
|
133,414,188
|
||||||||
Restricted assets (1)
|
809,958
|
809,958
|
-
|
-
|
||||||||||||
Cemetery perpetual care trust investments (1)
|
682,315
|
682,315
|
-
|
-
|
||||||||||||
Derivatives - loan commitments (2)
|
2,032,782
|
-
|
-
|
2,032,782
|
||||||||||||
Total assets accounted for at fair value on a recurring basis
|
$
|
9,562,910
|
$
|
7,530,128
|
$
|
-
|
$
|
2,032,782
|
||||||||
Liabilities accounted for at fair value on a recurring basis
|
||||||||||||||||
Derivatives - call options (3)
|
(64,689
|
)
|
(64,689
|
)
|
-
|
-
|
||||||||||
Derivatives - put options (3)
|
(20,568
|
)
|
(20,568
|
)
|
-
|
-
|
||||||||||
Derivatives - loan commitments (3)
|
(36,193
|
)
|
-
|
-
|
(36,193
|
)
|
||||||||||
Total liabilities accounted for at fair value on a recurring basis
|
$
|
(121,450
|
)
|
$
|
(85,257
|
)
|
$
|
-
|
$
|
(36,193
|
)
|
|||||
(1) Mutual funds and equity securities
|
||||||||||||||||
(2) Included in other assets on the condensed consolidated balance sheets
|
||||||||||||||||
(3) Included in other liabilities and accrued expenses on the condensed consolidated balance sheets
|
Net
Loan
Commitments
|
Bank Loan
Interest Rate
Swaps
|
Loans
Held for Sale
|
||||||||||
Balance - December 31, 2016
|
$
|
6,809,332
|
$
|
(3,308
|
)
|
$
|
-
|
|||||
Originations
|
$
|
1,233,683,666
|
||||||||||
Sales
|
(1,151,031,388
|
)
|
||||||||||
Total gains (losses):
|
||||||||||||
Included in earnings (1)
|
(4,812,743
|
)
|
-
|
50,761,910
|
||||||||
Included in other comprehensive income (2)
|
-
|
3,308
|
-
|
|||||||||
Balance - December 31, 2017
|
$
|
1,996,589
|
$
|
-
|
$
|
133,414,188
|
||||||
(1) As a component of Mortgage fee income on the condensed consolidated statements of earnings
|
||||||||||||
(2) As a component of Unrealized gains on derivative instruments on the condensed consolidated statements of comprehensive income
|
Quoted Prices
|
||||||||||||||||
in Active
|
Significant
|
Significant
|
||||||||||||||
Markets for
|
Observable
|
Unobservable
|
||||||||||||||
Identical Assets
|
Inputs
|
Inputs
|
||||||||||||||
Total
|
(Level 1)
|
(Level 2)
|
(Level 3)
|
|||||||||||||
Assets accounted for at fair value on a nonrecurring basis
|
||||||||||||||||
Impaired mortgage loans held for investment
|
$
|
1,363,440
|
$
|
-
|
$
|
-
|
$
|
1,363,440
|
||||||||
Mortgage servicing rights additions
|
6,085,352
|
-
|
-
|
6,085,352
|
||||||||||||
Impaired real estate held for investment
|
8,500,000
|
-
|
-
|
8,500,000
|
||||||||||||
Impaired fixed maturity securities, held to maturity
|
426,984
|
-
|
426,984
|
-
|
||||||||||||
Total assets accounted for at fair value on a nonrecurring basis
|
$
|
16,375,776
|
$
|
-
|
$
|
426,984
|
$
|
15,948,792
|
Carrying Value
|
Level 1
|
Level 2
|
Level 3
|
Total
Estimated
Fair Value
|
||||||||||||||||
Assets
|
||||||||||||||||||||
Fixed maturity securities held to maturity
|
$
|
231,474,083
|
$
|
-
|
$
|
232,634,878
|
$
|
7,224,064
|
$
|
239,858,942
|
||||||||||
Mortgage loans held for investment:
|
||||||||||||||||||||
Residential
|
99,065,368
|
-
|
-
|
104,999,136
|
104,999,136
|
|||||||||||||||
Residential construction
|
53,795,008
|
-
|
-
|
53,795,008
|
53,795,008
|
|||||||||||||||
Commercial
|
52,129,530
|
-
|
-
|
53,487,729
|
53,487,729
|
|||||||||||||||
Mortgage loans held for investment, net
|
$
|
204,989,906
|
$
|
-
|
$
|
-
|
$
|
212,281,873
|
$
|
212,281,873
|
||||||||||
Policy loans
|
6,403,888
|
-
|
-
|
6,403,888
|
6,403,888
|
|||||||||||||||
Insurance assignments, net (1)
|
34,157,556
|
-
|
-
|
34,157,556
|
34,157,556
|
|||||||||||||||
Restricted assets (2)
|
1,142,355
|
-
|
1,146,584
|
-
|
1,146,584
|
|||||||||||||||
Restricted assets (3)
|
1,735,066
|
-
|
-
|
1,819,012
|
1,819,012
|
|||||||||||||||
Cemetery perpetual care trust investments (2)
|
948,735
|
-
|
941,823
|
-
|
941,823
|
|||||||||||||||
Cemetery perpetual care trust investments (3)
|
4,209
|
-
|
-
|
4,475
|
4,475
|
|||||||||||||||
Mortgage servicing rights, net
|
21,554,050
|
-
|
-
|
30,086,162
|
30,086,162
|
|||||||||||||||
Liabilities
|
||||||||||||||||||||
Bank and other loans payable
|
$
|
(151,451,152
|
)
|
$
|
-
|
$
|
-
|
$
|
(151,451,152
|
)
|
$
|
(151,451,152
|
)
|
|||||||
Policyholder account balances (4)
|
(47,448,620
|
)
|
-
|
-
|
(33,948,014
|
)
|
(33,948,014
|
)
|
||||||||||||
Future policy benefits - annuities (4)
|
(98,569,032
|
)
|
-
|
-
|
(97,549,438
|
)
|
(97,549,438
|
)
|
||||||||||||
(1) Included in other investments and policy loans on the condensed consolidated balance sheet.
|
||||||||||||||||||||
(2) Fixed maturity securities held to maturity
|
||||||||||||||||||||
(3) Participation in mortgage loans held for investment (commercial)
|
||||||||||||||||||||
(4) Included in future policy benefits and unpaid claims on the condensed consolidated balance sheet.
|
Carrying Value
|
Level 1
|
Level 2
|
Level 3
|
Total
Estimated
Fair Value
|
||||||||||||||||
Assets
|
||||||||||||||||||||
Fixed maturity securities held to maturity
|
$
|
228,397,623
|
$
|
-
|
$
|
233,806,219
|
$
|
7,692,190
|
$
|
241,498,409
|
||||||||||
Mortgage loans held for investment:
|
||||||||||||||||||||
Residential
|
99,816,535
|
-
|
-
|
106,050,169
|
106,050,169
|
|||||||||||||||
Residential construction
|
49,694,025
|
-
|
-
|
49,694,025
|
49,694,025
|
|||||||||||||||
Commercial
|
54,700,325
|
-
|
-
|
56,473,156
|
56,473,156
|
|||||||||||||||
Mortgage loans held for investment, net
|
$
|
204,210,885
|
$
|
-
|
$
|
-
|
$
|
212,217,350
|
$
|
212,217,350
|
||||||||||
Policy loans
|
6,531,352
|
-
|
-
|
6,531,352
|
6,531,352
|
|||||||||||||||
Insurance assignments, net (1)
|
35,455,098
|
-
|
-
|
35,455,098
|
35,455,098
|
|||||||||||||||
Restricted assets (2)
|
1,130,088
|
-
|
1,152,324
|
-
|
1,152,324
|
|||||||||||||||
Restricted assets (3)
|
1,701,811
|
-
|
-
|
1,796,910
|
1,796,910
|
|||||||||||||||
Cemetery perpetual care trust investments (2)
|
943,211
|
-
|
953,404
|
-
|
953,404
|
|||||||||||||||
Cemetery perpetual care trust investments (3)
|
4,128
|
-
|
-
|
4,411
|
4,411
|
|||||||||||||||
Mortgage servicing rights, net
|
21,376,937
|
-
|
-
|
27,427,174
|
27,427,174
|
|||||||||||||||
Liabilities
|
||||||||||||||||||||
Bank and other loans payable
|
$
|
(157,450,925
|
)
|
$
|
-
|
$
|
-
|
$
|
(157,450,925
|
)
|
$
|
(157,450,925
|
)
|
|||||||
Policyholder account balances (4)
|
(47,867,037
|
)
|
-
|
-
|
(34,557,111
|
)
|
(34,557,111
|
)
|
||||||||||||
Future policy benefits - annuities (4)
|
(99,474,392
|
)
|
-
|
-
|
(98,827,107
|
)
|
(98,827,107
|
)
|
||||||||||||
(1) Included in other investments and policy loans on the condensed consolidated balance sheet.
|
||||||||||||||||||||
(2) Fixed maturity securities held to maturity
|
||||||||||||||||||||
(3) Participation in mortgage loans held for investment (commercial)
|
||||||||||||||||||||
(4) Included in future policy benefits and unpaid claims on the condensed consolidated balance sheet.
|
Fair Values and Notional Values of Derivative Instruments
|
|||||||||||||||||||||||||
March 31, 2018
|
December 31, 2017
|
||||||||||||||||||||||||
Balance Sheet Location
|
Notional Amount
|
Asset Fair Value
|
Liability Fair Value
|
Notional Amount
|
Asset Fair Value
|
Liability Fair Value
|
|||||||||||||||||||
Derivatives not designated as hedging instruments:
|
|||||||||||||||||||||||||
Loan commitments
|
Other assets and Other liabilities
|
$
|
170,365,863
|
$
|
2,786,371
|
$
|
348,824
|
$
|
105,679,107
|
$
|
2,032,782
|
$
|
36,193
|
||||||||||||
Call options
|
Other liabilities
|
1,266,050
|
--
|
13,277
|
1,488,550
|
--
|
64,689
|
||||||||||||||||||
Put options
|
Other liabilities
|
5,128,950
|
--
|
128,598
|
2,265,900
|
--
|
20,568
|
||||||||||||||||||
Total
|
$
|
176,760,863
|
$
|
2,786,371
|
$
|
490,699
|
$
|
109,433,557
|
$
|
2,032,782
|
$
|
121,450
|
Three Months Ended
March 31
|
|||||||||
Derivative
|
Classification
|
2018
|
2017
|
||||||
Loan commitments
|
Mortgage fee income
|
$
|
440,958
|
$
|
2,167,593
|
||||
Call and put options
|
Gains on investments and other assets
|
$
|
79,171
|
$
|
134,563
|
As of
March 31
2018 |
As of
December 31
2017 |
|||||||
Amortized cost:
|
||||||||
Balance before valuation allowance at beginning of year
|
$
|
21,376,937
|
$
|
18,872,362
|
||||
MSR additions resulting from loan sales
|
997,497
|
6,085,352
|
||||||
Amortization (1)
|
(820,384
|
)
|
(3,580,777
|
)
|
||||
Application of valuation allowance to write down MSRs with other than temporary impairment
|
-
|
-
|
||||||
Balance before valuation allowance at end of period
|
$
|
21,554,050
|
$
|
21,376,937
|
||||
Valuation allowance for impairment of MSRs:
|
||||||||
Balance at beginning of year
|
$
|
-
|
$
|
-
|
||||
Additions
|
-
|
-
|
||||||
Application of valuation allowance to write down MSRs with other than temporary impairment
|
-
|
-
|
||||||
Balance at end of period
|
$
|
-
|
$
|
-
|
||||
Mortgage servicing rights, net
|
$
|
21,554,050
|
$
|
21,376,937
|
||||
Estimated fair value of MSRs at end of period
|
$
|
30,086,162
|
$
|
27,427,174
|
||||
(1) Included in other expenses on the condensed consolidated statements of earnings
|
Estimated MSR Amortization
|
||||
2018
|
4,091,450
|
|||
2019
|
4,091,450
|
|||
2020
|
4,091,450
|
|||
2021
|
4,091,303
|
|||
2022
|
3,269,025
|
|||
Thereafter
|
1,919,372
|
|||
Total
|
$
|
21,554,050
|
Three Months Ended
March 31 |
||||||||
2018
|
2017
|
|||||||
Contractual servicing fees
|
$
|
1,876,883
|
$
|
1,835,873
|
||||
Late fees
|
111,748
|
86,338
|
||||||
Total
|
$
|
1,988,631
|
$
|
1,922,211
|
As of
March 31,
2018
|
As of
December 31
2017
|
|||||||
Servicing UPB
|
$
|
2,941,337,111
|
$
|
2,924,868,843
|
Prepayment
Speeds |
Average
Life (Years) |
Discount
Rate |
||||||||||
March 31, 2017
|
4.01
|
%
|
6.92
|
10.01
|
||||||||
December 31, 2017
|
3.67
|
%
|
6.34
|
10.01
|
Three Months
Ended March 31
|
||||
2018
|
||||
Major goods/service lines
|
||||
At-need
|
$
|
2,737,625
|
||
Pre-need
|
495,104
|
|||
$
|
3,232,729
|
|||
Timing of Revenue Recognition
|
||||
Goods transferred at a point in time
|
$
|
2,072,481
|
||
Services transferred at a point in time
|
1,160,248
|
|||
$
|
3,232,729
|
Cemetery/Mortuary Segment
|
||||
Net mortuary and cemetery sales
|
$
|
3,232,729
|
||
Gains on investments and other assets
|
409,088
|
|||
Net investment income
|
88,078
|
|||
Other revenues
|
45,850
|
|||
Revenues from external customers
|
3,775,745
|
Contract Balances
|
||||||||||||
Receivables (1)
|
Contract Asset (2)
|
Contract Liability (2)
|
||||||||||
Opening (1/1/2018)
|
$
|
2,742,765
|
$
|
856,479
|
$
|
13,729,547
|
||||||
Closing (3/31/2018)
|
2,595,611
|
731,626
|
12,882,550
|
|||||||||
Increase/(decrease)
|
(147,154
|
)
|
(124,853
|
)
|
(846,997
|
)
|
||||||
(1) Included in Receivables, net on the condensed consolidated balance sheets
|
||||||||||||
(2) The contract asset and liability are netted together in Deferred pre-need cemetery and mortuary contract revenues on the condensed consolidated balance sheets.
|
Three months ended March 31
(in thousands of dollars) |
||||||||||||
2018
|
2017
|
% Increase
(Decrease)
|
||||||||||
Revenues from external customers
|
||||||||||||
Insurance premiums
|
$
|
18,810
|
$
|
17,357
|
8
|
%
|
||||||
Net investment income
|
9,778
|
8,774
|
11
|
%
|
||||||||
Gains on investments and other assets
|
21,860
|
(59
|
)
|
37151
|
%
|
|||||||
Other
|
412
|
87
|
374
|
%
|
||||||||
Total
|
$
|
50,860
|
$
|
26,159
|
94
|
%
|
||||||
Intersegment revenue
|
$
|
2,408
|
$
|
2,989
|
(19
|
%)
|
||||||
Earnings before income taxes
|
$
|
23,712
|
$
|
1,483
|
1499
|
%
|
Three months ended March 31
(in thousands of dollars) |
||||||||||||
2018
|
2017
|
% Increase
(Decrease)
|
||||||||||
Revenues from external customers
|
||||||||||||
Mortuary revenues
|
$
|
1,391
|
$
|
1,406
|
(1
|
%)
|
||||||
Cemetery revenues
|
1,951
|
2,131
|
(8
|
%)
|
||||||||
Other
|
434
|
68
|
538
|
%
|
||||||||
Total
|
$
|
3,776
|
$
|
3,605
|
5
|
%
|
||||||
Earnings before income taxes
|
$
|
861
|
$
|
759
|
13
|
%
|
Three months ended March 31
(in thousands of dollars) |
||||||||||||
2018
|
2017
|
% Increase
(Decrease)
|
||||||||||
Revenues from external customers
|
||||||||||||
Income from loan originations
|
$
|
11,862
|
$
|
14,872
|
(20
|
%)
|
||||||
Secondary gains from investors
|
15,578
|
26,194
|
(41
|
%)
|
||||||||
Total
|
$
|
27,440
|
$
|
41,066
|
(33
|
%)
|
||||||
Earnings before income taxes
|
$
|
(3,385
|
)
|
$
|
655
|
(617
|
%)
|
3.1
|
|
3.2
|
|
4.1
|
Specimen Class A Stock Certificate (1)
|
4.2
|
Specimen Class C Stock Certificate (1)
|
4.3
|
Specimen Preferred Stock Certificate and Certificate of Designation of Preferred Stock (1)
|
7.1
|
|
10.1
|
Amended and Restated Employee Stock Ownership Plan (ESOP) and Trust Agreement (1)
|
10.2
|
|
10.3
|
|
10.4
|
|
10.5
|
|
10.6
|
|
10.7
|
|
10.8
|
|
21
|
|
23.1
|
|
23.2
|
|
31.1
|
Certification pursuant to 18 U.S.C. Section 1350, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
Certification pursuant to 18 U.S.C. Section 1350, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
32.2
|
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
101.xml
|
Instance Document
|
101.xsd
|
Taxonomy Extension Schema Document
|
101.cal
|
Taxonomy Extension Calculation Linkbase Document
|
101.def
|
Taxonomy Extension Definition Linkbase Document
|
101.lab
|
Taxonomy Extension Label Linkbase Document
|
101.pre
|
Taxonomy Extension Presentation Linkbase Document
|
(1))
|
Incorporated by reference from Registration Statement on Form S‑1, as filed on September 29, 1987
|
(2)
|
Incorporated by reference from Schedule 14A Definitive Proxy Statement, as filed on June 5, 2003, relating to the Company's Annual Meeting of Stockholders
|
(3)
|
Incorporated by reference from Schedule 14A Definitive Proxy Statement, as filed on June 1, 2007, relating to the Company's Annual Meeting of Stockholders
|
(4)
|
Incorporated by reference from Schedule 14A Definitive Proxy Statement, as filed on June 2, 2014, related to Company's Annual Meeting of Stockholders
|
(5)
|
Incorporated by reference from Report on Form 8-K, as filed on June 13, 2014
|
(6)
|
Incorporated by reference from Report on Form 10-Q, as filed on August 14, 2015
|
(7)
|
Incorporated by reference from Registration Statement on Form S-8, as filed on October 20, 2015
|
(8)
|
Incorporated by reference from Report on Form 10-Q, as filed on August 15, 2016
|
Incorporated by reference from Report on Form 10-K, as filed on March 31, 2017
|
|
(10)
|
Incorporated by reference from Report on Form 8-K, as filed on August 4, 2017
|
(11)
|
Incorporated by reference from Report on Form 10-K, as filed on April 2, 2018
|
Dated: May 15, 2018
|
/s/ Scott M. Quist
|
|
Scott M. Quist
|
||
Chairman, President and Chief Executive Officer
|
||
(Principal Executive Officer)
|
||
Dated: May 15, 2018
|
/s/ Garrett S. Sill
|
|
Garrett S. Sill
|
||
Chief Financial Officer and Treasurer
|
||
(Principal Financial Officer and Principal Accounting Officer)
|
Dated: May 15, 2018
|
/s/ Scott M. Quist
|
|
Scott M. Quist
|
||
Chairman, President and Chief Executive Officer
|
||
(Principal Executive Officer)
|
Dated: May 15, 2018
|
/s/ Garrett S. Sill
|
|
Garrett S. Sill
|
||
Chief Financial Officer and Treasurer
|
||
(Principal Financial Officer and Principal Accounting Officer)
|
(1) |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated: May 15, 2018
|
/s/ Scott M. Quist
|
Scott M. Quist
|
|
Chairman, President and Chief Executive Officer
|
|
(Principal Executive Officer)
|
(1) |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
Dated: May 15, 2018
|
/s/ Garrett S. Sill
|
Garrett S. Sill
|
|
Chief Financial Officer and Treasurer
|
|
(Principal Financial Officer and Principal Accounting Officer)
|
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
May 15, 2018 |
|
Entity Registrant Name | SECURITY NATIONAL FINANCIAL CORP | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Trading Symbol | snfca | |
Amendment Flag | false | |
Entity Central Index Key | 0000318673 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q1 | |
Class A Common Stock | ||
Entity Common Stock, Shares Outstanding | 14,569,321 | |
Class C Common Stock | ||
Entity Common Stock, Shares Outstanding | 2,089,372 |
Comprehensive Income Statement - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Comprehensive Income Statement | ||
Net earnings | $ 16,925,923 | $ 1,860,000 |
Other comprehensive income: | ||
Unrealized gains on equity securities | 29,871 | |
Unrealized gains on derivative instruments | 1,595 | |
Other comprehensive income, before income tax | 31,466 | |
Income tax expense | (10,174) | |
Other comprehensive income, net of income tax | 21,292 | |
Comprehensive income | $ 16,925,923 | $ 1,881,292 |
Statements of Stockholders' Equity - USD ($) |
Class A Common Stock |
Class C Common Stock |
Additional Paid-in Capital |
Accumulated Other Comprehensive Income |
Retained Earnings |
Treasury Stock |
Total |
---|---|---|---|---|---|---|---|
Balance at Dec. 31, 2016 | $ 27,638,012 | $ 3,804,458 | $ 34,813,246 | $ 264,822 | $ 67,409,204 | $ (1,370,611) | $ 132,559,131 |
Net earnings | 1,860,000 | 1,860,000 | |||||
Other comprehensive income | 21,292 | 21,292 | |||||
Grant of stock options | 101,996 | 101,996 | |||||
Sale of treasury stock | 178,002 | 146,065 | 324,067 | ||||
Purchase of treasury stock | (185,470) | (185,470) | |||||
Stock Dividends | 930 | 4 | 2,350 | (3,284) | |||
Conversion Class C to Class A | 1,214 | (1,214) | |||||
Balance at Mar. 31, 2017 | 27,640,156 | 3,803,248 | 35,095,594 | 286,114 | 69,265,920 | (1,410,016) | 134,681,016 |
Balance at Dec. 31, 2017 | 29,071,154 | 4,178,748 | 38,125,042 | 603,170 | 77,520,951 | (931,075) | 148,567,990 |
Cumulative effect adjustment upon adoption of new accounting standard (ASU 2016-01) | $ (603,170) | 603,170 | |||||
Net earnings | 16,925,923 | 16,925,923 | |||||
Grant of stock options | 58,087 | 58,087 | |||||
Exercise of stock options | 63,968 | (22,115) | 41,853 | ||||
Sale of treasury stock | 88,964 | 222,410 | 311,374 | ||||
Stock Dividends | 3,520 | (4) | 5,362 | (8,878) | |||
Balance at Mar. 31, 2018 | $ 29,138,642 | $ 4,178,744 | $ 38,255,340 | $ 95,041,166 | $ (708,665) | $ 165,905,227 |
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents {1} | ||
Cash and cash equivalents | $ 101,728,202 | $ 85,069,717 |
Change in Restricted assets | 7,468,609 | 6,837,786 |
Change in Cemetery perpetual care trust investments | 2,205,322 | 921,106 |
Total cash, cash equivalents, restricted cash and restricted cash equivalents | $ 111,402,133 | $ 92,828,609 |
1) Basis of Presentation |
3 Months Ended |
---|---|
Mar. 31, 2018 | |
Notes | |
1) Basis of Presentation | 1) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10 Q and Articles 8 and 10 of Regulation S X. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements of the Company and notes thereto for the year ended December 31, 2017, included in the Companys Annual Report on Form 10-K (file number 000-09341). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The presentation of certain amounts in the prior year have been reclassified to conform to the 2018 presentation.
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant changes in the near term are those used in determining the value of derivative assets and liabilities; those used in determining deferred acquisition costs and the value of business acquired; those used in determining the value of mortgage loans foreclosed to real estate held for investment; those used in determining the liability for future policy benefits and unearned revenue; those used in determining the estimated future costs for pre-need sales; those used in determining the value of mortgage servicing rights; those used in determining allowances for loan losses for mortgage loans held for investment; those used in determining loan loss reserve; and those used in determining deferred tax assets and liabilities. Although some variability is inherent in these estimates, management believes the amounts provided are fairly stated in all material respects. |
2) Recent Accounting Pronouncements |
3 Months Ended |
---|---|
Mar. 31, 2018 | |
Notes | |
2) Recent Accounting Pronouncements | 2) Recent Accounting Pronouncements
Accounting Standards Adopted in 2018
Accounting Standards Update (ASU) No. 2017-01: Business Combinations (Topic 805): Clarifying the Definition of a Business Issued in January 2017, ASU 2017-01 intends to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the current implementation guidance in Topic 805, there are three elements of a business: inputs, processes, and outputs. While an integrated set of assets and activities, collectively referred to as a set, that is a business usually has outputs, outputs are not required to be present. ASU 2017-01 provides a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. While the Companys acquisitions have historically been classified as either business combinations or asset acquisitions, certain acquisitions that were classified as business combinations by the Company would have been considered asset acquisitions under the new standard. As a result, transaction costs may be capitalized more often since the Company expects some of its future acquisitions to be classified as asset acquisitions under this new standard. In addition, goodwill that was previously allocated to businesses that were sold or held for sale will no longer be allocated and written off upon sale if future sales were deemed to be sales of assets and not businesses. ASU 2017-01 was adopted by the Company on January 1, 2018 and it will be applied prospectively to transactions occurring after the adoption date, as applicable.
ASU No. 2016-18: Statement of Cash Flows (Topic 230): Restricted Cash Issued in November 2016, ASU 2016-18 requires restricted cash and cash equivalents to be included with cash and cash equivalents in the consolidated statement of cash flows and disclose the nature of the restrictions on cash and cash equivalents. The Company currently discloses the restrictions on cash and cash equivalents in Note 8 of the Notes to Consolidated Financial Statements in the Companys Annual Report on Form 10-K and will continue these disclosures. Note 8 also discloses the components of the Companys restricted assets and cemetery perpetual care trust investments which include restricted cash and cash equivalents. ASU 2016-18 was adopted by the Company on January 1, 2018. The Company previously presented changes in restricted cash and cash equivalents under investing activities on the consolidated statements of cash flows. Upon adoption of ASU 2016-18, the Company amended the presentation in the consolidated statements of cash flows to include the restricted cash and cash equivalents with cash and cash equivalents and retrospectively reclassified all periods presented. The adoption of this standard does not impact the Companys total cash and cash equivalents but is a change in presentation within the consolidated statements of cash flows.
ASU No. 2016-01: Financial Instruments Overall (Topic 825-10) Issued in January 2016, ASU 2016-01 changes the accounting for non-consolidated equity investments that are not accounted for under the equity method of accounting by requiring changes in fair value to be recognized in income. The Company adopted this standard on January 1, 2018 using the modified retrospective approach with the cumulative effect of the adoption made to the balance sheet as of the date of adoption. Thus, the adoption resulted in a reclassification of the related accumulated net unrealized gains of $603,170 included in accumulated other comprehensive income as of December 31, 2017 to retained earnings. Under previous guidance, changes in fair value for investments of this nature were recognized in accumulated other comprehensive income as a component of stockholders equity. Additionally, ASU 2016-01 simplifies the impairment assessment of equity investments without readily determinable fair values; requires entities to use the exit price when estimating the fair value of financial instruments; and modifies various presentation disclosure requirements for financial instruments. The Company holds equity securities that were previously measured at fair value with changes in fair value recognized through other comprehensive income. Upon adoption of ASU 2016-01 the Company now recognizes the changes in the fair value of these equity securities through earnings as part of gains on investments and other assets on the condensed consolidated statements of earnings, thus increasing the volatility of the Companys earnings. The adoption of this standard does not significantly affect the Companys comprehensive income or stockholders equity.
ASU No. 2014-09: Revenue from Contracts with Customers (Topic 606) - Issued in May 2014, ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition. ASU 2014-09 clarifies the principles for recognizing revenue in order to improve comparability of revenue recognition practices across entities and industries. ASU 2014-09 provides guidance to assist in the identification of contracts with customers and separate performance obligations within those contracts, the determination and allocation of the transaction price to those identified performance obligations and the recognition of revenue when a performance obligation has been satisfied. ASU 2014-09 also requires disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. Premiums and related fees from insurance contracts and mortgage banking revenues are excluded from the scope of this new guidance.
The Company adopted this standard on January 1, 2018 using a modified retrospective approach. No cumulative effect adjustment was made to beginning retained earnings. The Companys revenues from contracts with customers that are subject to ASU 2014-09 include revenues on mortuary and cemetery contracts, which is less than 5% of the Companys total revenues. The recognition and measurement of these items did not change as a result of the Companys adoption of ASU 2014-09 and thus the adoption of ASU 2014-09 does not significantly impact the Companys condensed consolidated statements of earnings or condensed consolidated statements of cash flows. The Company reclassified $856,479 of amounts due from customers for unfulfilled performance obligations on cancelable pre-need contracts from Receivables, net to Deferred pre-need cemetery and mortuary contract revenues on the Companys condensed consolidated balance sheets.
The standard primarily impacts the manner in which the Company recognizes a) certain nonrefundable up-front fees and b) incremental costs to acquire new pre-need funeral trust contracts and pre-need and at-need cemetery contracts (i.e., selling costs). The nonrefundable fees will continue to be deferred and recognized as revenue when the underlying goods and services are delivered to the customer. The incremental selling costs will continue to be deferred and amortized by specific identification to the delivery of the underlying goods and services. Additionally, the amounts due from customers for undelivered performance obligations on cancelable pre-need contracts represent contract assets, which are required to be netted with deferred pre-need cemetery and mortuary contract revenues, instead of receivables on the Companys consolidated balance sheets.
Accounting Standards Issued But Not Yet Adopted
ASU No. 2016-13: Financial Instruments Credit Losses (Topic 326) Issued in June 2016, ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis (such as mortgage loans and held to maturity debt securities) and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current general accepted accounting principles (GAAP) and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. The new authoritative guidance will be effective for the Company on January 1, 2020. The Company is in the process of evaluating the potential impact of this standard.
ASU No. 2016-02: Leases (Topic 842) - Issued in February 2016, ASU 2016-02 supersedes the requirements in Accounting Standards Codification (ASC) Topic 840, Leases, and was issued to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new authoritative guidance will be effective for the Company on January 1, 2019. The Company is in the process of evaluating the potential impact of this standard, which is not expected to be material to the Companys results of operations but will have an effect on the balance sheet presentation for leased assets and obligations.
The Company has reviewed other recent accounting pronouncements and has determined that they will not significantly impact the Companys results of operations or financial position. |
3) Investments |
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Notes | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3) Investments | 3) Investments
The Companys investments as of March 31, 2018 are summarized as follows:
The Companys investments as of December 31, 2017 are summarized as follows:
Fixed Maturity Securities
The following tables summarize unrealized losses on fixed maturity securities held to maturity, which are carried at amortized cost, at March 31, 2018 and December 31, 2017. The unrealized losses were primarily related to interest rate fluctuations. The tables set forth unrealized losses by duration with the fair value of the related fixed maturity securities:
There were 238 securities with fair value of 97.5% of amortized cost at March 31, 2018. There were 141 securities with fair value of 97.9% of amortized cost at December 31, 2017. During the three months ended March 31, 2018 and 2017 an other than temporary decline in fair value resulted in the recognition of credit losses on fixed maturity securities of $-0- and $52,139, respectively.
On a quarterly basis, the Company evaluates its fixed maturity securities held to maturity. This evaluation includes a review of current ratings by the National Association of Insurance Commissions (NAIC). Securities with a rating of 1 or 2 are considered investment grade and are not reviewed for impairment. Securities with ratings of 3 to 5 are evaluated for impairment. Securities with a rating of 6 are automatically determined to be impaired and are written down. The evaluation involves an analysis of the securities in relation to historical values, interest payment history, projected earnings and revenue growth rates as well as a review of the reason for a downgrade in the NAIC rating. Based on the analysis of a security that is rated 3 to 5, a determination is made whether the security will likely make interest and principal payments in accordance with the terms of the financial instrument. If it is unlikely that the security will meet contractual obligations, the loss is considered to be other than temporary, the security is written down to the new anticipated market value and an impairment loss is recognized. Impairment losses are treated as credit losses as the Company holds fixed maturity securities to maturity unless the underlying conditions have changed in the financial instrument to require an impairment.
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 amortized cost and estimated fair value of fixed maturity securities held to maturity, at March 31, 2018, 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.
The Company is a member of the Federal Home Loan Bank of Des Moines (FHLB). In June through August of 2017, the Company purchased a total of $50,000,000, par value, of United States Treasury fixed maturity securities that it deposited with the FHLB. These securities will generate interest income for the Company and will be available to use as collateral on any cash borrowings from the FHLB. As of March 31, 2018, the Company owed $20,000,000 to FHLB. This amount owed was paid on April 2, 2018.
Equity Securities
The following tables summarize unrealized losses on equity securities, that were carried at estimated fair value based on quoted trading prices at December 31, 2017. The unrealized losses were primarily the result of decreases in fair value in the retail, industrial and energy sectors. The tables set forth unrealized losses by duration and number of investment positions, together with the fair value of the related equity securities in a loss position:
The average fair value of the equity securities was 77.5% of the original investment as of December 31, 2017. 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 Companys previous intent to continue holding a security.
The fair values for equity securities are based on quoted market prices.
See Note 2 regarding the adoption of ASU 2016-01 on January 1, 2018. The Company now recognizes the changes (unrealized gains and losses) in the fair value of these equity securities through earnings as part of realized gains on investments and other assets on the condensed consolidated statements of earnings instead of other comprehensive income on the condensed consolidated balance sheets.
The Companys gains from investments and other assets, including net realized gains and losses from sales, calls, and maturities, unrealized gains and losses on equity securities, and other than temporary impairments are summarized as follows:
The net realized gains and losses on the sale of securities are recorded on the trade date, and the cost of the securities sold is determined using the specific identification method.
The carrying amount of held to maturity securities sold was $472,883 and $28,073 for the three months March 31, 2018 and 2017, respectively. The net realized loss related to these sales was $306,851 for the three months ended March 31, 2018 and the net realized gain related to these sales was $2,434 for the three months ended March 31, 2017. Although the intent is to buy and hold a fixed maturity security to maturity, the Company will sell a security prior to maturity if conditions have changed within the entity that issued the security to increase the risk of default to an unacceptable level.
Major categories of net investment income are as follows:
Net investment income includes income earned by the restricted assets of the cemeteries and mortuaries of $110,802 and $115,501 for the three months ended March 31, 2018 and 2017, 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 with regulatory authorities as required by law amounted to $9,247,333 at March 31, 2018 and $9,264,977 at December 31, 2017. These restricted securities are included in various assets under investments on the accompanying condensed consolidated balance sheets.
There were no investments, aggregated by issuer, in excess of 10% of shareholders equity (before net unrealized gains and losses on equity securities) at March 31, 2018, other than investments issued or guaranteed by the United States Government.
Real Estate Held for Investment
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 mortgage foreclosures.
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 Companys 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 12 commercial properties in 8 states. These properties include industrial warehouses, office buildings, retail centers, and undeveloped land, and the redevelopment and expansion of its corporate campus (Center53) in Salt Lake City, Utah. The Company does use debt in strategic cases to leverage established yields or to acquire a higher quality or different class of asset.
The aggregated net ending balance of commercial real estate that serves as collateral for bank borrowings was approximately $64,864,000 and $64,704,000 as of March 31, 2018 and December 31, 2017, respectively. The associated bank loan carrying values totaled approximately $41,309,000 and $40,994,000 as of March 31, 2018 and December 31, 2017, respectively.
The following is a summary of the Companys commercial real estate held for investment for the periods presented:
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. As an orderly and active market for these homes returns, the Company has the option to dispose or to continue and hold them for cash flow and acceptable returns.
The Company established Security National Real Estate Services (SNRE) 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 March 31, 2018, SNRE manages 101 residential properties in 7 states across the United States.
The net ending balance of residential real estate that serves as collateral for a bank borrowing was approximately $-0- and $34,431,000, as of March 31, 2018 and December 31, 2017, respectively. The associated bank loan carrying value was approximately $-0- and $26,773,000 as of March 31, 2018 and December 31, 2017, respectively. This real estate relates to the Companys Dry Creek at East Village apartment complex sold in March 2018.
The net ending balance of foreclosed residential real estate included in residential real estate held for investment is $31,349,678 and $33,372,228 as of March 31, 2018 and December 31, 2017, respectively.
The following is a summary of the Companys residential real estate held for investment for the periods presented:
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 approximately 10% of the overall commercial real estate holdings.
As of March 31, 2018, real estate owned and occupied by the Company is summarized as follows:
Mortgage Loans Held for Investment
Mortgage loans held for investment 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 March 31, 2018, the Company had 42%, 16%, 12%, 10%, 6%, 3% and 3% of its mortgage loans from borrowers located in the states of Utah, Florida, Texas, California, Nevada, Arizona, and Tennessee, respectively.
Mortgage loans held for investment are carried at their unpaid principal balances adjusted for net deferred fees, charge-offs and the related allowance for loan losses. Interest income is included in net investment income on the condensed consolidated statements of earnings and is recognized when earned. The Company defers related material loan origination fees, net of related direct loan origination costs, and amortizes the net fees over the term of the loans. Origination fees are included in net investment income on the condensed consolidated statements of earnings.
Mortgage loans are secured by the underlying property and require an appraisal at the time of underwriting and funding. Generally, the Company will fund a loan not to exceed 80% of the loans collateral fair market value. Amounts over 80% will require additional collateral or mortgage insurance by an approved third-party insurer.
The Company provides for losses on its mortgage loans held for investment through an allowance for loan losses (a contra-asset account). The allowance is comprised of two components. The first component is an allowance for collectively evaluated impairment that is based upon the Companys historical experience in collecting similar receivables. The second component is based upon individual evaluation of loans that are determined to be impaired. Upon determining impairment, the Company establishes an individual impairment allowance based upon an assessment of the fair value of the underlying collateral. In addition, when a mortgage loan is past due more than 90 days, the Company does not accrue any interest income. When a loan becomes delinquent, the Company proceeds to foreclose on the real estate and all expenses for foreclosure are expensed as incurred. Once foreclosed, an adjustment for the lower of cost or fair value is made, if necessary, and the amount is classified as real estate held for investment. The Company will rent the properties until it is deemed desirable to sell them.
The allowance for losses on mortgage loans held for investment could change based on changes in the value of the underlying collateral, the performance status of the loans, or the Companys actual collection experience. The actual losses could change, in the near term, from the established allowance, based upon the occurrence or non-occurrence of these events.
For purposes of determining the allowance for losses, the Company has segmented its mortgage loans held for investment by loan type. The Companys loan types are commercial, residential, and residential construction. The inherent risks within the portfolio vary depending upon the loan type as follows:
Commercial - Underwritten in accordance with the Companys policies to determine the borrowers ability to repay the obligation as agreed. Commercial loans are made primarily based on the underlying collateral supporting the loan. Accordingly, the repayment of a commercial loan depends primarily on the collateral and its ability to generate income and secondary on the borrowers (or guarantors) ability to repay.
Residential Secured by family dwelling units. These loans are secured by first mortgages on the unit, which are generally the primary residence of the borrower, generally at a loan-to-value ratio (LTV) of 80% or less.
Residential construction (including land acquisition and development) Underwritten in accordance with the Companys underwriting policies which include a financial analysis of the builders, borrowers (guarantors), construction cost estimates, and independent appraisal valuations. These loans will rely on the value associated with the project upon completion. These cost and valuation estimates may be inaccurate. Construction loans generally involve the disbursement of substantial funds over a short period of time with repayment substantially dependent upon the success of the completed project and the ability of the borrower to secure long-term financing. Additionally, land is underwritten according to the Companys policies, which include independent appraisal valuations as well as the estimated value associated with the land upon completion of development into finished lots. These cost and valuation estimates may be inaccurate. These loans are considered to be of a higher risk than other mortgage loans due to their ultimate repayment being sensitive to general economic conditions, availability of long-term or construction financing, and interest rate sensitivity.
The following is a summary of the allowance for loan losses as a contra-asset account for the periods presented:
The following is a summary of the aging of mortgage loans held for investment for the periods presented:
Impaired Mortgage Loans Held for Investment
Impaired mortgage loans held for investment 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:
Credit Risk Profile Based on Performance Status
The Companys mortgage loan held for investment 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 Companys performing and non-performing mortgage loans held for investment were as follows:
Non-Accrual Mortgage Loans Held for Investment
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 interest income that had been accrued. Payments received for loans on a non-accrual status are recognized on a cash basis. Interest income recognized from any payments received for loans on a non-accrual status was immaterial. Accrual of interest resumes if a loan is brought current. Interest not accrued on these loans totals approximately $223,000 and $204,083 as of March 31, 2018 and December 31, 2017, respectively.
The following is a summary of mortgage loans held for investment on a non-accrual status for the periods presented.
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4) Loans Held For Sale |
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4) Loans Held For Sale | 4) Loans Held for Sale
Fair Value Option Election
Accounting Standards Codification (ASC) No. 825, Financial Instruments, allows for the option to report certain financial assets and liabilities at fair value initially and at subsequent measurement dates with changes in fair value included in earnings. The option may be applied instrument by instrument, but it is irrevocable. The Company elected the fair value option for loans held for sale originated after July 1, 2017. The Company believes the fair value option most closely aligns the timing of the recognition of gains and costs. These loans are intended for sale and the Company believes that the fair value is the best indicator of the resolution of these loans. Electing fair value also reduces certain timing differences and better matches changes in the fair value of these assets with changes in the fair value of the related derivatives used for these assets.
Interest income is recorded based on the contractual terms of the loan and in accordance with the Companys policy on mortgage loans held for investment and is included in mortgage fee income on the condensed consolidated statement of earnings. None of these loans are 90 or more days past due nor on nonaccrual status as of March 31, 2018. See Note 8 to the condensed consolidated financial statements for additional disclosures regarding loans held for sale.
The following is a summary of the aggregate fair value and the aggregate unpaid principal balance of loans held for sale for the periods presented:
Mortgage Fee Income
Mortgage fee income consists of origination fees, processing fees, interest income and certain other income related to the origination and sale of mortgage loans held for sale.
Major categories of mortgage fee income for loans held for sale are as follows:
Loan Loss Reserve
When a repurchase demand corresponding to a mortgage loan previously held for sale and sold to a third-party investor 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:
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. The Company believes there is potential to resolve any alleged claims by third-party investors on acceptable terms. If the Company is unable to resolve such claims on acceptable terms, legal action may ensue. In the event of legal action by any third-party investor, the Company believes it has significant defenses to any such action and intends to vigorously defend itself against such action. |
5) Stock-based Compensation |
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5) Stock-based Compensation | 5) Stock Compensation Plans
The Company has four fixed option plans (the 2003 Plan, the 2006 Director Plan, the 2013 Plan and the 2014 Director Plan). Compensation expense for options issued of $58,087 and $101,996 has been recognized for these plans for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, the total unrecognized compensation expense related to the options issued was $155,658, which is expected to be recognized over the vesting period of one year.
The fair value of each option granted is estimated on the date of grant using the Black Scholes Option Pricing Model. The Company estimates the expected life of the options using the simplified method. Future volatility is estimated based upon the weighted historical volatility of the Companys Class A common stock over a period equal to the expected life of the options. The risk-free interest rate for the expected life of the options is based upon the Federal Reserve Boards daily interest rates in effect at the time of the grant.
A summary of the status of the Companys stock compensation plans as of March 31, 2018, and the changes during the three months ended March 31, 2018, are presented below:
A summary of the status of the Companys stock compensation plans as of March 31, 2017, and the changes during the three months ended March 31, 2017, are presented below:
The total intrinsic value (which is the amount by which the fair value of the underlying stock exceeds the exercise price of an option on the exercise date) of stock options exercised during the three months March 31, 2018 and 2017 was $111,157 and $-0-, respectively. |
6) Earnings Per Share |
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6) Earnings Per Share | 6) Earnings Per Share
The basic and diluted earnings per share amounts were calculated as follows:
Net earnings per share amounts have been retroactively adjusted for the effect of annual stock dividends. For the three months March 31, 2018 and 2017, there were 589,822 and 89,250 of anti-dilutive employee stock option shares, respectively, that were not included in the computation of diluted net earnings per common share as their effect would be anti-dilutive. |
7) Business Segments |
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7) Business Segments | 7) 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 Companys life insurance segment consists of life insurance premiums and operating expenses from the sale of insurance products sold by the Companys independent agency force and net investment income derived from investing policyholder and segment surplus funds. The Companys 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 Companys mortgage segment consists of fee income and expenses from the originations of residential mortgage loans and interest earned and interest expenses from warehousing loans held for sale.
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 of the Form 10-K for the year ended December 31, 2017. Intersegment revenues are recorded at cost plus an agreed upon intercompany profit, and are eliminated upon consolidation.
Factors Management Used to Identify the Enterprises Reportable Segments
The Companys 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.
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8): Fair Value of Financial Instruments |
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8): Fair Value of Financial Instruments | 8) Fair Value of Financial Instruments
GAAP defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. GAAP also specifies a fair value hierarchy based upon the observability of inputs used in valuation techniques. Observable inputs (highest level) reflect market data obtained from independent sources, while unobservable inputs (lowest level) reflect internally developed market assumptions. Fair value measurements are classified under the following hierarchy:
Level 1: Financial assets and financial liabilities whose values are based on unadjusted quoted prices for identical assets or liabilities in an active market that the Company can access.
Level 2: Financial assets and financial liabilities whose values are based on the following: a) Quoted prices for similar assets or liabilities in active markets; b) Quoted prices for identical or similar assets or liabilities in non-active markets; or c) Valuation models whose inputs are observable, directly or indirectly, for substantially the full term of the asset or liability.
Level 3: Financial assets and financial liabilities whose values are based on prices or valuation techniques that require inputs that are both unobservable and significant to the overall fair value measurement. These inputs may reflect the Companys estimates of the assumptions that market participants would use in valuing the financial assets and financial liabilities.
The Company utilizes a combination of third party valuation service providers, brokers, and internal valuation models to determine fair value.
The following methods and assumptions were used by the Company in estimating the fair value disclosures related to significant financial instruments: The items shown under Level 1 and Level 2 are valued as follows:
Equity Securities: The fair values of investments in equity securities along with methods used to estimate such values are disclosed in Note 3 of the Notes to the condensed consolidated financial statements.
Restricted Assets: A portion of these assets include mutual funds and equity securities that have quoted market prices that are used to determine fair value. Also included are cash and cash equivalents and participations in mortgage loans. The carrying amounts reported in the accompanying condensed consolidated balance sheets for these financial instruments approximate their fair values due to their short-term nature.
Cemetery Endowment Care Trust Investments: A portion of these assets include equity securities that have quoted market prices that are used to determine fair value. Also included are cash and cash equivalents. The carrying amounts reported in the accompanying condensed consolidated balance sheets for these financial instruments approximate their fair values due to their short-term nature.
Call and Put Options: The Company uses quoted market prices to value its call and put options.
Additionally, there were no transfers between Level 1 and Level 2 in the fair value hierarchy.
The items shown under Level 3 are valued as follows:
Loans Held for Sale: The Company elected the fair value option for all loans held for sale originated after July 1, 2017. The fair value is based on quoted market prices, when available. When a quoted market price is not readily available, the Company uses the market price from its last sale of similar assets.
Loan Commitments and Forward Sale Commitments: The Companys mortgage segment enters into loan commitments with potential borrowers and forward sale commitments to sell loans to third-party investors. The Company also uses a hedging strategy for these transactions. A loan commitment binds the Company to lend funds to a qualified borrower at a specified interest rate and within a specified period of time, generally up to 30 days after issuance of the loan commitment. Loan commitments are defined to be derivatives under GAAP and are recognized at fair value on the consolidated balance sheets with changes in their fair values recorded in current earnings.
The Company estimates the fair value of a loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted MBS prices, estimates of the fair value of mortgage servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms of the commitment. The change in fair value of the underlying mortgage loan is measured from the date the loan commitment is issued. Following issuance, the value of a mortgage loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans. Fallout rates and other factors from the Companys recent historical data are used to estimate the quantity and value of mortgage loans that will fund within the terms of the commitments.
Impaired Mortgage Loans Held for Investment: The Company believes that the fair value of these nonperforming loans will approximate the unpaid principal balance expected to be recovered based on the fair value of the underlying collateral. For residential and commercial properties, the collateral value is estimated by obtaining an independent appraisal. The appraisal typically considers area comparables and property condition as well as potential rental income that could be generated (particularly for commercial properties). For residential construction loans, the collateral is typically incomplete, so fair value is estimated as the replacement cost using data from Marshall and Swift, a provider of building cost information to the real estate construction.
Real Estate Held for Investment: The Company believes that in an orderly market, fair value will approximate the replacement cost of a home and the rental income provides a cash flow stream for investment analysis. The Company believes the highest and best use of the properties are as income producing assets since it is the Companys intent to hold the properties as rental properties, matching the income from the investment in rental properties with the funds required for future estimated policy claims.
It should be noted that for replacement cost, when determining the fair value of mortgage properties, the Company uses Marshall and Swift, a provider of building cost information to the real estate construction industry. For the investment analysis, the Company used market data based upon its real estate operation experience and projected the present value of the net rental income over seven years. The Company also considers area comparables and property condition when determining fair value.
In addition to this analysis performed by the Company, the Company depreciates Real Estate Held for Investment. This depreciation reduces the book value of these properties and lessens the exposure to the Company from further deterioration in real estate values.
Mortgage Servicing Rights: The Company initially recognizes Mortgage Servicing Rights (MSRs) at their estimated fair values derived from the net cash flows associated with the servicing contracts, where the Company assumes the obligation to service the loan in the sale transaction. The precise fair value of MSRs cannot be readily determined because MSRs are not actively traded in stand-alone markets. Considerable judgment is required to estimate the fair values of these assets and the exercise of such judgment can significantly affect the Companys earnings.
The following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the condensed consolidated balance sheet at March 31, 2018.
Following is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs:
The following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis by their classification in the condensed consolidated balance sheet at March 31, 2018.
The following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a recurring basis by their classification in the condensed consolidated balance sheet at December 31, 2017.
Following is a summary of changes in the condensed consolidated balance sheet line items measured using level 3 inputs:
The following tables summarize Level 1, 2 and 3 financial assets and financial liabilities measured at fair value on a nonrecurring basis by their classification in the condensed consolidated balance sheet at December 31, 2017.
Fair Value of Financial Instruments Carried at Other Than Fair Value
ASC 825, Financial Instruments, requires disclosure of fair value information about financial instruments, whether or not recognized in the balance sheet, for which it is practicable to estimate that value.
Management uses its best judgment in estimating the fair value of the Companys financial instruments; however, there are inherent limitations in any estimation technique. Therefore, for substantially all financial instruments, the fair value estimates presented herein are not necessarily indicative of the amounts the Company could have realized in a sales transaction at March 31, 2018 and December 31, 2017.
The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows as of March 31, 2018:
The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows as of December 31, 2017:
The methods, assumptions and significant valuation techniques and inputs used to estimate the fair value of these financial instruments are summarized as follows:
Fixed Maturity Securities Held to Maturity: 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.
Mortgage Loans Held for Investment: The estimated fair value of the Companys mortgage loans held for investment is determined using various methods. The Companys mortgage loans are grouped into three categories: Residential, Residential Construction and Commercial. When estimating the expected future cash flows, it is assumed that all loans will be held to maturity, and any loans that are non-performing are evaluated individually for impairment.
Residential The estimated fair value is determined through a combination of discounted cash flows (estimating expected future cash flows of interest payments and discounting them using current interest rates from single family mortgages) and considering pricing of similar loans that were sold recently.
Residential Construction These loans are primarily short in maturity accordingly, the estimated fair value is determined to be the carrying value.
Commercial The estimated fair value is determined by estimating expected future cash flows of interest payments and discounting them using current interest rates for commercial mortgages.
Policy Loans: The carrying amounts reported in the accompanying condensed consolidated balance sheet for these financial instruments approximate their fair values because they are fully collateralized by the cash surrender value of the underlying insurance policies.
Insurance Assignments, Net: These investments are primarily short in maturity, accordingly, the carrying amounts reported in the accompanying condensed consolidated balance sheet for these financial instruments approximate their fair values.
Bank and Other Loans Payable: The carrying amounts reported in the accompanying condensed consolidated balance sheet for these financial instruments approximate their fair values due to their relatively short-term maturities and variable interest rates.
Policyholder Account Balances and Future Policy Benefits-Annuities: Future policy benefit reserves for interest-sensitive insurance products are computed under a retrospective deposit method and represent policy account balances before applicable surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policy account balances. Interest crediting rates for interest-sensitive insurance products ranged from 1.5% to 6.5%. The fair values for these investment-type insurance contracts are estimated based on the present value of liability cash flows.
The fair values for the Companys insurance contracts other than investment-type contracts are not required to be disclosed. However, the fair values of liabilities under all insurance contracts are taken into consideration in the Companys overall management of interest rate risk, such that the Companys exposure to changing interest rates is minimized through the matching of investment maturities with amounts due under insurance contracts. |
9) Allowance For Doubtful Accounts and Loan Losses and Impaired Loans |
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Notes | |
9) Allowance For Doubtful Accounts and Loan Losses and Impaired Loans | 9) Allowance for Doubtful Accounts
The Company records an allowance and recognizes an expense for potential losses from other investments and receivables in accordance with generally accepted accounting principles.
Receivables are the result of cemetery and mortuary operations, mortgage loan operations and life insurance operations. The allowance is based upon the Companys historical experience for collectively evaluated impairment. Other allowances are based upon receivables individually evaluated for impairment. Collectability of the cemetery and mortuary receivables is significantly influenced by current economic conditions. The critical issues that impact recovery of mortgage loan operations are interest rate risk, loan underwriting, new regulations and the overall economy. |
10) Derivative Commitments |
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10) Derivative Commitments | 10) Derivative Instruments
Mortgage Banking Derivatives
Loan Commitments
The Company is exposed to price risk due to the potential impact of changes in interest rates on the values of loan commitments from the time a loan commitment is made to an applicant to the time the loan that would result from the exercise of that loan commitment is funded. Managing price risk is complicated by the fact that the ultimate percentage of loan commitments that will be exercised (i.e., the number of loans that will be funded) fluctuates. The probability that a loan will not be funded or the loan application is denied or withdrawn within the terms of the commitment is driven by a number of factors, particularly the change, if any, in mortgage rates following the issuance of the loan commitment.
In general, the probability of funding increases if mortgage rates rise and decreases if mortgage rates fall. This is due primarily to the relative attractiveness of current mortgage rates compared to the applicants committed rate. The probability that a loan will not be funded within the terms of the mortgage loan commitment also is influenced by the source of the applications (retail, broker or correspondent channels), proximity to rate lock expiration, purpose for the loan (purchase or refinance), product type and the application approval status. The Company has developed fallout estimates using historical data that take into account all of the variables, as well as renegotiations of rate and point commitments that tend to occur when mortgage rates fall. These fallout estimates are used to estimate the number of loans that the Company expects to be funded within the terms of the loan commitments and are updated periodically to reflect the most current data.
The Company estimates the fair value of a loan commitment based on the change in estimated fair value of the underlying mortgage loan, quoted mortgage-backed securities (MBS) prices, estimates of the fair value of mortgage servicing rights, and an estimate of the probability that the mortgage loan will fund within the terms of the commitment. The change in fair value of the underlying mortgage loan is measured from the date the loan commitment is issued and is shown net of expenses. Following issuance, the value of a loan commitment can be either positive or negative depending upon the change in value of the underlying mortgage loans.
Forward Sale Commitments
The Company utilizes forward commitments to economically hedge the price risk associated with its outstanding mortgage loan commitments. A forward commitment protects the Company from losses on sales of the loans arising from exercise of the loan commitments. Management expects these types of commitments will experience changes in fair value opposite to changes in fair value of the loan commitments, thereby reducing earnings volatility related to the recognition in earnings of changes in the values of the commitments.
The net changes in fair value of loan commitments and forward sale commitments are shown in current earnings as a component of mortgage fee income on the consolidated statements of earnings. Mortgage banking derivatives are shown in other assets and other liabilities and accrued expenses on the condensed consolidated balance sheets.
Call and Put Options
The Company uses a strategy of selling out of the money call options on its equity securities as a source of revenue. The options give the purchaser the right to buy from the Company specified equity securities at a set price up to a pre-determined date in the future. The Company uses the strategy of selling put options as a means of generating cash or purchasing equity securities at lower than current market prices. The Company receives an immediate payment of cash for the value of the option and establishes a liability for the fair value of the option. The liability for options is adjusted to fair value at each reporting date. In the event a call option is exercised, the Company recognizes a gain on the sale of the equity security enhanced by the value of the option that was sold. If the option expires unexercised, the Company realizes a gain from the sale of the option. In the event a put option is exercised, the Company acquires an equity security at the strike price of the option reduced by the value received from the sale of the put option. The equity security is then traded as a normal equity security in the Companys portfolio. The net changes in the fair value of call and put options are shown in current earnings as a component of gains (losses) on investments and other assets. Call and put options are shown in other liabilities and accrued expenses on the condensed consolidated balance sheets.
The following table shows the notional amount and fair value of derivatives as of March 31, 2018 and December 31, 2017.
The following table shows the gains and losses on derivatives for the periods presented.
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11) Reinsurance, Commitments and Contingencies |
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11) Reinsurance, Commitments and Contingencies | 11) Reinsurance, Commitments and Contingencies
Reinsurance
The Company follows the procedure of reinsuring risks in excess of a specified limit, which ranges from $25,000 to $100,000. The Company is liable for these amounts in the event such reinsurers are unable to pay their portion of the claims. The Company has also assumed insurance from other companies.
Mortgage Loan Loss Settlements
Future loan losses can be extremely difficult to estimate. However, management believes that the Companys reserve methodology and its current practice of property preservation allow it to estimate its potential losses on loans sold. The estimated liability for indemnification losses is included in other liabilities and accrued expenses and, as of March 31, 2018 and December 31, 2017, the balances were $2,912,000 and $2,572,000, respectively.
Mortgage Loan Loss Litigation
Lehman Brothers Holdings Litigation Delaware and New York
In January 2014, Lehman Brothers Holdings, Inc. (Lehman Holdings) entered into a settlement with the Federal National Mortgage Association (Fannie Mae) concerning the mortgage loan claims that Fannie Mae had asserted against Lehman Holdings, which were based on alleged breaches of certain representations and warranties by Lehman Holdings in the mortgage loans it had sold to Fannie Mae. Lehman Holdings acquired these loans from Aurora Bank, FSB, formerly known as Lehman Brothers Bank, FSB, which in turn purchased the loans from certain residential mortgage loan originators, including SecurityNational Mortgage. A settlement based on similar circumstances was entered into between Lehman Holdings and the Federal Home Loan Mortgage Corporation (Freddie Mac) in February 2014.
Lehman Holdings filed a motion in May 2014 with the U.S. Bankruptcy Court of the Southern District of New York to require the mortgage loan originators, including SecurityNational Mortgage, to engage in non-binding mediations of their alleged indemnification claims against the mortgage loan originators relative to the Fannie Mae and Freddie Mac settlements with Lehman Holdings. The mediation was not successful in resolving any issues between SecurityNational Mortgage and Lehman Holdings. On January 26, 2016, SecurityNational Mortgage filed a declaratory judgment action against Lehman Holdings in the Superior Court for the State of Delaware. In the Delaware action, SecurityNational Mortgage asserted its right to obtain a declaration of rights in that there are allegedly millions of dollars in dispute with Lehman Holdings pertaining to approximately 136 loans. SecurityNational Mortgage sought a declaratory judgment as to its rights as it contends that it has no liability to Lehman Holdings as a result of Lehman Holdings settlements with Fannie Mae and Freddie Mac. Lehman Holdings filed a motion in the Delaware court seeking to stay or dismiss the declaratory judgment action. On August 24, 2016, the Court ruled that it would exercise its discretion to decline jurisdiction over the action and granted Lehman Holdings motion to dismiss.
On February 3, 2016, Lehman Holdings filed an adversary proceeding against approximately 150 mortgage loan originators, including SecurityNational Mortgage, in the U.S. Bankruptcy Court of the Southern District of New York seeking a declaration of rights similar in nature to the declaratory judgment that SecurityNational Mortgage sought in its Delaware lawsuit, and for damages relating to the alleged obligations of the defendants under the indemnification provisions of the alleged agreements, in amounts to be determined at trial, including interest, attorneys fees and costs incurred by Lehman Holdings in enforcing the obligations of the defendants. No response was required to be filed relative to the Complaint or the Amended Complaint dated March 7, 2016. A Case Management Order was entered on November 1, 2016.
On December 27, 2016, pursuant to the Case Management Order, Lehman Holdings filed a Second Amended Complaint against SecurityNational Mortgage, which eliminates the declaratory judgment claim but retains a similar claim for damages as in the Complaint. The case is presently in a motion period. Many of the defendants, including SecurityNational Mortgage, filed a joint motion in the case asserting that the Bankruptcy Court does not have subject matter jurisdiction concerning the matter and that venue is improper. Lehman Holdings response memorandum was filed on May 31, 2017 and a reply memorandum of the defendants filing the motion was filed on July 14, 2017. A hearing date for the motion is set for June 12, 2018. No Answer to the Second Amended Complaint is required to be filed by SecurityNational Mortgage pending further order of the Court. SecurityNational Mortgage denies that it has any liability to Lehman Holdings and intends to vigorously protect and defend its position.
Other Contingencies and Commitments
The Company has entered into commitments to fund construction and land development loans and has also provided financing for land acquisition and development. As of March 31, 2018, the Companys commitments were approximately $82,523,000 for these loans, of which $54,254,000 had been funded. The Company will advance funds once the work has been completed and an independent inspection is made. The maximum loan commitment ranges between 50% and 80% of appraised value. The Company receives fees and interest for these loans and the interest rate is generally fixed 5.50% to 8.00% per annum. Maturities range between six and eighteen months.
The Company belongs to a captive insurance group for certain casualty insurance, worker compensation and liability programs. Insurance reserves are maintained relative to these programs. The level of exposure from catastrophic events is limited by the purchase of stop-loss and aggregate liability reinsurance coverage. When estimating the insurance liabilities and related reserves, the captive insurance management considers a number of factors, which include historical claims experience, demographic factors, severity factors and valuations provided by independent third-party actuaries. If actual claims or adverse development of loss reserves occurs and exceed these estimates, additional reserves may be required. The estimation process contains uncertainty since captive insurance management must use judgment to estimate the ultimate cost that will be incurred to settle reported claims and unreported claims for incidents incurred but not reported as of the balance sheet date.
The Company is a defendant in various other legal actions arising from the normal conduct of business. Management believes that none of the actions will have a material effect on the Companys financial position or results of operations. Based on managements assessment and legal counsels representations concerning the likelihood of unfavorable outcomes, no amounts have been accrued for the above claims in the consolidated financial statements.
The Company is not a party to any other material legal proceedings outside the ordinary course of business or to any other legal proceedings, which, if adversely determined, would have a material adverse effect on its financial condition or results of operations.
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12) Mortgage Servicing Rights |
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12) Mortgage Servicing Rights | 12) Mortgage Servicing Rights
The Company initially records these MSRs at fair value as discussed in Note 8.
The Companys subsequent accounting for MSRs is based on the class of MSRs. The Company has identified two classes of MSRs: MSRs backed by mortgage loans with initial term of 30 years and MSRs backed by mortgage loans with initial term of 15 years. The Company distinguishes between these classes of MSRs due to their differing sensitivities to change in value as the result of changes in market. After being initially recorded at fair value, MSRs backed by mortgage loans are accounted for using the amortization method. Amortization expense is included in other expenses on the consolidated statements of earnings. MSR amortization is determined by amortizing the MSR balance in proportion to, and over the period of the estimated future net servicing income of the underlying financial assets.
The Company periodically assesses MSRs for impairment. Impairment occurs when the current fair value of the MSR falls below the assets carrying value (carrying value is the amortized cost reduced by any related valuation allowance). If MSRs are impaired, the impairment is recognized in current-period earnings and the carrying value of the MSRs is adjusted through a valuation allowance.
Management periodically reviews the various loan strata to determine whether the value of the MSRs in a given stratum is impaired and likely to recover. When management deems recovery of the value to be unlikely in the foreseeable future, a write-down of the cost of the MSRs for that stratum to its estimated recoverable value is charged to the valuation allowance.
The following is a summary of the MSR activity for the periods presented.
The following table summarizes the Companys estimate of future amortization of its existing MSRs carried at amortized cost:
The Company collected the following contractual servicing fee income and late fee income as reported in other revenues on the condensed consolidated statement of earnings:
The following is a summary of the unpaid principal balances (UPB) of the servicing portfolio for the periods presented:
The following key assumptions were used in determining MSR value:
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13) Income Taxes |
3 Months Ended |
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Mar. 31, 2018 | |
Notes | |
13) Income Taxes | 13) Income Taxes
The Companys overall effective tax rate for the three months ended March 31, 2018 and 2017 was 20.1% and 35.8%, respectively, which resulted in a provision for income taxes of $4,261,000 4261258 and $1,038,000 1037770, respectively. The Companys effective tax rates differ from the U.S. federal statutory rate of 21% largely due to its provision for state income taxes. The effective tax rate in the current period decreased when compared to the prior year period largely due to the Tax Cuts and Jobs Act reduction of the federal statutory rate from 35% to 21%. |
14) Revenues From Contracts With Customers |
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14) Revenues From Contracts With Customers | 14) Revenues from Contracts with Customers
See Note 2 regarding the adoption of ASU No. 2014-09. The Companys cemetery and mortuary revenues are the only revenues recognized from contracts with customers, thus they are the only revenues subject to ASU No. 2014-09.
Pre-need contract sales of funeral services and caskets - revenue and costs associated with the sales of pre-need funeral services and caskets are deferred until the services are performed or the caskets are delivered.
Sales of cemetery interment rights (cemetery burial property) - revenue and costs associated with the sale of cemetery interment rights are recognized in accordance with the retail land sales provisions based on GAAP. Under GAAP, recognition of revenue and associated costs from constructed cemetery property must be deferred until 10% of the sales price has been collected.
Pre-need contract sales of cemetery merchandise (primarily markers and vaults) - revenue and costs associated with the sale of pre-need cemetery merchandise is deferred until the merchandise is delivered.
Pre-need contract sales of cemetery services (primarily merchandise delivery and installation fees) - revenue and costs associated with the sales of pre-need cemetery services are deferred until the services are performed.
Prearranged funeral and pre-need cemetery customer acquisition costs - costs incurred related to obtaining new pre-need contract cemetery and prearranged funeral services are accounted for under the guidance of the provisions based on GAAP. Obtaining costs, which include only costs that vary with and are primarily related to the acquisition of new pre-need cemetery and prearranged funeral services, are deferred until the merchandise is delivered or services are performed.
Revenues and costs for at need sales are recorded when a valid contract exists, the services are performed, collection is reasonably assured and there are no significant obligations remaining.
The following table disaggregates revenue for the Companys cemetery and mortuary contracts.
The following table reconciles revenues from cemetery and mortuary contracts to Note 7 Business Segment Information for the three months ended March 31, 2018:
The opening and closing balances of the Companys receivables, contract assets and contract liabilities are as follows:
The amount of revenue recognized for the three months ended March 31, 2018 that was included in the opening contract liability balance was $724,771.
The difference between the opening and closing balances of the Companys contract assets and contract liabilities primarily results from the timing difference between the Companys performance and the customers payment. |
1) Basis of Presentation: Accounting Policy (Policies) |
3 Months Ended |
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Mar. 31, 2018 | |
Policies | |
Accounting Policy | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10 Q and Articles 8 and 10 of Regulation S X. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. These financial statements should be read in conjunction with the consolidated financial statements of the Company and notes thereto for the year ended December 31, 2017, included in the Companys Annual Report on Form 10-K (file number 000-09341). In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the year ending December 31, 2018. The presentation of certain amounts in the prior year have been reclassified to conform to the 2018 presentation. |
1) Basis of Presentation: Use of Estimates Policy (Policies) |
3 Months Ended |
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Mar. 31, 2018 | |
Policies | |
Use of Estimates Policy | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Material estimates that are particularly susceptible to significant changes in the near term are those used in determining the value of derivative assets and liabilities; those used in determining deferred acquisition costs and the value of business acquired; those used in determining the value of mortgage loans foreclosed to real estate held for investment; those used in determining the liability for future policy benefits and unearned revenue; those used in determining the estimated future costs for pre-need sales; those used in determining the value of mortgage servicing rights; those used in determining allowances for loan losses for mortgage loans held for investment; those used in determining loan loss reserve; and those used in determining deferred tax assets and liabilities. Although some variability is inherent in these estimates, management believes the amounts provided are fairly stated in all material respects. |
2) Recent Accounting Pronouncements: New Accounting Pronouncements, Policy (Policies) |
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New Accounting Pronouncements, Policy | Accounting Standards Adopted in 2018
Accounting Standards Update (ASU) No. 2017-01: Business Combinations (Topic 805): Clarifying the Definition of a Business Issued in January 2017, ASU 2017-01 intends to clarify the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. Under the current implementation guidance in Topic 805, there are three elements of a business: inputs, processes, and outputs. While an integrated set of assets and activities, collectively referred to as a set, that is a business usually has outputs, outputs are not required to be present. ASU 2017-01 provides a screen to determine when a set is not a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. While the Companys acquisitions have historically been classified as either business combinations or asset acquisitions, certain acquisitions that were classified as business combinations by the Company would have been considered asset acquisitions under the new standard. As a result, transaction costs may be capitalized more often since the Company expects some of its future acquisitions to be classified as asset acquisitions under this new standard. In addition, goodwill that was previously allocated to businesses that were sold or held for sale will no longer be allocated and written off upon sale if future sales were deemed to be sales of assets and not businesses. ASU 2017-01 was adopted by the Company on January 1, 2018 and it will be applied prospectively to transactions occurring after the adoption date, as applicable.
ASU No. 2016-18: Statement of Cash Flows (Topic 230): Restricted Cash Issued in November 2016, ASU 2016-18 requires restricted cash and cash equivalents to be included with cash and cash equivalents in the consolidated statement of cash flows and disclose the nature of the restrictions on cash and cash equivalents. The Company currently discloses the restrictions on cash and cash equivalents in Note 8 of the Notes to Consolidated Financial Statements in the Companys Annual Report on Form 10-K and will continue these disclosures. Note 8 also discloses the components of the Companys restricted assets and cemetery perpetual care trust investments which include restricted cash and cash equivalents. ASU 2016-18 was adopted by the Company on January 1, 2018. The Company previously presented changes in restricted cash and cash equivalents under investing activities on the consolidated statements of cash flows. Upon adoption of ASU 2016-18, the Company amended the presentation in the consolidated statements of cash flows to include the restricted cash and cash equivalents with cash and cash equivalents and retrospectively reclassified all periods presented. The adoption of this standard does not impact the Companys total cash and cash equivalents but is a change in presentation within the consolidated statements of cash flows.
ASU No. 2016-01: Financial Instruments Overall (Topic 825-10) Issued in January 2016, ASU 2016-01 changes the accounting for non-consolidated equity investments that are not accounted for under the equity method of accounting by requiring changes in fair value to be recognized in income. The Company adopted this standard on January 1, 2018 using the modified retrospective approach with the cumulative effect of the adoption made to the balance sheet as of the date of adoption. Thus, the adoption resulted in a reclassification of the related accumulated net unrealized gains of $603,170 included in accumulated other comprehensive income as of December 31, 2017 to retained earnings. Under previous guidance, changes in fair value for investments of this nature were recognized in accumulated other comprehensive income as a component of stockholders equity. Additionally, ASU 2016-01 simplifies the impairment assessment of equity investments without readily determinable fair values; requires entities to use the exit price when estimating the fair value of financial instruments; and modifies various presentation disclosure requirements for financial instruments. The Company holds equity securities that were previously measured at fair value with changes in fair value recognized through other comprehensive income. Upon adoption of ASU 2016-01 the Company now recognizes the changes in the fair value of these equity securities through earnings as part of gains on investments and other assets on the condensed consolidated statements of earnings, thus increasing the volatility of the Companys earnings. The adoption of this standard does not significantly affect the Companys comprehensive income or stockholders equity.
ASU No. 2014-09: Revenue from Contracts with Customers (Topic 606) - Issued in May 2014, ASU 2014-09 supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition. ASU 2014-09 clarifies the principles for recognizing revenue in order to improve comparability of revenue recognition practices across entities and industries. ASU 2014-09 provides guidance to assist in the identification of contracts with customers and separate performance obligations within those contracts, the determination and allocation of the transaction price to those identified performance obligations and the recognition of revenue when a performance obligation has been satisfied. ASU 2014-09 also requires disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. Premiums and related fees from insurance contracts and mortgage banking revenues are excluded from the scope of this new guidance.
The Company adopted this standard on January 1, 2018 using a modified retrospective approach. No cumulative effect adjustment was made to beginning retained earnings. The Companys revenues from contracts with customers that are subject to ASU 2014-09 include revenues on mortuary and cemetery contracts, which is less than 5% of the Companys total revenues. The recognition and measurement of these items did not change as a result of the Companys adoption of ASU 2014-09 and thus the adoption of ASU 2014-09 does not significantly impact the Companys condensed consolidated statements of earnings or condensed consolidated statements of cash flows. The Company reclassified $856,479 of amounts due from customers for unfulfilled performance obligations on cancelable pre-need contracts from Receivables, net to Deferred pre-need cemetery and mortuary contract revenues on the Companys condensed consolidated balance sheets.
The standard primarily impacts the manner in which the Company recognizes a) certain nonrefundable up-front fees and b) incremental costs to acquire new pre-need funeral trust contracts and pre-need and at-need cemetery contracts (i.e., selling costs). The nonrefundable fees will continue to be deferred and recognized as revenue when the underlying goods and services are delivered to the customer. The incremental selling costs will continue to be deferred and amortized by specific identification to the delivery of the underlying goods and services. Additionally, the amounts due from customers for undelivered performance obligations on cancelable pre-need contracts represent contract assets, which are required to be netted with deferred pre-need cemetery and mortuary contract revenues, instead of receivables on the Companys consolidated balance sheets.
Accounting Standards Issued But Not Yet Adopted
ASU No. 2016-13: Financial Instruments Credit Losses (Topic 326) Issued in June 2016, ASU 2016-13 amends guidance on reporting credit losses for assets held at amortized cost basis (such as mortgage loans and held to maturity debt securities) and available for sale debt securities. For assets held at amortized cost basis, Topic 326 eliminates the probable initial recognition threshold in current general accepted accounting principles (GAAP) and, instead, requires an entity to reflect its current estimate of all expected credit losses. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net amount expected to be collected. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however Topic 326 will require that credit losses be presented as an allowance rather than as a write-down. The new authoritative guidance will be effective for the Company on January 1, 2020. The Company is in the process of evaluating the potential impact of this standard.
ASU No. 2016-02: Leases (Topic 842) - Issued in February 2016, ASU 2016-02 supersedes the requirements in Accounting Standards Codification (ASC) Topic 840, Leases, and was issued to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The new authoritative guidance will be effective for the Company on January 1, 2019. The Company is in the process of evaluating the potential impact of this standard, which is not expected to be material to the Companys results of operations but will have an effect on the balance sheet presentation for leased assets and obligations.
The Company has reviewed other recent accounting pronouncements and has determined that they will not significantly impact the Companys results of operations or financial position. |
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3) Investments: Schedule of Unrealized Loss on Investments (Tables) |
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3) Investments: Schedule of Major categories of net investment income (Tables) |
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3) Investments: Commercial Real Estate Investment (Tables) |
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3) Investments: Residential Real Estate Investment (Tables) |
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3) Investments: Schedule of Allowance for loan losses as a contra-asset account (Tables) |
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Allowance for loan losses as a contra-asset account |
|
3) Investments: Schedule of aging of mortgage loans (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of aging of mortgage loans |
|
3) Investments: Schedule of Impaired Mortgage Loans (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Impaired Mortgage Loans |
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3) Investments: Schedule Of Credit Risk Of Mortgage Loans Based On Performance Status (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Credit Risk Of Mortgage Loans Based On Performance Status: |
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3) Investments: Schedule of Mortgage loans on a nonaccrual status (Tables) |
3 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||
Schedule of Mortgage loans on a nonaccrual status |
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4) Loans Held For Sale: Aggregate fair value - Loans Held for Sale (Tables) |
3 Months Ended | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||
Tables/Schedules | |||||||||||
Aggregate fair value - Loans Held for Sale |
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4) Loans Held For Sale: Schedule of Mortgage Fee Income for Loans Held for Sale (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||||||||||||||||
Schedule of Mortgage Fee Income for Loans Held for Sale |
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4) Loans Held For Sale: Schedule of loan loss reserve which is included in other liabilities and accrued expenses (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||
Schedule of loan loss reserve which is included in other liabilities and accrued expenses |
|
5) Stock-based Compensation: Schedule of stock inventive plan changes (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of stock inventive plan changes |
A summary of the status of the Companys stock compensation plans as of March 31, 2017, and the changes during the three months ended March 31, 2017, are presented below:
|
6) Earnings Per Share: Schedule of Earnings Per Share, Basic and Diluted (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted |
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7) Business Segments: Schedule of Revenues and Expenses by Reportable Segment (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Revenues and Expenses by Reportable Segment |
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8): Fair Value of Financial Instruments: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AsOfMarch312018Member | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis |
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AsOfDecember312017Member | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis |
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8): Fair Value of Financial Instruments: Schedule of Changes in the consolidated balance sheet line items measured using level 3 inputs (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AsOfMarch312018Member | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in the consolidated balance sheet line items measured using level 3 inputs |
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AsOfDecember312017Member | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in the consolidated balance sheet line items measured using level 3 inputs |
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8): Fair Value of Financial Instruments: Schedule of Fair Value Measurements, Nonrecurring (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
AsOfMarch312018Member | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Measurements, Nonrecurring |
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AsOfDecember312017Member | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value Measurements, Nonrecurring |
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8): Fair Value of Financial Instruments: Schedule of Financial Instruments Carried at Other Than Fair Value (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Schedule of Financial Instruments Carried at Other Than Fair Value |
The carrying values and estimated fair values for such financial instruments, and their corresponding placement in the fair value hierarchy, are summarized as follows as of December 31, 2017:
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10) Derivative Commitments: Schedule of Derivative Assets at Fair Value (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Derivative Assets at Fair Value |
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10) Derivative Commitments: Schedule of Gains and Losses on Derivatives (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||||||||||||||
Schedule of Gains and Losses on Derivatives |
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12) Mortgage Servicing Rights: Schedule of Mortgage Servicing Rights (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tables/Schedules | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Mortgage Servicing Rights |
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12) Mortgage Servicing Rights: Schedule of Finite-Lived Intangible Assets, Future Amortization Expense, Mortgage Servicing Rights (Tables) |
3 Months Ended | ||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense, Mortgage Servicing Rights |
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12) Mortgage Servicing Rights: Schedule of Other Revenues (Tables) |
3 Months Ended | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||
Schedule of Other Revenues |
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12) Mortgage Servicing Rights: Summary of Unpaid Principal Balances of the Servicing Portfolio (Tables) |
3 Months Ended | ||||||||
---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||
Tables/Schedules | |||||||||
Summary of Unpaid Principal Balances of the Servicing Portfolio |
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12) Mortgage Servicing Rights: Assumptions used in determining MSR value (Tables) |
3 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||
Tables/Schedules | |||||||||||||
Assumptions used in determining MSR value |
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14) Revenues From Contracts With Customers: Revenues For The Company's Cemetery and Mortuary Contracts (Tables) |
3 Months Ended | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||
Revenues For The Company's Cemetery and Mortuary Contracts | The following table disaggregates revenue for the Companys cemetery and mortuary contracts.
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14) Revenues From Contracts With Customers: Reconciliation of Revenues from Cemetery and mortuary contracts to Business Segment Information (Tables) |
3 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||
Tables/Schedules | |||||||||||||
Reconciliation of Revenues from Cemetery and mortuary contracts to Business Segment Information |
|
14) Revenues From Contracts With Customers: Schedule of Opening and Closing Balances of Receivables, Contract Assets and Contract Liabilities (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||
Tables/Schedules | |||||||||||||||||||||||||||||||||
Schedule of Opening and Closing Balances of Receivables, Contract Assets and Contract Liabilities |
|
3) Investments (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Average market value over amortized cost | 97.50% | 97.90% | |
Other than Temporary Impairment, Credit Losses Recognized in Earnings, Period Increase (Decrease) | $ 52,139 | ||
Net Investment Income | $ 10,074,431 | 9,016,376 | |
Securities on deposit for regulatory authorities | 9,247,333 | $ 9,264,977 | |
Residential Real Estate 1 | |||
Pledged Assets Separately Reported, Other Assets Pledged as Collateral, at Fair Value | 34,431,000 | ||
Bank Loans | 26,773,000 | ||
Foreclosed Residential Real Estate included in Residential Real Estate Held for Investment | 31,349,678 | $ 33,372,228 | |
Cemeteries and mortuaries | |||
Net Investment Income | $ 110,802 | $ 115,501 |
3) Investments: Equity Securities - Additional (Details) |
Dec. 31, 2017 |
---|---|
Details | |
Average Market Value of Security over initial investment | 77.50% |
3) Investments: Gain (Loss) on Investments (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Fixed maturity securities held to maturity: | $ 22,020,939 | $ 93,191 |
Held-to-maturity Securities | ||
Gross Realized Gains | 28,133 | 2,434 |
Gross Realized Losses | (308,931) | |
Other than Temporary Impairments | (52,139) | |
Equity Securities | ||
Gross Realized Gains | 60,978 | |
Gross Realized Losses | (4,556) | |
Gains and losses during 2018 on securities sold in 2018 | 14,650 | |
Unrealized Gains and Losses on securities held at end of period | (372,042) | |
Other Assets | ||
Gross Realized Gains | 22,951,723 | 456,275 |
Gross Realized Losses | $ (292,594) | $ (369,801) |
3) Investments: Net carrying amount of held to maturity securities (Details) - Held-to-maturity Securities - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Net carrying amount for sales of securities | $ 472,883 | $ 28,073 |
Net realized loss related to sales of securities | $ 306,851 | |
Net realized gain related to sales of securities | $ 2,434 |
3) Investments: Schedule of Major categories of net investment income (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Gross investment income | $ 13,945,344 | $ 12,364,725 |
Investment Income, Investment Expense | (3,870,913) | (3,348,349) |
Net Investment Income | 10,074,431 | 9,016,376 |
FixedMaturitySecuritiesHeldToMaturityMember | ||
Gross investment income | 2,529,841 | 2,424,805 |
Equity Securities | ||
Gross investment income | 58,292 | 54,786 |
MortgageLoansRealEstateMember | ||
Gross investment income | 4,531,927 | 3,410,761 |
Real Estate | ||
Gross investment income | 2,670,440 | 2,894,331 |
PolicyStudentAndOtherLoansMember | ||
Gross investment income | 102,866 | 116,845 |
Insurance Assignments | ||
Gross investment income | 3,860,937 | 3,364,642 |
Other investments | ||
Gross investment income | $ 53,673 | $ 7,543 |
3) Investments: Schedule of Impaired Mortgage Loans (Details) - USD ($) |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Commercial Loan | ||
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment | $ 365,220 | |
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment | 365,220 | |
Residential Mortgage | ||
Impaired Financing Receivable, with No Related Allowance, Recorded Investment | $ 3,653,126 | 3,322,552 |
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment | 3,653,126 | 3,290,094 |
Impaired Financing Receivable, with Related Allowance, Recorded Investment | 1,709,837 | 1,601,000 |
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance | 1,709,837 | 1,601,000 |
Impaired Financing Receivable, Related Allowance | 292,220 | 237,560 |
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment | 1,709,837 | 1,350,115 |
Residential Construction | ||
Impaired Financing Receivable, with No Related Allowance, Recorded Investment | 461,834 | |
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment | 277,232 | |
Impaired Financing Receivable, with Related Allowance, Recorded Investment | 461,834 | |
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance | 461,834 | |
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment | 277,232 | |
TotalResidentialMortgageMember | ||
Impaired Financing Receivable, with Related Allowance, Recorded Investment | 5,362,963 | 4,923,552 |
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance | 5,362,963 | 4,923,552 |
Impaired Financing Receivable, Related Allowance | 292,220 | 237,560 |
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment | $ 5,362,963 | $ 4,640,209 |
3) Investments: Schedule Of Credit Risk Of Mortgage Loans Based On Performance Status (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Represents the monetary amount of MortgageLoans, as of the indicated date. | $ 208,303,794 | $ 207,639,509 |
Commercial Loan | ||
Represents the monetary amount of MortgageLoans, as of the indicated date. | 52,384,376 | 54,954,865 |
Residential Mortgage | ||
Represents the monetary amount of MortgageLoans, as of the indicated date. | 101,665,364 | 102,527,111 |
Residential Construction | ||
Represents the monetary amount of MortgageLoans, as of the indicated date. | $ 54,254,054 | $ 50,157,533 |
3) Investments: Summary of Interest not accrued on non-performing mortgage loans (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Details | ||
Interest not accrued on non-performing loans | $ 223,000 | $ 204,083 |
3) Investments: Schedule of Mortgage loans on a nonaccrual status (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest | $ 5,362,963 | $ 5,385,386 |
Residential Mortgage | ||
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest | $ 5,362,963 | 4,923,552 |
Residential Construction | ||
Loans and Leases Receivable, Nonperforming, Nonaccrual of Interest | $ 461,834 |
4) Loans Held For Sale: Aggregate fair value - Loans Held for Sale (Details) |
Mar. 31, 2018
USD ($)
|
---|---|
Details | |
Fair value of loans held for sale | $ 124,866,313 |
Aggregate unpaid principal balance - Loans Held for Sale | 121,111,768 |
Unrealized gain - Loans Held for Sale | $ 3,754,545 |
4) Loans Held For Sale: Schedule of Mortgage Fee Income for Loans Held for Sale (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Interest and Other Income | $ 1,116,454 | $ 1,734,527 |
Mortgage fee income | 25,460,160 | 38,974,760 |
LoansHeldForSaleMember | ||
Loan fees | 5,745,309 | 9,304,925 |
Secondary gains | 15,578,495 | 26,194,350 |
Change in fair value of loan commitments | 440,958 | 2,167,593 |
Change in fair value of loans held for sale | 2,929,996 | |
Provision for loan loss reserve | (351,051) | (426,634) |
Mortgage fee income | $ 25,460,160 | $ 38,974,760 |
4) Loans Held For Sale: Schedule of loan loss reserve which is included in other liabilities and accrued expenses (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Details | ||
Beginning, Loan Loss Reserve | $ 2,571,524 | $ 627,733 |
Loan loss reserve, Provisions for losses | 351,051 | 1,851,187 |
Loan loss reserve, Charge-offs | (10,420) | 92,604 |
Ending, Loan Loss Reserve | $ 2,912,155 | $ 2,571,524 |
5) Stock-based Compensation (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Details | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs, Capitalized Amount | $ 58,087 | $ 101,996 |
Unrecognized compensation expense related to the options issued in December 2014 | 155,658 | |
Total intrinsic value | $ 111,157 |
5) Stock-based Compensation: Schedule of stock inventive plan changes (Details) - USD ($) |
3 Months Ended | |||
---|---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
Class A Common Stock | ||||
Shares, Outstanding | 842,738 | 741,973 | 880,426 | 741,973 |
Shares outstanding | $ 4.48 | $ 4.33 | $ 4.35 | $ 4.33 |
Shares Exercised | (31,984) | |||
Shares Cancelled | (5,704) | |||
Options Exercisable | 744,686 | 636,764 | ||
Options exercisable | $ 4.40 | $ 3.94 | ||
Available options for future grant | $ 421,241 | $ 253,432 | ||
Weighted average contractual term of options outstanding | 6.55 years | 7.12 years | ||
Weighted average contractual term of options exercisable | 6.53 years | 6.70 years | ||
Aggregated intrinsic value of options outstanding | $ 850,528 | $ 1,837,828 | ||
Aggregated intrinsic value of options exercisable | $ 836,882 | $ 1,824,086 | ||
Class C Common Stock | ||||
Shares, Outstanding | 523,603 | 556,298 | 523,603 | 556,298 |
Shares outstanding | $ 5.24 | $ 4.61 | $ 5.24 | $ 4.61 |
Options Exercisable | 468,477 | 493,298 | ||
Options exercisable | $ 5.29 | $ 4.26 | ||
Available options for future grant | $ 165,638 | |||
Weighted average contractual term of options outstanding | 3.19 years | 2.42 years | ||
Weighted average contractual term of options exercisable | 2.43 years | 2.13 years | ||
Aggregated intrinsic value of options outstanding | $ 251,961 | $ 1,264,540 | ||
Aggregated intrinsic value of options exercisable | $ 232,667 | $ 1,264,540 |
6) Earnings Per Share: Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Details | ||
Net earnings | $ 16,925,923 | $ 1,860,000 |
Weighted-average Class A equivalent common share outstanding (1) | 16,171,412 | 15,827,495 |
GrantOfEmployeeStockOptions | $ 176,365 | $ 493,335 |
Diluted weighted-average shares outstanding | 16,347,777 | 16,320,830 |
Net earnings per Class A Equivalent common share (1) | $ 1.05 | $ 0.12 |
Net earnings per Class A Equivalent common share-assuming dilution (1) | $ 1.04 | $ 0.11 |
6) Earnings Per Share (Details) - $ / shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Details | ||
Antidilutive Securities Excluded from Computation of Net Income, Per Outstanding Unit, Amount | $ 589,822 | $ 89,250 |
7) Business Segments: Schedule of Revenues and Expenses by Reportable Segment (Details) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Revenue from customers | $ 82,076,109 | $ 70,829,297 | |
SegmentReportingInformationIncomeLossBeforeIncomeTaxes | 21,187,182 | 2,897,770 | |
Identifiable Assets | 995,206,766 | 956,751,793 | |
Goodwill | 2,765,570 | 2,765,570 | $ 2,765,570 |
Life Insurance Segment | |||
Revenue from customers | 50,860,529 | 26,158,701 | |
SegmentReportingInformationIntersegmentRevenue | 2,408,163 | 2,988,651 | |
SegmentReportingInformationIncomeLossBeforeIncomeTaxes | 23,711,810 | 1,483,480 | |
Identifiable Assets | 873,263,596 | 831,233,557 | |
Goodwill | 2,765,570 | 2,765,570 | |
Cemetery and Mortuary | |||
Revenue from customers | 3,775,745 | 3,604,897 | |
SegmentReportingInformationIntersegmentRevenue | 117,117 | 109,351 | |
SegmentReportingInformationIncomeLossBeforeIncomeTaxes | 860,763 | 758,911 | |
Identifiable Assets | 92,747,811 | 99,554,821 | |
Mortgage | |||
Revenue from customers | 27,439,835 | 41,065,699 | |
SegmentReportingInformationIntersegmentRevenue | 133,597 | 95,770 | |
SegmentReportingInformationIncomeLossBeforeIncomeTaxes | (3,385,391) | 655,379 | |
Identifiable Assets | 163,896,491 | 164,990,647 | |
Segment Reconciling Items | |||
SegmentReportingInformationIntersegmentRevenue | (2,658,877) | (3,193,772) | |
Identifiable Assets | $ (134,701,132) | $ (139,027,232) |
8): Fair Value of Financial Instruments: Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Assets accounted for at fair value on a recurring basis | ||
Available-for-sale Securities | $ 5,889,151 | $ 6,037,855 |
Fair value of loans held for sale | 124,866,313 | |
Restricted assets of cemeteries and mortuaries | 800,510 | 809,958 |
Cemetery perpetual care trust investments | 648,381 | 682,315 |
Derivatives - loan commitments | 2,786,371 | 2,032,782 |
Assets, Fair Value Disclosure | 134,990,726 | 9,562,910 |
Liabilities accounted for at fair value on a recurring basis | ||
Derivatives - Call Options | (13,277) | (64,689) |
Derivatives - Put Options | (128,598) | (20,568) |
Derivatives - loan commitments1 | (348,824) | (36,193) |
Liabilities accounted for at fair value | (490,699) | (121,450) |
Trading Securities, Equity | 6,037,855 | |
Fair Value, Inputs, Level 1 | ||
Assets accounted for at fair value on a recurring basis | ||
Available-for-sale Securities | 5,889,151 | 6,037,855 |
Restricted assets of cemeteries and mortuaries | 800,510 | 809,958 |
Cemetery perpetual care trust investments | 648,381 | 682,315 |
Assets, Fair Value Disclosure | 7,338,042 | 7,530,128 |
Liabilities accounted for at fair value on a recurring basis | ||
Derivatives - Call Options | (13,277) | (64,689) |
Derivatives - Put Options | (128,598) | (20,568) |
Liabilities accounted for at fair value | (141,875) | (85,257) |
Trading Securities, Equity | 6,037,855 | |
Fair Value, Inputs, Level 3 | ||
Assets accounted for at fair value on a recurring basis | ||
Fair value of loans held for sale | 124,866,313 | |
Derivatives - loan commitments | 2,786,371 | 2,032,782 |
Assets, Fair Value Disclosure | 127,652,684 | 2,032,782 |
Liabilities accounted for at fair value on a recurring basis | ||
Derivatives - loan commitments1 | (348,824) | (36,193) |
Liabilities accounted for at fair value | $ (348,824) | $ (36,193) |
8): Fair Value of Financial Instruments: Schedule of Changes in the consolidated balance sheet line items measured using level 3 inputs (Details) - USD ($) |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Loan Commitments | ||
Fair Value Balance | $ 1,996,589 | $ 6,809,332 |
Fair Value, Losses (Gains) included in earnings | 440,958 | (4,812,743) |
Fair Value Balance | 2,437,547 | 1,996,589 |
Loans Held for Sale | ||
Fair Value Balance | 133,414,188 | |
Fair Value, Originations | 479,953,484 | 1,233,683,666 |
Fair Value, Sales | (505,586,040) | (1,151,031,388) |
Fair Value, Transfer to mortgage loans held for investment | (139,464) | |
Fair Value, Losses (Gains) included in earnings | 17,224,145 | 50,761,910 |
Fair Value Balance | $ 124,866,313 | 133,414,188 |
Bank Loan Interest Rate Swaps | ||
Fair Value Balance | (3,308) | |
Fair Value, Losses (Gains) included in other comprehensive income | $ 3,308 |
8): Fair Value of Financial Instruments: Schedule of Fair Value Measurements, Nonrecurring (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Mortgage Loans on Real Estate | $ 1,417,617 | $ 1,363,440 |
Assets accounted for at fair value on a nonrecurring basis - Impaired real estate held for investment | 1,005,866 | |
Assets accounted for at fair value on a nonrecurring basis - Mortgage servicing rights | 997,497 | 6,085,352 |
Assets, Fair Value Disclosure, Nonrecurring | 3,420,980 | 16,375,776 |
Assets accounted for at fair value on non-recurring basis | ||
Impaired real estate held for investment | 8,500,000 | |
Impaired fixed maturity securities, held to maturity | 426,984 | |
Fair Value, Inputs, Level 2 | ||
Assets, Fair Value Disclosure, Nonrecurring | 426,984 | |
Assets accounted for at fair value on non-recurring basis | ||
Impaired fixed maturity securities, held to maturity | 426,984 | |
Fair Value, Inputs, Level 3 | ||
Mortgage Loans on Real Estate | 1,417,617 | 1,363,440 |
Assets accounted for at fair value on a nonrecurring basis - Impaired real estate held for investment | 1,005,866 | |
Assets accounted for at fair value on a nonrecurring basis - Mortgage servicing rights | 997,497 | 6,085,352 |
Assets, Fair Value Disclosure, Nonrecurring | $ 3,420,980 | 15,948,792 |
Assets accounted for at fair value on non-recurring basis | ||
Impaired real estate held for investment | $ 8,500,000 |
8): Fair Value of Financial Instruments: Schedule of Financial Instruments Carried at Other Than Fair Value (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
FixedMaturitySecuritiesHeldToMaturityMember | ||
Carrying Value | $ 231,474,083 | $ 228,397,623 |
Estimated Fair Value | 239,858,942 | 241,498,409 |
Residential Mortgage | ||
Carrying Value | 99,065,368 | 99,816,535 |
Estimated Fair Value | 104,999,136 | 106,050,169 |
Residential Construction | ||
Carrying Value | 53,795,008 | 49,694,025 |
Estimated Fair Value | 53,795,008 | 49,694,025 |
Commercial Loan | ||
Carrying Value | 52,129,530 | 54,700,325 |
Estimated Fair Value | 53,487,729 | 56,473,156 |
MortgageLoansNet1Member | ||
Carrying Value | 204,989,906 | 204,210,885 |
Estimated Fair Value | 212,281,873 | 212,217,350 |
PolicyLoanMember | ||
Carrying Value | 6,403,888 | 6,531,352 |
Estimated Fair Value | 6,403,888 | 6,531,352 |
Insurance Assignments | ||
Carrying Value | 34,157,556 | 35,455,098 |
Estimated Fair Value | 34,157,556 | 35,455,098 |
Restricted Assets 1 | ||
Carrying Value | 1,142,355 | 1,130,088 |
Estimated Fair Value | 1,146,584 | 1,152,324 |
Restricted Assets 2 | ||
Carrying Value | 1,735,066 | 1,701,811 |
Estimated Fair Value | 1,819,012 | 1,796,910 |
Cemetery perpetual care trust investments 1 | ||
Carrying Value | 948,735 | 943,211 |
Estimated Fair Value | 941,823 | 953,404 |
Cemetery perpetual care trust investments 2 | ||
Carrying Value | 4,209 | 4,128 |
Estimated Fair Value | 4,475 | 4,411 |
MortgageServicingRightsMember | ||
Carrying Value | 21,554,050 | 21,376,937 |
Estimated Fair Value | 30,086,162 | 27,427,174 |
BankAndOtherLoansPayableMember | ||
Carrying Value | (151,451,152) | (157,450,925) |
Estimated Fair Value | (151,451,152) | (157,450,925) |
Policyholder account balances | ||
Carrying Value | (47,448,620) | (47,867,037) |
Estimated Fair Value | (33,948,014) | (34,557,111) |
FuturePolicyBenefitsAnnuitiesMember | ||
Carrying Value | (98,569,032) | (99,474,392) |
Estimated Fair Value | (97,549,438) | (98,827,107) |
Fair Value, Inputs, Level 2 | FixedMaturitySecuritiesHeldToMaturityMember | ||
Estimated Fair Value | 232,634,878 | 233,806,219 |
Fair Value, Inputs, Level 2 | Restricted Assets 1 | ||
Estimated Fair Value | 1,146,584 | 1,152,324 |
Fair Value, Inputs, Level 2 | Cemetery perpetual care trust investments 1 | ||
Estimated Fair Value | 941,823 | 953,404 |
Fair Value, Inputs, Level 3 | FixedMaturitySecuritiesHeldToMaturityMember | ||
Estimated Fair Value | 7,224,064 | 7,692,190 |
Fair Value, Inputs, Level 3 | Residential Mortgage | ||
Estimated Fair Value | 104,999,136 | 106,050,169 |
Fair Value, Inputs, Level 3 | Residential Construction | ||
Estimated Fair Value | 53,795,008 | 49,694,025 |
Fair Value, Inputs, Level 3 | Commercial Loan | ||
Estimated Fair Value | 53,487,729 | 56,473,156 |
Fair Value, Inputs, Level 3 | MortgageLoansNet1Member | ||
Estimated Fair Value | 212,281,873 | 212,217,350 |
Fair Value, Inputs, Level 3 | PolicyLoanMember | ||
Estimated Fair Value | 6,403,888 | 6,531,352 |
Fair Value, Inputs, Level 3 | Insurance Assignments | ||
Estimated Fair Value | 34,157,556 | 35,455,098 |
Fair Value, Inputs, Level 3 | Restricted Assets 2 | ||
Estimated Fair Value | 1,819,012 | 1,796,910 |
Fair Value, Inputs, Level 3 | Cemetery perpetual care trust investments 2 | ||
Estimated Fair Value | 4,475 | 4,411 |
Fair Value, Inputs, Level 3 | MortgageServicingRightsMember | ||
Estimated Fair Value | 30,086,162 | 27,427,174 |
Fair Value, Inputs, Level 3 | BankAndOtherLoansPayableMember | ||
Estimated Fair Value | (151,451,152) | (157,450,925) |
Fair Value, Inputs, Level 3 | Policyholder account balances | ||
Estimated Fair Value | (33,948,014) | (34,557,111) |
Fair Value, Inputs, Level 3 | FuturePolicyBenefitsAnnuitiesMember | ||
Estimated Fair Value | $ (97,549,438) | $ (98,827,107) |
10) Derivative Commitments: Schedule of Derivative Assets at Fair Value (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Derivative, Notional Amount | $ 176,760,863 | $ 109,433,557 |
Derivative Asset, Notional Amount | 2,786,371 | 2,032,782 |
Derivative Liability, Notional Amount | 490,699 | 121,450 |
Loan Commitments | ||
Derivative, Notional Amount | 170,365,863 | 105,679,107 |
Derivative Asset, Notional Amount | 2,786,371 | 2,032,782 |
Derivative Liability, Notional Amount | 348,824 | 36,193 |
Call Options | ||
Derivative, Notional Amount | 1,266,050 | 1,488,550 |
Derivative Liability, Notional Amount | 13,277 | 64,689 |
Put Options | ||
Derivative, Notional Amount | 5,128,950 | 2,265,900 |
Derivative Liability, Notional Amount | $ 128,598 | $ 20,568 |
10) Derivative Commitments: Schedule of Gains and Losses on Derivatives (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Details | ||
Gain (Loss) on Derivatives, Loan Commitments | $ 440,958 | $ 2,167,593 |
Gain (Loss) on Derivatives, Call and put options | $ 79,171 | $ 134,563 |
11) Reinsurance, Commitments and Contingencies: Mortgage Loan Loss Settlements (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Details | ||
Funds reserved and accrued to settle investor related claims | $ 2,912,000 | $ 2,572,000 |
11) Reinsurance, Commitments and Contingencies: Other Contingencies and Commitments (Details) |
Mar. 31, 2018
USD ($)
|
---|---|
Details | |
Commitments to fund new residential construction loans | $ 82,523,000 |
Commitments to fund new residential construction loans funded | $ 54,254,000 |
12) Mortgage Servicing Rights: Schedule of Mortgage Servicing Rights (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Details | ||
Balance before valuation allowance at beginning of year | $ 21,376,937 | $ 18,872,362 |
MSRs proceeds from loan sales | 997,497 | 6,085,352 |
Amortization | (820,384) | (3,580,777) |
Balance before valuation allowance at year end | 21,554,050 | 21,376,937 |
Mortgage servicing rights, net | 21,554,050 | 21,376,937 |
Estimated fair value of MSRs at end of period | $ 30,086,162 | $ 27,427,174 |
12) Mortgage Servicing Rights: Schedule of Finite-Lived Intangible Assets, Future Amortization Expense, Mortgage Servicing Rights (Details) |
Mar. 31, 2018
USD ($)
|
---|---|
Details | |
Finite-Lived Intangible Assets, Amortization Expense, Remainder of Fiscal Year | $ 4,091,450 |
Finite-Lived Intangible Assets, Amortization Expense, Year Two | 4,091,450 |
Finite-Lived Intangible Assets, Amortization Expense, Year Three | 4,091,450 |
Finite-Lived Intangible Assets, Amortization Expense, Year Four | 4,091,303 |
Finite-Lived Intangible Assets, Amortization Expense, Year Five | 3,269,025 |
Finite-Lived Intangible Assets, Amortization Expense, after Year Five | 1,919,372 |
Finite-Lived Intangible Assets, Accumulated Amortization | $ 21,554,050 |
12) Mortgage Servicing Rights: Schedule of Other Revenues (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Other income | $ 1,988,631 | $ 1,922,211 |
Contractual Servicing Fees | ||
Other income | 1,876,883 | 1,835,873 |
Late fees | ||
Other income | $ 111,748 | $ 86,338 |
12) Mortgage Servicing Rights: Summary of Unpaid Principal Balances of the Servicing Portfolio (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Details | ||
Servicing Unpaid Principal Balance | $ 2,941,337,111 | $ 2,924,868,843 |
12) Mortgage Servicing Rights: Assumptions used in determining MSR value (Details) |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Details | ||
Prepayment Speeds | 4.01% | 3.67% |
Average Life in Years of MSR | 6.92 | 6.34 |
Discount Rate | 10.01% | 10.01% |
13) Income Taxes (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Details | ||
Effective Income Tax Rate Reconciliation, Percent | 20.10% | 35.80% |
Income tax expense | $ 4,261,258 | $ 1,037,770 |
14) Revenues From Contracts With Customers: Revenues For The Company's Cemetery and Mortuary Contracts (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Total revenues | $ 82,076,109 | $ 70,829,297 |
Net mortuary and cemetery sales | 3,232,729 | $ 3,358,973 |
Major goods or services lines - at need | ||
Total revenues | 2,737,625 | |
Major goods or services lines - pre need | ||
Total revenues | 495,104 | |
Timing of Revenue Recognition - Goods transferred at a point in time | ||
Total revenues | 2,072,481 | |
Timing of Revenue Recognition - Services transferred at a point in time | ||
Total revenues | $ 1,160,248 |
14) Revenues From Contracts With Customers: Reconciliation of Revenues from Cemetery and mortuary contracts to Business Segment Information (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Net mortuary and cemetery sales | $ 3,232,729 | $ 3,358,973 |
Gains on investments and other assets | 22,020,939 | 145,330 |
Net Investment Income | 10,074,431 | 9,016,376 |
Other revenues | 2,477,492 | $ 2,028,873 |
Cemetery and Mortuary | ||
Gains on investments and other assets | 409,088 | |
Net Investment Income | 88,078 | |
Other revenues | 45,850 | |
Revenues from External Customers | $ 3,775,745 |
14) Revenues From Contracts With Customers: Schedule of Opening and Closing Balances of Receivables, Contract Assets and Contract Liabilities (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Receivables (net of allowances for doubtful accounts of $1,569,422and $1,544,518 for 2018 and 2017) | $ 9,398,972 | $ 10,443,869 |
Deferred pre-need cemetery and mortuary contract revenues | 12,150,924 | 12,873,068 |
Receivables | ||
Receivables (net of allowances for doubtful accounts of $1,569,422and $1,544,518 for 2018 and 2017) | 2,595,611 | 2,742,765 |
Increase (Decrease) in Accounts Receivable | (147,154) | |
Contract Asset | ||
Deferred pre-need cemetery and mortuary contract revenues | 731,626 | 856,479 |
Increase (Decrease) in Deferred Revenue | (124,853) | |
Contract Liability | ||
Deferred pre-need cemetery and mortuary contract revenues | 12,882,550 | $ 13,729,547 |
Increase (Decrease) in Deferred Revenue | $ (846,997) |
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